Export date 07/10/2021
RAPPORT DE MONITORING OF THE EUROPEAN CHARTER OF LOCAL AUTONOMY Country :
Article 2 Constitutional and legal foundation for local self government
The principle of local self government shall be recognised in domestic legislation, and where practicable in the constitution.
Albania [Article ratified - Report adopted on 31 October 2013 ]
The organisation and functioning of local government in Albania is guaranteed by the following legal acts: the Albanian Constitution, Part I, Article 13 and Part VI on local government, adopted in 1998; the European Charter of Local Self-Government, signed on the basis of Decision of Council of Ministers (DCM) No. 203, dated 26.3.1998 and ratified by the Parliament by adopting the Law No. 8548 “On The European Charter of Local Self-Government” dated by11 November 1999;
Law No. 8652, dated 31 July 2000 ‘On the Organisation and Functioning of Local Government in Albania’ as amended;
Law no. 8654, date 31 July 2000, “On the organisation and functioning of the municipality of Tirana”;
Law no. 8653, date 31 July 2000, “On the administrative and territorial division of local government units in Republic of Albania”;
Law No. 8699 dated 23 November 2000 “On the ratification of the Cross-Border Cooperation Framework Convention between municipalities and local authorities, its two protocols and other local governance documents”;
DCM No. 651, dated 29 December 1999 ‘On the Strategy for Decentralisation and Local Autonomy’.
Constitutional provisions
The fundamental principles of the Constitution of Albania provide the key provisions for the structure
page 1 / 796 and operation of local and regional authorities: separation of powers, supremacy of the sovereignty of the people, right to direct universal suffrage by secret ballot, political pluralism, and guarantee of the fundamental rights and freedoms of citizens.
Article 13 of Constitution affirms that the local government in Albania is founded upon the basis of the principle of decentralisation of power and is exercised according to the principle of local autonomy.
Articles 108-115 define the principles of local government and authorities. Thus, Article 108(1) establishes that the units of local government are communes, municipalities and regions, while Article 108(2) establishes that the local boundaries cannot be changed without prior consultation of the inhabitants.
Article 109 (1) stipulates that, the representative organs of the basic units of local government are councils that are elected every four years in general direct elections by secret ballot. In addition, the mayor of the municipality and the head of the commune as the executive organ of the LGU, are elected directly in the same manner.
Article 110 defines that, the region (composed of several basic unit of local government) is the unit in which regional policies are elaborated, implemented and harmonised with state policy.
Basic powers and the principle of the right to local fiscal autonomy are listed in Article 113, establishing that the councils of the communes, municipalities and regions regulate and administer local issues, in an independent manner, within their jurisdiction by exercising the rights of ownership, administering all income created local issues, having the right to exercise economic activity and the right to collect and spend the income necessary for the exercise of their functions. According to this Article, local authorities should be entitled to adequate fiscal financial resources, which they may freely dispose within the framework of their powers.
Primary legislation
The Law on the Organisation and Functioning of Local Government, no. 8652 of July 2000 (the Organic Law), is the main law that has been prepared and approved within the framework of the decentralisation reform. It affirms the rights and competences of the LGUs in conformity with the Constitution and the Charter, and establishes the framework of the relations between the central and local governments.
The Organic Law is divided into 11 chapters covering general provisions, the rights of the LGUs, the functions and competencies of Communes, Municipalities and Regions, local government finance, the composition, establishment, organisation, authority and tasks of municipal and communal councils, the mayors, territorial subdivisions, the organisation of the regional council and the reorganisation of LGUs.
By virtue of this law, municipalities and communes are clearly entitled to a substantial autonomy over a large list of functions in the areas of public services, economic development, social and cultural activities, public order and protection.
Other important acts with additional amendments of relevance to local government are:
Law No. 8743 dated 2.22. 2001 ‘On Immovable State Property’ that defines: the immovable properties to be transferred in property or in use to the local governments, the regime of property rights and the administrative management of the transfer process with key steps and respective
page 2 / 796 deadlines;
Law No. 8744, dated 2.22. 2001 “On the Transfer of Immovable State Public Property to Local Government Units”;
Law No. 8653, dated 31 July 2000 ‘On the Territorial and Administrative Division of Local Government Units’, defines the borders of each municipality, commune, district and region;
Law No.8654, dated 31 July 2000 on ‘Organisation and Functioning of Municipality of Tirana’;
Law No. 8752, dated 26.3.2001, ‘On Establishment and Functioning of the Structures for the Administration and Protection of Land’;
Law No. 8927, dated 25.7.2002, ‘On the Prefect’;
Law No. 8934, dated 5.9.2002, ‘On Environmental Protection’;
Law No. 8978, dated 12 December 2002, ‘On the Local Tax for Small Business’;
Law No. 8979, dated 12 December 2002, ‘On some Additions and Amendments to Law No. 8438, dated 28 December 1998, ‘On Income Tax ’;
Law No. 8980, dated 12 December 2002, ‘On Amendments to Law No. 8560, dated 22 December 1999, ‘On Tax Procedures in the Republic Of Albania’’;
Law No. 8982, dated 12 December 2002, ‘On the Local Tax System’;
Law No. 9010, dated 13.2.2003, ‘On the Environmental Administration of Solid Waste’;
Law No. 7850 dated 29.7.1994 ‘The Civil Code’;
Law No 8991, date 23/01/2003, “On some additions and amendments to the Law No 8405, date 17.9.1998, “On urban planning”, amended by the decision No 2, date 25 November 1999 of the Constitutional Court, and by Laws No 8453, date 4.2.1999, No 8501, date 16.6.1999 and No 8682, date 7 November 2000”;
Law No. 9232, date 13 May 2004 “On social programs for housing residents in urban areas”;
Law No. 9632, date 30 October 2006 “On local taxes”;
Law No. 9675, date 13 January2007 “On some amendments to law no. 8417, date 21 October 1998 “Constitution of the Republic of Albania”;
Law No. 9719, date 23 April 2007 “On some changes and amendments to Law no. 9232, date 13 May 2004 “On social programs for housing residents in urban areas”;
Law No. 9745, date 28 May 2007 “On some changes and amendments to Law no. 9632, date 30 October 2006, “On local taxes”;
Law No. 9743, date 28 May 2007 “On some changes and amendments to Law no. 8405, date 17 September 1998 “On urban planning”, amended;
page 3 / 796 Law No. 9869, date 4.2.2008 “On loans for Local Government”;
Law No. 10 119, date 23.4.2009 “On territory planning”.
Article 2 of the Charter stipulates clearly that the “principle of local self-government shall be recognised in domestic legislation and where practicable in the constitution”. The Constitution of Albania (Article 13) recognises the concept of local self-government. Articles 108-115 thereof set up the fundamental rights, functions and power boundaries for the LGUs. The scope of their powers, internal structure and financial guarantees are defined by the organic law; territorial arrangement is established by the law on territorial and administrative division of the LGUs. There are also some 20 legal acts that regulate the local government system in Albania.
The Albanian legal system being monistic, the Charter is recognised as an integral part of the legislation and there is a specific law (No. 8548) that sets up the legal mechanisms for the realisation of the principles of the Charter. The Rapporteurs are satisfied to note that the principles of the Charter set forth in Article 2 are fully covered and taken into account by the legal acts of Albania.
The rapporteurs would only add that, in many Council of Europe member States, the administrative territorial division and the boundaries of municipalities are an integral part of the organic law on LGUs whereas in Albania, they are the subject of a separate law. This law regulates the structure, roles and responsibilities of both the regional authorities and the LGUs, which creates confusion. In an ideal case, there would be a separate law on regional governments and perhaps, this is a consideration that could be taken up by the legislator in further developing the legislation on local government.
It should also be noted that the current procedure for the adoption of normative acts gives the Council of Ministers the right to issue a decision that obtains status of law 40 days after formal adoption by the Parliament. This practice allows the government to make its decisions obligatory for all levels of public administration in the country. The rapporteurs would recommend replacing this procedure with the ordinary practice of adopting normative acts after three readings, giving parliamentary factions more control over the legislative process and improving legislative procedure.
Andorra [Article ratified - Report adopted on 28 March 2018 ]
Consistently with a long tradition of local self-government deeply rooted in the history of Andorra (actually the Parishes are at the origin of the Principality), the principle of local self-government is recognized in the 1993 Constitution and the Qualified Laws, especially in the Llei qualificada de delimitació de competències dels Comuns.
Article 79.1 of the Constitution provides that “The Local Councils, as organs of representation and administration of the Parishes, are public corporations with legal status and with local regulatory powers subject to law by means of ordinances, regulations and decrees. Within the area of their jurisdiction subject to the Constitution, the law and tradition, the Local Councils function under the principle of self-government, recognised and guaranteed by the Constitution”.
As for the legal status of the European Charter of local self-government, Andorra ratified the Charter on 23r March 2011. According to Article 3, paragraph 4, of the Constitution, “Treaties and international agreements take effect in the legal system from the moment of their publication in the Official Gazette of the Principality of Andorra and cannot be amended or repealed by law”. The conventions, therefore, takes precedence over domestic law and are enforceable in Andorran courts.
No data has been found on the impact of the Charter on the legal system of Andorra. According to
page 4 / 796 the President of the Constitutional Court who met with the rapporteurs, the Charter has not been mentioned by the Court in its rare decisions on local self-government. The Charter is not mentioned either in the Qualified Laws on local self-government which have been drafted in 1993, well before the ratification of the Charter.
Express reference is made to the Charter in the explanatory memorandum to the Order on organisation and functioning adopted by the Comuns on 24 November 2011, in that it establishes the Comuns right to associate (in accordance with Article 10 of the Charter – see below, paragraph 149).
The rapporteurs consider that the requirements of Article 2 of the Charter are fully respected in Andorra.
Armenia [Article ratified - Report adopted on 15 June 2021 ]
Article 2: Foundation of local self-government
The principle of local self‑government shall be recognised in domestic legislation, and where practicable in the constitution.
142. Article 2 of the Charter requires signatory countries to recognise the principle of local self‑government in their domestic legislation.
143. In Armenia, both the constitution and the LGA recognise the principle of local self- government. As has been shown above, Article 179, paragraph 1, of the constitution and Article 3 of the Local Government Act recognise and define local self-governments. By their definitions, local self- government means the right and capacity of democratically elected local bodies to manage, under their scope of responsibility, the local public affairs in the interests of the local population.
Austria [Article ratified - Report adopted on 28 September 2020 ]
B-VG specifically recognises the first core element of local self-government, namely, the existence of “local authorities endowed with democratically constituted decision-making bodies”. Firstly, Articles 6 to 8 identify the municipal level, as one where fundamental rights of the Austrian citizens need to be protected. Secondly, Chapter VI on Municipalities, and more specifically, Article 117 enumerates the municipal authorities, namely: a) the municipal council (Gemeinderat), the general representative body to be elected by those entitled to vote in the municipality; b) the municipal executive board (city council) (Gemeindevorstand / Stadtrat), or in Statutory cities, the city senate (Stadtsenat); c) the mayor (Bürgermeister).
Pursuant to Article 117.2, B-VG, the municipal council is elected on the basis of proportional representation by equal, direct, personal and secret suffrage by the male and female federal nationals who have their main domicile in the municipality. And although specific election regulations may occur, the conditions for suffrage and electoral eligibility may not be more restrictive than in the electoral regulations for the Land Parliament. Paragraph 6 indicates that the mayor is elected by the municipal council. B-VG recognises, however, the possibility of the Länder to stipulate in their constitutions that the mayor shall be elected by those with municipal council suffrage.
Local self-government is also enshrined in Municipal codes of all Länder,44 namely, in Burgenland Municipal Code (Burgenländische Gemeindeordnung 2003),45 Carinthian Municipal Code (Kärntner
page 5 / 796 Allgemeine Gemeindeordnung 1998),46 Lower Austrian Municipal Code (NÖ Gemeindeordnung 1973),47 Upper Austrian Municipal Code (Oö. Gemeindeordnung 1990),48 the Municipal Code of Salzburg (Salzburger Gemeindeordnung 1994),49 Styrian Municipal Code (Steiermärkische Gemeindeordnung 1967),50 The Municipal Code of Tyrol (Tiroler Gemeindeordnung 2001),51 The Municipal Code of Vorarlberg (Vorarlberg Gesetz über die Organisation der Gemeindeverwaltung 1985).52 These documents include references to the two other core components of local self- government, namely: autonomy in exercising local power and resources necessary to accommodate local needs.
In Burgenland, the Municipal Code (Article 14) identifies the following organs of the municipality: the municipal council, the municipal board, the mayor and the municipal treasurer. Elections are direct, free, secret, proportional and all Austrians residing in the municipality can vote, as well as members of another EU country who are registered in the municipality. The members of the municipal council as well as the mayor are elected for a period of five years (Articles 16-17). Burgenland differentiates between Marktgemeinde – of greater economic importance for the surrounding areas, and Stadtgemeinde – municipalities that have gained particular importance for the wider area due to their economic structure, their cultural institutions, their population or traffic situation (Article 3.1).
In Carinthia, according to the Municipal Code, the municipal council is elected by all municipality citizens for a mandate of six years (Articles 2, 18 and 19). Similar provisions apply to the mayor as well (Article 23).
The Lower Austrian Municipal Code describes the organs of the municipality (the municipal board, the municipal council, the mayor) (Article 18). The mayor is elected from among the municipal councillors by the municipal council (Article 26).
The Upper Austrian Municipal Code enumerates the municipal organs in Article 17 and states that the mayor is elected by the municipal council (Article 25). In addition, Article 3 recognises the right of the Land government to create municipalities of different kinds, upon their request, and in the limits of the population (municipalities with more than 2 000 inhabitants may apply to become Marktgemeinde and those with more than 4 500 inhabitants, Stadtgemeinde).
In Salzburg, the municipal council, the municipal leadership, the mayor, and the committees are the local authorities (Article 18). The mayor is directly elected by all the eligible voters in the municipality (Article 35).
The Styrian Municipal Code enumerated the following local authorities: the municipal council, the municipal board (Gemerindevorstand), the mayor, the management committees, the specialised committees, and the municipal treasurer (Article 14). Styria enjoys directly elected municipal councils and mayors elected by the municipal council for a term of five years (Articles 16, 17 and 19). In addition, Article 3 states that the designation Marktgemeinde may be given only to municipalities of more than 3 000 inhabitants, whereas that of Stadtgemeinde to those of at least 10 000 inhabitants.
In Tyrol, the Municipal Code describes the local authorities in Article 21 and stipulates the length of the mandate: six years (Article 25).
The Municipal Code of Vorarlberg indicates in Article 20 that the municipal council is to be directly elected by Austrian citizens and foreign citizens of the Union who have the right to vote according to the municipal electoral law; and in Article 61 that the municipal council elects the mayor. The political mandate is for five years (Article 35).
page 6 / 796 During the monitoring visit, the members of the Austrian National Delegation to the Congress as well as of the National Associations acknowledged the legal recognition and substantial implementation of the principle of local self-government in Austria.
The rapporteurs observe that elements of the principle of self-government are present in the Federal Constitution, as well as in the Land Municipal Codes, and therefore conclude that Austria complies with Article 2.
Azerbaijan [Article ratified - Report adopted on 17 June 2021 ]
Local self-government is recognised in the Constitution (Section IV, Chapter IX), although not as part of the state power (which is regulated in Section III) nor part of the public administration. While acknowledging the position of the government which considers municipalities as part of the state power and as institutions of the public administration, the rapporteurs note that neither the Constitution nor the corresponding legislation, beginning with the Law on the Status of Municipalities, include the main features of the Charter’s definition of local self-government, since they do not establish the right of local authorities to regulate and manage local public affairs nor the concept of the interest of the local population.
The constitutional and legislative recognition of the principle of local self-government, which refers to the right of local authorities to regulate and administer local affairs in an autonomous way, is an indispensable requirement of the Charter. Against this background, the independence of municipalities means the possibility to decide autonomously on a substantial share of local issues, not, like in the context of Azerbaijan, their exclusion from the state structure and from the public administration without being provided with any significant power.21 To fulfil the obligations stemming from Article 2 of the Charter, Azerbaijan should therefore unambiguously recognise municipalities as state institutions exercising public power and as part of the overall public administration.
The Charter does not contain any specific obligation as far as to regional self-government and the organization of public administration are concerned. In Azerbaijan only one regional tier of government exists, the Nakhichevan Autonomous Republic, regulated in Chapter VIII of the Constitution, as part of the state power. The state administration includes also administrative districts, that are territorial offices of the central administration. Furthermore, 10 economic regions (zones) have been in place for 15 years, which however are mere branches of the central government implementing economic planning at territorial level. Given the strong centralization of the state structure and the asymmetric structure affecting the Nakhchivan Autonomous Republic, a moderate decentralization by introducing elected regional governments as provided for in the Framework on Regional Democracy could be considered in order to enhance tailor-made solutions and policies in the diverse regions of the country.
The organization of the local government in the capital city represents a unique case among the Council of Europe’s member states. Baku is the only capital city without an elected city government accountable to the local population. According to the Charter, the role of central government authorities should be limited to the regulation and (proportionate) administrative supervision of (the capital city’s) municipal government, while in the case of Baku the central government manages the city directly through the Baku City Executive Authority. Furthermore, article 5.9 of the Law on Territorial Structure and Administrative Territorial Division assumes the adoption of a law on Baku city, but this has not been the case so far.
The Congress delegation was informed that the issue of possibly setting up an elective city council and mayoral institution in Baku is not on the political agenda. The main reason is reportedly the strategic importance of the city for the national government and its development strategy:
page 7 / 796 infrastructural and beautification works would allegedly be slowed down if decisions are not taken and implemented centrally.
The rapporteurs, weighing up the reasons given by the Azerbaijani authorities for sustaining the current system of the capital’s administration, do not see any compelling argument for depriving the capital of local self-government and recall Congress Recommendation 219 (2007) on the “Status of capital cities” and Recommendation 133 (2003) on the “Management of capital cities”, establishing the conditions for setting up a democratically elected municipality in the capitals of the Council Europe member states.
While the principle of local self-government is formally recognised in legislation, including in the constitution, its very concept and its design do not correspond to those laid down in the Charter. In order to assess compliance with Article 2, the formal recognition of the principle in domestic legislation is not sufficient. Rather, the core elements of the principle as defined by the Charter have to be enshrined in legislation. According to the Contemporary Commentary on the explanatory report to the European Charter of Local Self-Government22 (Paragraph 22) these core elements, as stated in the preamble of the Charter, are: a) “local authorities endowed with democratically constituted decision-making bodies”; b) “a wide degree of autonomy with regard to their responsibilities”; c) “ways and means by which those responsibilities are exercised and the resources required for their fulfilment”. These elements are not safeguarded in the pertinent legislation.
For these reasons, the rapporteurs conclude that Article 2 of the Charter is not respected in Azerbaijan.
Belgium [Article ratified - Report adopted on 15 October 2014 ]
Flemish Region (Vlaanderen)
As pointed out above, the principle of local self-government is recognised in the Belgian Constitution and, in addition to the federal law, by the Flemish regional legislature through Flemish legislation, especially the Flemish parliament’s Municipalities Act of 2005 (sections 2 and 3), which establishes the profile of the Flemish municipalities, and the Flemish Government Agreement on the internal state reform, which was approved the Flemish government on 8 April 2011. Since 2009, several legislative changes have been made by the Flemish legislature, in particular the amendment to the Decree of 6 July 2001 regulating intermunicipal co-operation and the amendments to the Decree of 15 July 2005, the Provincial Decree of 9 December 2005, the Decree on the social services centres of 19 December 2008, etc.
The principle of local self-government is accordingly not only recognised in domestic legislation but also in the Constitution. The rapporteurs noted the Flemish legislature’s constant concern to take account of the fundamental principles of local government and consider that Article 2 of the Charter is fully complied with in Flanders.
Walloon Region and German-speaking Community
At the constitutional level, the key questions concerning local self-government are governed in particular by Articles 41 and 162 to 166 of the Constitution. According to the Constitution, the municipalities and provinces are responsible for regulating “everything that is of municipal and/or provincial interest”. This municipal and provincial interest is not explicitly defined, so the municipality or province has fairly broad scope for action and can accordingly deal with anything not expressly prohibited.
page 8 / 796 The Code of Local Democracy and Decentralisation (CLDD) contains all the rules on local government, i.e. on the Walloon provinces and municipalities. It was approved by the Decree of 27 May 2004. The reforms of the CLDD, which were introduced on 8 December 2005, have brought about substantial changes to the constitution and composition of the municipal executive as well as the way in which it operates. This reform was continued with the Decree of 26 April 2012, most of the provisions of which came into force on 24 May 2012. The Walloon provinces are governed by the Decree of 2 February 2004.
Since its recognition in 1973, the self-government of the German-speaking Community has made possible the development of special relations with its nine municipalities, based on close co- operation between the Community and the municipalities. This co-operation mainly focuses on dialogue and exchanges of views, thus avoiding the need for binding directives and circulars.
Article 2 is complied with in Wallonia and in the German-speaking Community.
Brussels-Capital Region
The European Charter of Local Self-Government has been ratified by the Brussels-Capital Region. The Brussels-Capital Region Parliament regularly makes reference to the Charter in its ordinances, which in the legislative hierarchy are equivalent to decrees.
According to the principle of local self-government: ‘Interests which are exclusively of a municipal nature are dealt with by municipal cial councils, according to the principles laid down by the Constitution’ (Belgian Constitution, Article 41). This means that to implement municipal interests a municipality must be able to initiate measures and decide on the resources to be allocated to them without its decision-making authority being subject to even tacit authorisation.
On 5 March 2009 the government of the Brussels-Capital Region adopted an ordinance fundamentally amending the new Municipalities Act and designed to modernise the way the municipal system operated and improve the efficiency of services delivered. The Sixth State Reform has given the parliaments of the Brussels-Capital Region the freedom to determine certain aspects of their own organisation.
Article 2 is observed in the Brussels-Capital Region.
Bosnia and Herzegovina [Article ratified - Report adopted on 31 October 2019 ]
At State level, the BiH Constitution does not contain the concept of Local Self-Government. Thus neither constitutional guarantees for the relations between municipalities and different levels of government are established in the State Constitution, nor does (framework) legislation for local self- government exist at State level. The relations with local self-government are therefore exclusive relations between the two Entities (and, in the Federation of Bosnia and Herzegovina, also the Cantons) and local authorities. As a result, three parallel systems of local self-government exist: Federation of Bosnia and Herzegovina (and Cantons), Republika Srpska and Brčko District. The single situations of local self-government thus differ considerably one from each other, according to the respective legislative framework and in practice.
