AUSTRIA

The Republic of Austria is a federal state and parliamentary democracy, composed of nine autonomous federal states (Bundesländer or Länder). The Head of the Federation is the Federal President, elected to universal suffrage for a six-year mandate. At the federal level, there is a bicameral system composed of two chambers, the National Council (Nationalrat), composed of 183 members, and the Federal Council (Bundesrat, also referred to as the Chamber of States), composed of 61 members (as of 2018). Members of the National Council are elected every five years by universal suffrage through a proportional system. In contrast to the National Council, members of the Bundesrat are not directly elected. They are delegates elected by the nine State Parliaments. Depending on their population, the number of representatives for each state varies from 3 to 12.

The 1920 Austrian Constitution (amended in 1929) and the Fiscal Constitutional Law (1948) guarantee the autonomy of the nine autonomous states (Art. 2) and the principle of subsidiarity and local self-government of municipalities (Art. 116). The Federal States, enshrined in the constitution, provides for the sharing of tasks between the nine states and the federal government. They are composed of three main elements: 1) the distribution of legislative and administrative competencies; 2) the participation of the states in federal legislation and administration; 3) the constitutional autonomy of the states. The Bundesrat represents the interests of the states at the federal level, but its members are selected by political parties and not form caucuses in the states.

Each of the nine states has its own parliament (Landtag), whose members are elected by direct universal suffrage for five years. The Landtag is responsible for electing a state government, headed by a Governor (Landeshauptmann or Landeshauptfrau), elected by the Land Parliament. As such, states have their own constitution and legislation, which regulates municipal law within the scope provided by national framework legislation (Art. 115). Municipalities are governed by municipal councils, with members elected by direct universal suffrage for five-to-six year terms, depending on the state. Mayors are elected directly in some states, and by the municipal council in others. In the case of Vienna, the city council also serves as the Landtag, the city senate as the state government and the mayor as the Governor.

Austrian federalism is characterised by a high level of harmonisation within all the government levels for public services, tax bases and budget constraints for local jurisdictions. It has, however, a few shortcomings, including strong vertical fiscal imbalances, overlaps in responsibilities across levels of government and complexity. The 2003 Austrian Constitutional Convention was supposed to carry out a wide reform of the federation but it closed in 2005 without agreement. In 2013, Austria launched a wide administrative reform concerning all levels of government, which was intended to identify margins of efficiency and appropriate measures to reach savings on spending for administration and public subsidies. A constitutional reform, agreed in 2018 and implemented in January 2020 (Kompetenzbereinigung), aimed at clarifying territorial responsibilities across levels of government and promoting administrative simplification (e.g. in information and reporting processes).

TERRITORIAL ORGANISATION
MUNICIPAL LEVEL	INTERMEDIATE LEVEL	STATE LEVEL	TOTAL NUMBER OF SNGs (2021)
2 093 municipalities (Gemeinden)		9 states (Bundesländer) including Vienna
Average municipal size: 4 313 inhabitants
2 093		9	2 102

OVERALL DESCRIPTION: The Austrian federal system comprises two tiers of subnational governments: states (Länder) and municipalities (Gemeinden).

STATE LEVEL: The federal entities consist of nine states. The average population of the states is around 988 000 inhabitants, ranging from around 294 000 inhabitants in Burgenland to 1 935 000 in Vienna (21.5% of the national population). Except Vienna, the number of municipalities varies from 96 in Vorarlberg to 573 in Lower Austria. The gap in per capita GDP between the richest and poorest state has decreased in Austria over the last sixteen years. In 2020, the GDP per capita was only 1.7x higher in Vienna, the richest state, than in Burgenland, the poorest one. Among the countries with the lowest disparities between states in GDP per capita, Austria ranks in the top 25%.

MUNICIPAL LEVEL: The municipal level comprises 2 093 entities, including 15 statutory cities (Statutarstädte), 186 urban municipalities (excluding statutory cities), 771 market towns and the remaining being small municipalities. The statutory cities have a special statute, gathering the power and responsibilities of a municipality and an administrative district.

Austrian municipalities are among the smallest within the OECD, with an average municipal size of 4 238 inhabitants (compared to 10 250 inhabitants on average in the OECD and 5 960 in the EU). 55% of municipalities have fewer than 2 000 inhabitants and only 13% have more than 5 000 inhabitants. ln several states, the number of municipalities has decreased through recent mergers, such as in Styria in 2014 and 2020 (from 539 to 286 municipalities). Vienna, the capital-city, has a special statute as both a municipality and a federal state. It comprises 23 municipal districts, which have their own parliaments and chairpersons.

