The Administrative Court in Neustadt an der Weinstraße has dismissed the test case brought by the city of Pirmasens and the district of Südwestpfalz against the municipal financial equalisation scheme in Rhineland-Palatinate. The court of first instance has thus confirmed the state’s position: according to the ruling, the State Financial Equalisation Act (LFAG), as amended at the end of 2022, is not unconstitutional.
OPPENLÄNDER Rechtsanwälte represented the State of Rhineland-Palatinate in the proceedings through Prof. Dr Christofer Lenz and Dr Henrike Schulte. The case was particularly challenging from both a factual and a legal perspective. At its heart lay the fundamental question of whether the state guarantees its local authorities a level of funding that is sufficient under constitutional law.
The plaintiffs, the city of Pirmasens and the district of Südwestpfalz, had argued that local authority budgets were structurally underfunded in view of increasing demands and additional responsibilities. In particular, they invoked the principle of ‘konnexität’, according to which the party that gives rise to a task should bear the cost of financing it.
The state, on the other hand, had defended the structure of the municipal financial equalisation scheme and highlighted the extensive support provided to local authorities. According to the first-instance ruling now available, the State Parliament and the State Government complied with constitutional requirements when revising the LFAG.
Reasons for the ruling and further proceedings
The written grounds for the ruling are not yet available.
An appeal against the decision may be lodged with the Higher Administrative Court of Rhineland-Palatinate in Koblenz. The plaintiffs have already announced their intention to make use of this option. The proceedings are therefore not yet definitively concluded. Moreover, the case is of fundamental significance beyond Rhineland-Palatinate, as the constitutional requirements regarding municipal funding are also the subject of intense debate in other federal states.
OPPENLÄNDER Rechtsanwälte successfully represents state governments and ministries of numerous federal states in other proceedings, including an abstract action for judicial review, statutory provisions in local government law and disputes between constitutional bodies. The firm advises and represents the public sector, in particular in complex proceedings relating to constitutional, administrative and financial law.