Legislation in the Federation of Bosnia and Herzegovina: The Law on Principles of Local Self- Government of the Federation, adopted in 2006, has been fully harmonized with the Charter; the basic principles and definitions of local government and local authorities can be found in articles 2 to 7. At the time, the Federation of Bosnia and Herzegovina legislator intensely cooperated with the Council of Europe (and UNDP), and cities and municipalities had been involved in consultations
page 9 / 796 during the legislative process. The competencies have been regulated, as well as the relations between Mayors and Councils and the (stronger) role of local communities within the municipalities, mjesne zajednice. An attempt to amend the Law on Principles of Local Self- Government (2013/14) in order to strengthen the latter bodies further, in a perspective of strengthening citizens’ participation, has met local authorities’ resistance.
As there is no Ministry for Local Self-Government at the Federation of Bosnia and Herzegovina level, the Federal Ministry of Justice comprises a Department for Public Administration which also deals with local self-government issues. The establishment of a Ministry of its own would only be possible by constitutional amendment.
When it comes to the cantonal laws on local self-government, so far only three cantons have harmonised their laws with the Federation of Bosnia and Herzegovina Law on Local Self-Government, while Canton Tuzla has taken over the federal law in its entirety. This is the situation 12 years after passing of the deadline for the harmonisation of cantonal laws with Federal law, which had been established six months after the adoption of the Federation of Bosnia and Herzegovina Law, in 2006. A positive example is the Constitution of Sarajevo Canton which was amended in 2017. It now contains clear definitions of Canton, City of Sarajevo and municipalities and their respective powers. A two year-deadline has been foreseen for the implementation of these amendments regarding the harmonisation of competencies and resources. This process is still ongoing.
In Republika Srpska, a new Law on local self-government was adopted in November 2016. After comprehensive consultation for months and expression of full support by the Republika Srpska Association of local authorities, the new law, which is supposed to respect the guidelines provided by the Charter, entered in force on 1 January 2017.
Overall, Bosnia and Herzegovina’s legislative situation can be considered in compliance with Article 2 of the Charter, as the principle of local self‑government is expressly recognised in applicable domestic legislation.
However, the problem remains that the overall constitutional structure does not consider local self- government sufficiently and as part of a comprehensive system. Therefore, the introduction in the Constitution of Bosnia and Herzegovina of at least a definition of local self-government, such as the level of government closest to the citizens, and of the right to local self-government of local authorities, would be desirable and useful in order to guarantee a minimum standard throughout the country.
Some years ago, the Associations of municipalities and cities of the Federation of Bosnia and Herzegovina and of Republika Srpska organized public debates throughout the country (with assistance from Swiss Development Agency) and, based on the conclusions of those public debates, presented a proposal to include the concept of “local self-government” in the BiH Constitution to the then President of the BiH Constitutional Amendments Committee, Mr Sefik DZAFEROVIC (now a member of the Presidency of BiH). However, no change has ever been adopted.
Bulgaria [Article ratified - Report adopted on 21 January 2021 ]
Article 2 – Constitutional and legal foundation for local self‑government
The principle of local self‑government shall be recognised in domestic legislation, and where practicable in the constitution.
1. According to the contemporary commentary of the Charter,20 Article 2 binds the parties to
page 10 / 796 recognise “the principle” of local self-government. This expression introduces in the Charter the difference between “principles” and “rules”. Consequently, it must be considered sufficient for a party to comply with Article 2, to recognise the core elements of local self- government.
1. To define these “core elements”, a key role is played by the Preamble and by Article 3 of the Charter. Both refer to the aspects of local self-government that have always been considered as the essential features of this concept in the modern European tradition: (a) “local authorities endowed with democratically constituted decision-making bodies”; (b) “a wide degree of autonomy with regard to their responsibilities”; (c) “ways and means by which those responsibilities are exercised, and the resources required for their fulfilment”. Therefore, it would be necessary to check not only the formal recognition of the principle in the domestic legislation, but also whether those core elements are enshrined in that legislation.
1. According to Article 136(1) of the constitution, “a municipality shall be the basic administrative territorial unit at the level of which self-government shall be practiced. Citizens shall participate in the government of the municipality both through their elected bodies of local self-government and directly, through a referendum or a general meeting of the populace.” Furthermore, Article 138 of the constitution stipulates that “The body of local self-government within a municipality shall be a municipal council elected directly by the populace for a term of four years by a procedure envisaged by the law”, while Article 139(1) defines that “the mayor shall be the executive power within a municipality. He shall be elected for a term of four years by the populace or by the municipal council in a manner established by law”. Bulgarian municipalities are therefore endowed with democratically constituted decision-making bodies.
1. While the constitution does not directly refer to the municipal sphere of responsibility, the Local Self‑Government and Local Administration Act (LSGLA: Article 17)21, stipulates that local self-government shall be expressed in the right and actual opportunity of citizens and their elective bodies at the municipal level “to resolve on their own all issues of local importance that the law has empowered them [with]”, also including an indicative list of municipal responsibilities.22
1. The constitution stipulates that “a municipality shall be entitled to own municipal property, which it shall use to the interest of the territorial community” (Article 140). Article 141 stipulates that “(1) A municipality shall have its own budget. (2) A municipality’s permanent sources of revenue shall be established by law. (3) The municipal council shall determine the size of local taxes under conditions, by a procedure and within the frames, established by law. (4) The municipal council shall determine the size of local charges by a procedure, established by law. (5) The State shall ensure the normal work of the municipalities through budget appropriations and other means.” In other words, the constitution itself provides for means and resources for the fulfilment of municipal responsibilities. Further relevant regulations are included in the legislation and especially in the Local Taxes and Fees Act (LTFA)23 and Public Finance Act.
1. The rapporteurs conclude that local self-government in Bulgaria is guaranteed by the constitution as regards principles of exercise, bodies, property rights and municipal finance. The constitutional norms are further developed in domestic legislation. Therefore, the rapporteurs consider that the requirements of Article 2 of the Charter are satisfied in Bulgaria. Nevertheless, they would encourage the Bulgarian authorities to include more specific provisions about the sphere of local government responsibilities in the constitution,
page 11 / 796 following a relevant amendment, since explicit constitutional safeguards would further protect municipal powers and discretion.
Croatia [Article ratified - Report adopted on 20 October 2016 ]
The Constitution describes Croatia as a “unitary and indivisible democratic and social state”. Although the state is unitary, the Constitution declares (Article 4) that “government shall be organised on the principle of separation of powers into the legislative, executive and judicial branches, but limited by the constitutionally guaranteed right to local and regional self-government” Article 133 states “citizens shall be guaranteed the right to local and regional self-government”. According to this article, the right to local and regional self-governance is to be realised through local and regional representative bodies elected in free elections. Citizens are also stated to be able to “directly participate in administering local affairs, through meetings, referenda and other forms of direct decision-making, in conformity with law and statute”. The Constitution, inter alia, sets out that the rights specified in Article 133 of the Constitution must be exercised by the European Union nationals in compliance with law and the EU acquis communautaire.
The formulation of Article 4 of the Constitution - “limited by the constitutionally guaranteed right to local and regional self-government” and the content of Article 135 of the Constitution that upon defining competences of local self-government “priority shall be given to the bodies which are the closest to citizens” provides evidence that the principle of local governance and subsidiarity is fully realized in the Constitution of Croatia.
Croatia thus fully complies with Article 2 of the Charter.
Cyprus [Article ratified - Report adopted on 20 October 2016 ]
Article 2 of the Charter requires signatory countries to recognise the principle of local self- government in their domestic legislation.
In Cyprus, the relevant constitutional provisions (Chapter VIII) do not meet this requirement of the Charter, since they provide local self-government only for some large cities and in an indirect way (among incompatibility rules). The two relevant laws, the Municipalities Law and the Communities Law, in their present form, do contain general provisions on local government, but they are considered too vague and not comprehensive enough to be seen as recognizing local self- government as a whole, and do not clearly ensure the principle of subsidiarity. The two relevant laws, in their present form contain rules only for the establishment or the merger of new local authorities. The situation is thus not in conformity with Article 2.
Czech Republic [Article ratified - Report adopted on 8 March 2012 ]
The Charter is applicable with reference to local authorities of all categories (Article 13), and the Czech Republic has made no specific declaration as to its applicability to the regional authorities that have existed since 2000. However, the main line of legal and financial regulations in the Czech Republic is the same for local municipalities and regions. This makes it reasonable to present a common exposé of the situation for both, but with separate remarks regarding each of them insofar as commanded by the nature of each question addressed.
As already pointed out, the provisions enshrined in Article 8 as well as Chapter 7 of the 1992 Constitution take ample care of the requirement under Article 2 of the Charter that the principle of local self-government be recognised in the Constitution.
page 12 / 796 Denmark [Article ratified - Report adopted on 31 October 2013 ]
The principle of local self-government is guaranteed under the Danish Constitution, Article 82 of which reads as follows: “The right of the municipalities to manage their own affairs independently under the supervision of the State shall be laid down by statute”. In legal doctrine, this article is often interpreted as being primarily a legal safeguard against the abolition of the municipalities by statute. Abolishing the municipalities would therefore require an amendment of the Constitution in accordance with the procedure set out in Article 88 thereof. Secondly, Article 82 grants the local authorities the right to manage their own affairs and their budget independently, in compliance with the legislation on the administration of municipalities and the many statutes and regulations on the various competences delegated to the municipalities by the Parliament and the Government. The legal limits on such self-government cannot, however, be precisely defined, any more, in fact, than can the restrictions and limitations imposed on the legislature (Folketing). This lack of clarity in the legal definition of self-government could cause problems.
At the same time, this article provides for administrative or State supervision of the municipal administration. Such supervision is confined to the legality of municipal and regional council decisions. It does not permit the State to pronounce on the expediency of the acts of local and regional councils. Supervision is a separate administrative responsibility of the Ministry of Economy and the Interior. There are five offices in all – one per region – responsible for supervising the relevant municipal and regional councils. 58. The safeguards set out in Article 82 of the Constitution do not apply to the regions set up under the 2007 reform. On the other hand, these regions are subject to the same general system of administrative supervision of the State as the municipalities. Prior to the reform, there were counties which held the same legal status as the municipalities and to which they were therefore comparable (in fact, they were known as amtskommune (“county municipalities”) in Danish). On the legal front, the abolition of the counties is considered as a reorganisation of the country’s municipalities, alongside the creation of a new territorial authority, the region.
There are many laws providing the regions with a wide range of freedoms as regards the management of issues falling within their remit. The municipalities have far more responsibilities than the regions and therefore enjoy greater freedom and independence. The legislation applicable to the regions accordingly provides for a lesser degree of self-governing powers and, in particular, does not permit them to levy taxes.
The rapporteurs conclude that all in all, the Law on Local Self-Government safeguards the scope of local self-government as set out in Articles 2 and 3 of the Charter. However, they also note that the municipalities consider that legislation is increasingly tending to reduce their autonomy, particularly owing to the weakening of legislative power under EU regulations and directives.
Estonia [Article ratified - Report adopted on 29 March 2017 ]
Article 2 of the Charter requires signatory countries to recognise the principle of local self- government in their domestic legislation or constitution. Overall, the rapporteurs consider that this Charter provision is reflected in the Estonian Constitution. Nevertheless, there may be a constitutional and legislative margin to increase legal protection of local self-government principles, as well as to improve continuity of central state politics towards local self-governments.
In Estonia, the relevant constitutional provisions (Chapter XIV) do meet this requirement of the Charter; Article 154, paragraph 1, stipulates that “all local issues shall be resolved and managed by
page 13 / 796 local governments, which shall operate independently pursuant to law”. Details are regulated in particular in the Local Government Organisation Act, the Local Government Financial Management Act and the Local Government Council Election Act.
In this context, Article 3 of the Constitution gives an indication as to what extent principles and rules of international law are part of the Estonian legal system. According to section 2 of the ECLSG Ratification Act, the Republic of Estonia undertakes to follow all the articles of the Charter in the territory subject to its jurisdiction. The Charter sets out the minimum requirements that the state must keep in mind when organising local self-government, including when deciding funding for local authorities. Therefore, the Court en banc has held that the Charter plays an important role in interpreting the provisions of the Constitution concerning the organisation of local self-government and “in principle … generally recognized principles and rules of international law are directly applicable in [the] Estonian legal system. These rules can be relied upon in Estonian courts”. This also would apply to the European Charter of Local Self-Government. In accordance with Article 123 (2) of the Constitution when laws or other legislation of Estonia are in conflict with an international treaty ratified by the Riigikogu, the provisions of the international treaty apply.
Finland [Article ratified - Report adopted on 28 March 2017 ]
The principle of local government is explicitly recognised in the Finnish Constitution. In Section 121, para. 1, it is provided that “Finland is divided into municipalities, whose administration shall be based on the self-government of their residents”, while para. 2 stipulates that municipalities “have the right to levy municipal tax”. Furthermore, Section 14 of the Constitution States that “every Finnish citizen and every foreigner permanently resident in Finland…has the right to vote”. The Supreme Administrative Court assumed that the principle of commensurate resources of municipalities (Art. 9 para. 2 of the Charter) has been acknowledged in Finland, although it has not been explicitly enshrined in the Constitution. Extensive rules on the legal status of municipalities are set out in the Local Government Act (410/2015).
Concerning regions and/or other higher levels of local or regional self-government, Section 121, para. 3, stipulates that “provisions on self-government in administrative areas larger than a municipality are laid down by an Act”, while in Section 14 (“Electoral and participatory rights”) there are no provisions concerning regional elections and citizens’ participation at the regional level. The legal status of autonomous regions has not been configured yet in Finland and the necessary measures for the purpose have not been adopted yet, since there is an ongoing regional reform process.
With regard to municipalities, Finland complies with Article 2. Legislation on the new autonomous regions is pending as the regional reform has not been completed yet. A constitutional amendment that would bring the constitutional status of the regions up to the level of municipalities would nonetheless seem necessary if the Government decides to create genuine self-governing regions.
France [Article ratified - Report adopted on 22 March 2016 ]
The principle of local government is explicitly recognised in the French Constitution, in Article 1 paragraph 1 which (since the amendment of 2003) states that the organisation of the French Republic is decentralised. This introduces the principle of decentralisation which is, according to French legal doctrine, the principle of territorial self-government, traditionally focusing on the administrative mission of local self-government.
In addition to this explicit incorporation of the decentralisation principle in the first article of the
page 14 / 796 French constitution in the beginning of the 21st century, there is also the constitutional notion of “free administration”. The so-called principle of free administration for territorial collectivities (“principe de la libre administration des collectivités territoriales”) was announced by the Constitution of 27 October 1946 (Article 87) and then also adopted in Article 72 of the Constitution of 4 October 1958. This principle first developed its full legal effect during the seventies, due to the case law of the Conseil Constitutionnel (Constitutional Council) and, later on, of the Conseil d’Etat (Council of the State).
According to Article 34 of the French Constitution, the law lays down the fundamental principles of free administration of “territorial collectivities” (“collectivites territoriales”). The term comes from the older, wider notion of “territorial community” (“communaute territorial”), often used already by the beginning of the 20th century in legal handbooks of Leon Duguit and other writers, in order to describe a political community defined through the common affiliation of its members to a certain territory. Today, Article 72 of the French Constitution enumerates the territorial collectivities of the Republic (“communes”, “departments”, “regions”, “collectivités de statut particulier”, “collectivités d’ outre-mer”), but it also gives the possibility to the legislator to create other sorts of territorial collectivities, if need be, to replace one or more of the aforementioned types.
According to Article 72 paragrah 2 of the Constitution, these territorial collectivities are “freely administered” (“s’administrent librement”), by elected councils who have regulatory power for the exercise of their competences.
The French Constitution recognises and guarantees the principle of local self-government, first as a defining principle for the character of the Republic (Article 1, since 2003), then through Articles 34 and especially 72 and the following, where the principle of “free administration” for “territorial collectivities” is enshrined, the existence of different sorts of territorial collectivities is guaranteed (Article 72 paragraph 1) and the main institutional features of local government are configured. The Constitution includes a special chapter (Titre XII Des Collectivités Territoriales) for local government, however, only the first three articles (Articles 72, 72-1, 72-2) refer to local government in general, while most articles are dedicated to the special status of overseas territories (Articles 72-3, 72-4, 73, 74, 74‑1). There is extensive and systematic legislation (see below) recognising and regulating different aspects of local government.
Therefore, it follows that the requirements of Article 2 are met in France.
Georgia [Article ratified - Report adopted on 7 November 2018 ]
The new Article 7, paragraph 4, of the Constitution of Georgia provides that: the citizens of Georgia shall regulate the affairs of local importance through local self-government in accordance with the legislation of Georgia. Delineation of competence between the state authorities and self-governing units is based on the principle of subsidiarity. The State ensures the correspondence of financial resources of self-governing units with its competences determined by organic law.
As already shown in several parts of this report, the principle of local self-government is recognised both in the Constitution of Georgia and in ordinary legislation and, more specifically, in the Code of Local Self-Government. The existence of legal acts that are incompatible with the Code and the constitution remains a serious matter of concern in domestic legislation. In April 2016, the parliament received a set of draft changes which concerned 174 pieces of legislation. At its spring session in 2016, parliament adopted the changes at first reading but then the discussion of the package stopped and this process has not yet been revived. During the consultation procedure, the Government of Georgia informed the delegation that the process will continue in the context of decentralisation.
page 15 / 796 In spite of problems with previous sectoral legislation, it is obvious, however, that the principle of local self-government is recognised both at the level of the constitution and of the legislation and that Georgia fully complies with Article 2 of the Charter.
Germany [Article ratified - Report adopted on 14 March 2012 ]
Article 2 of the Charter requires signatory countries to recognise the principle of local self- government in their domestic legislation. The German legal system acknowledges this principle, and both the Federal Basic Law and the Land constitutions contain constitutional guarantees for the administrative and legal status of local authorities. As we have seen above, Article 28 Section (2) of the Basic Law provides the right for local governments to regulate all local affairs under their own responsibility, within the limits prescribed by the laws. The right of self-government is also guaranteed, within the limits of the law, for the associations of municipalities. The financial autonomy, including the right of municipalities to have tax revenues are also defended by the Basic Law.
Remarkably, the constitutional recognition of the principle of local self-government resembles that of the Charter in a number of Land constitutions, referring to the right to regulate and administer local affairs in an autonomous way. The power of local authorities can be exercised within the legal framework provided by federal and Land legislation, in accordance of the Article 3, para. 1 of the Charter.
As it was described in Chapter 3 of this report, the constitutional status and the basic rights of local authorities are recognised equally in the federal and the Land constitutions. Most relevant laws of the Länder repeat and specify this status.
Greece [Article ratified - Report adopted on 26 March 2015 ]
Consistently with the Greek tradition of centralisation, the principle of local self-government is not included among the “Basic Provisions” of Part One of the Constitution. Conversely, the principle can be found in Section VI of Part Three of the Constitution, in Chapter One “Organization of the Administration”, Articles 101 and 102 (Article 101A addresses a different matter, namely independent authorities). The location of the principle is the result of the view, well-rooted in the Greek tradition, according to which local authorities are considered part of the executive power. This view, however, is not always perfectly compatible with the principle of “local self-government” and in case of a future constitutional revision; the opportunity to include an entire section on self- government should be taken into account.
Article 101, paragraph 1, establishes the principle of “deconcentration” for the administration of the State: “1. The administration of the State shall be organised according to the principle of decentralisation.”
Article 102, in its actual text, following the 2001 revision, establishes in paragraph 1: “1. The administration of local affairs shall be exercised by local authorities of first and second level. For the administration of local affairs, there is a presumption of competence in favor of local authorities. The range and categories of local affairs, as well as their allocation to each level, shall be specified by law. Law may assign to local authorities the exercise of competences constituting mission of the State”. The notion of “local affairs” is not defined by the Constitution and it is a matter of legislation or of judicial interpretation.
Article 102, paragraph 2 points out that: “2. Local authorities shall enjoy administrative and financial
page 16 / 796 autonomy”. Financial autonomy is more specifically regulated by paragraph 5: “5. The State shall adopt the legislative, regulatory and fiscal measures required for ensuring the financial independence and the funds necessary to the fulfilment of the mission and exercise of the competences of local authorities […] Every transfer of competences from central or regional administrations of the State to local government also entails the transfer of the corresponding funds”.
In comparison with most constitutions, especially the most recent ones, the constitutional regulation of local self-government in Greece is rather circumscribed and synthetic. In addition, also as a result of the 2001 (Article 102) and the 2008 (Article 101) amendments, the provisions are neither organic nor well-organised. Therefore, the remark contained in the 2008 Congress recommendation, at para 5b, according to which Article 102 does not identify the two levels of local authorities (consequently weakening their constitutional guarantee), still holds unfortunately true.
Hungary [Article ratified - Report adopted on 12 February 2021 ]
Article 2 requires that the principle of local self-government be enshrined in law, preferably in the Constitution.
The 2013 report pointed out that in Hungary the principle of local self-government is not explicitly enshrined either in the Constitution or in legislation and argued that the right to local self- government is not presented as a fundamental principle of Hungarian institutions.67 The revision of the Cardinal Act on Local Self-Government was recommended so that the principle of local self- government is explicitly guaranteed in legislation and in practice.
However, the rapporteurs of the present report believe that this conclusion can be tempered by the explicit reference, in the preamble to the Cardinal Act on Local Self-Government, to the Charter68 which enshrines the principle of local self-government – and that the principle of local self- government can therefore be considered to be formally recognised in legislation.
In the rapporteurs’ view, both the Constitution and legislation also contain some important elements of this principle. Article 31.1 of the Fundamental Law establishes that “In Hungary, local governments shall function to manage local public affairs and exercise local public power”. Articles 31 and 32 of the Constitution guarantee the existence of local authorities, although the Constitution stipulates that the powers of local authorities are exercised “within the limits of the law” which leaves the legislature with considerable room for manoeuvre.
Article 2.1 of the Cardinal Act on Local Self-Government sets out that “Local self-governance is the right of the community of electors in a settlement or a county to enforce the responsibility of the citizens, facilitating constructive cooperation within the local community”. However, the Cardinal Act focuses especially on the “sense of responsibility of citizens” and on the “rationalisation” of public services, much more than on local autonomy and self-government.
Therefore, the rapporteurs consider that, even though guaranteed in domestic law, the principle of local self-government could indeed be more explicitly recognised in legislation and in practice.
In light of the preceding considerations, the rapporteurs conclude that the requirements of Article 2 of the Charter are formally complied with in Hungary, although, they are of the opinion that the legislation could be improved to anchor the principle of local self-government more explicitly in order to ensure its full respect in practice.
