Local Transport Financing Act

Billions of euros more in assistance for local public transport

Building and expanding local public transport systems is an important precondition for a successful transformation of mobility. To encourage urgently needed investment, the German government has adopted a package worth billions of euros – making an important contribution to climate change mitigation, combating air pollution and enhancing the quality of life in towns and cities.

A tram drives along its rails beside two lanes of slow-moving cars on a road.

By expanding local public transport, the German government is paving the way to achieving climate targets

Photo: imago images / Rupert Oberhäuser

On the basis of decisions made on the climate action programme, financial assistance provided by the German government under the provisions of the Local Transport Financing Act (Gemeindeverkehrsfinanzierungsgesetz or GVFG) is to be raised from the current level of 332 million euros to around 665 million euros in 2020. In 2025 the sum is to be further increased to two billion euros. As of 2026 the figure will once again rise by 1.8 per cent a year.

What is receiving assistance?

The financial assistance is to go to:

  • Completely overhauling existing local public transport systems. To ensure that local public transport is attractive, it is important that existing systems can continue to operate. These systems also make an important contribution to climate change mitigation, reducing air pollution and enhancing the quality of life in towns and cities.
  • Building and extending stations and stops used by local rail-based transport systems including trams and underground railways.
  • Building and extending infrastructure for passengers to change to local rail-based transport systems, where local authorities are responsible for construction and maintenance – provided charging stations are provided for vehicles using alternative engine technology.

What are the most important cornerstones of the amendments to the Local Transport Financing Act?

  • The percentage of financing shouldered by federal government is to be raised from 60 to 75 per cent, provided a cost-effectiveness study is conducted. The remainder is to be financed jointly by federal and state governments, as is currently the case.
  • In future, projects are to receive assistance as of a volume of 30 million euros, rather than the current level of 50 million euros. In individual cases the limit can even be reduced to 10 million euros. This means that funding can be used for effective, but smaller-scale projects, benefiting even more people in Germany.
  • The amendment also includes facilitating the presentation of the benefits for the economy as a whole.

The amended act is to come into effect on 1 January 2020.

The amendment to the German Basic Law or constitution on 28 March 2019 (Art. 125c German Basic Law) makes it possible to amend the Local Transport Financing Act Gemeindeverkehrsfinanzierungsgesetz (GVFG) and re-establish a new financing partnership with federal government to ensure that local public transport systems are attractive.