"Departure" by Uli Lamp

Municipal debt relief fund

Municipal debt relief fund

Municipal Debt Relief Fund KEF-RP

Excerpt from the guide "Municipal Debt Relief Fund Rhineland-Palatinate"

The "Municipal Debt Relief Fund Rhineland-Palatinate (KEF-RP)" is a building block of the
medium- to long-term effective measures within the framework of the
"Reform Agenda to Improve Municipal Finances" announced on 8 June 2010.
The financial volumes that have to be moved for a debt relief / partial debt relief of the municipal liquidity loans
are enormous. On the other hand, these loans exist, they have to be serviced and they threaten to increase further if no effective countermeasures are taken. Incisive, long-term and sustainable measures are therefore required which, on the one hand, not only limit and reduce existing liquidity loans but, at the same time, also prevent the threatened build-up
of new liquidity loan obligations wherever possible.
As part of the reform agenda, the agreement
on the "Municipal Debt Relief Fund Rhineland-Palatinate (KEF-RP)" was therefore signed on 22 September 2010 by Minister President
Kurt Beck and the chairmen of the central municipal associations
(see Annex 2). According to this agreement, the debt relief fund will be established on 1
January 2012. In principle, each municipality decides on its own responsibility
within the framework of municipal self-administration whether it will participate in the debt relief fund.
The contract for joining must be concluded by 31 December 2013 at the latest.
The KEF-RP is intended to help the municipalities to significantly reduce their
liquidity loans accumulated up to the cut-off date of 31 December 2009 in a total amount of around EUR 4.6 billion. The fund is to have a maximum total volume of 3.825 billion euros and is to raise up to 255 million euros annually over a term of 15 years in order to repay up to two thirds of the municipal liquidity loans existing at the end of 2009 and to reduce the interest charges due (due to the system of the unified treasury, the local municipalities do not show any loans to secure liquidity; the decisive factor
for participation in the KEF-RP here are the liabilities to the association municipality
as of 31 December 2009). One third of the financing of the fund (1.275 billion euros) is to be provided by the municipalities themselves (e.g. through budget savings, tax or levy increases, etc.), another third is raised from the municipal financial equalisation scheme and thus comes from the solidarity community of the municipal family, the last third comes from the state budget.
It has to be taken into account that the municipal liquidity loans are distributed very differently regionally and structurally
. In many cases a far-reaching
debt relief can be achieved with the KEF-RP, in other cases this will not succeed, but only a mitigation of the debt development can be achieved. All in all, the KEF-RP is an important instrument which, if designed and applied consistently, can bring about a sustainable improvement of the municipal financial situation, especially if the measures of the KEF-RP are accompanied by a sustainable change of awareness both in municipal and state politics as well as in federal politics. The instruments of the KEF-RP (municipal consolidation measures and debt relief assistance) are not sufficient on their own to ensure a permanent budget balance. However, they are an important step which must be followed by further steps.

According to § 5 of the consolidation agreement to be concluded, both the consolidation agreement and the evidence of the consolidation results are to be published on the website.

Proofs and contracts of the association municipality can be found here;

Municipal Debt Relief Fund

All other documents can be found at the respective local churches: