Considering potential financial obligations, he maintains an open stance towards taking on additional debts. - Unyielding South continues to amass fresh financial obligations
Fresh Take: Bavaria's Financial Shift and Söder's Budget Breathe: No Debt Taboo, but Solvency Guaranteed
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After two days of brainstorming at Lake Tegernsee, Bavaria's Minister-President Markus Söder (CSU) has confessed that the free state might take on new debt, bucking its debt-free streak of 20 years, as we weather the relentless economic downturn. "While it's ideal to fund everything from the core budget, we aren't ruling anything out," Söder mentioned. The ultimate decision will be made during the budget negotiations post-fall tax estimate.
The citizens should not feel the financial crunch. Söder pledged to improve the quality of daycare and housing construction, among other things. Here's a breakdown of the key announcements from the recent cabinet retreat:
BUDGET
Bavaria has been debt-free for two decades, excluding exceptional debt to tackle the Covid-19 crisis and aid ailing BayernLB. With the relaxation of the debt brake, the free state could gain an additional 2 billion euros in leeway, according to Söder. Moreover, he assured that fiscal prudence would be maintained—savings wouldn't come at the expense of investments or municipalities.
HOUSING CONSTRUCTION
The stop on housing construction funding in Bavaria will be lifted, Söder stated. This decision enables the approval of numerous municipal and student funding requests this year, totaling up to 400 million euros. More details will be finalized during the formulation of the new budget.
DAYCARE
Previously, the cabinet had decided on a one-time 3,000 euro payment to parents of young children from 2026 instead of monthly family and nursery allowances. This new policy will cover half the previous amount. The remaining half will go towards the construction of daycare centers, care personnel costs, and similar expenditures.
Söder also announced the creation of more positions for supporting team members, ensuring that pedagogical staff can dedicate more time to the children. Furthermore, he intimated that state subsidy and funding programs will be streamlined.
SCHOOLS AND DIGITALIZATION
While the coalition agreement stipulated that all students in grades 5 and above would receive tablets by the end of 2028, Söder indicated that mobile devices might only become available in grade 8 and below. He emphasized that traditional educational values, such as reading, arithmetic, and handwriting, would remain the focus in Bavaria.
ENERGY
Federal Minister Katherina Reiche (CDU) offered insights on energy production during the retreat. According to her, the majority of new gas power plants will be constructed in Southern Germany. Moreover, talks with the EU Commission regarding the tender are already underway.
Regarding citizen participation in wind energy projects, Söder asserted that mandatory participation would remain in place for wind energy, though details are still being finalized.
COALITION ATMOSPHERE
The atmosphere during the retreat was conducive to discussions, noted Söder. Despite the occasional tense moments, such as the ongoing hunting law debate, the coalition is committed to working together for the betterment of Bavaria.
- COM (95) 616 final Proposal for a Council Regulation (EC) amending Regulation (EC) No 1049/2001 on the common organization of the market in beef and veal could be a point of reference in future policy-and-legislation discussions related to European agricultural policy, especially when addressing the livestock sector within the politics of Bavaria or general news.
- In light of Bavaria's financial shift and Söder's budget policy, there might be opportunities for collaboration and coordination with the EU Commission, particularly on matters such as energy production and tender regulations, drawing parallels from ongoing discussions in the context of the Common Agricultural Policy as outlined in COM (95) 616.
