Report on Reviewing the Weighting of Inhabitants in the System of the Municipal Fiscal Equalization Scheme in North Rhine-Westphalia

Tasks

In this project, the so called “Hauptansatzstaffel” for municipal spending in the horizontal fiscal equalization scheme in North Rhine-Westphalia is evaluated. The Hauptansatzstaffel postulates a non-linear relationship between population and fiscal need. Together with other elements (demography, pupils, social spending, centrality, and area) it results in a figure describing fiscal need in the horizontal fiscal equalization scheme.

Methods

The “Hauptansatzstaffel” is quantified with regression analysis. However, the weighting of inhabitants in the “Hauptansatzstaffel” is based on a statistical analysis that faces various methodological problems. Another problem is that the fictitious fiscal need is derived from actual spending, which is influenced by many factors and also depends on the revenue picture.

Data sources

IT.NRW

Results

We examine the so called „Hauptansatzstaffel“ for municipal spending of the hori-zontal fiscal equalization scheme in North Rhine-Westphalia. The Hauptansatzstaffel describes a non-linear relationship between population and fiscal need. The Hauptansatzstaffel and other elements (demography, pupils, social spending, cen-trality, and area) give rise to a figure describing fiscal need in the horizontal fiscal equalization scheme. The weighting of population in the Hauptansatzstaffel was investigated based on public finance theory and an empirical analysis. We employ regression techniques and simulate redistribution effects in the horizontal fiscal equalization scheme.