The bill for the public finances of local authorities came like a bolt from the blue, in total contrast with both Bulgarian tradition and EU directives. And if it is passed in the current version, it will end the financial autonomy of local authorities. Such is the opinion of the National Association of Municipalities in Bulgaria (NAMB).
As with the three previous governments, representatives of association launched negotiations with the Cabinet of GERB yet in the first days of its term in 2009. The two governments – the central and local one, shook hands and agreed to work on a strategy and the program for decentralization in medium term. Among the regulations, which had to be changed was the Local Finance Act and legislation pertaining to part of the taxes collected from individuals which were to become local taxes, the revenue from which was supposed to stay within the communities where the person lives or works. Among the consensus points was the idea to assist municipalities in severe financial condition.
They created also an authority to manage the process – Council on Decentralization, in which on par were involved the central institutions on the one hand and delegates from NAMB from the other.
In October 2011, the Finance Minister Simeon Dyankov put an end to the council. The body was unilaterally closed by him, and its functions were transferred to the Council for Administrative Reform. Ever since then there has been no meeting on decentralization. The reason for this is the project of the Public Finance Act, which in the opinion of all mayors is completely contrary to the decentralization programme.
The arbitrary decision of Dyankov has had also a European dimension. In 2011 was presented the second monitoring report of the Council of Europe to implement the European Charter of Local Self-Government. The charter has been part of the country’s domestic law since 1995.
The most distinctive requirement there is the country to break the link between the municipal budget process from that of the state. The process of making local governments budgets should not depend in any degree on the central budgeting – apart from some figures set out in the state budget. The idea is that there should be no pressure and guidance, nor endless interference, as well as an aim to reduce dependence on transfers from the target municipalities with endless conditions how and what to spend the money on. This was particularly important for the delegated budgets, where the influence and restrictions from the Ministry of Education and Science onto municipalities were enormous. All schools were monitored by the Ministry in complete conflict with in the Charter, under which municipalities are given the total sum of all transfers and it is up to them to decide how to use them.
The draft law on public finances does not account for specifics in municipalities as self-governing communities. It renders them down to some kind of local ministry or agency to which the Council of Ministers and in particular the Minister of Finance allocates funds, said Emil Savov, deputy executive director of the Association.
The law on public finances bill has given shelter to 18 kinds of directions of the Finance Minister that municipalities must comply with. And the first one of them is to comply with the instructions of Finance Minister. In the current Municipal Budget Act, which will be repealed by the new law, says that the first guiding principle in making municipal budget is the development strategy of the municipality.
The BANKER
