THE ATTRIBUTION OF ADMINISTRATIVE FUNCTIONS IN THE GERMAN STRUCTURE

The Länder as the Main Administrators

  The space devoted to the preceding section would not be merited if, in connection with the Bundesrat's position, it were not necessitated by a distinctive feature of the German system: the multi-faceted network of intergovernmental relations between the Federation and the Länder reflects the fact that the Länder have always been the main administrators not just of their own laws, but also of most federal and directly applicable European legislation.

  This is all the more important since the bulk of legislation is nowadays enacted at the federal and the European level. The administrative role of the Länder is defined in Article 83 of the Basic Law, which confers upon them both the right and the duty to "execute federal statutes as matters of their own concern in so far as this Basic Law does not otherwise provide or permit." Articles 84 and 85 of the Basic Law differentiate in this field between administrative functions to be preformed by the Länder "as matters of their own concern" (under general administrative rules requiring the Bundesrat's consent and subject to federal supervision relating to legal standards only), and other matters in which "the Länder execute federal statutes as agents of the Federation" (subjecting them "to the instructions of the appropriate highest federal authorities" and to federal supervision dealing also with the "appropriateness of execution"). Nevertheless, in the entire field of administrative functions, the Länder are clearly the predominant bodies, while federal administrative powers, defined in Articles 87-90 of the Basic Law, are classed as exceptions to that rule. They only cover areas such as the foreign service, defence, the federal waterways and others which are conducted "as matters of direct federal administration with their own administrative substructures". All of this explains the otherwise rather obscure provision in Article 50 of the Basic Law that "the Länder . . . participate through the Bundesrat in the . . . administration of the Federation".

The Significance of the Bundesrat's Position

  While the attribution of administrative functions may sound to be more or less technical matter, its significance within the German system derives from the implications which flow from it for the position of the Bundesrat in the passing of federal legislation: All federal statutes providing in the area of their own execution "for the establishment of the requisite authorities and the regulation of administrative procedures" require the Bundesrat's consent, even if such provision is only contained in one single paragraph or section of the respective Federal Act. Mainly for this reason, approximately 55 per cent of all federal legislation nowadays needs the consent of the Bundesrat. The same applies to delegated legislation of the Federal Government (ordinances) pursuant to such statutes and generally to all matters "that are executed by the Länder as agents of the Federation or as matters of their own concern" (Article 80 of the Basic Law). It applies to federal legislation with administrative relevance based on European Directives (framework rules to be filled in by laws of the Member States of the European Union). With European competence constantly expanding into fields of federal relevance in Germany, the European dimension has naturally had an increasing impact not only on the field of administration, but also on that of legislative powers (as discussed below). The important observation at this stage is that alongside its core function of representing regional interests in federal legislation, the most outstanding function of the Bundesrat is to apply the administrative experience of the Länder to the shaping of federal law.

Local Government Autonomy

  While considering the field of administration reference needs to be made to the role of local government autonomy in the German constitution system. Since the beginning of the 19th century that autonomy—on both the town and county levels—has always been of considerable importance for German structures of government as a whole. Its status can even be compared with that of the federal principle due to the fact that the Basic Law accords an institutional guarantee to that autonomy in Article 28 of the Basic Law (despite the fact that the organisation and supervision of local government clearly and indisputably belongs to the legislative and organisational sphere of the Länder). Local government bodies, which carry out large parts of the administrative functions attributed to the Länder by federal legislation, thus enjoy a constitutionally protected status of an autonomous tier of government (which even entitles them to raise matters concerning that status before the Federal Constitutional Court). The functional area linking the Länder and local government most closely together is that of regional and town and country planning, where they possess substantial autonomy vis-a-vis the federal tier, thus compensating for much of the legislative losses which the Länder (and with them local government) have suffered.

THE DISTRIBUTION OF LEGISLATIVE POWERS

Legislative Losses of the Länder

  Before outlining the different categories of federal competence in the field of legislation, it needs to be re-emphasised that the bulk of legislation is today enacted at the federal level. This might seem paradoxical in the face of Article 30 of the Basic Law, which states in general terms that "except as otherwise provided or permitted by this Basic Law, the exercise of government powers and the discharge of governmental functions shall be incumbent on the Länder". As has been shown this is still true in the administrative area. The paradox between the reality and the legal situation in the field of legislation is further sharpened by Article 70 of the Basic Law, which rules that "the Länder shall have the right to legislate in so far as this Basic Law does not confer legislative power on the Federation" and thus defines the Länder as the location of residual legislative power. However in the practical process of filling the statute books, this constitutional stipulation has been widely eroded in the legislative sphere by the impact of both the broadening of the criteria and the expansion of the catalogues of exclusive, concurrent and framework legislative powers of the federation in Articles 70-75 of the Basic Law. This has had the effect of leaving a fairly small, though by no means unimportant, amount of legislative powers for the Länder (specifically in the areas of their own constitutions and of local government, policing, and cultural affairs including media legislation).