HORIZONTAL COOPERATION: At the federal level, co-operation between states are facilitated by the Land Governors Conferences (Landeshauptleutekonferenzen), which are held several times a year and supported by a permanent liaison office of the states set up in 1951 (Verbindungsstelle der BundesLänder). There is no federal representative in these horizontal meetings. They usually produce non-binding agreements, with the exception of the EU integration of states (Integrationkonferenz der Länder), which aims to prepare statements on EU policies before raising them to the federal government. States also gather during informal preparatory meetings at technical level (Landesamtsdirektorenkonferenz).

At the local level, the Constitution states that municipalities may join forces by agreement or by law to form municipal associations (Gemeindeverbände). A 2011 federal constitutional amendment and the 2017 Fiscal Equalisation Act (FAG) further reinforced the ability of municipalities to engage in inter-municipal associations. There are now around 766 municipal associations, including 49% in the education sector (school community associations), 25% for administrative purpose (citizenship and registry offices), 9% in the cultural sector (music school associations) and the remaining in the social assistance and local transport sectors.

STATE TERRITORIAL ADMINISTRATION: Austrian states are also divided into 79 districts (Politische Bezirke), which are deconcentrated entities with primarily administrative functions. The district administrative authority is equally responsible for the implementation of federal and state laws. Functionally, the district administrative authority acts either on behalf of the federal government or for the state (mittelbare Bundesverwaltung). This includes legal areas such as registration, forestry, health, trade, environment, traffic law, youth welfare, disability or social welfare.

Austrian federalism and division of competences is symmetrical, as the nine states have equal rights concerning their legislative competencies and their constitutional autonomy. Art. 15 of the Constitution assigns large exclusive competencies to the federal government (public security, taxes, civil and penal law, industrial affairs, education, healthcare). Many amendments have led to the transfer of additional powers to the federal level since 1920.

States have devolved own competences over which they have legislation and administration powers (primarily in spatial planning, environmental protection, agriculture, public order and supervision of municipal affairs). In addition, they also have the constitutionally guaranteed right to exercise their competences and pass by law legislation in many areas regulated under federal laws. Moreover, Art. 12 of the Constitution enables states to finance any projects within the realm of the federation or state without being restricted to their exclusive competencies.

The 2020 constitutional reform aims at simplifying the division of competences between the federal government and states. The reform package considerably reduces mutual consent rights. Only poverty, sanatoria and nursing homes, and electricity remain under the scope of Art. 12 (i.e. the federal government is responsible for the legislation and the states for the implementation and execution). Land reform, plant protection, natural healing resources, health requirements in sanatoria, and youth welfare become exclusive competences of states by falling under Art. 15. By contrast, the federal governments have now exclusive legislative powers on population policy and labour law in the fields of agriculture and forestry, based on the amended Art. 10.

Local governments are responsible for the delivery of local services and infrastructure, through own and delegated competences from the federal or state governments. As a result, municipal responsibilities may vary from one state to another. They hold significant responsibilities regarding strategic spatial planning and land-use plans within their jurisdictions.

Main responsibility sectors and sub-sectors
SECTORS AND SUB-SECTORS	State level	Municipal level
1. General public services (administration)	Supervision of municipal affairs; Building regulations	Local administration; Public events regulation
2. Public order and safety	Police and emergency services	Local police; Fire brigades
3. Economic affairs / transports	Transport, energy distribution; Traffic regulation; Agriculture	Municipal roads, local and urban public transport; Local energy supply
4. Environment protection	Environmental protection	Water, sewage and household waste disposal
5. Housing and community amenities	Spatial regional planning; Urban and land development	Town planning; Local housing, water supply and management
6. Health	Health administration; Hospitals (shared with the federal level)	Primary healthcare (medical centres); Preventive healthcare
7. Culture & Recreation	Sports and Leisure	Culture, local sport facilities
8. Education	Primary, general lower-secondary and part-time vocational schools	Construction, preservation of primary schools
9. Social Welfare	Social assistance, family policy (maternity, infant and youth protection and welfare)	Elderly care: Social assistance and nursing homes (can differ among states)

Scope of fiscal data: states and municipalities, including municipal associations and other municipal entities.

