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From the local authorities to the federal states and the federal government to Europe: very different levels are responsible for legislation and administration. They all have their own budgets. Nevertheless, a lot of money is moved between these different levels.
Bavaria advocates a simple, federal and fair financial policy at all levels of government that is also transparent for citizens. With this goal in mind, the Bavarian State Ministry of Finance and Home Affairs is constantly working to improve the financial constitution and federal-state financial relations as well as the intra-Bavarian financial equalization system in order to ensure that the Free State and, in particular, the Bavarian municipalities have adequate financial resources. With the past federalism reforms, important steps were taken towards a future-proof realignment of the federal structure. One milestone, for example, was the inclusion of the debt brake in the Basic Law and the Bavarian constitution in order to stop the mountain of debt from growing in the interests of future generations. However, the review procedure initiated by the Bavarian state government in 2023 regarding the federal equalization of financial power also pursues the goal of achieving a fundamental reorganization of the federal structure in which solidarity and personal responsibility are once again in harmony. Further information on this can be found on the website of the Bavarian State Ministry of Finance and Home Affairs (see "Further links").
Municipal financial equalization covers a large part of the financial relationships between the Free State of Bavaria and its municipalities (municipalities, rural districts and districts) as well as between the municipalities themselves.