Iceland [Article ratified - Report adopted on 29 March 2017 ]
page 17 / 796 Consistently with a long tradition of local autonomy, deeply rooted in the Icelandic history, the principle of local self-government is included in Chapter VII – on Rights and Freedoms – of the Icelandic Constitution, enacted at the very moment of the independence from Denmark, in 1944. According to Article 78 of the Constitution, “The municipalities shall manage their affairs independently as laid down by law. The income sources of the municipalities and the right of the municipalities to decide whether and how to use their sources of income shall be regulated by law.”
Article 1 (Autonomy of municipalities) of the Local Government Act 138/2011 establishes that “1. Iceland is divided into municipalities (local government areas) which are in charge of their own affairs, at their own responsibility. 2. Administration of municipalities is exercised by municipal councils which are elected in democratic elections by their residents in accordance with the Local Government Elections Act”. Article 2 (Overall administration of local government affairs) provides that “2. The Minister responsible for local government affairs shall take account of, and respect, the autonomy of the municipalities, the tasks they deal with and their finances”. Article 3, setting out the aim and the premises of the Act, provides that: “the municipalities are independent government authorities” and that they “have independent sources of revenue and an independent right to determine the tariffs they are permitted to set”.
As for the legal status of the European Charter of Local Self-Government (considered in Recommendation 283 (2010), lett. c), according to which Icelandic authorities were invited to pass legislation to give the Charter legal force in the domestic system), this is still uncertain in Iceland, notwithstanding the mention of the Charter contained in article 3, para. 4 of Law 138/2011.
During the meeting with the rapporteurs, the President of the Supreme Court pointed out that there are few cases dealing with local autonomy, referring to Article 78 of the Constitution as a standard for the judgment. While currently there are no judgments in which the Charter has been cited, municipalities can nevertheless refer to the Charter as an interpretative tool, even if the Charter has not been ratified. According to the President, the new provision opens the door to more indirect references.
The rapporteurs believe that appropriate legislation to give the European Charter of Local Self- Government legal force as a directly applicable source of law in the domestic legal system should be passed and that the previous recommendation should be reiterated.
Ireland [Article ratified - Report adopted on 31 October 2013 ]
The Charter was ratified on 14 May 2002, with a declaration to the effect that Ireland intends to confine the scope of the Charter to the following categories of authorities: county councils, city councils and town councils.
Constitutional protection of local self-governments did not change during the evaluated period and is rather weak.
Italy [Article ratified - Report adopted on 18 October 2017 ]
In Italy, the principle of local self-government is explicitly recognised and proclaimed in the constitution. Thus, the Constitution proclaims that the Republic is one and indivisible, but in the same provision states that the Republic recognises and promotes local and regional autonomies in
page 18 / 796 view to achieve “the fullest measure of administrative decentralisation” (Article 5). The fact that the Republic “recognises” local self-governments conveys the idea, in a certain way, that the local autonomy is not a creation of the State, but a sort of pre-existing entity. Something which, under a strict historical perspective, is fully true.
Article 114 provides that “the Constitution is composed of the Municipalities, the Provinces, the Metropolitan Cities, the regions and the State”. These four local and regional bodies “are autonomous entities having their own statutes, powers and functions”. In this sense, the case-law of the Italian Council of State, which is the highest body in the administrative jurisdiction, has established that municipalities and provinces enjoy full “administrative” autonomy, as opposed as the autonomy enjoyed by the regions, which is a “political” autonomy. Article 117 states that Municipalities, provinces and metropolitan cities have regulatory powers as to the organisation and implementation of the functions attributed to them. Furthermore, Article 118 of the Constitution is a key provision for the purposes of this report, since it deals with the principle of subsidiarity, which is reflected in several aspects: first, “administrative functions are attributed to the municipalities, unless they are attributed to the provinces, metropolitan cities and regions or to the State” pursuant to the principle of subsidiarity. In the last indent of that article, reference is again made to the principle of subsidiarity.
These Constitutional provisions, which expressly recognise local self-government, have been specified and supplemented by a harmonic body of domestic legislation on local authorities which also recognise explicitly local self-government. The most relevant reference is to be found in the “Codified Laws” (Testo Unico), whose Article 3, paragraph 1 proclaims that: “the local communities, organised in municipalities and provinces, are autonomous”. The 4th indent of the said article goes on to specify that municipalities and provinces have autonomy in the domains of “regulation, self- organisation and administration, as well as taxing and financial autonomy”.
In the light of these constitutional provisions, the rapporteurs conclude that the Italian legal system complies with the requirements of Article 2 of the Charter. Furthermore, the interlocutors met during the visit ensured the delegation that the principles enshrined in the Charter do inspire domestic legislation on local governments.
Despite this overall positive situation, reference should be made to the legal status of the said Charter within the domestic legal system, especially in the light of certain recent judgements of the Constitutional Court. Two general features should be first presented, to have a clear picture of the situation. To begin with, Italy is a country with a classical “dualist” approach to International Treaties. Article 117 of the Constitution provides that the legislative powers of the Republic shall be exercised “with limitations deriving from EU-legislation and international obligations”. Treaties occupy a sort of “intermediate” position between the Constitution and regular legislation and, as a rule, a Treaty has to be “received” in the internal legal order, and the Legislative power enacts legal rules by which the said Treaty crystallises into operational legal rules. This makes difficult, from a methodological point of view, to invoke “directly” in the courts (especially in the administrative courts) the wording or provisions of a given treaty. On the other hand, under Italian constitutional Law, a court cannot disapply a given piece of legislation on the ground that it could be contrary to the Constitution or to a regular international treaty: the court is under the obligation to refer to the Constitutional Court, which will rule on that question. This feature hampers dramatically the possibility to invoke the direct application of the Charter in a given administrative litigation, in which local authorities could be parties.
In the above described context, the Charter is generally seen as a binding international treaty, to which Italy has made no reservation or further scope limitation whatsoever. The Charter is seen as an “interposed rule” (norma interposta), between the Constitution and ordinary legislation.
page 19 / 796 According to a leading academic, “the national Constitution had already incorporated principles regarding local authorities, so national legislation did not require readjustments to comply with the terms of the Charter”.
However, and contrary to what happens in the case of the regions, local authorities cannot bring a direct legal action in the Constitutional Court to challenge the compatibility of a piece of legislation with the principles and provisions of the Charter. Only by means of a referral or preliminary question can the Administrative regional Courts or the Council of State ask the Constitutional Court about the said compatibility (see infra, point 5.8). In this scenario, the case-law of the Constitutional Court has raised some concerns in the Congress. For instance, in its ruling No 50/2015 (dealing precisely with the Delrio Act) the Court said that, in the framework of the specific legal problems raised by the constitutional question, the Charter was basically a sort of guideline, or a guiding political document (un mero atto di indirizzo), and was too vague to be taken as reference for an abstract control of “legitimacy” of a given piece of national legislation. On this point, it should be pointed that a meeting with the Constitutional Court was scheduled for the monitoring visit in order to get clarifications on this point, but unfortunately it could not take place.
Anyway, and according to the information collected by the monitoring delegation, the point is not that the Constitutional Court understands –as a rule- that the Charter is not an applicable Treaty in itself, but that the problems raised in the precise proceedings leading to the ruling No. 50/2015 were too imprecise in order to be adjudicated exclusively on the basis of the wording of the Charter. Therefore, that ruling should not be taken as a “final” and denial ruling on the “legal teeth” of the Charter, but only as a specific reply constrained to a precise question. Apparently, in January this year the Administrative Regional Court of the Lazio region has formulated a request for a preliminary ruling in the Constitutional Court, concerning a State law that imposes the obligatory merger of municipalities in some cases. The said regional administrative court understands that this piece of legislation could disregard the principle of local self-government. Apparently in this case, the referral is very detailed and well structured. Consequently, in adjudicating this preliminary ruling, the Constitutional Court will have a new opportunity to clarify his interpretation of the binding effect of the Charter in the Italian legal system.
Latvia [Article ratified - Report adopted on 27 March 2018 ]
In Latvia, the principle of local self-government is not explicitly recognised or proclaimed as such in the Constitution. The Charter entered into force in Latvia in 1997, and from this very moment it became “the law of the land”. The lack of explicit mentions to the principle of local self-government in the Constitution has not been an obstacle for the Constitutional Court to declare and proclaim the principle of self-government in a consistent case-law. Indeed, the direct applicability of the Charter is ensured and recognised by the Constitutional Court, and as matter of fact the Latvian Constitutional Court is probably the domestic Constitutional Court that has developed a most comprehensive jurisprudence on the recognition and application of the Charter. The constitutional basis for such case-law is arts. 1 and 101 of the Constitution (Satversme) (see, infra, point 4.10).
This situation was also considered in the Congress monitoring report of 2011, and the Delegation understood that the fact that the principle is protected by the case-law of the Constitutional Court is sufficient, in order to appraise the compliance with article 2. For the sake of consistency, the rapporteurs follow this view, even if it is evident that the case-law of a constitutional court is not necessarily monolithic or stable, and there is the danger (even theoretically) that the Court could nuance or reduce its jurisprudence over time.
At the level of regular legislation, it should be also noted that the principle of local self-government as such is not explicitly proclaimed in the national legislation. However, art. 5 of the Law on Local
page 20 / 796 governments clearly provides that “Local governments, within the scope of their competence and the law, shall act independently”, a wording which clearly stands for the implicit recognition of local self-government. Apart from that, the legal scheme and the political scenario of the country is pervaded by the idea that local authorities enjoy “independence” or self-administration (pašvaldÄ«bas, in Latvian).
In the light of the precedent, it may be concluded that article 2 of the Charter is respected in Latvia, although it would be more than advisable that Latvian authorities consider amending the Constitution or the Law on Local Governments in order to introduce expressly the principle of local self-government.
Liechtenstein [Article ratified - Report adopted on 28 March 2018 ]
Article 2 of the Charter requires signatory countries to recognise the principle of local self- government in their domestic legislation. In Liechtenstein, while the Constitution does not contain a definition of local government, the Municipalities Act sets out the fundamental elements of the municipalities' legal status (section 3 of the Municipalities Act of 1996). According to its provisions, they are “public law bodies” (thus legally recognising that they exercise public authority), which regulate and administer local matters (reference to their functions) in an autonomous way (providing self-government for the local communities).
In the rapporteurs’ opinion, Liechtenstein is in compliance with the requirements of Article 2 of the Charter.
Lithuania [Article ratified - Report adopted on 6 November 2018 ]
The 1992 Constitution devotes an entire chapter, Chapter X, to ‘’Local Self-government and Governance”. The opening provision of this chapter, Article 119, proclaims that “The right to self- government shall be guaranteed to administrative units of the territory of the state, which are provided for by law. It shall be implemented through corresponding municipal councils”.
The constitutional principles on local self-government are implemented by legislation, especially by the Law on Local Self-Government, which Articles 2 establishes that: “This Law shall lay down the procedure of formation and activities of municipal institutions when implementing the provisions of the Constitution of the Republic of Lithuania and the European Charter of Local Self-government, define the principles of local self-government, municipal institutions and their competence, functions, the status of a municipal councillor, the grounds of economic and financial activities of municipalities”.
The Charter as a ratified international treaty, has the priority of the application in cases of collision with the other domestic legal acts (with the exception of the Constitution itself), including laws adopted by the Seimas and constitutional laws.
As it was already noticed during the 2011 monitoring visit, the principle of local self-government has been further developed by the Constitutional Court in many judgments, in which the Court also referred to the Charter, as a source of constitutional interpretation.
The rapporteurs consider that the requirements of Article 2 of the Charter are fully satisfied in Lithuania.
Luxembourg [Article ratified - Report adopted on 21 October 2015 ]
page 21 / 796 The principle of local self-government is recognised in the Constitution and in legislation, and is reflected in Chapter IX of the Luxembourg Constitution entitled “Communes”, Article 107, paragraph 1, of which provides that “communes form autonomous authorities, organised on a territorial basis, possessing legal personality and managing their own assets and interests through their subordinate bodies”. The amended Communal Law of 13 December 1988 (including the implementing Grand Ducal regulations) lays down detailed rules on the organisation of the communal system. The Council of State and the ordinary and administrative courts ensure compliance with the requirements of the European Charter of Local Self-Government. Consequently, the recognition of local self-government by the Constitution and in domestic legislation is in compliance with Article 2 of the Charter. Likewise, as mentioned above, the importance that Luxembourg attaches to proper local self-government is demonstrated by the fact that the country was the first having ratified the European Charter of Local Self-Government.
Malta [Article ratified - Report adopted on 29 March 2017 ]
There is no explicit reference or recognition of local self-government either in the Maltese Constitution or in the Local Councils Act, which constitutes the core piece of legislation regarding local self-government in the Republic of Malta.
Instead of making reference and recognizing the principle of “local self-government”, Article 115A of the Constitution provides for the adoption of a system of “local government”, omitting or not including the word “self”. Hence, there is no reference to the principle of “local self-government” per se either in the Constitution or in the Local Councils Act.
It may be argued that the reference in Article 115A of the Constitution to a system of local government and the administration of localities by local councils elected by the residents of the locality may be understood as a reference to local self-government. Moreover, one may argue that whether or not the principle of local self-government in Malta is endorsed or recognized in the Maltese legislation does not depend solely on the making of express reference to the term per se, but also on the existence of such legislative provisions which essentially apply this principle in practice.
From the text of the Local Councils Act and the observations made to the delegation during the monitoring visit, it is evident that the share of the public affairs regulated by the local councils is limited. The main reason behind this seems to be the financial dependence of local councils on the annual grant allotted to them by the central government through the Appropriation Act and the preparation of the Annual Budget. Furthermore, the National Audit Office, a fully autonomous entity, is responsible for the annual auditing of all local councils whilst the central government through the Ministers of Local Government and Finance, are granted extensive powers and rights to be involved in the conduct of the local affairs, limiting the scope of the local councils’ competences, powers and legal authority to conduct the affairs of their localities themselves. Consequently, the omission of the word “self”, as a component of the concept of local self-government, seems to reflect the local authorities’ lack of autonomy in practice, their dependence on the central government and their inability to regulate and manage a substantial share of the public affairs.
In light of the above, the rapporteurs consider that Malta is not in conformity with Article 2 of the Charter.
page 22 / 796 Monaco [Article ratified - Report adopted on 28 March 2018 ]
Despite Monaco’s small geographical size, local government is a long-established tradition here and the Municipality’s history is tied up with that of the Principality. Representative democracy began in the Principality in 1910 with the election by universal suffrage of the Municipal Council. For this reason, a remarkable amount of space had already been granted to the Municipality in the 1911 Constitution. This tradition continued with the 1962 Constitution: Chapter IX is given over entirely to the Municipality and the first article states that “the territory of the Principality forms a single municipality” (Article 78).
However, the Constitution makes no explicit reference to local self-government. It was Article 1 of Law No. 959/1974 on municipal organisation, as amended by Law No. 1.316 of 29 June 2006, which introduced the principle of free administration: “The territory of the Principality shall form a single municipality endowed with legal personality. It shall administer itself freely, via an elected council, in accordance with procedures prescribed by the Constitution and the law”.
It should also be considered that, in addition to being formally enshrined in the texts, the principle of local self-government is embodied in other provisions, such as those on the powers of the elected Municipal Council, supervision and local finances.
Bearing in mind the foregoing, the rapporteurs conclude that Monaco complies with Article 2 of the Charter.
Montenegro [Article ratified - Report adopted on 21 October 2015 ]
In Montenegro, the principle of local self-government is recognised in the Constitution of Montenegro, the Law on Local Self-Government, the Law on Local Self-Government Financing, the Act on Territorial Organization of Montenegro, as well as in internal regulations, rulebooks of ministries and acts of local communities.
The right to local self-government is guaranteed by Article 22 of the Constitution: “The right to local self-government shall be guaranteed” and by constitutional Articles 113-117 of Chapter IV on Local self-government. In this respect, the representatives of the Constitutional Court, stressed to the rapporteurs that this right is equal to all other human rights and fundamental freedoms (including personal, political, economic, social and cultural rights).
The principles of local self-government are also guaranteed by the Act on Ratification of the European Charter of Local Self-Government, the Act on Ratification of Additional Protocol to the European Charter of Local Self-Government, the Act on Ratification of the European Framework Convention on Cross-Border Cooperation of Territorial Communities and Authorities. According to Article 9 of the Constitution of Montenegro, international agreements are not only “an integral part of the internal legal order”, but “have the supremacy over the national legislation and shall be directly applicable when they regulate the relations differently from the internal legislation”. Interlocutors from the Constitutional Court emphasised to the delegation that the European Charter is always considered in its decisions in relation to a legal question which has a legal basis in the European Charter or indeed when applicants indicate a violation of the rights set forth within it.
The rapporteurs noted the constant concern of Montenegro’s legislature to take account of the fundamental principles of local government. They consider that Article 2 of the Charter is fully complied with in Montenegro.
page 23 / 796 Netherlands [Article ratified - Report adopted on 26 March 2014 ]
In the Netherlands, the principle of local self-government is not explicitly or openly recognised either in the Constitution or in the applicable domestic legislation (Municipalities Act). An attentive reading of both legal texts (at least the English version of them) reveals that they do not use the words “local self-government”, “local autonomy” or any other similar terminology. As for what concerns the Constitution, the opening article of Chapter 7 (Article 123) does not include a general proclamation of local autonomy or self-government (as is the case in other European constitutions). This section provides that “provinces and municipalities may be dissolved by an Act of Parliament”, which is a rather unusual and forceful way to open up the constitutional regulation of local and regional authorities in domestic constitutions. Neither the subsequent articles of Chapter 7 nor the Municipalities Act (which regulates extensively all important organic, operational and procedural aspects of the working of municipalities) include the words “local autonomy”, “local self- government”, “local self-administration” or “local free administration”. In short, there is no “programmatic” set of initial provisions, such as those that can be found in other domestic legislations on local government.
However, this does not mean that the Dutch legal system ignores the principle or the concept of local autonomy. Article 124 para.1 of the Constitution provides that “the powers of provinces and municipalities to regulate and administer their own internal affairs shall be delegated to their administrative organs”. This means that the Constitution recognises, in an implicit manner, that provinces and municipalities have the power to regulate and administer their own internal affairs. Indeed, local self-government is enshrined in the national constitutional tradition and is an essential part of the Dutch political landscape. In this sense, it has been written that “Local authorities’ powers are not attributed to them by the Constitution or the legislature: the Constitution simply recognises the competences they already had before the State existed. This is the foundation for local autonomy in the Netherlands. This autonomy can be characterized as the discretionary responsibility to govern, with both legislative and executive powers, the municipal or the provincial “household”. At present, the "household" is the sphere of public interest that a province or a municipality can oversee”.
In addition, the Dutch constitution (Article 124 para.2) also foresees that local authorities may be required “to provide regulation and administration” by an Act of Parliament or by the public authorities of a higher public body. This crucial concept in Dutch public law is called “medebewind” and will be examined infra.
Local self-government is thus recognised in the domestic and constitutional traditions, as an inherent part of the governmental landscape, but there is no “open” or “explicit” recognition of that concept. There is no explicit guarantee of local self-government either in the Constitution or in the key statute on municipalities; the actual scope, degree and extension of local self-government in the Netherlands is entirely attributed to regular legislation. Consequently, there is a risk that political considerations of the moment could – through legislation – severely restrict or reduce the intensity or extension of the autonomy enjoyed by provinces and municipalities, up to the potential stage of making it an almost unrecognisable notion (in the light of the most common Western European standards in the matter).
This feature has another indirect consequence: since there is no constitutional proclamation of a given/precise content of local autonomy, it is impossible to trigger legal challenges against statutes or regulations approved by the central government that could potentially make an attempt on local autonomy. This topic will be further discussed infra.
page 24 / 796 In the light of the above considerations, the Rapporteurs consider it reasonable to support the view that, at present Dutch constitutional and statutory arrangements do not formally satisfy the requirements of Article 2 of the Charter and that a clearer statement in the Constitution and legislation would provide better protection for local authorities.
North Macedonia [Article ratified - Report adopted on 26 February 2013 ]
Local Self-Government and decentralisation are intrinsically related to a successful and sustainable implementation of the OFA and, therefore, are part of the fundamental principles of the State in its current form. Municipalities should gradually receive greater responsibility for managing their own affairs as well as the capacity and resources to do so. Overall, the changes required for implementing the OFA have produced positive effects, as confirmed and underlined by all interlocutors. This impression is matched by the wide consensus over the OFA which cuts across political parties, and represents the general attitude within the institutions and among Mayors as confirmed by the interviews.
Constitutional Provisions
Local Self-Government is considered as one of the fundamental constitutional values (Article 8) and is directly regulated in Section V of the Constitution. Articles 114-117 provide, inter alia, for the right of citizens to local self-government, the establishment of municipalities and the possibility to establish forms of neighbourhood self-government within municipalities, autonomy as regards competences, guarantee for “own” financial sources as well as State funding for municipalities, and the definition of the City of Skopje as a separate unit of local self-government to be regulated by a separate law.
Legislative Provisions
The Law no. 5/2002 on Local Self-Government (hereafter LSG Law) is an organic law and the central piece of legislation implementing the above constitutional provisions. According to the LSG Law, municipalities are legal entities which have their own territory and name (and may have a coat of arms), their own regulations among which the statute is the one of highest rank, their own and delegated competences, their own and other sources of financing, their own organs elected by the citizens and inhabitants who are citizens with permanent residence on the territory of the municipality.
The system of local self-government is also regulated by a series of further ordinary laws, among which can be cited three important laws adopted in 2004: the Law on Financing of the Units of Local Self-Government, Law on Territorial Organisation no 55/2004, and the Law on the City of Skopje of 16 August 2004. Further laws include the Law on local elections, the Law on participation of citizens in the decision-making process, the Law on inter-municipality cooperation, the Law on the State Inspectorate for Local-Self Government, and the Law on Balanced Regional Development.
The process of decentralisation, which started on 1 July 2005 after the establishment of the normative and institutional framework, has not yet been completed.
Responsibilities in the areas of urban planning and development, education, water, agricultural land and economic development were to be transferred together with - parts of - the relevant staff to local authorities. In order to achieve these objectives, more than 30 laws have been adopted to provide for the transfer of competences in conformity with Article 22 of the LSG Law, but also for the transfer of funds, facilities and personnel from central to local level. Altogether, more than 80 laws contain provisions related to local self-government.
page 25 / 796 In the Rapporteurs’ opinion, this splitting into numerous legal bases bears the risk of fragmentation and confusion. While formally extensive powers and responsibilities are attributed to municipalities by the LSG Law, numerous special laws determine important details for their effective use. Among the special regulations there might also be some reservations regarding the conferred powers as well as the parallel transfer of sufficient resources (e.g. education and transport of pupils, see below) – despite the principle of concomitant financing anchored in Article 21 para. 2 of LSG Law.
