Hessian Minister-President Boris Rhein (CDU) is urgently pushing for a complete overhaul of federal-state financial regulations, insisting that states must be compensated for revenue shortfalls caused by the planned tax reforms. Speaking to Redaktionsnetzwerk Deutschland ahead of a meeting between regional leaders and Chancellor Friedrich Merz (CDU) on Thursday, Rhein stated that any expansion of services or reduction of taxes at the federal level must not be dumped onto the states and municipalities. He emphasized that new burdens must be fully balanced.
Rhein warned that the budgets of both states and local municipalities are already strained to their limit, stressing that the existing federal-state financial imbalance cannot be allowed to worsen. He called for the financial relationship between the levels of government to be built on a solid foundation. The Hessian government chief stressed that the principle “who orders, pays,” which is enshrined in the federal coalition agreement, must be upheld, requiring a permanent and reliable structure so that states and municipalities can be confident that federal laws will not unilaterally become their burden.
The state leadership summit is scheduled for Thursday in Berlin, where both parties have long been negotiating a financial reform. A key element of these discussions is the principle of “Veranlassungskontextität” (“who orders, pays”), which dictates that states and municipalities should receive compensation if they are financially harmed by national laws.
