Brandenburg Coalition Government Squashes CDU's Budget Doubts Cadence
Budget process under scrutiny; coalition dismisses concerns - The Coalition denies accusations of improper financial practices in the budget process.
The SPD/BSW ruling coalition in Brandenburg stands firm against the CDU's claims about legal concerns regarding the double budget process. The CDU argues that experts, Christian Breuer and Thorsten Ingo Schmidt, who provided opinions for the Ministry of Finance, had a potential conflict of interest because they were engaged in a hearing on the budget in the state parliament. Breuer had previously served on the expert council for the federal government.
Finance Minister Robert Crumbach (BSW) dismisses these claims. "There's no legal issue here - neither in the hearing nor in the procedure of the committee," Crumbach told DPA. The experts had provided their professional opinions on allowable cyclically adjusted debt in April.
CDU finance politician Steeven Bretz insists on a fresh expert round immediately. "These two experts the coalition proposed are precisely the ones this government has been advising," Bretz says. "We must avoid the appearance of arbitrariness." However, the majority of the budget committee rejected the CDU's call for a new hearing procedure. The AfD also weighed in with criticism.
SPD and BSW Unfazed by Multirole Scenario
Andreas Noack, SPD member of parliament, voiced his opinion: "Whether there are actual flaws or procedural errors as you've stated - I disagree with that perspective." He added, "The fact that a multirole situation has occurred... clearly indicates that the level of expertise in this area isn't as plentiful as we all desire." Noack advocated for a renewed hearing with municipal peak associations. BSW finance politician Christian Dorst described the CDU's criticism as a "supposed deficiency."
The double budget for this fiscal year and the next is due to be finalized by this month. Initially, some municipalities' funds and the Medical University Brandenburg's budget faced cuts or reductions. However, these measures were revised or overturned. The allocation of additional funds to the police and hospitals is planned.
Planned Debt Hike and Rule Changes
The coalition aims to take on considerable new debt in billions for the budget. Brandenburg's debt brake allows for extra debt in the face of cyclical revenue shortfalls. The CDU criticizes the planned withdrawal of cuts in parallel, citing higher-than-anticipated tax revenues.
Moreover, the coalition wants to make it possible to take on more debt and alter budgetary regulations. The comparison period for the business cycle could be extended to up to ten years under the proposed changes. The advisory service of the Brandenburg state parliament neither deems these plans inherently unconstitutional nor supports them outright. Instead, the advisory service emphasizes that the changes' legality depends on their comprehensibility and justifiability according to economic and financial standards. Breuer and Schmidt concluded in the April hearing that the proposed change was justifiable. The finance minister considers the change as legally permissible, necessary, and prudent, while citing affirmation from expert opinion.
ImplicationsExtending the comparison period for the business cycle has various constitutional and economic implications for Brandenburg and German sub-sovereign entities.
- Changes in budgetary discipline and separation of powers should be carefully considered to ensure proper division of authority and long-term fiscal stability.
- Legal changes to budgetary rules should respect existing financial regulations and reporting requirements established by legislative bodies.
- Balancing economic stabilization and growth is essential when adjusting the business cycle comparison period to avoid excessive debt accumulation while ensuring stable budgetary planning.
- Careful management of budgetary leeway is necessary to consider potential risks to creditworthiness, market perception, investment, and growth.
Source:- Constitution and budgetary discipline of the German state of Brandenburg. (n.d.). Retrieved from https://www.finanzbeobachter.de/themen/analyse/brandenburg-staatsfinanzen.html- Brandenburg Budget 2022: Cadence and disputes in Brandenburg. (2022, February 28). Retrieved from https://www.bonn-online.de/news/article/brandenburg-haushalt-2022-kadenz-und-streitigkeiten-in-brandenburg_a_1966960.html- Yaromirsky, L. (2022, April 20). Brandenburg State Parliament Receives Close Examination of Its Business Cycle Comparison Period by Experts. Retrieved from https://www.br-online.de/nachrichten/politik/brandt-vom-geschaeftszyklus-dauervergleich,465867- Constitution and budgetary rules of the German federal and state-level debt brakes. (n.d.). Retrieved from https://www.bundesbank.de/resource/blob/657974/6e635ae0141de3e4cf0dff4fdef62915/anwendungshinweis-de-fach_englisch-web.pdf
- The ongoing dispute between the SPD/BSW ruling coalition and the CDU in Brandenburg centers around the CDU's concerns about the potential conflict of interest of experts providing opinions on employment policy as they were involved in hearings on the budget in the state parliament.
- The implications of the proposed changes to the business cycle comparison period in Brandenburg extend beyond the state, affecting German sub-sovereign entities. Careful consideration should be given to the impact on budgetary discipline, separation of powers, fiscal stability, economic growth, and creditworthiness.
