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Bavaria Freezes New Borrowing Through 2027, Scraps Family Payouts to Fund Daycare

The pledge is financed via higher tax receipts, federal special funds and a €4.9 billion withdrawal from reserves.

Overview

  • Minister-President Markus Söder announced the plan after a two-day budget retreat, saying childcare places take precedence over one-off transfers.
  • The halved Kinderstartgeld of €3,000 per child and the Krippengeld are being canceled about six weeks before launch, with funds redirected to Kitas to offset rising operating costs and avert closures.
  • The funding mix includes an estimated €3.3 billion in additional tax revenue, about €7 billion in federal debt-financed special funds and roughly €2 billion in internal savings.
  • Bavaria will draw around €4.9 billion from reserves over two years, leaving roughly €1 billion remaining.
  • Savings measures include delaying civil-servant pay increases by six months, a hiring freeze in 2026 and limits on family-part time from September 2027, while 2027 plans add 1,500 teachers and 400 support staff and maintain a €168 billion budget through 2027 with 17% for investment in education, research, municipalities and infrastructure.