Not only the LSG Law, but also the Laws on local finances, on territorial organisation and on the City of Skopje as well as laws related to culture, language, education, personal documents and the use of symbols are subject to the double majority requirement (see para. 17).
The guarantees for all communities, such as those regarding language rights and political participation of different communities, provided at municipal (and central) level by the constitutional changes through the OFA, constitute the basis of the current constitutional and legal system.
Decentralisation should further improve the conditions for democratisation, peaceful co-existence of different communities, economic stability and prosperity through development as well as for accession to the EU. Its importance for local democracy lies in its objectives: Enhancing the quality of political decision-making through the inclusion of local authorities and through strengthening their autonomy, and for increasing political participation by reaching out to the citizens.
Norway [Article ratified - Report adopted on 26 March 2015 ]
In Recommendation 141 (2003) on regional democracy in Norway, the Congress noted that the Norwegian Constitution of 1814 contained no provision relating to either local or regional self- government. Likewise, the Local Government Act of 25 September 1992 contains no binding general provisions on the legal protection of local self-government.
No constitutional or legislative reform aimed at recognising local self-government has succeeded to date.
Various proposals for constitutional reform have been tabled by MPs with a view to expressly enshrining the principle of local self-government or local democracy in the Constitution (there were 12 proposals during the previous parliament) but none has ever been adopted by the Norwegian Parliament. These proposals tend to come from individual MPs rather than entire parties. One such proposal was rejected in 2012. Three further alternative proposals for constitutional amendments were then submitted to Parliament and must now be examined by the Standing Committee on Scrutiny and Constitutional Affairs. They are expected to be voted on in 2015. If adopted, they would have the effect of enshrining in the Constitution people’s right to manage local affairs through bodies elected by direct universal suffrage within the framework prescribed by national law. During the consultation process, the government pointed out, that a public committee to propose a new Local Government Act was appointed in June 2013. By means of the comments received following the visit, the delegation noted that the government considers the formation of the public committee as an effective measure to comprehensively review the Local Government Act and therewith strengthen municipal self-government.
The procedure for amending the Norwegian Constitution provides that the amendments must be considered by two successive parliaments and approved by a two-thirds majority. The Standing Committee on Scrutiny and Constitutional Affairs reviews and makes recommendations to the Storting on constitutional bills. A bill to amend the Constitution may be put forward by a member of the Storting or a member of the Government. The proposed amendments to the Constitution must be submitted during the first three Stortings of an electoral term. There will therefore always be a
page 26 / 796 general election between submission of a proposed amendment and the decision whether or not to adopt it. This allows the electorate to make its opinions known. A two-third majority is required to adopt an amendment to the Constitution and at least two-thirds of the members must be present in the Chamber to vote on any constitutional matter. One pragmatic way of protecting local self- government would be to incorporate the principle of local self-government in specific legislation, as a first step to constitutional recognition. The local government association KS, supports the idea of incorporating the principle of local self-government into the local government act. Still, the KS insists that the principle should nevertheless be incorporated in the Constitution.
The rapporteurs are on the opinion that the situation is not in compliance with the Charter on this point.
Poland [Article ratified - Report adopted on 2 April 2019 ]
Chapter VII of the Constitution is devoted to “Samorząd terytorialny” (Territorial self-government). The key provision is Article 165, according to which: “1. Units of local government shall possess legal personality. They shall have rights of ownership and other property rights. 2. The self-governing nature of units of local government shall be protected by the courts”.
The Polish Constitution expressly uses the word “self-government” (samorząd) or “self-governing nature” of the local government units. The same expression is used to translate in Polish the title of the Charter (Europejska Karta Samorządu Terytorialnego).
Moreover, the word “self-governing” or “autonomous” is also used in the legislation as an adjective to refer to local “self-governing authorities” (samorząd lokalny, in the case of gminy and powiaty) and “self-governing region” (samorząd regionalny or województwo).
Local self-government is thus recognised at the domestic level, both in the Constitution and in legislation, in an “open” and “express” manner. Consequently, it is possible to initiate legal challenges against statutes or regulations approved by parliament or the national government, that could potentially infringe upon local autonomy.
Therefore, the rapporteurs consider that the requirements of Article 2 of the Charter are fully satisfied in Poland.
Portugal [Article ratified - Report adopted on 28 September 2020 ]
Article 6 of the Portuguese Constitution sets out the principle of the unitary State and enshrines the system of insular autonomous regions and the principles of subsidiarity, autonomy of local authorities and the democratic devolution of public administration. Title VIII of the Constitution (on local government) sets out more detailed provisions. The Assembly of the Republic has exclusive competence to legislate on local and regional affairs (Articles 164 and 165 of the Constitution). Article 2 of the Charter is therefore strictly complied with.
Owing to a strict hierarchy of norms, the rapporteurs noted that the Constitutional Court had a key role to play in protecting the Constitution, in accordance with its Article 221: it had the task of “assessing cases of unconstitutionality and unlawfulness in accordance with Articles 277 and following”. The Court’s role focuses therefore on supervising the conformity of legal acts with the Constitution (and the European Convention on Human Rights). On the other hand, it does not have the task of verifying the conformity of those acts with the European Charter of Local Self- Government. The institutions entitled to lodge a constitutional appeal are the President, the
page 27 / 796 Assembly of the Republic, the Ombudsman and the Prosecutor general.
The role of the Constitutional Court is important: while it is a true court of law, its composition is subject to political considerations as the judges are chiefly appointed, for a non-renewable 9-year term, by the Assembly of the Republic (10 out of 13), with the other 3 co-opted by the first 10 to be appointed. The judges are appointed for a non-renewable term of nine years and must ensure compliance with all of the Constitution’s provisions, including those relating to local and regional self- government. That said, there is no procedure open to local authorities for referring a matter to the Constitutional Court: a prior application to an ordinary court is always required before a procedure can be initiated before the Constitutional Court: it is therefore a verification prompted by an objection.
Finally, Article 8 (2) of the Constitution contains provisions for the entry into force of international conventions: the Charter definitely constitutes an international convention according to that provision, and Portuguese courts may therefore refer to it and take it into account when they have to settle disputes between local and regional authorities and the central state administration and between local authorities and the administrative region to which they belong. This is a further possibility afforded by Portuguese law for ensuring compliance with the Charter.
In the light of the above, the rapporteurs consider that Article 2 of the Charter is correctly applied in Portugal.
Republic of Moldova [Article ratified - Report adopted on 4 April 2019 ]
In the Republic of Moldova, the principle of local self-government is explicitly recognised and established in the constitution and in regular legislation. For example, Article 109.1 of the constitution provides that “public administration within the administrative territorial units shall be based on the principles of local autonomy, decentralisation of public services”. The second paragraph of this article even provides a wide definition of the extent of local autonomy: “The concept of autonomy shall encompass both the organisation and functioning of the local public administration, as well as the management of the communities represented by that administration.” The general legislation on local government also establishes and recognises the principle of autonomy, with explicit references to the Charter. Thus, Article 3 of the Law on Local Public Administration enumerates the “basic principles of local public administration” and provides that: “The public administration in administrative and territorial units shall rely on principles of local autonomy, decentralisation…” (paragraph1). Finally, Article 7 provides that: “In carrying out their competences, the authorities of local public administration enjoy autonomy, enshrined in and safeguarded by the Constitution of Moldova, the European Charter of Local Autonomy and by other treaties Moldova is a party to.” This express reference to the Charter in domestic legislation constitutes a recognition of the principle of local self-government.
The Constitutional Court has systematically underlined and stressed the importance of local autonomy and provided a clear definition. Thus, in its ruling No. 71/1999 the court stated that “local autonomy presumes the right and effective capacity of local authorities to manage and solve, under the law, under their own responsibility and in favour of the local population, an important part of public affairs”, a definition that strongly resembles that provided by Article 2 of the Charter. Furthermore, in its ruling No. 14/2004 (on co-ordination of local public administration activity), the court went on to declare that “the principle of local autonomy is one of the fundamental principles of any democratic system. It governs the local public administration and the work of its authorities. This constitutional principle gives local administrative units the possibility of self-government at local level, to the extent there is no interference with the autonomy of other local communities and with general interests of the nation.” Finally, the Law on Local Public Administration also recognises and
page 28 / 796 establishes the principle of local autonomy.
In the light of the above, it may be concluded that Article 2 of the Charter is fully respected in the Republic of Moldova.
Romania [Article ratified - Report adopted on 3 March 2011 ]
In Romania, the principle of local self-government is recognised in the Constitution (Articles 120 and 121) and other legal instruments.
The general legal framework of local self-government consists of a set of legislative acts that have undergone significant development, especially during the last decade.
The law on local public administration passed in 1991, which was considerably improved by another law on the subject passed in 2001, was revised in 2006 to reflect real progress in local self- government. The concept of local self-government contained in Article 3 (1) and (2) of the Charter was adopted in the general revision of this law on 16 March 2008. It is to be found for example in Article 3(1), (2) and (3) of Law no. 215/2001 as well as in Law no. 67/2004 on local elections and Law no. 393/2004 on the conditions of office of local elected representatives. Article 4(1) of Law 215/2001 also states that local self-government only relates to administrative and financial matters and is exercised on the basis of, and within the limits imposed by, the law.
Russian Federation [Article ratified - Report adopted on 30 October 2019 ]
As already shown in several parts of this report, the principle of local self-government is recognised both in the Constitution of the Russian Federation and in ordinary legislation and, more specifically, in the Federal Law of 6 October 2003 N 131-FZ “On general principles of organisation of local self-government in the Russian Federation” (as amended, in force since 1 May 2018). According to Article 1 of this law:
Article 1. Local self-government
1. Local Self-Government is one of the foundations of the constitutional order of the Russian Federation recognised, guaranteed and implemented throughout the territory of the Russian Federation.
2. Local self-government in the Russian Federation is a form of exercise by the people of his power, providing, within the limits defined by the Constitution of the Russian Federation, federal laws, and in cases stipulated by federal laws, the laws of the subjects of the Russian Federation, an independent and the population under its own responsibility, directly and/or through local authorities issues of local significance, proceeding from the interests of the population, taking into account historical and other local traditions.
The existence of legal acts that are incompatible with this federal act and the constitution remains a serious matter of concern in domestic legislation. However, in spite of problems with various pieces of legislation, it is clear that the principle of local self-government is recognised both at the level of the constitution and legislation.
The rapporteurs consider that the Russian Federation complies, in principle, with Article 2 of the Charter.
page 29 / 796 San Marino [Article ratified - Report adopted on 28 March 2018 ]
The principle of local government is not explicitly recognised in the constitution of San Marino. However, there is a provision in the Declaration on the Citizens’ Rights and Fundamental Freedoms which seems to include safeguards for the benefit of local government: According to the last paragraph of Article 3: “Each power of the State shall act in the mutual respect for their autonomy and competence” Furthermore, in Article 16 of this Declaration, township councils are explicitly mentioned among the parties which can file a request with the Guarantors’ Panel for the verification of the conformity of laws with the Constitution: Art. 16...”The Guarantors’ Panel shall: a) verify the conformity... [..] upon direct request...[..} five township councils..”
The principle of local government is explicitly recognized in Law No. 127 of 27 September 2013. Notably, Article 1 para. 2 of this law defines the township as an “institutional and territorial entity to which the law confers legal personality and administrative, representative and consultative functions”.
San Marino complies with Article 2 since the principle of local government is explicitly recognized in domestic legislation. Nevertheless, an explicit constitutional recognition of this principle would certainly upgrade the position of local government in this country and bring the legal status of local government closer to the spirit of the Charter, particularly in view of the possibilities for fostering judicial protection of local government through the Guarantors’ Panel (see also below Art. 11 of the Charter.
Serbia [Article ratified - Report adopted on 18 October 2017 ]
Provincial autonomy and local self-government are guaranteed by the Serbian Constitution. Article 12 of the Constitution stipulates that “state power is restricted by the right of citizens to provincial autonomy and local self-government”. The right to self-government can only be subject to supervision of constitutionality and legality. Article 97, which lists the competences of central government, stipulates that “Serbia organises and provides for … territorial organisation of the Republic of Serbia and the system of local self-government”. Part seven of the Constitution is entirely devoted to the territorial organisation of the country. Article 176 provides that autonomous provinces and local self-government units shall have the status of legal entities. This part also lists the competences (original powers) of the autonomous provinces and local self-government units and clarifies that additional functions may be delegated. However, as is evident from Article 177, the principle of subsidiarity is not applied, as the article states “matters deemed to be of republican, provincial or local interest shall be specified by the law”. If self-government is infringed, the autonomous province or local self-government unit has the right to lodge an appeal with the Constitutional Court (Articles 187 and 193). 37. The rapporteurs have been informed that a revision of the Constitution is presently under way, which should make it possible for Serbia to ratify most of the currently non-ratified articles of the Charter.
After the adoption of the Constitution in 2006, the Serbian parliament passed a number of laws regulating the status and activities of provincial and local self-government, including laws on territorial organisation, local self-government, local government finance, the capital city and local elections. Many of these pieces of legislation are currently subject to revision both in order to clarify matters that have turned out to be insufficiently regulated, and as a part of the EU accession process.
The rapporteurs are of the opinion that Serbia complies with the requirements of Article 2 of the
page 30 / 796 Charter, as the principle of local self-government is well enshrined both in the Constitution and in legislation.
Slovak Republic [Article ratified - Report adopted on 24 March 2016 ]
Although the principle of local self-government is not explicitly recognised or proclaimed as such or with this precise wording, it can be implied from Art. 65 of the Slovak Constitution (see supra). Apart from that, the legal scheme for local authorities is clearly pervaded by the idea of “independence” or self-administration (samospráva, in Slovak). Furthermore, the interlocutors ensured the delegation that the principles enshrined in the European Charter on Local Self-Government do inspire domestic legislation on local governments. Therefore, it can be said that the requirements of Art. 2 of the Charter are satisfied by the present legal and constitutional situation of the Slovak Republic
Slovenia [Article ratified - Report adopted on 6 November 2018 ]
In Slovenia, the principle of local self-government is explicitly recognised in the Constitution. As previously mentioned, Article 9 of the Constitution establishes that “Local self-government in Slovenia is guaranteed”. In addition, Part V of the Constitution sets the basic principles of self- government and covers the definition of the municipality, the scope of local self-government, urban municipalities, regions; municipal revenues and local taxes as well as supervision by state authorities.
The Local Self-Government Act serves as the “umbrella” law in regulating local self-government. Since its adoption, it was amended many times to adapt to administrative modernisation tendencies of local self-government. Article 2 of this Law states that: “A municipality shall, in accordance with the Constitution and laws, independently regulate and perform the matters, duties and functions vested in it by law”. This clearly stands for obvious and sound recognition of local self-government at the level of regular legislation as well.
Since the principle of local self-government is recognised both in the Constitution and in the domestic legislation, the rapporteurs conclude that Slovenia is in compliance with the above mentioned article of the Charter.
Spain [Article ratified - Report adopted on 20 March 2013 ]
The Spanish Constitution of 1978 explicitly recognises local self-government (autonomía local) but does not provide a definition of it. Section 137 identifies the basic local government units that are present in the country and recognises them as constituent parts of the State. The concept of “local autonomy” in Spain is difficult to summarise in a precise and detailed legal way. But different legal instruments are relevant: (a) the European Charter of Local Self Government (b) the Spanish Constitution; (c) the laws and regulations approved by the national and regional Parliaments and executives; (d) the case-law of the Spanish Constitutional Court; (e) the case-law of the Supreme Court. It is important to mention that the case-law of the Supreme Court and, especially, that of the Constitutional Court is an essential element of Spanish local government law. As the Constitution merely states general formulae as regards local autonomy one can perfectly support the proposition that the Constitutional Court is the ultimate recipient of the idea of local autonomy. Since 1981, the Court has issued key rulings in the field, and has built the actual constitutional concept of local autonomy.
Sweden [Article ratified - Report adopted on 2 April 2014 ]
page 31 / 796 The requirement of a constitutional foundation for local self-government had been fulfilled in Sweden before the constitutional revision took place in 2011. The Instrument of Government from 1974 stipulated already in its Chapter I, Article 1 that Swedish democracy is realised through a representative and parliamentary form of government and through local self-government. With the introduction of Chapter 14 in the Instrument of Government, the constitutional protection of local self- government has been further strengthened. Article 2 of Chapter 14 clarifies that not only activities of local authorities in their own sphere of competences but also delegated competences in special legislation are based on the principle of local self-government.
The Local Government Act (1991) is the main legislative text governing local authorities in Sweden which are the municipalities and county councils. The local authorities manage a very substantial share of public affairs (approximately 75 %) which raises the question of whether they have full autonomy as foreseen by Article 3 para. 1 of the Charter, which stipulates that they should manage a substantial share of public affairs “under their own responsibility”. More and more detailed state regulations and “rights” legislation intervene in local authorities’ regulation of their own affairs. The Government, however, maintains that the state regulations are not detailed to such an extent that they infringe on the autonomy of local authorities.
The requirement of Article 3 para.2 of the Charter is fully implemented in Sweden. Municipalities and county councils are governed by elected assemblies, the municipal council and the county council respectively. These bodies are elected in local elections, which is also based in the Constitution (RF 14:1) The executive bodies, the municipal executive board and the county council executive board are appointed by the assemblies to whom they are responsible.
Sweden complies with the provisions of Articles 2 and 3 of the Charter.
Switzerland [Article ratified - Report adopted on 20 October 2017 ]
The previous Constitution of the Swiss Confederation of 1874 included no specific provisions regarding municipalities. The revision of the Constitution in 1999 for the first time recognised municipal autonomy, in a new Article 50, thus giving more visibility and legitimacy to the municipalities as institutions. This article guarantees municipal self-government in accordance with cantonal law (paragraph 1). Therefore, the cantonal constitutions and laws determine the scope and limits of municipal self-government. Generally speaking, the rights enshrined in the Charter are reflected in the legislation on municipal self-government passed by the cantons. In view of the principle of cantonal sovereignty set out in the Federal Constitution, the Confederation is not legally able to force cantons to respect municipal self-government, since it is mainly a cantonal competence. In other words, the commitments entered into on signing the European Charter of Local Self-Government legally bind the Confederation, not the cantons, and yet it is the cantons’ responsibility to ensure the Charter’s implementation without the Confederation directly intervening through federal laws, for example. The Federal Court, an organ of the Confederation, can order compliance with the principles of municipal self-government if asked to hear an appeal. The cantons must abide by its judgments. It has competence for guaranteeing observance of the requirements of the European Charter of Local Self-Government, which may be invoked before it.
On the other hand, the Confederation has full competence for implementing Article 50 of the Federal Constitution, which imposes certain obligations on the Confederation. Article 50, paragraph 2, of the Constitution requires the Confederation to take account of the consequences of its actions for
page 32 / 796 municipalities in general, while paragraph 3 requires it to take into consideration the situation of towns, urban agglomerations and mountain regions in view of their specific situation. Even though it is enshrined in the Federal Constitution, within the limits of cantonal law, municipal self-government is not specifically recognised by all the cantonal constitutions. Those which do so also use differing terminology. Some constitutions refer to “municipal matters” (Article 5, paragraph 2, of the Constitution of Aargau; Article 119, paragraph 1, of the Constitution of Glarus; Article 65 of the Constitution of Grisons; Article 68, paragraph 2 of the Constitution of Lucerne; Article 105 of the Constitution of Schaffhausen; Article 45, paragraph 2, of the Constitution of Solothurn; Article 85, paragraph 1, of the Constitution of Zurich). Others refer to the municipalities’ “own field of activities” (Article 71 of the Constitution of Nidwalden; Article 83, paragraph 1, of the Constitution of Obwalden) or even to “local responsibilities” (Article 44, paragraph 2, of the Constitution of Basel-Landschaft; Article 69 of the Constitution of Valais).
The delegation was informed of the Federal Council’s report of 13 May 2015 on the implementation of Article 50 of the Constitution, which points out that the guarantee of municipal self-government enshrined in the Constitution is not binding and cannot be invoked by municipalities before the Confederation. For the latter, the provision is essentially of political value. However, some Swiss legal specialists maintain that a minimum level of institutional autonomy must be guaranteed to the municipalities by the Confederation. The municipalities can file final appeals to the Federal Court in the event of violations of their rights of self-government (Article 189 of the Constitution). Beyond its great symbolic and therefore political impact, Article 50 of the Constitution reflects the importance acquired by towns and urban areas in Switzerland today. As for the mountain regions, these were already mentioned in the previous Constitution.
Furthermore, paragraphs 2 and 3 of Article 50 of the Constitution impose new obligations on the Confederation, because the latter must take municipal interests into consideration as well as the unique situation of towns, urban areas and mountain regions. Since the new Constitution’s entry into force on 1 January 2000, the federal authorities have adopted a series of measures in order to implement Article 50 of the Constitution.
On 16 October 2002 the Federal Council issued guidelines for the federal administration concerning co-operation between the Confederation, the cantons and the municipalities. Moreover, under Article 141, paragraph 2, of the law of 13 December 2002 on the Parliament relating to the substance of messages from the Federal Council to the Chambers, an “aide-mémoire” on the presentation of these messages was adopted, which contains instructions on presenting the consequences of the Confederation’s activity for the cantons and municipalities, particularly with regard to financial and human resources, and for the towns, urban areas and mountain regions. The law of 18 March 2005 on consultation (Article 4, paragraph 2, c) provides that “the umbrella organisations of municipalities, towns and mountain regions operating at national level” shall be invited to give their opinions during the preparatory work on Confederation acts which affect them. The participation of these organisations in the legislative process, which was already in effect, is therefore now legally guaranteed.
Consequently, the rapporteurs consider that Switzerland is in compliance with the requirements of Article 2 of the Charter.
Turkey [Article ratified - Report adopted on 1 March 2011 ]
The analysis article by article is currently unavailable
Ukraine [Article ratified - Report adopted on 31 October 2013 ]
page 33 / 796 The principle of local self-government is set out in article 7 of the Constitution: "In Ukraine, local self- government is recognised and guaranteed". This guarantee fosters local self-government. Article 92 paragraph 15 of the Constitution lays down the principle that the "principles of local self- government" shall be determined exclusively by law.