SNA 2008

Availability of fiscal data: High

Quality/reliability of fiscal data: High

GENERAL INTRODUCTION: The Fiscal Constitutional Law (1948) is the main act governing fiscal decentralisation in Austria. Relations between all levels of government are further set up by the Austrian Stability Pact (Österreichischer Stabilitätspakt) and the Fiscal Equalisation Law (Finanzausgleichsgesetz – FAG). The FAG details the rules of tax sharing, intergovernmental transfers and cost bearing between levels of government. It is a single majority law of the federal government, negotiated between the federal government, the states and municipalities.

For a federal country, the degree of autonomy of SNGs in Austria is relatively low on the revenue side, whereas they have a relatively high discretion over spending, resulting in strong fiscal imbalances. Major subnational own-source taxes and shared taxes are set at the federal level. States have only rate-setting power on minor taxes. The 2017 FAG was a first step towards more transparency and stronger tax autonomy of the states. It introduced new instruments to improve the efficiency and quality of public spending, such as benchmarking and spending reviews at the subnational level. A fiscal sharing arrangement was also adopted for the period 2017-2021, to provide EUR 300 million of additional funds each year to state and local governments, in addition to a EUR 125 million grant for expenses related to migration and integration.

The 2020 constitutional reform was accompanied by structural reforms under the national 2020-2024 Government Programme, which include the establishment of an eco-social tax and the implementation of a new financial equalisation scheme to meet climate targets. A new subsidy system with strategy involving states is also planned.

Subnational, state and local government expenditure by economic classification
	Dollars PPP / inhabitant			% GDP			% general government			% subnational, state and local government
-	SNG	State	Local	SNG	State	Local	SNG	State	Local	SNG	State	Local
Total expenditure	10 509	5 528	4 980	18.9%	9.9%	9.0%	33.1%	17.4%	15.7%	100.0%	100.0%	100.0%
Inc. current expenditure	9 518	5 101	4 417	17.1%	9.2%	7.9%	32.3%	17.3%	15.0%	90.6%	92.3%	88.7%
Compensation of employees	3 490	1 916	1 573	6.3%	3.4%	2.8%	55.2%	30.3%	24.9%	33.2%	34.7%	32.0%
Intermediate consumption	2 092	921	1 171	3.8%	1.7%	2.1%	54.9%	24.2%	30.8%	19.9%	16.7%	23.5%
Social expenditure	1 615	916	699	2.9%	1.7%	1.3%	11.8%	6.7%	5.1%	15.4%	16.6%	14.0%
Subsidies and current transfers	2 112	1 213	900	3.8%	2.2%	1.6%	45.8%	26.3%	19.5%	20.1%	21.9%	18.1%
Financial charges	55	48	7	0.1%	0.1%	0.0%	7.5%	6.5%	1.0%	0.5%	0.9%	0.1%
Others	153	86	67	0.3%	0.2%	0.1%	56.3%	31.8%	24.5%	1.5%	1.6%	1.3%
Incl. capital expenditure	991	428	563	1.8%	0.8%	1.0%	43.0%	18.6%	24.5%	9.4%	7.7%	11.3%
Capital transfers	227	155	72	0.4%	0.3%	0.1%	55.1%	37.6%	17.5%	2.2%	2.8%	1.5%
Direct investment (or GFCF)	764	273	491	1.4%	0.5%	0.9%	40.4%	14.4%	25.9%	7.3%	4.9%	9.9%

EXPENDITURE: SNG spending in Austria is below the average of the nine OECD federal countries (20.6% of GDP and 43.5% of public expenditure in 2020) and ranks last among OECD federal countries in terms of share in total public spending. States and municipalities have a similar weight in SNG expenditure and their respective shares in public spending (17.4% and 15.7% in 2020) have remained relatively stable since 2000. States and municipalities altogether represent more than half of total public spending on staff expenditure (55.2%) and goods and services (54.9%) and almost half for subsidies and current transfers (45.8%).

DIRECT INVESTMENT: Austrian SNGs’ role in public investment is below the average of OECD federal countries (54.6% of public investment in 2020). However, SNG investment as a share of GDP is close to the average of OECD federal countries (2.0%). In 2020, 30.1% of SNG investment in Austria was dedicated to economic affairs (maintenance of infrastructures in transport, industry, agriculture), followed by healthcare (26.0%), a main category of investment spending because Austrian states are responsible for hospital expenditure, including their operations and financing. Future investment priorities set at the central government level include new technologies, green and digital transition (a “Digital Roadmap” was introduced in 2017 at federal and state levels).

