Federalism Reform II

When the first-phase reforms took effect, the Bundestag and Bundesrat agreed on an additional reform, this time of the country's federalist financing structures. Concretely, this took the form of the "Collation of topics pertaining to reform of federal-state financial relationships," which served as the basis for the second federalist commission that was formed in December 2006. The commission is addressing a number of topics, including:

• Overcoming existing budget crises: Approaches for restructuring and increasing autonomy
• Critical analysis of responsibilities, setting standards
• Reducing bureaucracy and increasing efficiency
• Ensuring adequate funding exists for required services
• Ensuring departmental agencies can work autonomously
• Facilitating cooperation between states
• Consolidating policy-related services and their impacts on the federal-state financial relationship 

The window of opportunity for the second phase of reform, which is defined by the tenure of the current grand coalition government, will remain open until the end of 2008 or the beginning of 2009, when campaigning for the 2009 federal elections will begin. Despite this opportunity, the current discussion is in danger of bogging down in a plethora of detailed proposals on early-recognition mechanisms, preventative measures and efforts for resolving existing budget crises, an issue inherently related to public debt levels.

As for the future, it seems unavoidable that participants must come to some sort of additional policy agreement on the reform's medium- and long-term objectives. Ideally, they would produce a cohesive, comprehensive approach designed to stand the test of time. Should this not happen during the second-stage negotiations, then preparatory measures should be put in place for a third stage lasting until 2020 and beyond. Given the impact of demographic change and the ongoing European integration process, discussions could focus on the implicit and long-term aspects of debt-related issues and on the federal-state financial relationship.

In preparing a number of expert opinions, the Bertelsmann Stiftung wants to examine a range of possibilities in various policy fields for distributing responsibilities and financial resources among the country's federalist actors. The horizontal perspective, the more common perspective when looking at political decision-making processes in federalist systems, should thus be augmented by a vertical viewpoint that focuses on individual policy areas.

In addition, the Bertelsmann Stiftung will be carrying out a representative survey to ascertain the public's attitudes and preferences when it comes to Germany's federalist system. The survey's goal is to ensure that the oft-expressed idea that federalist states are more in touch with citizens' needs does in fact become reality.