But using Linux was not a decision of the IT department - it was a political decision by the city council and the mayor. If they decide to give a subsidy to Linux to promote local software development, that is perfectly within their mandate.

By the way, you need to realize that Munich's finances are very sound. In 2012 the city had a budget surplus of around 700 million € - so spending 20-30 million € on a 10 year IT project is not something that hurts them very much...