As far as regional self-government is concerned, article 134 of the Constitution stipulates that the Autonomous Republic of Crimea is an "inseparable part" of Ukraine. This article grants the Autonomous Republic a right to exercise the powers listed in its article 137, but within the limits defined by the Constitution. As for regional self-government in general, the Constitution only indirectly recognises it, by listing the territorial units holding the status of an oblast, which include the cities of Kyiv and Sevastopol.
The details of local governance are set out in the Law on local self-government of 21 May 1997, and also in other special laws (see paragraph 42 above). Ukrainian legislation (both constitutional and ordinary) therefore complies with article 2 of the Charter.
United Kingdom [Article ratified - Report adopted on 26 March 2014 ]
The current situation of local government seems to be the result of historical evolution, various layers of reform and ad hoc measures rather than an overall national scheme or system of local government. At present, the United Kingdom does not have a written constitution, or any specific legal guarantees for the principles of local self-government. Although it has ratified the Charter without any reservation (see below, Article 12), the Charter’s principles are neither expressly nor specifically incorporated in legislation. The principles are neither directly applicable nor can local authorities refer to it in case of judicial review. Courts might use the Charter, as should the legislator, as an aid to interpretation regarding domestic legislation in local affairs.
Placing the Charter on a statutory basis would be a move towards such a constitution and would represent a fundamental and historic shift in the constitutional arrangements based upon constitutional conventions. Devolution (in particular the debate on the future of Scotland) and the new government’s commitment to “localism” have started a debate on the codification of local government legislation.
In 2011, the new Political and Constitutional Reform Committee of the House of Commons (PCRC) undertook an inquiry into “Prospects for Codifying the Relationship between Central and Local Government” in England, in which the prospects for “incorporating” the Charter have also been considered. In its report, the Committee presented a draft Code for illustrating the essential elements necessary for a new relationship between central and local government. It recommended a statutory status for such a Code and proposed to enhance this status by a degree of “entrenchment”. The Committee also suggested some “next steps” in order to achieve the adoption of such a Code. In its response in May 2013, the Government commented sceptically on the proposal of an entrenched code as this would “support an increasingly litigious culture”.
Constitutional or legislative entrenchment of local government is not easy in the UK legal system(s). An important parallel might be drawn with the European Convention on Human Rights which was incorporated by the Human Rights Act 1998 and thus become enforceable although not really entrenched as its repeal by Parliament is still possible. In its Report, the PCRC referred to the option of incorporation of the Charter, rejecting it in favour of the proposed draft Code which is said to be in line with the Charter’s principles while at the same time better reflecting the specific features of the situation in the UK.
The rapporteurs would recall, however, that while the UK is already bound by the Charter (including
page 34 / 796 its claim for entrenchment “where practicable”), the differences between the four systems of local government in the country are considerable and destined to increase due to different priorities and instruments. If this process continues, a “Magna Charta” on local government as a common frame of and for the four systems might make sense in order to give common and fundamental principles visibility. The Charter provides such a frame.
As in the other parts of the country, there is no constitutional protection of local government in Scotland and the principle of subsidiarity is not defined in domestic legislation. The Scotland Act does not recognise the right to local self-government. In strictly legal terms, the status, shape and powers of local authorities are therefore totally dependent on the Scottish Parliament which has the power to unilaterally impose changes. Effective relationships between local government and the Scottish government are therefore mainly based on good will and trust. During the visit, however, the Scottish Minister for Local Government and Planning has repeatedly underlined the importance of the “partnership approach” and the Government’s intention to give local self-government constitutional protection in case of Scottish independence.
In the context of the debate on the proposed Community Empowerment (Scotland) Bill, COSLA had suggested to use the Bill for embedding local governance in legislation and to give a statutory basis to the right to local self-government. Interestingly, the proposal suggests using the Charter for that purpose, replicating the model of integration of the ECHR into the UK domestic legal system. The Human Rights Act 1998 placed obligations on public bodies to observe the ECHR provisions. It is also binding for legislation. COSLA representatives informed the Congress delegation during the visit that, in a similar way, the provisions of the Additional Protocol could provide an elegant way of promoting a comprehensive approach to protect citizen rights at the local level and taking a first step to implement the Charter on which the Protocol is based. According to COSLA, the Community Empowerment (Scotland) Bill could and should be used for putting the right to local self-government on a statutory footing. This would set an important precedent. Concretely, a statutory duty on Ministers might be introduced in the Bill whereby Ministers of the Scottish Government, while exercising their functions, must observe and promote the principles and provisions of the Charter. This would be practically feasible as placing a duty on Scottish Ministers, which refers to external treaties, would be similar to the approach already used for placing the ECHR in UK legislation. Although this is no constitutional protection, it would reduce the chance for Scottish legislation on local government to be (unilaterally) revoked.
Local authorities in Wales provide statutory services as set out in legislation and are empowered by laws made at the UK and Welsh levels to provide other services. Although the services provided by local authorities are subject to laws, strategies and targets set and monitored mainly by the Welsh Government, local authorities do have discretion in providing and delivering those services in their areas. The responsibilities of local authorities are quite extensive and listed in numerous pieces of primary and secondary legislation passed by the UK Parliament and the National Assembly for Wales.
Constitutional or legislative recognition and entrenchment of (the right to) local self-government does not exist in the UK. Nor are the principles expressly incorporated into domestic legislation. In the Rapporteurs’ opinion, compliance with the Charter means more than (implicit) compliance with its spirit. By introducing a “general power” for local authorities, the Localism Act 2011 has taken an important step into this direction in England, but the Charter requirements are not completely satisfied in terms of compliance. By contrast in Scotland, the issue of constitutional or legislative protection via a new Scotland Act depends on the outcome of the referendum.
Article 3.1
page 35 / 796 Concept of local self government
Local self-government denotes the right and the ability of local authorities, within the limits of the law, to regulate and manage a substantial share of public affairs under their own responsibility and in the interests of the local population.
Albania [Article ratified - Report adopted on 31 October 2013 ]
Consult reply indicated at article 2
Andorra [Article ratified - Report adopted on 28 March 2018 ]
The main question that must be addressed under this heading is whether, in the present situation, Andorran municipalities do regulate and manage a “substantial share of public affairs under their own responsibility and in the interests of the local population”. This provision of the Charter requires an assessment which takes into account a rather “subjective” and relative nature of the concept of “a substantial share of public affairs”, since no official or universal method of measuring such substantial character has yet been developed. The question therefore must be addressed considering the historical evolution, the culture and the constitutional traditions of the country under analysis.
In order to assess compliance with this provision, both legislative and factual aspects should be taken into consideration.
Local government in Andorra has fewer functions, compared to other countries. According to the information provided to the rapporteurs, municipalities are responsible for approximately 22% of the public sector. Education and health are State competences. The most important local competences are population census, local planning, municipal roads and public domain. Municipalities also contribute to touristic infrastructures. Social affairs are a State competence, but municipalities are developing preschool services and services for elderly people and extra-curricular activities.
Taking into account the specificity of Andorra, as a State with a small surface area, and considering that none of the interlocutors complained about the scope of local competences, rapporteurs consider that the Constitution and the laws entrust municipalities with a series of competences and powers that can be assessed as “fair” or “reasonable” in the sense of Article 3.1 of the Charter.
Armenia [Article ratified - Report adopted on 15 June 2021 ]
Article 3.1
1 Local self‑government denotes the right and the ability of local authorities, within the limits of the law, to regulate and manage a substantial share of public affairs under their own responsibility and in the interests of the local population.
145. Article 3, paragraph 1, requires that local authorities should have “a substantial share of public affairs under their own responsibility”. Although the Charter does not specify which tasks and functions must fall within the remit of local government, it should regulate and administer primarily those public affairs that affect the local community most and that it can carry out more effectively.
page 36 / 796 146. The rapporteurs did not find any evidence that the powers and duties of the municipalities had been extended since the previous monitoring report, which found that “the most important and costly local public services are provided by the state. Local authorities take part in service delivery only to a limited extent”.18 Even municipal amalgamations, implemented since 2015, have not played a more prominent role in the provision of public services, despite the fact that the purpose of merger procedures was precisely to create more efficient and powerful municipalities. But the amalgamation processes have not been followed by the transfer of central government powers and duties in line with the principle of subsidiarity. Even if the term “a substantial share of public affairs” is a fairly broad expression, it requires that local authorities not only have just residual powers or secondary tasks, but that they should be able to shape effective local policies within their scope of responsibility, and should be able to provide a certain number of public services for the benefit of the local population. It should be remembered though that the amalgamation reform is not yet complete.
147. It should also be noted that while some municipalities (especially Yerevan and larger municipalities) also carry out delegated state responsibilities, this does not imply the application of the principle of subsidiarity, as these public tasks and functions are carried out under full state control.
Austria [Article ratified - Report adopted on 28 September 2020 ]
The explanatory report to the Charter53 states that “it is not possible to define precisely what affairs local authorities should be entitled to regulate and manage. (…) The traditions of member states as to the affairs which are regarded as belonging to the preserve of local authorities differ greatly. In reality most affairs have both local and national implications and responsibility for them may vary between countries and over time and may even be shared between different levels of government”.
In Austria, there are four essential types of power:54
i. Exclusive federal power (of legislation and execution, according to Article 10, B-VG); ii. Federal legislation power and Land execution power (Article 11, B-VG); iii. Federal legislation power for general principles and Land implementing and execution power (Article 12, B-VG); iv. Exclusive Land power (of legislation and execution, Article 15, B-VG).
Pursuant to Article 118, B-VG, a municipality has its own sphere of competence and one assigned to it either by the Federation or the Land. Its own sphere of competence comprises, apart from the matters mentioned in Article 116.2, B-VG (on municipal associations, Gemeindeverbände), all matters exclusively or preponderantly the concern of the local community as personified by a municipality and suited to performance by the community within its local boundaries. Legislation shall expressly specify matters of that kind as being such as fall within the municipality’s own sphere of competence.
B-VG (Article 118.3), as well as the Municipal codes of the Länder include, in the area of municipal power, the following matters in particular:
i. appointment of the municipal organs, notwithstanding the competence of election boards at a higher level; settlement of the internal arrangements for performance of the municipal functions; ii. appointment of the municipal staff and exercise of the service prerogative over them, notwithstanding the competence of disciplinary, eligibility, and exam commissions at a higher level; iii. local public security administration (Article 15.2, B-VG), local events control;
page 37 / 796 iv. administration of municipal traffic areas, local traffic police; v. crops protection police; vi. local market police; vii. local sanitary police, in particular in the field of emergency and first aid services as well as matters pertaining to deaths and interment; viii. public decency; ix. local building police; local fire control; local development planning; x. public services for extra-judicial settlement of disputes; xi. voluntary sale of movables.
In addition, municipalities are entitled in matters pertaining to their own sphere of competence to issue on their own initiative local police ordinances for the prevention of imminently to be expected or existing nuisances interfering with local communal life as well as to declare non-compliance with them an administrative contravention. Such ordinances may not violate existing laws and ordinances of the Federation and Land (Article 118.6, B-VG).
The municipality shall conduct the business for which it is competent within the framework of the laws and ordinances of the Federation and the Land on its own responsibility, free from instructions and under exclusion of legal redress to administrative authorities outside the municipality. According to Article 117.7, B-VG, the business of the municipalities is to be conducted by the local administrative office (city administrative office), and that of Statutory cities by the City administration. A civil servant with legal training shall be appointed to take charge as the city administration’s chief executive of the City administration’s internal services.
In matters of their own sphere of competence the Federation and the Land have a right of supervision over the municipality (Article 119a, B-VG). The mayor, the members of the municipal executive board (city council, city senate) and, if appointed, other executive officials are accountable to the municipal council for the performance of their functions relating to the municipality’s own sphere of competence (Article 118.5, B-VG). Also, according to Article 117.8, B-VG the Land legislature can, in matters pertaining to the municipality’s own sphere of competence, provide for the direct participation and assistance of those entitled to vote in the municipal council election.
During the monitoring visit, representatives of Austrian municipalities and associations appreciated that while the status of local government in Austria has generally improved since 2011, there still remains a need to redefine the scope of local responsibilities and ensure the financial sustainability of (small and medium) municipalities.
The rapporteurs welcome the recent reforms undertaken by Austria in order to strengthen local self- government and thereby encourage Austrian authorities to continue channelling their efforts to generate good local governance. The rapporteurs conclude that Austria complies with the provisions of this Article yet look forward to the translation of the New Government Plan (January 2020) into concrete measures intended to consolidate further the constitutional role and place of municipalities in Austrian federalism.
Azerbaijan [Article ratified - Report adopted on 17 June 2021 ]
The Azerbaijani legal framework on local self-government points to the autonomy of the municipal level, to the extent that it even places it outside the administrative structure of the country. It also lays down a series of public functions that municipalities are entitled to manage, albeit subsidiarily. However, autonomy of municipalities, often framed even in terms of “independence” does not mean that they are in a position to “regulate and manage a substantial share of public affairs under their own responsibility and in the interest of the local population”, as required by Article 3.1 of the
page 38 / 796 Charter. In practice, in the context of Azerbaijan, autonomy of municipalities means that they are completely irrelevant in determining any aspect of local life, as all power and resources are vested and exercised by the local executive authorities. Even if they were fully exercised in practice, the range of responsibilities of municipalities laid down in the Constitution and statutes is too narrow to correspond to the requirement of Article 3.1 of the Charter.
Although the Charter does not specify what local public affairs must be regulated and managed by municipalities, the most important local matters that greatly affect the life of the local community should, as a general principle, be decided and managed by local governments. The explanatory report to Article 3.1 of the Charter states that “the intention of the Charter is that local authorities should have a broad range of responsibilities which are capable of being carried out at local level”. This is not the case in Azerbaijan, as the vast majority of local public services are delivered by the local executive bodies of the state administration, which are directly subordinate to the central government authorities.
Such division of powers and duties raises serious and even broader concerns about the democratic deficit that the organization of local government reveals, as all significant local powers are exercised by non- elected peripheral offices of the government while democratically accountable elected bodies (municipal councils), have extremely limited functions and weight and “fail to account for any substantial share of public affairs”, as noted by the Congress in its first Recommendations 126 (2003). The overall situation has not significantly changed since then.
More specifically, as local self-government is not defined by the Constitution which merely refers to it as being “carried out by municipalities”, which are elected bodies (Article 142(I) and (II)), the constitutional regulation does not include the main components of the Charter’s definition of local self-government. Neither the Constitution nor the Law on the Status of Municipalities provide for the right of municipalities to regulate and manage local public affairs nor for the concept of the interest of the local population.
In fact, the Constitution and the following legislation, in particular the Law on the Status of Municipalities, are ambiguous in referring to local self-government: on one hand, they provide a list of powers attributed to municipalities, also in some potentially significant areas such as social services, education and economic development but on the other hand the activity of municipalities is restricted to what is not already covered by the state administration and in any case municipalities cannot interfere with the implementation of programmes of state bodies in the same areas (local social protection and social development programmes, local economic development programmes, Articles 4.3 and 5.2 of the Law on the Status of Municipalities). During the consultation procedure, the national authorities explained in this regard that municipalities are also identified as “executors of most of the State programme and national action plans adopted over the past years”.
Following this ambiguity, local executive power is exercised by the heads of local executive bodies, as provided for by the Constitution (Article 124) and the subsequent legislation. The scope of responsibility of these bodies is determined by the President of Azerbaijan, who also appoints the heads of these bodies. This is singular not only in terms of splitting local functions between the state administration and locally elected bodies, but also with regard to the division of law-making powers between the parliament and the president when it comes to defining the powers and duties of public authorities in the field of overall public administration.
Due to the formal separation of tasks and institutions, there is no formal hierarchical relationship between the municipalities and the respective local executive authorities, even though administrative boundaries frequently overlap. Nonetheless, many experts and stakeholders interviewed by the Congress delegation reported on the informal influence of the executive
page 39 / 796 authorities over municipalities. Some sources refer to the practice whereby local executive authorities ask municipalities to report on a regular basis on the sale of land and on their financial situation, despite the fact that there is no legal basis for this.
The functions of local governments are typically not full and exclusive since municipalities and local executive authorities carry out many parallel functions. In such a situation, if both local governments and local bodies of the state administration have tasks in a specific area, it is obvious that the level with more means, resources and political power prevails.
The Charter also requires that local authorities should have discretionary power even as regards delegated powers, so as to adapt their exercise to local conditions. However, as a first step it is necessary to define clearly the administrative nature of municipalities’ responsibilities, distinguishing the delegated powers from other functions, since central government should ensure the proper financial means necessary to implement the delegated tasks.
The municipal level can be brought to a degree of autonomy corresponding to the requirement of Article 3.1 of the Charter only if the Law on the Status of Municipalities and the other laws transferring tasks and functions to municipalities are amended by ensuring that the powers and duties entrusted to municipalities are full and exclusive and that the municipalities have full discretion to exercise their initiative with regard to any matter not excluded from their competence.
The delegation refers to the Contemporary commentary23 affirms that “the Charter is an international treaty of regional scope that is binding like any other treaty. Consequently, the ratifying countries are required to implement it in accordance with the “pacta sunt servanda” principle, a long- standing principle of international law, and in the manner laid down by the UN Vienna Convention on the Law of Treaties (1968)”.
For these reasons, the rapporteurs conclude that Article 3.1 of the Charter is not respected in Azerbaijan.
Belgium [Article ratified - Report adopted on 15 October 2014 ]
Flemish Region (Vlaanderen)
The local authorities in Flanders possess powers and responsibilities granted to them in general terms by the Constitution and in specific terms by regional legislation, and they also exercise powers that originate from a variety of instruments, including projects, competitions, receiving deposits of money, and subsidies and functions delegated by the federal and regional governments.
As far as the concept of local self-government and its importance for the municipal level is concerned, the question is more complex. In fact, the local authority carries out a dual function. On the one hand, it is a decentralised autonomous political entity with its own decision-making powers and is free to act if the matter is not excluded from its responsibilities by the Constitution, the law, a decree or ordinance. On the other hand, the municipality is a local subordinate body, which means it is tasked with implementing certain decisions taken by other authorities (federal, regional, community). Moreover, for the local authorities regionalisation in Belgium has led to much stronger regional centralism than that existing in the former national state.
Walloon Region and German-speaking Community
The New Municipal Law and the Code of Local Democracy and Decentralisation regulate the operation of local self-government in the Walloon Region, the provinces and the municipalities.
page 40 / 796 The municipalities in the Walloon Region are considered self-governing political entities with their own decision-making powers and are free to take action if the matter concerned is not excluded from their area of responsibility by the Constitution, the law or regional decree. Each municipality has an elected assembly, the municipal council, and an executive, known as the Collège des Bourgmestre et Échevins.
Each province has an elected assembly, the provincial council and an executive, the Provincial College (formerly called the Permanent Delegation [Députation permanente]). The provincial executive is headed by a Member of the Provincial Parliament - President. The provinces have the power to deal with all matters of provincial interest, that is to say they are free to act if the matter concerned is not excluded from their area of responsibility by the Constitution, the law or regional decree.
As far as the German-speaking Community is concerned, the organisation of its nine towns and municipalities situated in the Province of Liège is regulated by decrees adopted by the Community’s Parliament. Full exercise thereof will only be effective in 2015.
Brussels-Capital Region
The special law of 12 January 1989 on Brussels institutions governs the statutory framework for the Brussels-Capital Region. Local self-government has its legal basis in Articles 41 and 162 of the Belgian Constitution and in regional legislation.
Regarding the concept of local self-government at municipal level, the matter is more complex. As indicated above, the local authority has a dual function. On the one hand, it is an independent decentralised political authority with its own decision-making power, free to take initiatives in so far as the field has not been placed outside its jurisdiction by the Constitution, a statute, a decree or an ordinance; on the other, a municipality is a subordinate local authority, that is, responsible for implementing certain decisions taken by other authorities (federal, regional, Community).
A municipality thus has a number of mandatory missions, which are the same for each municipality in Brussels (although the way in which they are implemented may differ), together with discretionary missions specific to each municipality.
The rapporteurs consider that, in principle, the authorities of both the Brussels Capital Region and the 19 municipalities have the right and ability, within the limits of the law, to regulate and manage a substantial share of public affairs under their own responsibility and in the interests of the local population, whereas, regarding the functions specific to each municipality, the municipalities do not always have full freedom, since they are subject to administrative supervision by the Region.
On 23 October 2013 the Association of the City and Municipalities of the Brussels-Capital Region (AVCB) adopted a regional memorandum containing its demands for the regional tier of government looking ahead to the elections for the Brussels Parliament on 25 May 2014. This memorandum called for ‘strong municipalities to partner a strong Region’ and for systematic consultation between local authorities and their association on the one hand and the regional authorities on the other – consultation that, according to the AVCB, had sometimes been lacking in the recent past.
Bosnia and Herzegovina [Article ratified - Report adopted on 31 October 2019 ]
The main question is whether, in the present situation, municipalities in Bosnia and Herzegovina regulate and manage a “substantial share of public affairs under their own responsibility”.
page 41 / 796 In assessing compliance, both legislative and factual aspects have to be considered. Under the current legislation in the two Entities and 10 Cantons, there is a considerable number of competencies to be exercised and managed by municipalities (see article 8 of the Federation of Bosnia and Herzegovina Law on Local Self-Government, and Republika Srpska Local Self-Government Law).[10] The related problems will be discussed below under Article 4 and mainly concern the lack of clarity in the assignment of functions and the generation of unfunded mandates for municipalities through the delegation of tasks.
Another important indicator for assessing the role of local government, and its practical operation, is local government’s share in revenue and expenditure. In the Federation of Bosnia and Herzegovina, municipalities and cities share some 10 percent of revenues, vis-à-vis a relatively small share for central government (some 20 percent) and the 10 Cantons (some 25 percent); the rest is divided between pension and disability funds at the Federation of Bosnia and Herzegovina level (around 25 percent) and separate health and employment funds in each Canton (almost 20 percent of total revenues). In Republika Srpska, cities and municipalities share some 14 percent of revenues, vis-à- vis 44 percent of central government revenues and 42 percent dominated by pensions, disabilities, health, road and employment funds.[11] This share may be substantial considering the political and economic situation of the country, but not so when compared to the most general standards across Europe.
In the light of the above, it may be concluded that Article 3.1 of the Charter is generally respected, but there is certainly room for substantial improvement.
