News
In times of tight budgets, local authorities need to rely on a fair and legally robust fiscal equalisation system. FiFo Köln, in cooperation with Professor Thomas Döring (sofia Darmstadt), has evaluated vertical and horizontal equalisation in the state of Brandenburg. Among the many findings of the study, one empirical observation stands out: The traditional 'Einwohnerveredelung' approach, in which fiscal needs increase solely according to city size – a Prussian invention –, is no longer a viable solution for Brandenburg. An evidence-based fiscal equalisation system that directly addresses municipal tasks does this crucial job drastically better. The study is now available as FiFo Report 39.
Public water management is the neglected stepchild of the current investment debate – its needs are enormous, yet it is frequently overlooked. At the request of the Enquete Commission ‘Water in Times of Climate Crisis’ of the North Rhine-Westphalian state parliament, FiFo and GWS Osnabrück examined the requirements and financing instruments for resilient water management in North Rhine-Westphalia. The study, now published as FiFo Report 38, combines macroeconomic simulations with the design of economic instruments. Among other recommendations, we suggest significantly raising water withdrawal fees in North Rhine-Westphalia and redesigning the wastewater levy. Furthermore, improvements are needed to the market for insurance against natural hazards.
Universities are important drivers of growth and innovation in a region. Graduates of universities of applied sciences in particular bring scientific expertise and application-oriented practical knowledge to companies. This can also improve the productivity and wages of workers without academic or vocational training. FiFo researcher Eric Schuß has demonstrated this for a wave of Bavarian university foundings. The study has now been published by the renowned journal Empirical Economics.
Germany is embarking on a race to catch up on its neglected infrastructure. A debt package of 500 billion euros provides the necessary financial foundation. However, having a lot of money is only the first step. Spending it successfully — i.e. effectively, quickly, and in a targeted manner — is the more difficult task. In a short report for the Heinrich Böll Foundation, Michael Thöne examines the biggest obstacles to implementation, suggests solutions and outlines what we need to change – including ourselves. The Handelsblatt reports. Link to the study and to the online event presenting the study on 9 December 2025 is available.
The year 2025 is a tumultuous time for German municipal finances, with the implementation of new property tax models varying from state to state almost fading into the background. But only almost. North Rhine-Westphalia and Saxony-Anhalt give individual municipalities the option of applying a uniform tax rate for central property tax B, or of distinguishing between residential and non-residential properties and taxing the latter at a higher rate. However, it is not trivial to integrate these two alternatives equitably and without disincentives in the municipal financial equalisation process. At the autumn conference of the Association of Treasurers of North Rhine-Westphalia in Hagen, Michael Thöne will present the FiFo solution, which is also set to be implemented with the GFG NRW 2026. The corresponding FiFo Report No. 35 can be found here.