The Bundestag has approved annual relief of one billion euros for states and municipalities. The law is set to take effect retroactively from 2026 and run until 2029.
The Bundestag voted Thursday evening with the governing Union and SPD factions in favor of the Länder- und Kommunalentlastungsgesetz. States and municipalities will receive a total of four billion euros by 2029.
Of the annual sum, 400 million euros go to financially strong donor states such as Bayern. East German states receive 350 million euros to cover former DDR pensions. Another 250 million euros are allocated to states with heavily indebted municipalities, including over 164 million euros for Nordrhein-Westfalen.
The law still requires approval by the Bundesrat. SPD budget expert Thorsten Rudolph called the decision a strong sign of solidarity. Municipalities had previously warned of an impending financial collapse.
