The Implications of the 2005 Federal Election on the Länder: Does a Grand Coalition in Berlin Mean Great Changes for the Länder?
By Dr. Mathias Neukirchen

From a constitutional perspective, the last federal election will not have significant implications for the sixteen Land (federal state) parliaments and governments. The Länder have their own independence on which the federal government and its constitutional organs have no direct influence.

While the Länder are involved on the federal level through the Bundesrat, the federal government has no say in the working areas of the Länder. The government and its supporting coalition parties in the Bundestag depend on a corresponding majority in the Bundesrat, because about 70 percent of all important legislation requires consent by the Bundesrat. When Land elections result in a change of government on the Land level and consequently in a change of proportion in the Bundesrat, the Bundesrat can potentially block the federal government and thereby limit its ability to govern. In such a case, the government might feel the necessity to call for new elections as we witnessed after the Land elections in North Rhine-Westphalia on May 22, 2005. Whether the government under Chancellor Gerhard Schröder was indeed blocked by the Bundesrat or whether there was unwillingness within the SPD to support the course of the reforms is another question.

On the other hand, there has not been a case where the Land government called for new elections as a result of an outcome of federal elections, because the ability of the Land government to govern is not influenced by which party holds a majority in the Bundestag.

This autonomy is the basis of German federalism, the basis for the observance of regional interests, and the basis for more vertical division of power between the federal government and the Land levels. Against this background, it becomes clear that the “merging” of all or several Land elections, which is repeatedly discussed by the public, is neither constitutionally possible nor is it desirable with regards to the autonomy of the Länder.

Apart from the constitutional insignificance, the new government that emerged from the election of September 18, 2005, may bring about great changes for the Länder during the sixteenth legislative period. The possibilities of changes that the federal government could make are presented in the following.

Through its actions each government can significantly influence the situation in the Länder. By exerting its legislative and administrative prerogatives, the federal government can regulate essential areas uniformly nationwide.

In part, the action of the federal government directly affects the budget of the Länder. Unlike a company, the Länder are not able to determine their income or expenditures completely independently. Expenditure and income of the Länder can be and are directly affected by federal legislation. By introducing relevant legislation, the federal government can force the Länder or its local authorities to provide specific services, such as in the area of childcare. This can lead to several million Euros of additional expenditures for the Länder and its local authorities, and is a strong influence upon their budgets.

The federal government equally can influence the income of the Länder, because federal legislation determines the amount of many taxes and levies, which partly flow to the Länder. If the Bundestag – as it is planned – increases the VAT by three percentage points to nineteen percent, the Länder would receive additional revenues. To put it in numbers, this reorganization would mean for the Free and Hanseatic City of Hamburg, for example, the following: this small Land would have to cope with approximately 65 million Euros of additional expenditures due to the statutory claim of a free place at a daycare facility for children. On the other hand, the planned increase in VAT would provide Hamburg with approximately 150 million Euros of additional revenue.

In addition to the influence of a federal government on the budget of the Länder, the current government has the possibility to enact further changes for the Länder. Within the framework of the coalition treaty, the CDU/CSU and the SPD have agreed on common goals and have a majority in the Bundestag, which is needed to change the constitution. Because of the involvement of both the CDU/CSU and the SPD, obstruction in the Bundesrat or vigorous opposition from the Länder is unlikely. Even skeptics, therefore, predict that a reform of the federal system will be finalized during this legislative period. The goal of the proposed reforms to date was, on the one hand, to reduce the number of legislation that require approval by the Bundesrat, and, on the other hand, expand the rights of the Länder. The grand coalition has agreed on an appropriate federal reform in the coalition treaty; it is not possible to show all implications and changes here. Instead, the implications of the reform shall be demonstrated with some examples.

The coalition treaty states that in the course of the reform a number of legislation powers will be devolved from the federal to the Land level. The federal government will, for example, lose the ability to pass framework legislation in the area of higher education and to regulate the opening hours of shops. This strengthens the educational and regulatory abilities of the Länder and enhances diversity. If these new possible abilities are used properly, it would be for the Länder’s benefit.

The Land governments already have laws ready and will use their new prerogatives quickly. Several Land governments are already planning laws to further liberalize the shop opening hours and to empower the local authorities to revoke the otherwise-remaining law of closing time on Sundays on special occasions. We will, thus, have to get used to the fact that the opening hours in Germany will, in the future, depend on the location and will vary.

The coalition agreement equally foresees that as part of the federal reform a number of privileges are transferred from the Land to the federal level. Thus, the Länder equally lose some privileges, such as in the area of Nature and Water Supply legislation.

In the past decades, the Länder have lost more and more rights to the federal government. This has been compensated by an enhanced right to a say in the Bundesrat. The loss of rights of the Länder to the federal government was bought through financial allocations and an increase in laws requiring Bundesrat consent. This has led to a lack of transparency regarding the responsibility and the decision-making process. With the federal reform, the new government can reorganize the relation between the federal and the Land level and rectify this erroneous trend. This will give some of the range for maneuver, which had been lost in the past decades, back to the Länder. The federal government will regain its ability to act, because the possibilities of the Länder to obstruct or blackmail within the Bundesrat will decrease. Even though the details of the federal reform are contended, there is a fundamental agreement that a reform is important and right.

The grand coalition thus has no constitutional implications for the Länder, but the implications for the budget of the Länder as well as their future prerogatives, however, could be immense and a federal reform could change the federalism arrangement in Germany for the foreseeable future.

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This article was translated by Julia Meuter and appeared in the February 17, 2006 AICGS Advisor.

For the original German version, please click here.