Bulgaria [Article ratified - Report adopted on 21 January 2021 ]
Article 3.1
24 1. According to the contemporary commentary of the Charter ,this provision defines the content and the subjects of local self-government. As subjects, the Charter mentions the “local authorities”. These are territorial public entities endowed with their own legal personality having the power to make decisions and enforce them. These authorities should have the democratic features provided by Article 3.2. Different types of local authorities are the addressees of the Charter since they are not confined to the lowest or “local” level of territorial organisation and may encompass also “regional” bodies (see Article 13 of the Charter). Therefore, the notion of “local authorities” should be understood and interpreted in a broad sense. It comprises different types of entities such as urban and rural municipalities, county-type cities and capital cities with special status, supra-municipal or provincial entities. In the case of Bulgaria, however, the notion of “local authorities” only applies to municipalities since mayoralties and wards are defined as “component administrative and territorial units of municipalities” without a distinct legal personality (Article, 2 paragraph 2, LSGLA), while regions lack directly elected bodies.
1. According to the Charter, local governments should regulate and manage a “substantial share of public affairs”. The Charter grants a certain margin of appreciation to States to set “the limits of the law” and to identify the radius of action of local authorities. However, the Charter stresses that the share of public affairs managed by local government should be “substantial” and not residual. In other words, local authorities should have a range of responsibilities offering the possibility of local public policies for the benefit of the local population.
1. Local authorities cannot regulate and manage effectively a “substantial share of local affairs” if these authorities are too small and/or are deprived of the resources necessary to
page 42 / 796 fulfil their tasks. Therefore, amalgamations of municipalities may be advisable in some cases. Another possibility is the use of inter-municipal co-operation to achieve joint service provision.
1. The general conclusion that prevails is that the decentralisation strategy must integrate clearly defined sectoral policies and objectives that effectively contribute to achieving optimal and balanced decentralisation of power and resources, as well as measures encouraging the local authorities to pursue policies for sustainable economic and social development25.
1. Bulgaria has experienced a substantial increase in local government competence, even though the output of the ambitious decentralisation strategy has not been considered as satisfactory. According to information provided by the NAMRB, local government responsibilities include, inter alia in the following fields:
public works and communal activities, 100% of the services: cleanliness, street maintenance (57 000 km), street lighting, plumbing, parks and green areas (95 million m2); municipal road network: almost 50% of all roads in the country (19 500 km of municipal roads) – maintenance, repair and construction of municipal roads; education: 86% of all schools (2 018) and 96% of kindergartens (1 726) are municipal, and 74 schools (with "Agriculture", "Veterinary Medicine", "Food Industry” profiles) were transferred to municipalities with the entry into force of the new Preschool and School Education Act in 2016; healthcare: 122 municipal institutions for hospital care (36% of total), 152 institutions for out- patient care (7% of total), 820 nurseries, including nursery groups in kindergartens (over 90% of total); social services: municipalities are responsible for the management of all social services as a State-delegated activity, while municipalities directly provide 87% of all services, the rest is provided by private entities, out of which, specialised institutions: 167 are homes for adults with various disabilities, or for the elderly; 569 are daycare centres and daycare in the community services: 625 are residential services in the community; 1 387 are pensioners’ clubs; social patronage at home is provided in 231 municipalities and patronage care is provided in all municipalities; recreation, culture, and sports: municipal theatres, philharmonic associations and operas, orchestras, and ensembles, and libraries, museums, galleries, and ethnographic complexes, media, ritual halls, zoos, sports facilities, and sports schools; economic activities and services (tourism, other economic activities): support for tourist bases, sports and tourist schools, municipal markets, and other auxiliary activities.
Croatia [Article ratified - Report adopted on 20 October 2016 ]
Article 135 of the Constitution of Croatia states that “units of local self-government shall administer affairs of local jurisdiction by which the needs of citizens are directly fulfilled”. The organic Law on Local and Regional Self-government (No. 01-081-01-1100/2, 2001, as amended in 2005) defines that “municipality, town and county are independent in making decisions about tasks from their self- governing scope in accordance with the Constitution of the Republic of Croatia and this Law” (Article 18).
On the question of delegated powers, line ministries exercise close control over the functions transferred to self-governing authorities. The State Administration Offices present in the counties act on the line-ministries’ behalf and have the authority to exercise administrative and financial control over both levels of self-government (Act on the State Administration System, No. 190/03 as
page 43 / 796 amended of 2007 No. 79/07). The same law defines that a regional state administration office may have departments in cities and municipalities which shall be accountable to the head of the regional state administration office; that the state administration exercises control over the execution of delegated powers by local self-government and indicates the local self-government officials who should be involved in the execution of the delegated powers of the local self-government – giving them the status of public servant.
The existence of a dual public administration (local self-government and state administration) at a regional level makes relations between the local self-government and the state administration regional office rather complicated. Representatives of local self-government note that the administrative and financial control exercised by the regional state administration office greatly interferes with the process of decision-making at a local level and runs counter to the provision of Article 3.1 of the Charter. This peculiarity of the Croatian public administration system is indicated in Congress Recommendation 226 (2007) on Local and regional democracy in Croatia, which called on the Croatian authorities “to ensure that the clarification of powers to different levels of government leaves room for the autonomous exercise of powers by the municipalities” (Article 8.j. Rec.226(2007). In exchanges with the delegation during the current monitoring visit all of the interlocutors observed that the country is still overall very centralised. The rapporteurs note that government ministries have a high involvement in defining the limits of usage of certain powers – finance is an example – which, with the austerity measures as a result of the financial crisis, have become even more restrictive. The Charter sets out that the legal right to manage a substantial share of public affairs under local authorities’ own responsibility must be accompanied by the means of doing so effectively1. It further explains that “under their own responsibility” emphasises that local authorities should not be limited to merely acting as agents of higher authorities and this concerns both the first and second levels of self-government.
The rapporteurs conclude on Article 3 paragraph 1 that although the legislation on local self- government is in place, practice indicates that local authorities are not able to manage a substantial share of public affairs under their own responsibility. For this reason the rapporteurs conclude that Croatia is only partially in compliance with Article 3 paragraph 1.
Cyprus [Article ratified - Report adopted on 20 October 2016 ]
The Charter requires that local authorities must have “a substantial share of public affairs under their own responsibility”. Although the Charter does not specify which tasks and functions must fall within the competence of local governments, primarily those public affairs should be regulated and administered by them which affect most the local community and can effectively be carried out by local authorities.
In the current situation, this requirement is hardly met by local government system of Cyprus, where the most important and costly local public services are provided by the state. Local authorities take part in service delivery only to a limited extent. Cyprus has expressed its will to extend the competences of local authorities through the ongoing reform. This encouraging trend can however not be extensively detailed in this report as the reform has not been implemented yet, the monitoring visit being an assessment of local and/or regional democracy in a country at a given time. However, the rapporteurs take note of this promising evolution.
Regarding Article 3 paragraph 2 of the Charter, the Cypriot legal system recognizes certain forms of citizen participation like local referendum and public hearing. As it was referred to above, local referendum has to be held before any decision about the amalgamation or the change of administrative status of local authorities. Furthermore, consultative referenda can be held also in order to ascertain the opinion of local population on serious matters of public interest. In our
page 44 / 796 knowledge, such a referendum is only rarely called; one well-known example was the municipal referendum in Nicosia on the restoration and transformation of the old stadium in 2008. According to the Town and Planning Law of 1972, public hearing can be organized in the course of planning permit procedures.
In sum, Article 3 paragraph 1 is not complied with by Cyprus, as the rapporteurs found that local governments do not regulate and manage “a substantial share of public affairs under their own responsibility”.
Czech Republic [Article ratified - Report adopted on 8 March 2012 ]
The legal and financial regulations leave little room for doubt that local and regional authorities in the Czech Republic enjoy a well-defined right according to Article 3 (1) of the Charter to regulate and manage their part of public affairs within the limits of the law only. This point will be further developed in later paragraphs. On the other hand, whether the requirement under Article 3 (1) of the Charter that the share of public affairs devoted to the regulation and management of local and regional authorities is “substantial”, may be open to some doubt.
According to information provided by the representatives of the Ministry of Finance during the meeting with the Congress delegation, the combined budgets of local and regional authorities represent approximately one third of the country’s total public spending. This may easily be qualified as “substantial”. On the other hand, the distribution of the combined local and regional share between tasks qualified by Czech law as either proper or delegated has been hard to identify. The rapporteurs therefore limit their observation to taking note that there is a possibility that what is left to the proper powers of local and regional authorities, much less strictly regulated indeed and therefore closer to genuine “self-government” than the delegated powers, might be below the level qualified as “substantial”.
Denmark [Article ratified - Report adopted on 31 October 2013 ]
Consult reply indicated at article 2
Estonia [Article ratified - Report adopted on 29 March 2017 ]
Article 3 of the Charter requires that local authorities must have “a substantial share of public affairs under their own responsibility”. Although the Charter does not specify which tasks and functions must fall within the competence of local authorities, the latter should primarily regulate and administer those public affairs that affect the majority of the local community and can be effectively carried out by local authorities.
Article 154 (1) of the Estonian Constitution stipulates that “All local matters are determined and administered by local authorities, who discharge their duties autonomously in accordance with the law.” The details are set out in section 2 of the Local Government Organisation Act: Local government is the right, authority and duty of the democratically formed bodies of power of a local authority provided for in the Constitution, a rural municipality or city, to independently organise and manage local issues pursuant to law and based on the legitimate needs and interests of the residents of the rural municipality or city, and considering the specific development of the rural municipality or city. 2) Local government is: - based on the division of the territory of the state into administrative units; - exercised by democratically formed legislative and executive bodies and, with regard to local issues, by means of opinion polls or public initiative.
page 45 / 796 Representatives from various institutions and associations, together with local authorities, have underlined the need to clarify what are the mandatory tasks and functions of local government and how to differentiate between local affairs and state responsibilities. The Chancellor of Justice hinted that there is an on-going debate to clarify this issue and informed the rapporteurs that the question how to change domestic legislation to allocate a greater proportion of financial resources to local authorities is still being discussed as part of the on-going reform. The rapporteurs point out that the Chancellor of Justice can act on her own initiative if she has a reason to believe that the legislation of general application is not in conformity with the constitution and laws.
Another important issue has been raised by the National Audit Office when analysing the part of public affairs executed by local authorities. Should the distinction between state and local affairs be unclear, there is a risk that local authorities perform state functions at their own expense, instead of assigning costs directly to the competent state administration.
Finland [Article ratified - Report adopted on 28 March 2017 ]
According to Section 14 of the Constitution (para. 3): “Every Finnish citizen and every foreigner permanently resident in Finland who has reached eighteen years of age has the right to vote in municipal elections and municipal referendums, as provided for by an Act. Provisions on the right to participate otherwise in municipal government are laid down by an Act.” The rules on the right to vote in local elections are laid down in Section 20 of the Local Government Act (410/2015), which also grants electoral rights to non-EU citizens resident in Finland for two years and employees of international organisations operating in Finland. Section 21 of this law lays down the rules on voting rights in municipal referenda and in local referenda concerning a sub-area of a municipality. The following sections of the law refer to several means of participating and exerting influence in municipal activities (panels, users’ boards, independent planning by residents, etc.), together with youth participation, councils for the elderly and disability councils. Finland has also been a forerunner in matters of e-participation, with several cases of pilot implementation. With regard to the responsibility of executive organs towards the municipal assembly, it is worth mentioning that various decision-making authorities such as chairpersons, mayors and their deputies may be removed before the end of their term if they do not enjoy the confidence of the council (Section 34 of the Local Government Act).
Extensive provisions on political accountability and citizen participation are not only the product of well-established democratic traditions but also of public concern about democratic standards and respect for democracy. In recent years, much attention has been paid to the state of local democracy in Finland and the challenges it faces. Among the main concerns have been declining electoral turnout and inequality between inhabitants in their chances of participating in and influencing decision-making processes. In municipal elections in particular turnout had already been decreasing since the nineties. These two problems (voter turnout and participatory inequality) were also the main concerns expressed in the government report on democracy policy. In 2014, the government presented parliament with the first government report on democracy policy, and this contained definitions of policy connected with the need to develop democracy and the aims of democracy policy in forthcoming years. These included activities and aims relating to the local level and were taken into account during processes including the reform of the Local Government Act. The implementation of these aims is currently an ongoing process. Many different kinds of activities and aims were established in order to tackle these and other challenges. Activities related, inter alia, to government institutions at different levels of government, NGOs and political parties. Various ministries have already started implementing these activities in co-operation with NGOs and local governments.
The new Local Government Act (410/2015) highlights and introduces new means through which
page 46 / 796 transparency, responsiveness and accountability can be enhanced. In addition, new means and mechanisms of participation were introduced. Act 410/2015 also aimed to strengthen direct democracy at local level by introducing new sections on means of participation and by underlining residents’ participatory rights, along with the local council’s duty to ensure that there are diverse and effective opportunities for participation. It includes sections on youth councils, councils for the elderly and disability councils, which will be compulsory bodies at local level from the beginning of the term of the next council.
The new Act also highlights citizens’ and elected officials’ right to information. Municipalities must ensure, for example, that the necessary information about preparatory work concerning matters for consideration by decision-making bodies is distributed via public information networks once the meeting agenda is ready, to satisfy the general need for information. In their online communications, municipalities must ensure that information that should be kept secret is not released via public information networks and that personal privacy is protected when personal data is handled. Elected officials have the right to obtain information from municipal authorities where they consider this information to be essential for their work and it has not yet entered the public domain under sections 6 and 7 of the Local Government Act.
One interesting example is Raasepori, where the municipality uses the kuntalaisaloite.fi national e- service provided by the Finnish Ministry of Justice, enabling the inhabitants to contact the authorities electronically and follow up their enquiries via the municipality’s website. The municipality is also very active on social media (Facebook, Twitter, Instagram and Pinterest), which function partly as interactive question and answer channels but also as platforms for spreading information quickly and as marketing tools. The town encourages its employees at the sectoral level to stay in touch with the inhabitants through social media.
With regard to constitutional foundation (Art. 2 ECLSG) and the concept of local government (Art. 3 ECLSG), the Chairperson of the Constitutional Law Committee pointed out during the meeting with the rapporteurs that Section 121 of the Constitution also refers to regional authorities larger than one municipality, but only in one sentence. The government is preparing new legislation which will transfer a significant part of municipalities’ decision-making power to larger authorities, which will have directly, openly elected councils, fairly wide jurisdiction and, perhaps in the future, even the right to collect tax from their residents. Therefore, it may be appropriate to consider an amendment to the Constitution, which would describe the duties and powers of the new autonomous regions. Some other parliamentarians also stressed the need to amend the Constitution to give powers to levy taxes to the new tier of local self-government (in accordance also with Art. 4 of the Charter). However, during the consultation process, the Deputy Parliamentary Ombudsman shared with the delegation her view that the interpretation of the relevant Section 121 of the Constitution is not yet established. Therefore, according to the Deputy Ombudsman, it might be too early to analyse the need for possible amendment at this stage. Nonetheless, the rapporteurs consider that it should be preferable to tangibly guarantee the taxation right for the regional level. A constitutional amendment should foster this protection as the wording of Section 121 only purports to provide the municipalities’ taxation right.
The transfer of responsibility for social welfare and health care to the new regional tier will mean that 60% of municipal duties will be transferred to the regions, according to an Orimattila town councillor. The new regional entities will be subject to state control as there will be growing administrative supervision by central government and the financial resources of the new regional authorities will consist of block state grants. In this respect, the rapporteurs express their concerns that these grants are currently designed to fund only a limited number of competences. They consider that, if the future autonomous regions do not have enough diversified competences, these grants might be considered to be earmarked in practice. Furthermore, the SD (Social-Democrat)
page 47 / 796 parliamentary group stressed that the impact of the reform could vary from one region to another. The smallest autonomous region will have a population of about 70,000 while the largest will have no fewer than 1,600,000 inhabitants. On the whole, the reform may lead to stronger central government and weaker local decision-making. In a small autonomous region the risk of overconcentration at regional level would be relatively small but in the larger regions this danger would be considerably more pronounced.
Concerning the negative effects of regionalisation on municipalities, the delegation was told by a member of the Parliament who supports the government plans, that the reform would clearly reduce the municipalities’ duties and importance. In the future, the municipalities would be acting more as local participatory communities, so there was of course, “a risk of overconcentration at regional level”.
On the other hand, as the same person pointed out, some smaller municipalities today are in a financially restricted situation and their budgets are not balanced. This again has led to a situation where many services and municipal duties are taken care of by federations of municipalities. These federations are financed by municipalities, but their decision-making bodies are not chosen by open elections and therefore residents do not have a direct possibility to influence decision-making. Some argued that the present situation, with federations of municipalities governing local affairs, was “undemocratic”.
Currently, Finland has a two-tier governance structure including local and national levels. The local level (municipalities) forms the basis of local democracy while parliament ensures that central government is democratic. The regional level lacks any proper representative democracy. Despite the weakness of regional democracy, the regional level plays an important role in health care and regional development. Reforms to health care, social welfare and regional government will introduce representative democracy at the regional level throughout the country (with councils elected via direct elections). Many of the tasks currently arranged by municipalities will be exercised by the regions in the future. In addition, many of the tasks of state regional authorities will be given over to the future self-governed regions. These functions that are related to regional development have not yet been within the range of regional or local democracy. In this sense, local and regional democracy will widen with the reform.
The division of powers between the local/regional level and central government will change drastically because central government will delegate considerable economic power over regional development to the new counties. There will be a new balance, in which the local and regional levels might move closer to each other and co-operate in many tasks. Some government officials claim that eventually the authority of municipalities will be strengthened as central government will have less power in local affairs than it has now in practice. However, during the consultation process, the Association of Finnish Local and Regional Authorities expressed its doubt the perception that the reform will strengthen municipal self-government and decrease central government power over local affairs and it leaves room for interpretation. Another governmental argument is that even though many tasks will be transferred from the municipalities to the regions, there will not be such a drastic change in the level at which tasks are taken care of. This is because tasks are already organised by joint municipal authorities at supra-local level.
The municipalities will still have important service functions in the future. They will also have a role as communities for local participation, democracy, culture and development, retain a general mandate to manage the duties related to municipal self-government as decided by the residents and perform local duties defined by law. In accordance with current statutory principles, municipalities will still be responsible for managing and promoting employment. They will also continue to be responsible for the following tasks: promoting participation and culture, promoting health and well-
page 48 / 796 being, services related to sports, culture and other leisure activities, youth services, local industrial policy, land use, construction and urban planning. However, there will certainly be a shift in the role of municipalities. Regions will have tasks which they can hand over to municipalities by agreement. A very significant sector in which regions will be able to delegate authority to municipalities is labour policy. This will strengthen municipalities’ role in managing and promoting employment. In general, regions and municipalities will need to co-operate.
Some of the Finnish experts warned against attaching too much value to the fact that municipalities are currently responsible for social welfare and health care. It is quite common for people to see themselves as consumers of municipal services rather than as municipal citizens. Therefore most people do not really care who is in charge of these services; they care most about their cost, availability and efficiency. Municipalities’ big budgets and large staffs may even restrict their true political discretion since they are under extreme pressure to manage important and costly social services. Furthermore, municipal services are now managed by professionals and the principle according to which “municipalities should be run by elected politicians” has been receding, meaning that in practice, municipal politicians are often obliged simply to follow priorities set by their municipality’s professional managers. According to an Orimattila town councillor, the question arising is to “whether the Mayor, as well as the chairpersons of the executive committees in other municipalities should be directly elected, as the Congress recommended in 2002, despite the fact the new Local Government Act (410/2015) does not allow this”. In respect of this debate, the Government informed the delegation that an extensive study has recently shown that only a few municipalities in Finland would like a mayor elected through direct elections. No decision has been taken yet concerning the modification of the Local Government Act in the framework of the SOTE- reform to allow directly elected mayors. The new regions may probably simply mean that services will be rationalised, since municipal service provision is very expensive (lack of economies of scale). Therefore it is only efficiency that is being debated, not political or democratic considerations. Regions will pool various services (thus also creating economies of scale), which mainly used to lie in the hands of various regional municipalities associations and, in some cases, single municipalities, and align them under one leadership. However, these are rather routine tasks and regions therefore should also become major decision-makers on economic and cultural development activities. One should never underestimate the risk of bureaucratisation in local government, which should primarily serve as a political institution providing participatory possibilities and democratic legitimacy, not simply just another public service provider.
The rapporteurs conclude that Finland formally complies with Article 3, para. 1, of the Charter as the municipalities do regulate and manage a substantial share of public affairs. At the same time, however, they wish to express their concern about extensive state regulation of municipal affairs, especially in the wider area of social services, which the Government also acknowledged. With regard to paragraph 2 of Article 3 there are two points of concern: First, the fact that various municipal associations fulfil important municipal tasks (especially in the fields of welfare and healthcare) seems to undermine accountability to municipal councils in many cases, while there were also complaints about rising costs for municipalities who “simply pay the bill”. Secondly, the wide range of highly demanding services and activities seems to have caused a shift of power towards the professional managers of municipal and intermunicipal authorities. A process of “bureaucratisation” in local government has placed key decision-making processes in the hands of professionals and technocrats whereas elected politicians have been losing control over important policy fields. Therefore, new monitoring instruments and procedures are needed to restore the accountability of professional executives to the elected councils in accordance with Article 3, para. 2, of the Charter. To sum up, the rapporteurs conclude that Finland partially complies with Article 3, para. 2, of the Charter.
France [Article ratified - Report adopted on 22 March 2016 ]
page 49 / 796 The question about the exact meaning of the right and the ability to “regulate and manage a substantial share of public affairs under their own responsibility”arises in all countries party to the Charter. In France, the case law of the Conseil Constitutionnel, even since the eighties, indicates that a substantial share of public competence should be assigned to the territorial collectivities – with the effect that their elected assemblies should be able to exercise their rights of free administration on behalf of their communities (attributions effectives).
The percentage of local spending in total public spending (see above para. 109 et seq.) may be taken as an indicator of the share of public affairs that local government manages under its’ own responsibility and this share appears to reach a satisfactory level in France. There seems however to be an issue for smaller municipalities which are members of inter-municipal entities with own fiscal powers. In fact, these smaller municipalities manage a very small part of public responsibilities under their own responsibility, while the most important and demanding tasks are carried out by EPCI’s or other structures of inter-municipal co-operation. The fact that mayors of smaller municipalities represent their authorities on boards and assemblies of such inter-municipal entities does not change the fact that these municipalities do not “regulate and manage a substantial share” of public affairs “under their own responsibility”. France has declared that the Charter does not apply to such inter-municipal entities and the French Constitution does not include EPCI’s in the list of territorial collectivities (Article 72 paragraph 1). This worsens the situation for small municipalities whose competence is protected both by the Charter and the French Constitution but they delegate their tasks to entities which are excluded both from the normative field of Charter and from constitutional safeguards for local government. Therefore, the situation of small municipalities that perform only few secondary residual tasks and delegate their most important tasks to inter-municipal entities, amounts to a violation of the Charter. It should be clear that Article 3 paragraph 1, when using the term “ability” refers to each municipality and not simply to the overall situation or only to the majority of municipalities.
