LH meeting in Villach – financial equalization: still no fixed solution

When it drizzles during the autumn holidays, we go to the thermal baths – sounds good, doesn’t it? The invitation to the conference of state governors in Villach (Carinthia) sounds something like this. The politicians met at the Warmbader Hof, but probably not to relax in the whirlpool…

There are other matters on the agenda: After a conversation with Federal President Alexander Van der Bellen – more about that here – important domestic policy issues were discussed on Friday under the chairmanship of the Governor of Carinthia, Peter Kaiser.

For example, the weather: In view of storms and natural disasters, it is discussed how the lower limit of funds for the purchase of emergency equipment can be increased according to the Disaster Fund Act. “Thank you to all the emergency services,” were Kaiser’s first words after the conversations. The state governors have unanimously decided: the limit will be increased to 140 million euros.

Financial equality “without paternalism and excessive demands”
Financial equalization is also a central point of discussion: countries should receive an additional 2.4 billion euros annually. The distribution of the funds and the required investments are discussed; and of course the future fund, endowed with 1.1 billion euros, which is intended for the areas of childcare, primary education, housing and climate and the environment.

However, there is still no firm agreement on the distribution of resources. For this reason, the financial officials of the states will meet again on Thursday, November 9, for further discussions. According to Kaiser, a three-part decision was made: on the one hand, the state governors would take note of the basic agreement from the beginning of October; However, the current financial equalization is only an intermediate step and a first step “towards a vertical distribution key”, which should in any case be negotiated in the 2027/2028 financial equalization.

With regard to this renegotiation of the distribution key, the new future fund would already specify the topics. The federal government is the one that collects taxes, including on behalf of the states, cities and municipalities. The focus should be on partnership, says Kaiser.

“We need a common approach here with the federal government, without paternalism and without unilateral excessive demands on states and municipalities,” Kaiser said. The tax money that the federal government collects on behalf of the states must be distributed ‘fairly and equitably’.

Further resolutions unanimously adopted at the Conference of State Governors:

• The national expansion of broadband networks should be promoted.
• The state governors are calling for an amendment to the Energy Control Act, combined with a request for the federal government to submit the amendment.
• The dangers of cybercrime were discussed: The common level of security should be increased through the NIS2 directive.
• The right to adjust prices in the Electricity Industry and Organization Act is required.

Make housing more affordable
Another central topic: the KIM scheme. In plain language: financing housing must be made easier in the future. “Everyone who works hard and gets up day in and day out should be supported in creating real estate for themselves,” says Johanna Mikl-Leitner, Governor of Lower Austria. Your appeal to the Financial Markets Authority (FMA), which issued the regulation: it must “come down from its ivory tower and not thrash at the feet of those who want to create real estate for themselves.”

To achieve this, the KIM regulations must be adjusted, otherwise do not be surprised if the recession increases and unemployment also increases.

Van der Bellen: “Working together across party lines”
On Thursday evening, the Federal President visited the state governors in Villach. In a working interview, he urged politicians to work together across party lines: “The temptation to fall for populism is increasing. We really have to be vigilant here. Simple solutions are not a solution,” said Van der Bellen about the growing anti-Semitism in Europe and the current geopolitical conflicts – keyword Israel and Ukraine.

Giving citizens “orientation and support” is now the job of politicians, Kaiser said.