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Substantial changes of the funding responsibilities for local road works and local public passenger transport

Report of 2 November 2004 pursuant to Art. 99 Federal Budget Code. Pursuant to the Community Transport Financing Act, the Federal Government gives grants of about €1.3 billion annually for local road works and local public passenger transport.
Pursuant to the Community Transport Financing Act, the Federal Government provides grants of about €1.3 billion annually for local road works and local public passenger transport. In the past, local authorities and passenger transport companies frequently used the funds thus provided for purposes not compatible with the objectives of the Act. Against this background, the Bundesrechnungshof recommended that the grant funding provided under the Community Transport Financing Act should be included in the current overall review of the financial relations between the Federal Government and Germany’s constituent states (Länder) and to discontinue the co-funding arrangements in this field. In its report presented in November 2004, the Bundesrechnungshof made proposals for assuring that the funds provided under the above Act be used for the purposes laid down in the Act.
The courts of audit of the German states had repeatedly found that local authorities and local transport companies had acted inefficiently in selecting and implementing projects and had not complied with the objectives of the Community Transport Financing Act. The Bundesrechnungshof attributes these deficiencies mainly to the complex administrative procedure for funding under the Act, to a lacking sense of responsibility of the parties involved and to lacking programme results evaluations. Furthermore, the Bundesrechnungshof criticises that the Federal Government has so far not succeeded in introducing a legal provision under which to claim the refund of federal grants given under the Act in cases where the grant funds have not been used for the purposes specified in the Act.
The Bundesrechnungshof considers these short comings to be typical problems of co-funding schemes that can ultimately only be avoided by redefining the funding responsibilities of the Federal Government and the states. As a short term measure to be introduced before such redefinition, the Bundesrechnungshof suggests that the Federal Government and the states agree on unambiguous reimbursement rules. Furthermore, it supports the demands of the state courts of audit calling for the intensification of programme results evaluation and for federal funding to be provided increasingly in fixed amounts. The Bundesrechnungshof reported on its findings and proposals to the two Houses of the German Parliament in a report published on 2 November 2004.
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