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The Mother of All Reforms (November 8, 2006)

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According to the previous wording of Article 84, Sec. 1 (Basic Law), all federal legislation required Bundesrat approval if the law also contained regulations dealing with its administration and implementation – in Germany, these tasks generally lie within the authority of the federal states. The Federal Constitutional Court ruled that the approval requirement in these cases referred not only to administrative aspects, but also to the political substance of the regulations as well. This gave the federal states extensive opportunities to exert influence. In contrast, according to the new version of Article 84, Sec. 1 (Basic Law), a federal law does not require [Bundesrat] approval if the federal government also regulates the related administrative procedures; instead, it expressly allows for deviations from these procedures in the form of federal state legislation. The share of legislation requiring approval should be reduced in accordance with the law’s explanatory memorandum from the previous level of 60 percent to roughly 35-40 percent. It remains to be seen if this will be achieved. The approval requirement for most legislation dealing with shared state and municipal taxes (Article 105, Sec. 3, Basic Law) remains unchanged by this reform. Also, Article 104a, Sec. 4 (Basic Law), created new cases requiring approval: cases in which – in simple terms – federal legislation is tied to investments from federal state budgets to third parties. All in all, the named reservations do nothing to change the fact that this part of the federalism reform should be expressly welcomed.

Another positive development is the abolishment of framework legislation pursuant to Article 75 (Basic Law), within whose scope two subsequent legislative procedures have been necessary at the federal and state levels up to now. The corresponding areas of competency were divided up within the framework of the reform between the federal government and the federal states. In particular, legislative competence for remuneration, pensions and related benefits for state employees and state judges was transferred from the federal government to the federal states. Personnel costs play a major role in federal state budgets, and they will be significantly affected by steep increases in benefit expenditures in the future. Instead of the federal framework law in the area of higher education, concurrent legislation limited to the regulation of admission to institutions of higher education and the conferment of degrees entered into force; this legislation was connected with the right of federal states to deviate from federal law (Article 72, Sec. 2 Basic Law). The decentralization of competencies in individual areas is open to criticism, however. In the field of education policy, for example, the organization of the school system is correctly placed within the purview of the federal states, but shared, uniform federal achievement standards are still necessary in order to compare the educational achievements of individual federal states (Report 2004, nos. 588 ff.). Setting such central educational standards is possible, in principle, through the Standing Conference of Ministers of Education and Cultural Affairs of the Federal States. It is questionable, however, whether the ministers will be able to agree on equivalent standards that would apply to all federal states.

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Source: Sachverständigenrat zur Begutachtung der Gesamtwirtschaftlichen Entwicklung [German Council of Economic Experts], Annual Report 2006-07, “Widerstreitende Interessen – ungenutzte Chancen” ("Conflicting Interests – Missed Opportunities"), November 8, 2006, Chapter 6, Part 6,

Translation: Allison Brown

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