Overview
- On Thursday, June 25, the Ministerpräsidentenkonferenz approved a mechanism that makes the federal government cover 80 percent of additional costs for Länder and municipalities from new federal laws once those costs exceed €200 million.
- That agreement takes effect on 1 September and excludes general tax laws and EU‑implementation duties while promising a symmetric adjustment of revenue shares if costs later fall.
- Bund and Länder also agreed a 'Pakt für den Rechtsstaat' that channels about €210 million to digitalise courts and €240 million to create new justice posts, with states committing to hire 2,000 judges, prosecutors and staff by 2029.
- At federal level Chancellor Friedrich Merz is pressing to implement the Rentenkommission’s 33 recommendations largely unchanged and aims for laws this year, but the plan now faces organised resistance and political bargaining.
- Income‑tax reform remains unsettled because Finance Minister Lars Klingbeil had not provided a Sherpa‑negotiable draft, raising the risk of last‑minute compromises while the DGB has published a competing pension proposal defending the 'Rente mit 63'.