Concurrent and Framework Powers: Mechanisms for Restraining the Federal Level

  Among the categories of legislative powers of the federation, those of its concurrent and framework powers have been extended by numerous amendments to the Constitution from 1949 onwards. Concurrent powers are those under which "the Länder shall have power to legislate as long and to the extent that the Federation has not exercised its right to legislate by Federal Act" (Article 72 of the Basic Law). Framework powers enable the federation to limit the exercise of exclusive Länder legislative functions in certain fields and to a certain extent (Article 75). While the fields listed as concurrent and framework powers have been widened, the so-called "clause of need" justifying federal concurrent and framework legislation was also substantially expanded by the jurisdiction of the Federal Constitutional Court prior to the 1994 constitutional reform. The Court's central ruling was that the evaluation of such need was essentially a political question and thus not subject to the adjudication of the Court except in instances of gross violation of the discretionary powers thus vested in the federal legislature.[7] The Constitutional Reform Act of 27 October 1994 has now changed the "clause of need" for the Federation into a "clause of necessity" in favour of the Länder, while also attempting to force the Constitutional Court into abandoning its "political question theory" by giving it an explicit power of jurisdiction in disputes over the new "clause of necessity" (in Article 93/1/2a).

European Legislation and the Länder

  "Intrusion" by European institutions into the legislative competencies of the Länder has become a major challenge, in particular over the last decade. In its concerted efforts to meet this challenge, the Bundesrat has successfully pressed for a dam to be built to protect against the powers of the Federal Government to consent to such intrusions in its capacity as a member of the European Council of Ministers, which is still the main legislator of the European Union. Under the rules of the new Article 23 of the Basic Law, the actions of the Federal Government are now subject to the "decisive opinion" of the Budesrat, whenever and inasmuch as European legislation impinges on exclusive competencies of the Länder. Moreover, Article 23 (together with a corresponding amendment to Article 146 of the EEC-Treaty in the Maastricht Treaty) also ensures that in such matters the Länder now have the right to be represented at the table of the Council of Ministers itself by a nominee of the Bundesrat instead of a member of the Federal Cabinet.

FEDERAL LEGISLATIVE PROCEDURE

  Although essentially a technical matter, constitutional procedures for the federal legislative process naturally shape decisively both the allocation and the exercise of powers in a federal state. This is certainly the case in Germany, where, as noted above, the consent of the Bundesrat is required for a large number of federal laws.

  Nevertheless, the rules governing legislative procedure as laid down in Articles 76-78 of the Basic Law cannot be discussed in exhaustive detail here. For the purposes of this chapter, it is sufficient to state that the main distinction to be made in federal legislation (irrespective of whether it is initiated by the Federal Government, the Bundestag or by the Bundesrat) is that between laws which require the Bundesrat's consent (Zustimmungsgesetze or "consent bills") and those which do not, thus nonetheless giving the Bundesrat a suspensive veto of three weeks (Einspruchsgesetze or "objection bills"). The main criteria for the distinction between these two categories have already been touched upon in the discussion of the administrative powers of the Länder. Broadly speaking, all bills containing provisions relating to those powers or to matters with financial implications for the Länder are consent bills, and all others (about 45 per cent) are objection bills. In procedural terms that means that if conflict arises between the Bundestag and the Bundesrat, the Bundesrat must demand that the Committee of Mediation be convened in the case of objection bills, while in the case of consent bills it has the choice between two courses of action: it can either convene the Mediation Committee, or it can refuse its consent outright.