Subnational, state and local government expenditure by functional classification
	Dollars PPP / inhabitant			% GDP			% general government			% subnational, state and local government
-	SNG	State	Local	SNG	State	Local	SNG	State	Local	SNG	State	Local
Total expenditure by economic function	10 509	5 528	4 980	18.9%	9.9%	9.0%	-	-	-	100.0%	100.0%	100.0%
1. General public services	9 518	633	785	17.1%	1.1%	1.4%	19.2%	8.6%	10.6%	13.5%	11.5%	15.8%
2. Defence	3 490	0	0	6.3%	0.0%	0.0%	0.2%	0.1%	0.1%	0.0%	0.0%	0.0%
3. Security and public order	2 092	32	83	3.8%	0.1%	0.2%	14.3%	4.0%	10.3%	1.1%	0.6%	1.7%
4. Economic affairs/transports	1 615	754	569	2.9%	1.4%	1.0%	23.3%	13.3%	10.0%	12.6%	13.6%	11.4%
5. Environmental protection	2 112	27	89	3.8%	0.1%	0.2%	54.5%	12.7%	41.8%	1.1%	0.5%	1.8%
6. Housing and community amenities	55	67	64	0.1%	0.1%	0.1%	84.9%	43.4%	41.5%	1.2%	1.2%	1.3%
7. Health	153	1 797	1 153	0.3%	3.2%	2.1%	42.4%	25.8%	16.6%	28.1%	32.5%	23.2%
8. Recreation, culture and religion	991	92	256	1.8%	0.2%	0.5%	51.3%	13.6%	37.8%	3.3%	1.7%	5.2%
9. Education	228	891	866	0.4%	1.6%	1.6%	48.4%	24.5%	23.8%	16.7%	16.1%	17.4%
10. Social protection	764	1 235	1 114	1.4%	2.2%	2.0%	14.7%	7.7%	7.0%	22.4%	22.3%	22.4%

Health and social protection altogether represented 50.5% of SNG total expenditure in 2020. The third spending category for both levels of SNG is education (16.7%), followed by general public services and economic affairs/transport. Municipalities are responsible for the majority of expenditure in the fields of environmental protection (76.7% of SNG expenditure), recreation, culture and religion and public order and safety, while states are mainly responsible for health and economic affairs/transport.

Subnational, state and local government revenue by category
	Dollars PPP / inhabitant			% GDP			% general government			% subnational, state and local government
-	SNG	State	Local	SNG	State	Local	SNG	State	Local	SNG	State	Local
Total revenue	10 080	5 236	4 844	18.1%	9.4%	8.7%	37.2%	19.3%	17.9%	100.0%	100.0%	100.0%
Tax revenue	1 134	408	726	2.0%	0.7%	1.3%	7.7%	2.8%	4.9%	11.3%	7.8%	15.0%
Grants and subsidies	7 338	4 200	3 137	13.2%	7.6%	5.6%	-	-	-	72.8%	80.2%	64.8%
Tariffs and fees	1188	413	776	2.1%	0.7%	1.4%	-	-	-	11.8%	7.9%	16.0%
Income from assets	200	80	120	0.4%	0.1%	0.2%	-	-	-	2.0%	1.5%	2.5%
Other revenue	221	136	85	0.4%	0.2%	0.2%	-	-	-	2.2%	2.6%	1.8%

OVERALL DESCRIPTION: Austria’s subnational fiscal framework is characterised by significant vertical fiscal imbalances, with subnational spending powers higher than their revenue-raising powers. Most of subnational governments’ revenue come from financial equalisation mechanisms, which is based on tax-sharing schemes and regulated by the FAG. Grants and subsidies make up 72.8% of subnational revenue (of which 80.2% of state revenue and 64.8% of municipal revenue), while tax revenue represented only 11.3% of SNG revenue, well below the OECD average for federal countries (42.4%). Other sources of revenue for SNGs include tariffs and fees, and to a lesser extent property income and income from public companies.

TAX REVENUE: In 2020, tax revenue represented 15.0% of municipal revenue and 7.8% of state revenue. As a share of GDP and public tax revenue, SNG tax revenue in Austria is well below the OECD average for federal countries (9.3% of GDP and 44.5% of public tax revenue in 2020). Approximately 90% of all tax revenue is levied by federal revenue offices. Municipalities levy slightly more than 4.9% and states 2.8% of the total tax revenue.

States benefit from the tourist tax and the fishing and hunting licenses. In 2018, the tax autonomy to raise the housing subsidy contribution (Wohnbauförderungs-beitrag, currently 1% of payroll) was also transferred from the central government to the states.

