Municipalities Should Have Autonomy Over Use of Federal Funding - Federal authorities' funds allocation decisions should be left to local administrations
In Saxony, Germany, the need for urgent infrastructure investments has been highlighted by the Alliance for Progress and Social Justice (BSW) and DGB Saxony. The BSW has emphasized a massive investment backlog in the region, with Sabine Zimmermann, the BSW chairwoman, calling for attention to the state of hospitals and the Dresden Carol Bridge.
According to a study commissioned by DGB Saxony in March 2024, public investments totalling €44 billion are required over the next ten years. This figure includes investment needs in the areas of climate protection, infrastructure, education, and health.
The current state of infrastructure in Saxony has been a concern for many years, with governments since reunification running hospitals, particularly in rural areas, into the ground. The infrastructure in state and municipal ownership has an investment need of 8.6 billion euros, not including collapsed and endangered bridges.
In response to a proposal by Deputy Minister-President Petra Köpping (SPD) for an investment summit involving municipalities, the economy, and trade unions, Zimmermann welcomed the initiative. She highlighted that the Dresden Carol Bridge requires half of an annual tranche of funds to be restored.
During budget negotiations, Zimmermann had demanded an investment package of 600 million euros for municipalities, but this was rejected by the CDU and SPD. However, Saxony can expect more than four billion euros from the federal special assets over the next ten years, with around 400 million euros available annually for infrastructure investments.
The German government's large-scale investment program worth over €500 billion aims to drive infrastructure and climate initiatives over the next decade. This includes investments in smart grids, renewable energy projects, and high-tech industrial applications, with Saxony's tech cluster, Silicon Saxony, actively involved in implementing the federal High-Tech Agenda.
At the regional and municipal level, investments are underway, particularly in renewable energy projects. For example, municipalities hosting wind turbines receive direct business tax revenues and annual payments tied to electricity production under the German Renewable Energy Sources Act (EEG). This revenue supports local infrastructure, social services, and education, demonstrating municipalities’ crucial role in leveraging federal funds for regional development.
The 16 German states, including Saxony, have increased borrowing flexibility (up to 0.35% of GDP) to finance local infrastructure projects, enhancing their decision-making power in directing federal funds to regional priorities like rail electrification and digital networks.
In summary, infrastructure investment in Saxony is part of a broader national push towards climate-friendly modernization and digitalization, with municipalities playing an integral role through direct financial benefits and increased borrowing capacity to make autonomous decisions regarding federal funds for local projects. The urgent need for infrastructure investments, as highlighted by the BSW and DGB Saxony, remains a key focus in the region.
- The urgent need for infrastructure investments, as highlighted by the BSW and DGB Saxony, extends beyond Saxony, as the German government has launched a large-scale investment program worth over €500 billion to drive infrastructure and climate initiatives over the next decade.
- Within the context of the regional and national emphasis on infrastructure investments, community policy and employment policy in Saxony are closely linked, as municipal investments in renewable energy projects provide direct business tax revenues and annual payments that support local infrastructure, social services, and education.
