Municipal financial equalization; application for needs-based allocations and stabilization aid for cities and municipalities

Needs-based allocations are granted, among other things, in the case of events for which the municipalities are not responsible, for budget consolidation reports and municipal mergers. Stabilization assistance is granted to structurally weak municipalities in financial difficulties that are willing to consolidate.

Description

Classical needs-based allocations

Cities and municipalities can receive needs-based allocations in the following cases, among others:

  • Loss of trade tax,
  • Loss of spa and tourism contributions in 2020,
  • hardships in the context of key allocations,
  • voluntary mergers of municipalities,
  • Establishment of an administrative community or accession of a municipality to an already existing administrative community,
  • repair of damage caused by natural disasters,
  • Remediation of contaminated sites
  • rock remediation,
  • land acquisition as a result of military conversion,
  • Costs for the preparation of an expert opinion on budget consolidation (prepared by the Bavarian Municipal Auditing Association (BKPV) or state audit office).

Stabilization aid

Municipalities that are considered structurally weak on the basis of objective indicators or are particularly affected by negative demographic trends and are in a financial predicament through no fault of their own or whose financial performance is at risk can receive government help to help themselves by being granted stabilization assistance. Since 2019, stabilization assistance to cities and municipalities has been designed as a two-pillar model: Stabilization aid can be applied for to repay old debts (1st pillar) and/or as investment aid (2nd pillar).

The aim is that through their own consolidation and the granting of stabilization aid, the municipalities can

  • the above-average debt is reduced and
  • interest payments and repayments are reduced so that the municipalities regain more financial room for maneuver.

In addition, municipalities willing to consolidate can be supported in financing necessary investments in basic municipal equipment by being granted investment aid; an investment backlog can thus be avoided or reduced.

Prerequisites

Prerequisites for the granting of classical needs allocations:

  • The municipality has incurred financial hardship as a result of an event or special expenditure (loss of trade tax, hardship in the context of key allocations, voluntary mergers of municipalities, establishment of an administrative community or accession of a municipality to an existing administrative community, repair of damage caused by natural disasters, remediation of contaminated sites, rock remediation, purchase of land as a result of military conversion).
  • The municipality has exhausted all revenue possibilities to absorb the financial burdens caused by the special expenditure or event (including at least average assessment rates for property taxes and trade tax, levying cost-covering fees).
  • The municipality was not able to balance the administrative budget or the municipality has a financial hardship in the context of an overall view (e.g. comparison of the free financial margin with the costs to be incurred, existing reserves).

Prerequisites for the granting of classical needs allocations for expert opinions on budget consolidation:

  • The expert opinion must be current and has been prepared by the BKPV or the relevant state audit office.
  • The municipality must demonstrate that it is financially weak.

Requirements for granting stabilization aid (Pillar 1):

  • Existence of financial hardship (assessment within the framework of an overall view based on concrete criteria).
  • Existence of structural hardship (e.g. high population loss)
  • Evidence of a stringent and sustainable will to consolidate (e.g. by drawing up or updating and implementing a budget consolidation concept based on the specified 10-point catalog).
  • From the 6th year of application onwards, additional proof of special need.

Requirements for the granting of stabilization assistance (Pillar 2):

  • Three times receipt of stabilization assistance
  • Existence and continuation of a stringent and sustainable will to consolidate, including updating and implementation of the budget consolidation concept on the basis of the specified 10-point catalog
  • Restriction of borrowing to a level below ordinary repayments
  • Presentation of the investment program

Procedure

In the case of municipalities and cities belonging to a district, the application for a needs-based allocation and/or stabilization aid must be submitted in the required digital form to the relevant district office. They forward it via the district government to the Bavarian State Ministries of Finance and of the Interior, Sports and Integration. In the case of independent cities, the application must be submitted in the required digital form directly to the responsible district government. These forward it to the two state ministries.

The aforementioned state ministries review the submitted applications.

Once a year (in the fall), the Bavarian State Ministries of Finance and of the Interior, Sports and Integration decide on all applications for a needs-based allocation and/or stabilization aid pursuant to Article 11 of the Bavarian Fiscal Equalization Act (BayFAG) in the so-called Distribution Committee after hearing the top municipal associations.

After the distribution committee, the district governments make the decisions; the grants are usually paid out in the same year.

Special notes

Needs-based allocations do not constitute funding - they are granted to mitigate financial hardship resulting from special expenses/events.

Needs-based allocations are strictly subsidiary and are therefore only considered if other refinancing options (e.g. government subsidies, insurance reimbursements, claims for damages, cost sharing by third parties, etc.) are ruled out.

Deadlines

Applications for needs-based allocations or stabilization aid must be submitted by the deadline set by the Bavarian State Ministry of Finance and Home Affairs. The deadline is announced to the district governments and district offices in the spring by letter from the Ministry of Finance or on the website of the Bavarian State Ministry of Finance and Home Affairs (see "Further links").

Processing time

Decisions on all applications for demand allocations and stabilization assistance are made once a year (in the fall), and the processing time varies depending on when the application is submitted.

Required documents

  • Model 2 to Art. 44 BayHO
  • Sample of § 4 No. 4 KommHV-Cameralistics or Sample § 1 Para. 2 No. 4 KommHV-Doppik
  • last profit and loss account and financial account

    (only for local authorities using double-entry bookkeeping)

  • List of voluntary services
  • Budget consolidation concept in accordance with the requirements of the Bavarian State Ministry of Finance and Home Affairs

    (only for applications for stabilisation aid)

Forms

  • Form, Bavaria-wide: Bedarfszuweisungen bzw. Stabilisierungshilfen
    Please note

    This form has to be signed and sent to the responsible authority. You can sign the form manually and send it by email/fax or sign the form electronically with your qualified electronic signature an send it by (secure) email. If the responsible authority has set up a De-Mail account, you can also send the form by De-Mail using an sender-confirmed message.

Fees

  • none

Remedy

Administrative court proceedings; information

Administrative court action

Status: 02.05.2022

Responsible for editing: Bayerisches Staatsministerium der Finanzen und für Heimat

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Regierung von Oberbayern
Sachgebiet 12.2 - Kommunales Finanzwesen, Kommunale Förderungen; Oberversicherungsamt Südbayern

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Maximilianstraße 39
80538 München

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