Adoption of the federal budget
Government programme in figures
The revenues and expenditure of the Federation are determined in the budget each year. It represents a "government programme in figures" because it sets out the measures the state intends to take in the coming year and what financial resources are to be dedicated to what purposes.
The draft budget and draft Budget Act are drawn up by the Federal Ministry of Finance, then deliberated on and adopted by the Federal Government. After this, they must be passed by the Bundestag and the Bundesrat before they can enter into force.
The draft legislation is debated and usually revised in the Bundestag. Since, according to the Basic Law, the Bundestag has the right to adopt the budget and scrutinise its implementation by the government, the bill may only become law if it gains a majority in Parliament. The preparation of the budget is regulated precisely in the Federal Budget Code.
Preparation of the budget
The process by which the budget is drawn up begins in the divisions responsible for budgetary affairs within the federal ministries and supreme federal authorities. They have to assemble proposals for their budgets, weigh them up against each other, reduce them to their essentials, refine them and forward them to the Federal Ministry of Finance as preliminary estimates.
Even at this early stage, there are uniform principles that have to be complied with. They include the principle that a new budget is drawn up each year, the principle that all expected revenues and expenditure are to be set out in full, the principle that all revenues have to be used to pay for all expenditure and the principle that the sum of the revenues must ultimately be equal to the sum of the expenditure.
The preliminary estimates are subsequently gathered together, checked and consolidated by the Federal Ministry of Finance. When this is done, the planned expenditure is balanced with the tax revenues forecast by fiscal experts.
Draft budget and publication
Once the Federal Minister of Finance has gathered and consolidated all the departmental budgets, the Federal Government adopts the draft of the overall budget. Its main outlines are usually published the summer before the financial year for which plans are being made.
The budget is about 2,500 pages long and divided into an overall budget and the various departmental budgets. The departmental budgets set out in detail the levels of revenue and expenditure for each ministry and supreme federal authority.
Review in the Bundesrat and Bundestag
The draft budget and draft Budget Act are forwarded simultaneously to the Bundesrat and the Bundestag.
Here, the proposals are reviewed by working groups and compared with the financial plan, which sets out the prospective development of the budget over the next five years. The financial plan is also drawn up by the Federal Minister of Finance and adopted by the Federal Government.
The Bundesrat delivers its comments on the draft budget within six weeks. The Federal Government issues a counterstatement to the Bundesrat’s comments, then transmits the bill and the attached documents to the Bundestag. This means the Bundestag is able to take account of the attitude of the Länder in its deliberations.
Deliberations and voting in the Bundestag
The deliberations in the Bundestag involve three readings. During the first reading, the Federal Minister of Finance presents the budget. After several days of debate, the draft budget is then transmitted to the Budget Committee.
This is where the real work is done. The rapporteurs on the Committee examine all individual items of expenditure, discussing them in depth in the ministries and delivering their recommendations to the Budget Committee.
These recommendations are then scrutinised in what are known as departmental budget deliberations. In the end, the Committee presents the Bundestag with a more or less heavily amended draft budget.
This is followed by the second reading, during which debates again take place between the government and the opposition. Each departmental budget is voted on at this stage. During the third reading, the whole piece of legislation, including all amendments, is put to a final vote.
Voting in the Bundesrat
Lastly, the budget adopted in the Bundestag is again presented to the Bundesrat. If the Bundesrat agrees to it immediately, the Budget Act is signed by the Federal Minister of Finance, the Federal Chancellor and the Federal President, then published in the Federal Law Gazette.
Should the Bundesrat have reservations about the legislation, it may demand that the Mediation Committee be convened. If the Mediation Committee proposes amendments, the Bundestag must vote on the bill once more.
Should the proposed amendments be rejected by the majority of the Bundestag, the Bundesrat is still able to lodge an objection to the legislation. However, it is possible for such an objection to be overturned subsequently by the Bundestag. This brings the procedure to an end. The act may be signed and published.
Scrutiny of budgetary management
Nonetheless, the Bundestag’s role is far from over when the Budget Act enters into force: it now scrutinises the handling of tax revenues on an ongoing basis, a function that is devolved to the Budget Committee.
Above all, the Auditing Committee, a subcommittee of the Budget Committee, keeps a close eye on the government. In performing this role, it works closely with the Federal Court of Audit.
Following the end of the financial year, the Federal Court of Audit examines the actual levels of revenue and expenditure meticulously, then formulates "observations” on the budgetary management of the Federal Government. These observations are important because they provide the basis for the discussion in Parliament when it eventually has to discharge the Federal Government.