Tax revenue is slightly higher for municipalities, which can collect the municipal business tax (Kommunalsteuer) and the property tax (Grundsteuer). The Kommunalsteuer makes up the bulk of municipal tax revenue. It is a general payroll tax of 3% on total salaries and wages paid each month by permanent establishments based in Austria. The Austrian Federal Railway, some private railways and charitable associations are exempted from the municipal tax. The payroll tax base and rate are both fixed uniformly by the federal government. The property tax is levied on both land and buildings. The tax base is defined at the federal level, but municipalities have some discretion regarding the rate within limits set by state regulation. The property tax represented 15.4% of municipal tax revenue in 2020 (i.e. 2.3% of their total revenue) and only 0.2% of GDP in 2020, which is below the OECD average (1.0% of GDP).

GRANTS AND SUBSIDIES: Austria has a strong fiscal equalisation system based on tax-sharing arrangements. Around 85% of total tax revenue represents shared taxes, which include revenue from the personal income tax (PIT), the corporate income tax (CIT) and the VAT. 12.8% of municipal shared tax revenue was allocated by the states based on the weighted population key (WPK), to ensure that the most populated municipalities receive more revenue per capita to compensate for their higher financial requirements. Since the FAG 2017, the allocation of revenue has been more task orientated. The tax revenue share of municipalities is now allocated based on the childcare and schooling services provided.

According to the Federal Ministry of Finance, the total revenue collected at the federal level was shared as follows: 56.4% for the federal government, 22.3% for the states (excluding Vienna), 9.2% for the city of Vienna and 9.4% for the municipalities. Of the total transfers from the federal government to state and municipal levels, 97.6% were current grants and 2.4% capital grants in 2020.

Besides tax-sharing schemes, the FAG also distinguishes general grants, special need transfers and earmarked grants. General grants aim at equalising the average revenue of states and municipalities resulting from tax sharing arrangements (horizontal equalisation). They mostly cover expenditure in public administration and public services. Earmarked grants include grants on education, culture and transportation. Other transfers cover housing development, environmental purposes and infrastructure as well as transfers from the Federal Natural Disasters Fund. This Fund covers expenditures for protection against natural disasters and supports states for reconstructing infrastructure of states and municipalities.

OTHER REVENUE: Revenue derived from user charges and fees from local public companies are an important source of revenue for states (7.9% of state revenue in 2020) and even more for municipalities (16.0% of municipal revenue). This is due to Austria’s important network of 1 800 local public companies. Municipalities receive user fees levied on water, sewerage and waste, entertainment.

Subnational, state and local government fiscal rules and debt
	Dollars PPP / inh.			% GDP			% general government debt			% SNG debt			% SNG financial debt
-	SNG	State	Local	SNG	State	Local	SNG	State	Local	SNG	State	Local	SNG	State	Local
Total outstanding debt	7 639	4 418	3 221	13.7%	7.9%	5.8%	12.7%	7.3%	5.4%	100.0%	100.0%	100.0%	-	-	-
Financial debt*	6 215	3 530	2 685	11.2%	6.3%	4.8%	11.3%	6.4%	4.9%	81.4%	79.9%	83.4%	100.0%	100.0%	100.0%
Currency and deposits	0	0	0	-	-	-	-	-	-	0.0%	0.0%	0.00%	0.0%	0.00%	0.0%
Bonds / debt securities	995	907	88	-	-	-	-	-	-	13.0%	20.5%	2.7%	16.0%	25.7%	3.3%
Loans	5 220	2 624	2 596	-	-	-	-	-	-	68.3%	59.4%	80.6%	84.0%	74.3%	96.7%
Insurance pensions	0	0	0	-	-	-	-	-	-	0.0%	0.0%	0.0%	-	-	-
Other accounts payable	1 424	887	536	-	-	-	-	-	-	18.6%	20.1%	16.7%	-	-	-

FISCAL RULES: The Austrian Stability Pact, first established in 1999, sets deficit and surplus targets for the federal, state and local governments in order to involve all levels of government in the consolidation of public finances. The Pact adopted in 2013 (Public Law Gazette I No. 30/2013) required that, from 2017, the central government, the state governments and the municipalities have to achieve structurally balanced budgets as a basic principle. The Pact contains a series of rules: a structurally balanced general government budget (“debt brake”), a structural general government deficit not below -0.45% of GDP; ceiling on annual expenditure growth (expenditure brake); public debt reduction as defined in ESA terms (adjustment of the debt ratio); ceilings for public guarantees granted by the central government, the states and the municipalities and rules to strengthen budgetary co-ordination and medium-term budgetary planning of all governments, mutual exchange of information and transparency. Compliance with the fiscal rules is ensured by adequate sanctions. The Austrian Fiscal Advisory Council (Fiskalrat) was created in 2013 as an independent fiscal institution to promote sustainable public finances, fiscal discipline and compliance with EU fiscal requirements, including at subnational level.