  An important factor in the relations between the two chambers is the fact that in most fields of legislative procedure the Bundesrat is bound by time-limits designed to prevent obstruction. It normally has to comment on Government Bills (prior to their introduction in the Bundestag) within six (or if it so demands) nine weeks, and generally has to decide on Bills coming or returning from the Bundestag within three weeks. On giving or refusing its consent if required it can, however, determine its own timescale for decision, but must now (following the 1994 constitutional reform) decide "within an appropriate time". Even on such bills though, it must convene the Committee of Mediation within three weeks if it does not decide to refuse consent without making efforts at compromise in the Committee, in which case it must now also make its decision "within an appropriate time". The reformed provisions of Articles 76 and 77 of the Basic Law, which contain these rules, have in return introduced certain time limits for the Federal Government and the Bundestag for Bundesrat Bills, while the Bundesrat has always been bound by such limits for Government and Bundestag Bills.

THE FINANCIAL CONSTITUTION

Tax Legislation

  The financial procedures and arrangements of German federalism give rise to what might be called a "federalism by negotiation". This is mainly due to the fact that most (though not all) Federal Acts relating to the distribution of financial resources require the consent of the Bundesrat, thus giving it a strong bargaining power. In terms of autonomous powers to raise taxes, the functions of the Länder essentially boil down to the ruling of Article 105/2a of the Basic Law, which gives them the "power to legislate on local excise taxes as long and insofar as they are not identical with taxes imposed by federal legislation". In practice this power is inconsequential. In the field of concurrent federal legislation on taxes, though, the Bundesrat has a strong say as all "federal laws relating to taxes the receipts from which accrue wholly or in part to the Länder" or to the local government level require its consent (Article 105/3), while Article 106 defines in detail which tax revenues accrue to the Federation and/or the Länder (including local government).

Shared Taxes and Fiscal Equalisation

  The German "financial constitution", which determines the tax revenues which accrue to, and are equalised between, the different levels of government has the following five main characteristics:

  —   The basic (theoretical) rule is that the federation and the Länder "shall be autonomous and independent of each other in their budget management", but that they shall on the other hand "have due regard . . . to the requirements of overall economic equilibrium" (Article 109/1-2 of the Basic Law).

  —   Inland revenue is divided between the federation, the Länder and local authorities according to a mixed system of both separate and shared taxes: Shared taxes are by far the most important, and of them, income and corporation taxes (amounting to approximately 45 per cent of all inland revenue) are shared half and half between the federation and the lander (in the case of income tax after deduction of 15 per cent for local government bodies). Most important for the working of the federal system is the role of the shared value-added tax (VAT). VAT revenue is currently (since 1995) divided between the federation and the Länder in the ratio of 56:44 pere cent. This ratio is, however, not constitutionally fixed (as are income and corporation tax) but is adjusted in the light of changing financial needs approximately every two years by a Federal Act requiring Bundesrat consent (Article 106).

  —   This adjustment mechanism is all the more necessary as Federal Acts giving financial grants to individuals or corporations (Geldleistungsgesetze) are by no means necessarily financed at the cost of the federation alone. On the contrary, their costs have frequently to be met predominantly by the Länder, so that the financial effects of new legislation of this kind has to be ironed out via VAT share adjustments. Though the bulk of such legislation requires the Budesrat's consent, this is not the case if the proportion of the costs falling on the Länder is one quarter or less of the costs of the entire Act.[8]

  —   In addition, there exists a highly intricate system of financial equalisation (Finanzausgleich) which seeks to adjust financial allocations between federation and Länder themselves and to distribute the burdens imposed by constitutional duties.

  —   "Joint Task" arrangements added to the financial constitution in 1969, which legalised the co-financing of Länder responsibilities by the federation, were meant to have an additional effect of financial adjustment. They have since, however, fallen subject to considerable criticism both because of the problem of over—"entangling" federation and Länder in policy-making (Politikverflechtung) and even more so, because they tend to give the federation the power of the "golden leash" which can allow it to divide and rule by (selectively) offering co-financing of Länder initiatives (Articles 91a-b and 104a).

  In these various ways, the Basic Law attempts to iron out the numerous social, economic and territorial imbalances which are inherent in any federal system, not least the German one—especially since the addition of the financially extremely weak five eastern Länder to the federal structure following unification in 1990. The securing of "equivalent" or "uniform" living conditions throughout the country (as required in Articles 72 and 106 of the Basic Law), one of the paramount and traditional tasks of German federalism, has been made all the more visible and urgent by that event.

8   This rule has engendered much criticism in debates on the reform of the federal system, as discussed further in Uwe Leonardy, "German Federalism Towards 2000: To Be Reformed of Deformed?", also forthcoming in Jeffery (1998). Back