France declared itself not to be bound by Article 3 paragraph 2 of the Charter Nowdays, however, there seems to be no need for France to sustain this declaration as all tiers of local government have elected assemblies, while even the main inter-municipal entities (which are not subject to the Charter) have obtained directly elected assemblies. Therefore the rapporteurs believe that France could withdraw this declaration.
Georgia [Article ratified - Report adopted on 7 November 2018 ]
According to Article 7, paragraph 4, of the constitution, “the citizens of Georgia shall regulate the affairs of local importance through local self-government in accordance with the legislation of Georgia”.
Georgian municipalities have been given additional responsibilities in recent years, yet the share of local government in public affairs is still quite limited. It could be substantially increased, however, especially if social services, including primary and secondary education, together with health services, were decentralised and devolved to local government, and it seems that Georgian authorities are already moving in this direction.
Georgia therefore complies with Article 3, paragraph 1, of the Charter. However, the rapporteurs encourage the Georgian authorities to move forward with decentralisation and devolution of powers to local authorities.
page 50 / 796 Germany [Article ratified - Report adopted on 14 March 2012 ]
Consult reply indicated at article 2
Greece [Article ratified - Report adopted on 26 March 2015 ]
The main question that must be addressed under this heading is whether, in the present situation, Greek municipalities do regulate and manage a “substantial share of public affairs under their own responsibility and in the interests of the local population”. This provision requires an assessment which takes into account the rather “subjective” and relative nature of the concept of “a substantial share of public affairs”, since no official or universal method of measuring such substantial character has yet been developed. The question must be addressed considering the historical evolution, the culture and the constitutional traditions of the country under analysis.
In order to assess compliance with this provision, both legislative and factual aspects should be taken into consideration.
As for the legislation, a first problematic issue is the lack of statutory powers of municipalities, which cannot “regulate” local affairs. This aspect is part of the Greek longstanding and well-rooted tradition of centralisation and is enshrined in the Constitution itself. Actually, State competence (i.e. matters reserved to parliamentary law) for important subjects of public policy (education and health system, environmental protection, physical planning, economic development, etc.) is explicitly established by the Constitution (e.g. in Articles 21, 16, 24, 106), while local governments are deprived of regulatory autonomy. “This means” – according to the written answer provided by the Council of State in response to the questions raised by the rapporteurs – that “all strategic decisions regarding local authorities are taken at the level of National Parliament”.
This is also true as far as taxation is concerned. Article 78 of the Constitution safeguards the so called “taxation monopoly” of the parliament (whose plenary law defines subject, percentages and exemptions of taxation), whereas Article 102, para. 4 imposes correspondingly on the State the duty to “concern itself” to ensure the necessary resources for local authorities.
Statutory powers may be delegated by the Parliament to local authorities. This delegation is subject to the same rigid substantial and procedural rules that were drawn by the Constitution (Article 43) for any “organ of the executive function” (e.g. ministers, boards, etc.). This means that delegation of legislative power is allowed only by parliamentary act and only if it refers to “special matters” or “subjects of detailed or technical character or of local interest” (Article 43, para 2). Accordingly, case- law of the Greek Council of State underlined that local government competence for “local affairs” (Article 102, para. 1) refers only to single administrative acts and not to normative acts (local norms of general character), which are subject to the restrictions set out by Article 43, para. 2, just as they apply to any other organ of the executive function. Furthermore, the Council of State rejected the delegation of new responsibilities from the State to local government, every time these responsibilities refer to “important sectors of public policy”, which are assigned by the constitution exclusively to the state (e.g. physical planning, environmental protection, or the status of teachers in public schools).
After the 2001 constitutional revision, the new version of Article 102 of the Constitution, by establishing that “Law may assign to local government agencies the exercise of competences constituting mission of the State” tried to facilitate delegation of State responsibilities to local authorities (Article 75II of the Code of Municipalities and Communities 2006 (law 3463/2006)
page 51 / 796 assigning to municipalities state responsibilities) but the Council of State has continued to oppose delegation to local authorities. Furthermore, according to the prevailing legal view, the law can change borders and types of local government authorities for reasons of public interest, following objective criteria. Discretion of ordinary law over territorial structure and organizational form of local government is quite broad, especially when the existing structures are considered inefficient. For this reason, the amalgamation reforms of 1997 and 2010 did not face any serious legal opposition.
Regarding factual aspects, during their visits in Greece the rapporteurs were told in several meetings with the associations of local authorities and with some municipalities, that, notwithstanding this legal framework, “no decentralisation exists in Greece” or that “the country is less decentralised now than it was before Kallikratis”.
Several problematic aspects have been pointed out that the rapporteurs would like to list here, as they can undermine the very concept of local self-government: a. Kallikratis reform transferred many new competences to municipalities; some of them, e.g. on social policies, are important in a time of economic crisis, but without adequate financial and human resources municipalities cannot manage them. This is especially true for municipalities that experienced important mergers and have a vast territory (such as Lagadàs, for instance, where the rapporteurs had a meeting during their visit. b. As a consequence of the Kallikratis reform, in many fields there is an overlapping of competences (and responsibilities) between deconcentrated State administration, regions and municipalities. Competences need to be reassessed; mechanisms of co-operation and dialogue between the different authorities do not work properly. It is especially unclear concerning the role of 7 State authorities that are becoming progressively weaker, also as a consequence of the empowerment of regions; these State authorities cannot be abolished without a constitutional revision since there are some matters that according to the constitution cannot be transferred to local government. Rapporteurs were told by different interlocutors (at both local and national level) that they should be abolished. c. A better, more institutionalized, co-ordination and consultation at any level is warranted, especially in areas with extensive overlapping of competences (such as education or transportation). d. Financial autonomy is a very complex issue, as the transfer of competences occurred without adequate resources. Since 2010, the State funds (CAF) were cut by 60%; interlocutors pointed out that cuts have been proportionally more extensive at local level than at State level. e. There is a growing difficulty in collecting local taxes due to the economic crisis: more than addressing local affairs in the interests of local population, the main concerns of mayors are to be able to pay to the administrative staff their salaries each month. f. All interlocutors, both at national and local level, agreed that local authorities should be able to make use of own resources, especially taxes, also in order to enhance accountability; the proposal to transfer all taxes on local estates to local government is welcomed. g. Many municipalities, especially those located in remote areas, face significant operational problems due to the large extension of their territory and the lack of sufficient resources. h. Especially problematic is the issue of human resources. Since 2010, municipalities have experienced important cuts in personnel. Concerns have arisen from both a quantitative - many municipalities are understaffed - and a qualitative perspective – others are overstaffed with non-expert staff and are in need of staff with higher expertise. The number of staff employed at every municipality seems to escape planning and be the result of mere personal choices (depending on the number of employees who decide to retire or to take advantage of the mobility programs), also in consideration of the fact that it is not possible to hire new staff until 2016 and that cuts have been made to temporary contracts. Most interlocutors agreed that this policy on contracts responds to the need to eliminate the pre-existing patronage system, but the result is a lack of seasonal staff, especially in touristic destinations. The new, centralised, system for the selection of personnel – currently not operational due to the crisis - was perceived as too lengthy. i. Even more simple measures adopted by the legislator within the framework of the public administration reform – such as the compulsory publication on the web of decisions of local governments, the program on transparency58 or the centralised system for public procurement59
page 52 / 796 turned out to be difficult to implement at local level due to the lack of well-trained staff, able to use new technologies. j. The right and the ability of local authorities to manage local affairs in the interests of their populations are also undermined by the overwhelming quantity of existing legal provisions. Legislations and regulations often go into great detail. Standards established long ago are still in force, only partially amended due to their progressive obsolescence, ultimately increasing the complexity of legislation and creating inefficient procedures. This legislative complexity often determines different decisions in similar cases, both at the level of administrative courts and at the Court of audit. k. Another important obstacle is represented by the extensive bureaucracy. The supervision on local government is especially complex. Very often legality control turns into an expediency control; as a consequence of the crisis, financial controls - on expenditures and budget – increased and the control by the Observatory is considered by local authorities as undermining their autonomy; l. There are several cases of dismissals of elected officials after a final decision of a court; they are very often prosecuted for no reasons, as a consequence of anonymous complaints.
To summarise, considering Greece’s past as a much centralised State, the reform introduced by Kallikratis was considered positively (a step in the right direction) by most interlocutors, both at central and local level. This is so, especially because Kallikratis increased local competences, transparency and accountability, all elements considered necessary to counteract the diffuse maladministration and corruption, especially common at local government level.60 Within this framework, also the ex-ante control over local budget is admitted by some interlocutors at local level; many sources considered that until the crisis local budgets were not accurately drafted, and in many instances were merely fictional; therefore, the Observatory can be seen just as a temporary tool in order to make the budgets realistic.
Nevertheless, the rapporteurs were told very often that the implementation of the reform has been deeply affected by the crisis. This explains the abovementioned statements (“there is no decentralisation in Greece” or that “the country is less decentralised now than it was before Kallikratis”). There is a diffuse perception that agreements with the Troika determined Greek politics at any level and that, by the time being, there is no possibility to properly implement the reform, or any other improvement in the local self-government. The interlocutors, not only at national level, but also at local level, share the view that local governments must contribute to the country’s recovery. How this can be accomplished, however, is still very much an open issue.
Hungary [Article ratified - Report adopted on 12 February 2021 ]
The main question that must be addressed under this heading is whether, in the present situation, Hungarian municipalities and counties regulate and manage a “substantial share of public affairs under their own responsibility and in the interests of the local population”. This provision requires an assessment which takes into account the rather “subjective” and relative nature of such concepts as “ability”, “a substantial share of public affairs”, “under their own responsibility” and “in the interests of the local population” since no official or universal method of measuring such substantial character has yet been developed. The question must be addressed considering the historical evolution, the culture and the constitutional traditions of the country under analysis. It is also closely linked to the assessment of the compliance with other parts of the Charter, such as Articles 4, 8 and 9.
In order to assess compliance with this provision, both legislative and factual aspects should be taken into consideration.
In Hungary, local government authorities have regulatory powers. Based on Article T of the Fundamental Law, the decrees of local government are legal acts in which a generally binding rule of conduct may be determined. The normative power of local authorities is regulated in detail by the Cardinal Act on Local Self-Government.
page 53 / 796 Nevertheless, the part of public affairs local authorities can regulate and manage is definitely limited. The share of public affairs entrusted to local government has decreased very significantly. The financial autonomy of local governments has severely reduced, strengthening the control of central government over local government finance. In addition, numerous powers hitherto exercised by local government are described as being “naturally” recentralised. In particular, health and social care as much as education have been almost completely centralized. All three sectors, accounting for 86% of local expenditure, which were previously a matter for the municipalities and counties, have been transferred to the central level. In the new system of powers, counties now have only competences on rural development, regional development, regional planning and coordination.
Another indicator of the “importance” or the political and social role of local government in a country is the local government expenditure in the national general government consolidated budget, especially in comparison with other EU countries. In Hungary, as previously indicated, the local authorities manage only 12.9% of the total public expenditures, which is equivalent to 6% of GDP.
Recommendation 341 (2013) called the Hungarian government to “revise the legislation concerning local authorities’ mandatory tasks and functions so as to extend the range of powers normally assigned to them on the basis of the principles of decentralisation and subsidiarity”.
The process of recentralisation that affected several competences already transferred to local authorities, already outlined in the 2013 report, has not been reversed in the subsequent period and the Recommendation 341 (2013) has not been fulfilled.
It should especially be pointed out the transfer of many competences of local government to the new districts, introduced from 1 January 2013, which serve as divisions of State deconcentrated administration.
During the consultation process, the government opposed the views expressed by the rapporteurs, in particular regarding the focus on re-centralisation of certain competences related to public services. It explained that this re-centralisation should be considered as building “a strong, active and efficient State”. The government pointed out that before 2010 a significant portion of public services had been provided by local self-governments, resulting in unacceptable differences in the quality of services due to economic discrepancies among municipalities, and essentially transferring the increasing social tensions to the local authorities along with steadily decreasing resources”.
The rapporteurs do not share this approach. For a signatory State to comply with Article 3.1 of the Charter, the goal of ensuring an equal level of public services must be achieved by other tools than the transfer of most basic competences of local authorities to State institutions: primarily, by granting to local authorities’ sufficient financial resources and through implementing a fair and effective equalisation instrument, as indicated in Article 9 of the Charter.
In light of the preceding considerations, it has to be reiterated that the requirements of Article 3.1 of the Charter are not met in Hungary.
Iceland [Article ratified - Report adopted on 29 March 2017 ]
The main question that must be addressed under this heading is whether, in the present situation, Icelandic municipalities regulate and manage a “substantial share of public affairs under their own responsibility and in the interests of the local population”. This provision requires an assessment which takes into account the rather “subjective” and relative nature of the concept of “a substantial share of public affairs”, since no official or universal method of measuring such substantial character has yet been developed. The question must be addressed considering the historical evolution, the
page 54 / 796 culture and the constitutional traditions of the country under analysis.
In order to assess compliance with this provision, both legislative and factual aspects should be taken into consideration.
Icelandic laws and regulations entrust municipalities with a series of competences and powers that can be depicted as “fair” or “reasonable” in the light of the “unitary” constitutional characterisation of the country and of the geographical characteristics of the country, with a small population scattered very unevenly cross the territory. In spite of all attempts to amalgamate, the municipalities are generally wide spread and thinly populated, except in the Reykjavik region: more than half of the municipalities in the country have less than 1000 inhabitants and 1/3 have less than 500. As a consequence, they have a limited capacity to provide modern services. The small size of many municipalities contribute to explain the difficulties to launch a wider decentralisation process, although some new transfers of competences are under discussion (such as elderly care, health and home nursing), depending on the possibility to increase municipal co-operation.
The representatives of the smaller municipalities expressed some concerns about their capacity to fulfil all the tasks entrusted to them, but the Congress delegation did not hear any substantial or recurrent claim from local representatives that the present local competences were either insufficient or non-substantial. As a matter of fact, most interlocutors seemed satisfied by the current situation on this point. Even the economic and financial crisis seems mostly overcome and it does not impact on the ability of municipalities to manage a substantial share of public affairs.
In conclusion, the rapporteurs consider that the requirements of Article 3 para.1 of the Charter are satisfied by the present legal and factual situation in Iceland.
Ireland [Article ratified - Report adopted on 31 October 2013 ]
It cannot be said that local government in Ireland manages a substantial share of public affairs, certainly when compared to local government in other European countries. The interlocutors the rapporteurs met during the visit were sceptical about the policy paper granting any new role to local authorities in education, health, welfare, public transport, and policing, which are still essentially run by the central Ministries or agencies.
Since the last Congress Recommendation, no new competences have been transferred to local authorities. In fact, the opposite is true, for example the centralisation of water management, which was mentioned at several meetings. The rapporteurs were informed that, if anything, the transfer of powers has travelled in the opposite direction - from local to the national level. However, as indicated in Section 3.1.3, a certain limited amount of delegation and devolution may actually see the day in the near future as a result of the 2012 policy brief. The Government, through its Action Programme, is aiming to achieve a long term expansion of the role of local government, particularly by virtue of the enhanced confidence and credibility that they hope will ensue from the improvements that will be implemented through the Action Programme, particularly in local government efficiency, finance, governance and structures.
Italy [Article ratified - Report adopted on 18 October 2017 ]
As regards the concept of local self-government (Article 3, paragraph 1 of the Charter), the main question that must be addressed under this heading is whether, in the present situation, Italian municipalities and provinces do regulate and manage a “substantial share of public affairs”. The impression of the delegation should be nuanced. In the case of municipalities, the situation is
page 55 / 796 positive, but in the case of the provinces the appraisal is not so positive, in the light of the reduction of competences that has happened in recent years (see infra). However, it is true that, as explained below, some provinces may have additional competences according to the region where they are located, since the region may attribute competences to their provinces. Therefore, the picture may be varied.
Both in the case of municipalities and provinces, the principle of self-government applies to both entities ex constitutione in the same manner and with the same intensity; they have the power to enact binding local regulations, and there is a lack of “a priori” controls from State and regional agencies and departments, for most of the decisions taken by local authorities (see infra).
As regards the compliance with Article 3, paragraph 2 of the Charter, it should be noted that the internal structure and organisation of Italian local authorities is regulated exclusively by ordinary legislation, and not from the Constitution itself. There is here a clear constitutional difference between “local” and “regional” authorities, in the sense that the structure and organisation of regions are enshrined in the Constitution, while in the case of local authorities the Constitution is silent and therefore leaves a wide remit or discretion to the legislators.
The key rule here is again, the “Unified Laws” on local authorities of 2000, as amended, or Testo Unico. In the light of this legal framework, the main bodies of the local authorities may be described as follows:
Municipalities (Comuni)
The representative body is the city council (consiglio). The number of local councillors (consigliere) varies according to the number of inhabitants and fluctuates between 12 and 60 members (Article 37, Testo Unico). They are elected by the citizens of the municipality through an electoral process of secret, general, and direct voting and they serve a five-year term. The last local elections were held in June 2016 (with different dates in some Special Status regions). The municipal council is chaired by its own president, elected by the council members among themselves. It is the body for debate and decision-making and is depicted as the organ of direction and political-administrative control (Article 42, paragraph 1). It adopts the most important political decisions affecting the municipality, inter alia: the local budget, the agreements with other municipalities, land development plans, the local regulations and the internal by-laws (statuto), etc.
There are two key “executive” organs: the mayor (sindaco) and the board (Giunta).
The mayor, as in other European countries, is the key executive officer, and it is responsible for the entire administration and management of the municipality (Article 50, paragraph 1, Testo Unico). In this sense, the mayor manages, controls and supervises the functioning of the municipal services and offices, and the execution of municipal plans and decisions. Moreover, the mayor discharges all the competences and duties that are attributed to him by the local regulations and by-laws (statuto), and by the sectoral legislation, either enacted by the State or by the region. Apart from his strict “local” powers, the Law also assigns the mayor competences in matters of State responsibility such as the police, civil register, public order and security (Article 54). These powers are exercised in connection with (or under the control of) the “prefetto”. The mayor can also call for the meetings of the council, if there is no Council President (Article 50, paragraph 2).
The system to elect the mayor is different in small and in medium/large cities, but the mayor is elected at the same time as the council. If the municipality has less than 15,000 inhabitants, the candidate for the local council that receives the most votes is elected mayor. If the population is higher than the said figure, the system is more complex and may involve a two-round voting, if no
page 56 / 796 candidate obtains the absolute majority of the ballots.
From the perspective of Article 3, paragraph 2 of the Charter, a relevant aspect is the “responsibility” of the mayor (and, consequently, of the members of the Giunta) vis-á-vis the local Council. Despite the direct election of the mayor, the Council is still the sovereign body, so a motion of non-confidence (voto di sfiducia) is established in the Law (Article 52, Testo Unico). If the motion is successful (absolute majority is required), the mayor must resign.
The board or Giunta is the other key executive organ of the municipality. It is composed of the mayor, who acts as the chairman, and an even number of assessori. This number is established by the local by-laws (statuto) but it cannot be higher than 1/3 of the members of the council (Article 47, Testo Unico). The aldermen are appointed and dismissed by the mayor. The Giunta is basically conceived as an organ that assists and helps the mayor in discharging his duties (Article 48 Testo Unico). The members of the Giunta may act collectively, discharging duties and competences that are attributed to that body by the internal by-laws, by specific commissions of the Giunta or by the order of the Mayor. They can also act individually, following instruction, precise commitments or tasks commissioned by the mayor.
Provinces
At point 5.3, reference was made to the profound reforms that have been operated on the provinces by a set of laws and regulations whose keystone is the “Delrio Act”. The provinces have been reformulated in the area of competences, finances and resources, as a key point in the plan of structural reforms envisaged to overcome the economic crisis. At this point the rapporteurs need to underline once more the “transitory” nature of this piece of legislation, to the point that Article 51 of the said statute provides that the new regulation of provinces is enacted “in attesa della riforma del titolo V della parte seconda della Constituzione e delle relative norme di attuazione”, that is, “awaiting the reform of the Constitution”, a reform that could not be culminated due to the negative outcome of the December 2016 referendum. However, the Delrio Act does not affect the autonomous provinces of Trento and Bolzano.
This piece of legislation has not only altered the election system for the provincial bodies, but also some of their names, competences and profile. The current key organs of the provinces are the President, the Provincial Council and the Assembly of mayors. Before the Delrio Act, the “Unified Laws” on local authorities did regulate with a great parallelism the organs of the municipalities and those of the provinces, and this parallelism still exist to a certain extent.
Currently the key executive is still the President of the Province (Presidente della Provincia). The President has the same institutional profile and type of competences than the mayors have in municipalities, so there is no need to repeat what was presented above. As underlined supra, the President is no longer elected by the inhabitants of the municipalities of the province by universal and direct suffrage. Nowadays, the president is elected by direct and secret ballot by the mayors and by the members of the local council of the municipalities of the province, but only mayors are eligible to become the president of the province. Therefore, if the President ceases to be the mayor of his city, he can no longer be the President of the Province. The president may appoint a vice- president among those persons that are provincial council members, who helps and assists the president in discharging his duties. The old “Provincial board” was eliminated by the reforms.
The Provincial council (consiglio provinciale) is a multi-member organ, composed by consiglieri whose number is: 16 members in the provinces with more than 700,000 inhabitants; 12 in provinces having between 300,000 and 700,000 inhabitants and 10 in provinces with less than 300,000 inhabitants. The new figures represent a dramatic reduction of members, as compared with the
page 57 / 796 members of the old provincial councils. Another reform pertains to the length of the term they serve: currently is two years (while the President of the province serves a four-year one!). The members of the current provincial councils are elected by the mayors and by the local councillors of the province among themselves, also through a direct and secret ballot. The competences of the Provincial council are, mutatis mutandis, the same as those of the local council but it should be pointed out, for purposes of Article 3, paragraph 2 of the Charter, that apparently there are no specific provisions on the possibility to formulate a vote of dismissal or censorship in the Council as against the President, something which is in contradiction of Article 3, paragraph 2 of the Charter.
Finally, the Assembly of Mayor (Assemblea dei sindaci) is a brand-new organ in the traditional structure of the province, but its profile and competences are somehow murky, for the Law only provides that it is composed of the mayors of the municipalities of the province.
The change from the old “direct” election to the new “indirect” ones did not happen at once, but along an extended period that included deadlines, which were successively extended. Thus, the first elections of provincial bodies following the Delrio Act took place in September/October 2014 (in 65 provinces). In the rest of the provinces, such elections took place at different times, between November 2015 and September 2016.