DEBT: States and municipalities are free to borrow in the form of loans and bonds. Austrian municipalities borrow mostly from public banks and state-owned enterprises. States usually have a control committee that approves municipal loans based on a set of prudential rules, which differ among states. As a general rule, municipalities can only borrow to finance investment projects (“Golden Rule”).

In 2020, Austrian subnational debt represented 13.7% of GDP and 12.7% of total public debt, well below the OECD average for federal countries (36.6% of GDP and 26.5% of public debt). In 2020, states accounted for 57.8% of subnational debt and local governments for 42.2%. Within the financial debt, loans represented 84.0% of subnational debt and bonds 16.0%. No green bond has been issued at the subnational level.

TERRITORIAL MANAGEMENT OF THE CRISIS: The federal government is responsible for public health according to the Constitution (Art. 1, 12), including the management of pandemics. The pandemic was managed in a centralised manner in 2020. The federal government introduced restrictive measures on events, gatherings, restaurants, schools, higher education institutions and borders. Only a few decisions were taken at the state level, of which access to ski resorts and quarantine measures. With the COVID-19 law adopted in March 2020 (Maßnahmengesetz), subnational governments were authorised to ban individuals to enter certain facilities within their jurisdictions. However, regular communications between the federal government and states suggest vertical coordination prevailed for some measures during the crisis.

EMERGENCY MEASURES TO COPE WITH THE CRISIS AT THE DIFFERENT LEVELS OF GOVERNMENT: With the aim to support domestic production potential, states put in place several measures targeting the most affected SMEs and micro-enterprises in 2020, to complement the measures taken at the federal level. These comprise guarantees and bridge loans to sustain companies’ liquidity, non-repayable grants, a hardship fund (e.g. Tyrol), tax deferrals and waived interests, financing of telework infrastructure and digitalisation of SMEs. Upper Austria also developed aid packages for start-ups, which included technical support and loans deferral.

IMPACTS OF THE CRISIS ON SUBNATIONAL GOVERNMENT FINANCE: According to national statistics, the real Austrian GDP contracted by 6.6% due to the pandemic in 2020. The national Institute of Economic Research (WIFO) expects the real GDP to rebound slowly in 2021 and mostly in 2022. However, the recent lockdown implemented in November 2021 by Austrian authorities should delay economic recovery of the country later in 2022.

Subnational revenue decreased by 4.1% in 2020 compared with 2019, mainly driven by states (-4.8% vs. -3.3% for municipalities). This revenue drop largely resulted from lower tax revenue (-6.5%), not fully compensated by transfers. Tariffs and fees also slightly decreased in 2020 due to the closure of public facilities.

By contrast, subnational expenditure was almost stable in 2020 since some expenditure dropped with the containment measures (due to the annulation of events, closing of infrastructure, etc.). To deal with declining revenue in 2020, subnational governments also contracted their expenditure in housing and community amenities (-18%) and recreation and culture (-9.9%). Subnational governments’ debt increased by 5.1% between 2019 and 2020.

ECONOMIC AND SOCIAL STIMULUS PLANS: As part of its national Recovery and Resilience Plan 2020-2026 and in accordance with EU Regulation 2021/241, Austria will receive EUR 3.5 billion grants from the EU to support its long-term economic recovery, business attractiveness and domestic labour market. The plan largely focuses on green and digital transformations, but also education, research, health and regional development. It consists of 32 investments and 27 reforms, involving all levels of governments, with the aim to boost domestic GDP by 0.4% to 0.7% by 2026.

To sustain public service provision and investment at the local level, the federal government also adopted the 2020 EUR 1 billion Municipal Investments Act (Kommunalinvestitionsgesetz) and an additional EUR 1.5 billion package in 2021. About 1,500 municipalities received EUR 600 million of grants from the 2020 Act by mid-April 2021, which supported around EUR 2 billion investments at the municipal level. The second package will provide EUR 400 million of revenue shares in 2021, EUR 1 billion of advance payments on revenue shares and EUR 100 million increase in the structural fund for the weakest municipalities.