Metropolitan cities
This “new” type of local, intermediate entity was already foreseen in the Act of 8 June 1990, but never really incepted since then. The Delrio Act “activated” the actual establishment of those bodies an operation that has lasted one quart of a century. Here the delegation should only present summarily their internal structure, as regulated by the Delrio Act. The key organs are the metropolitan mayor, the metropolitan council and the metropolitan conference.
The metropolitan mayor (sindaco metropolitano) has more or less the same institutional and administrative profile of the President of a province. He represents the metropolitan city, and his competences are detailed at Article 8 of the Delrio Act. From the perspective of local democracy, though, this top official presents a more negative profile than the current presidents of provinces, since these are at least elected by the mayors and local council members. On the contrary, the metropolitan mayor is elected by no one: the person who becomes the mayor the city-capital of the province (capoluogo) becomes automatically and de iure the metropolitan mayor of the metropolitan city (Article 19, Delrio Act), so he discharges simultaneously both positions. The metropolitan mayor may appoint a vice-mayor.
The metropolitan council (consiglio metropolitano), has a profile and powers that do replicate to a large extent those of a provincial council (approval of the budget and of the “statuto”, etc). It is composed by the metropolitan mayor and by a number of councillors whose numbers varies according to the population of the “metropolitan city”: from 14 to 24 members. They are elected (among themselves) by the mayors and by the local council members of the municipalities of the province. These members serve a five-year term (Article 21, Delrio Act). Most of the “elections” related to the effective constitution of the “councils” of the metropolitan cities took place in 2016. For the purposes of Article 3, paragraph 2 of the Charter, the same remark should be made in connection to the metropolitan city (lack of responsibility of the Sindaco metropolitano vis-à-vis the Council).
Finally, the metropolitan conference (conferenza metropolitana) is composed of the metropolitan mayor (who presides its meetings) and by the mayors of the municipalities included in the metropolitan city (that is, in the “old” province). Its main competence is the approval and amendment of the by-laws (statuto) of the metropolitan city.
page 58 / 796 In the light of the precedent lines, some conclusions could be derived: the Italian system complies with Article 2 of the Charter but it does not comply with Article 3 paragraph 2, in the case of the provinces and metropolitan cities, since their governing bodies are not elected by the people. There is a kind of “indirect” election in the case of the provinces, but this light democratic link is absent in the case of the metropolitan cities. In this sense, two points should be mentioned: the Law provides the possibility for direct election for metropolitan cities, but possibility has not been activated. In addition, the rapporteurs were informed that a Bill was recently introduced in the House of Representatives by the “Lega Nord”, aiming at reintroducing the direct election in the case of provinces, but the overall impression was that the bill had little chance to be approved. It seems that the political sensitivity of the moment is far from this motion.
This observation is more regrettable in the sense that the legal reforms adopted in the case of those entities –namely the Delrio Act- were adopted after recommendation 337(2013), that recommended the Italian authorities to defend the system of direct local elections and by the fact that, on ratifying the Charter, the Italian Republic ratified the whole text without introducing any declaration excluding the application of Article 3, paragraph 2 to any of its local authorities.
Furthermore, in the opinion of the rapporteurs, the lack of a meaningful responsibility of the president of the province vis-à-vis the council and that of the metropolitan mayor as concerns the metropolitan council are in contradiction with the requirements of Article 3, paragraph 2.
Latvia [Article ratified - Report adopted on 27 March 2018 ]
For the sake of this provision of the Charter, the main question is whether, in the present situation, Latvian municipalities do regulate and manage a “substantial share of public affairs”. The rapporteurs think that this is the case, in the light of the number and importance of local competencies (see, infra point 3.3.2) and the fact that local authorities are endowed with typical “administrative” or governmental powers, such as the power to enact binding local regulations and to impose sanctions and fines on those who do not comply with them. Moreover, local authorities may approve different sorts of plans, in which they can freely formulate local public policies. In general there are no “a priori” controls from State agencies and departments, for most of the decisions taken by municipalities (see, infra).
Another indicator of the “importance” or the political and social role of local government in a country is the local government expenditure in the national general, government consolidated budget, especially in comparison with other EU countries. In this sense, the figures are eloquent, since Latvian indices are above the overall EU figures. For instance, in 2004 the indicator for Latvia was 27.9%, at that time the 10th highest in the EU. Some years later (2012), this indicator was even more positive, as it was the eighth highest in the EU.
Liechtenstein [Article ratified - Report adopted on 28 March 2018 ]
Article 3 paragraph 1 requires that local authorities should have “a substantial share of public affairs under their own responsibility”. Although the Charter does not specify which tasks and functions must fall within the remit of local government, it should regulate and administer primarily those public affairs which affect the local community most and which it can carry out more effectively.
Municipalities play a crucial role in local democracy in Liechtenstein and have wide-ranging powers. It is worth recalling that in 2006 Congress Recommendation 196 suggested increasing local government's role in the welfare services, and regional and town planning. During this monitoring visit, no similar problems were raised, except for community-level planning and development.
page 59 / 796 The democratic character of local authorities, based on their direct legitimacy and the holding of free elections, which are core values of the Charter entrenched in Article 3 paragraph 2, is indirectly guaranteed by the Liechtenstein Constitution. According to Article 110 paragraph 2.a. of the Constitution, the Municipalities Act has to establish the principle of free election of mayors and other officials of the municipalities. Article 111 guarantees that all Liechtenstein citizens who have reached the age of 18 and are not deprived of their voting rights shall be eligible to vote in the municipalities where they reside. Councillors are elected for four years on electoral lists.
As mentioned above, the Municipalities Act permits local citizens to initiate popular votes (referendums) on local matters, while in certain cases (such as changes in municipal boundaries) a local referendum is mandatory.
Consequently, the rapporteurs conclude that the situation in Liechtenstein complies with Article 3 paragraphs 1 and 2.
Lithuania [Article ratified - Report adopted on 6 November 2018 ]
The main question that must be addressed under this heading is whether, in the present situation, Lithuanian municipalities regulate and manage a “substantial share of public affairs under their own responsibility and in the interests of the local population”. This provision requires an assessment which takes into account the rather “subjective” and relative nature of the concept of “a substantial share of public affairs”, since no official or universal method of measuring such substantial character has yet been developed. The question must be addressed considering the historical evolution, the culture and the constitutional traditions of the country under analysis.
In order to assess compliance with this provision, both legislative and factual aspects should be taken into consideration.
In Lithuania, Article 120 of the Constitution states that “Municipalities shall act freely and independently within their competence defined by the Constitution and laws” and this principle is echoed by the Article 4, n.2 of the Law on Local Self-Government, which refers to “the freedom of independence and activity of municipalities in accordance with the competence denoted in the Constitution and laws”. The functions of the municipalities are divided into independent and State functions (delegated by the State to the municipalities) in accordance with the freedom of the decision making.
Another indicator of the “importance” or the political and social role of local government in a country is the local government expenditure in the national general, government consolidated budget, especially in comparison with other EU countries: in Lithuania, the budget of the municipalities (for independent functions) represent the 17,6% of the consolidate budget, according to 2017 data1.
Also taking into account the distinction between independent and delegated functions, in Lithuania, laws and regulations entrust municipalities with a series of competences and powers that can be depicted as “fair” or “reasonable” in the light of the “unitary” constitutional characterization of the country and of its size and population. The Congress delegation did not hear any substantial or recurrent claim from local representatives that the present local competences were insufficient.
Luxembourg [Article ratified - Report adopted on 21 October 2015 ]
Article 107 grants communes the right to manage their own assets and interests through their subordinate bodies (paragraph 1). The second paragraph of Article 107 provides: “in each commune
page 60 / 796 there shall be a communal council elected directly by the commune’s inhabitants; the conditions to vote or stand for election shall be regulated by law”.
Malta [Article ratified - Report adopted on 29 March 2017 ]
Article 3, paragraph 1 of the Charter deals with the very notion of local self-government and touches upon the principle of subsidiarity, indicating that each local authority must have the ability, within the limits of the law, to regulate and manage a substantial share of public affairs under their own responsibility and in the interests of the local population. The principle of subsidiarity is enshrined in Article 4, paragraph 3 of the Charter and hence, these two sub-Articles are usually examined together.
Historically, there were concerns that the share of public affairs regulated by local councils in the Republic of Malta was limited. This was partly attributed to the fact that the Republic of Malta was recently established and the Local Councils Act was only enacted in 1993. During the first Monitoring visit in 2002 it was observed that the local councils in Malta had been endowed with functions in a progressive but quite cautious manner. Many of the steps were rather small, and were hardly impressive either in number or in importance when compared to the state of local self-government in a number of other Member States.
Nine years later, the 2011 Monitoring Report acknowledged the extension of the functions of local councils. Despite this, the scope of functions of the central government had developed as well, having as a result for the overall assessment to remain the same. Furthermore, reference was made to the fact that the local councils’ spending, which depends mainly on the annual grant, as compared to central government spending in Malta, was very little, i.e. then projected to reach 1,28% in 2010. As a result, the limited share of the public affairs regulated by the local councils was reflected in the small size of the local councils’ spending as compared to the central government’s spending.
The current functions of local councils and their extent are provided in Section 5 herein above and as can be deduced from the immediately preceding Section 6 describing the recent legislative amendments since the 2011 Monitoring Report, nothing has changed since then; the functions and competences of the local councils have remained the same.
Despite being separate legal entities, local councils do not have the power either to impose local taxes or to borrow money, having as a result for their income to depend on government grants and their financial dependence on the central government to be maintained. The financial dependence of the local councils on government grants affects their ability to regulate and manage effectively the share of the public affairs being under their own responsibility according to the Local Councils Act. Any expenditure is essentially regulated and approved by the central government and the House of Representatives through the introduction of an allocation provision in the Annual Budget.
The allocation of funds to local councils has witnessed a steady increase since 2009, reaching approximately thirty seven million Euros per year in 2016. Nevertheless, when compared to the total central government expenditure, the expenditure of local councils is still kept at very low levels, as the statistics of the same source suggest.
It is clear from the above that the role of the local councils in the overall running of the Republic of Malta is minor and limited. The Republic of Malta has to proceed with amendments to the Local Councils Act in order to afford the local councils with wider powers for the purpose of enabling them to regulate a larger share of the localities’ public affairs.
The functions, competences and powers provided to local councils according to the Local Councils
page 61 / 796 Act relate to the maintenance and upkeep of existing establishments, roads and facilities, as opposed to the building or the creation of new ones. The remaining functions relate to the provision of services and the organization of activities. Local councils do not have the power or the autonomy, legal and financial, to initiate infrastructure projects for the public benefit, which require significant amounts of public money. The inexistence of such a power or authority is incidental to the restrictions imposed on local councils when borrowing capital, the inability of local councils to impose local taxes and the limited financial resources available to local councils as a result of the above.
The functions excluded from the competence of local councils relate mainly to the use and administration of parks, gardens, monuments, airports, ports, industrial estates and other establishments or attractions which could have been exploited by the local councils to collect money, fairs, duties and other kinds of taxes or income. The administration of these attractions and establishments is now being carried out by the central government, who receives the proceeds therefrom, when in fact such powers could be gradually devolved to local councils in order to enable them to secure their own funding, at least partly. The same applies to other services and functions which are now performed by the central government, such as the provision of building and town planning permits.
Compared to the local self-government systems of other Member States, local councils lack significant functions such as the administration and operation of sewerage and drainage systems, the operation and management of waste disposal facilities and the issuance of permits, such as the building and town planning permits which bring considerable income to the local authorities.
The impression received by the Congress delegation during the Monitoring visit was that local councils are eager to acquire more functions in order to regulate a greater share of the public affairs in their localities, provide better and more comprehensive services to the residents, undertake infrastructure and long-term projects, as well as be afforded with the power to impose and collect taxes to increase their financial autonomy and sustainability.
In light of the above, the Republic of Malta is not in compliance with Article 3, paragraph 1 of the Charter and the extent of the share of the public affairs under the local councils’ responsibility is by no means substantial, as required under Article 3, paragraph 1 of the Charter. Instead, the share of the public affairs regulated by local councils is restricted to the narrowly defined and limited functions of local councils prescribed in the Local Councils Act.
Monaco [Non ratified - Report adopted on 28 March 2018 ]
Monaco has not ratified Article 3, paragraph 1, of the Charter.
When Monaco ratified the Charter, it adopted an interpretative declaration concerning Article 3, in which it stated as follows: “The Princely Government recalls that the territory of the Principality, with a surface area of approximately 2 km², constitutes only one municipality which is an autonomous institution established by the Constitution, endowed with legal personality and governed by public law. Therefore, the concept of local self-government as stipulated in Article 3 of this Charter applies there, in Monaco, in light of the specific institutional and geographical characteristics of the country, within the framework defined by Chapter IX of the Constitution and by Law No. 959 of 24 July 1974”.
The main question posed by paragraph 1 of Article 3 is whether local authorities regulate and manage “a substantial share of public affairs”, which cannot be said for the Municipality of Monaco, whose budget only represents 5% of the Monegasque state budget.
Montenegro [Article ratified - Report adopted on 21 October 2015 ]
page 62 / 796 Paragraph 1 of Article 3, contains three requirements: first, a “substantial share of public affairs” as the material basis of local self-government, second, the own-responsibility of municipalities in the regulation and management of these affairs and third, the focus on the local population as the beneficiary. The paragraph sees these requirements as a definition not only of the “right” to act in a certain way but also of the “ability” to do so. Therefore, compliance cannot merely be a formality, local governments must also – de facto – be able to use these rights in the stated way.
The Constitution defines the form of local self-government, guarantees the status of the municipality as a legal entity, defines which acts local self-government and municipal bodies can adopt, defines the property-related powers of municipalities and their financing, as well as the autonomy of municipalities in the performance of their duties.
Article 1 of the Law on Local Self-Government, states that: “Local self-government includes the right of citizens and local self-government bodies to regulate and administrate, within the limits of the law, certain public and other affairs based on their own responsibility and in the interest of the local population”. Article 3 of the same law stipulates that: “Local self-government shall be exercised following the principles of democracy, decentralization, depolitization, autonomy, legality, professionalism, efficiency of the local self-government authorities and mutual co-operation between the State and the Municipality”. According to Article 28 of the above- mentioned law “The Municipality shall perform affairs of the local self-government that are of direct and common interest to the local population”.
As regards paragraph 2 of Article 3 of the Charter, it should be noted that the Montenegrin system does not include direct elections of mayors. They are elected by the municipal assemblies, by majority vote of all the members of the municipal assembly. It should be stressed that until 2009 the mayors of municipalities were elected directly by citizens but this provision was abolished and now it is the local assembly who decides on the appointment of the mayor. Some interlocutors consider this measure as a backwards step towards centralisation.
The Law on Election of Councillors and Representatives include the rules for a direct election of municipal councils. The dates for the elections are not harmonised, so that there is no single election day in Montenegro. In May 2014, 15 of the 23 municipalities held elections of their assemblies.
In addition to the mayor, a number of other administrative positions are awarded by political decision. In the case of Podgorica following the election of May 2014, it took until October 2014 to agree on the candidate for the position of mayor as well as the selection for all of the other positions awarded by majority decision in the assembly.
As concerns direct citizen participation and the civil sector, the Union of Municipalities of Montenegro informed the delegation that a set of models establishes a general legal and institutional framework for participation of citizens in local self-government. It creates the conditions for enabling environment and for building the environment for strengthening of the role and accountability of local self-government authorities, and citizens and non-governmental organisations as well, and of all other key players in the local self-government. Citizen participation in the decision-making process is also guaranteed by Article 6 of the Law on Local Self-Government which stipulates in Paragraph 1: “Citizens shall participate in decision-making processes related to their needs and interests, directly and through freely elected representatives in local self-government authorities”. The rapporteurs heard local representatives, in particular the mayor of Tuzi municipality, affirm this participation by citizens in local affairs.
page 63 / 796 The rapporteurs conclude that Article 3 is generally respected in Montenegro.
Netherlands [Article ratified - Report adopted on 26 March 2014 ]
The main question that must be addressed under this heading is whether, in the present situation, Dutch municipalities do regulate and manage a “substantial share of public affairs under their own responsibility and in the interests of the local population”. This provision requires an assessment which takes into account the rather “subjective” and relative nature of the concept of “a substantial” share of public affairs”, since there is no official or universal way of measuring that substantiality. The question must be tackled having in mind the historical evolution, the culture and the constitutional traditions of the country at stake.
Dutch laws and regulations entrust municipalities with a series of competences and powers that can be depicted as “fair” or “reasonable” in the light of the “unitary” constitutional characterisation of the country (although, of course, improvements could be made). The Congress delegation did not hear any substantial or recurrent claim from local representatives that the present local competences were either insufficient or non-substantial. As a matter of fact, most interlocutors seemed satisfied by the current situation on this point. It must be remembered that, in recent years, the central government has performed several decentralisation processes in favour of municipalities and provinces. What is more, a new and massive decentralisation process is under way at present. Leaving aside the question whether this arrangement is properly funded, this process will attribute to municipalities another significant share of public affairs and responsibilities, in fields that are highly sensitive for local residents.
In conclusion, the Rapporteurs consider that the scope of local self-government in the Netherlands can be defined as “mild” or “moderate”, in comparison with other structures throughout Europe. However, the situation is consistent with the national culture and constitutional traditions of the country. Therefore, it can be said that the requirements of Article 3 para.1 of the Charter are satisfied by the present legal and constitutional situation in the Netherlands.
North Macedonia [Article ratified - Report adopted on 26 February 2013 ]
Consult reply indicated at article 2
Norway [Article ratified - Report adopted on 26 March 2015 ]
The Norwegian system of local and regional government fits the definition of local self-government given in Article 3 of the Charter. Municipalities are responsible for a substantial share of public affairs which are managed under the direct responsibility of councils freely elected by secret ballot on the basis of equal, universal suffrage. The Local Government Act of 25 September 1992 envisages two systems for governing municipalities (and indeed counties). Under the “parliamentary” system of local government which may be adopted if the majority of municipal council members so decide, the executive board (“cabinet”) is the highest organ of local government. Members of the executive board report to the council and can be forced to resign if the council passes a resolution to that effect.
Norway also offers a wide range of opportunities for participatory democracy. The Local Government Act allows municipal councils (and county councils) to hold local (or regional) consultative referendums. Since 1970, there have been 721 local referendums in Norway. There is also an arrangement known as a “citizen’s initiative” whereby petitions can be submitted to the municipal council if they have been signed by at least 2% of the local population. All municipalities,
page 64 / 796 furthermore, are required to set up councils for the elderly and councils or similar arrangements for the disabled. The councils have a consultative role in all matters relating to this share of the population. In addition, specific consultation and participation procedures have been introduced in a number of municipalities.
In the rapporteurs’ view, Norway is in compliance with this provision of the Charter.
Poland [Article ratified - Report adopted on 2 April 2019 ]
The main question that must be addressed under this heading is whether, in the present situation, Polish municipalities and districts regulate and manage a “substantial share of public affairs under their own responsibility and in the interests of the local population”. This provision requires an assessment which takes into account the rather “subjective” and relative nature of such concepts as “ability”, “a substantial share of public affairs”, “under their own responsibility” and “in the interests of the local population” since no official or universal method of measuring such substantial character has yet been developed. The question must be addressed considering the historical evolution, the culture and the constitutional traditions of the country under analysis. It is also closely linked to the assessment of the compliance with other parts of the Charter, such as Articles 4, 8 and 9.
In order to assess compliance with this provision, both legislative and factual aspects should be taken into consideration.
In Poland, Article 166.1 of the Constitution states that «Public duties aimed at satisfying the needs of a self- governing community shall be performed by units of local government as their direct responsibility». This principle is echoed by the Article 2 of the Law on Municipal Self-Government, according to which “1. The municipality performs public tasks on its own behalf and on its own responsibility”. And Article 2 of the Law on Powiat Self-Government: “The county performs public tasks specified by law on its own behalf and on its own responsibility”. The functions of the municipalities and powiaty are divided into own (autonomous) functions and delegated functions, in accordance with the principle of freed decision-making.
Another indicator of the “importance” or the political and social role of local government in a country is the local government expenditure in the national general government consolidated budget, especially in comparison with other EU countries. In Poland, as previously indicated, the self- government authorities manage 31.3% of the total public expenditures.
Nevertheless, during the monitoring visit, the delegation was informed of a recent process of re- centralisation that affected several competences already transferred to local and regional authorities. Very often, it takes the form of the creation of State authorities, with the justification of the implementation of EU directives. The local representatives’ concerns are twofold. On one hand, they complain about the fact that those acts have been passed without being reviewed within the Joint Committee (see infra, sub Article 4). On the other hand, they consider the re-centralisation process unjustified and in violation of the principle of local self-government.
Among the previously local and regional competences that have gradually been re-allocated to the State, they especially mentioned:
- Centralisation of the agricultural advisory centres (dealing with farmers' support);
- Centralisation of the environmental protection funds (distributing EU funds);
- Centralisation of water management, including the authorities against flood;
page 65 / 796 - Centralisation of sport installation financed by the Lotto;
- Centralisation of competences on veterans;
- Centralisation of competences on management of schools;
- Centralisation of competences in the field of family benefits, parental benefits and a one-off childbirth benefit.
In its written replies to the rapporteurs’ questionnaire, the Ministry of the Interior and Administration pointed out some of the reasons for the centralization of the competences, focusing on the need to implement EU directives and rationalize public services to equalize standards of living. It concluded that the proposed legal solutions have been in the end adopted by Parliament in a vote. The same line of reasoning to justify the centralisation of certain competences was followed by the government during the consultation procedure. It negated the recentralisation as such and referred to it as building uniform standards of access to services and benefits of the welfare state or minor corrections in relation to the scale of self-government activities.
The rapporteurs are aware that it is not possible to define precisely, in Article 3.1, “what affairs local authorities should be entitled to regulate and manage” and that “the traditions of member states as to the affairs which are regarded as belonging to the preserve of local authorities differ greatly”. Consequently, they consider that the article must be read in light of the tradition of each Member State.
They also took note of the justifications provided for the takeover of competences by the Polish government, although the fact that the amendments have been adopted by the Parliament cannot be considered as a valid justification for violating the Charter.
However, considering the historical and successful decentralization process put in place in Poland since the 1990s and, consequently, the high level of autonomy enjoyed by Polish local authorities, taking into account also the interferences of central government within local competences as pointed out under Article 4.4 and Article 8.3, the rapporteurs express their concern vis-à-vis the process of re-centralization of competence that is ultimately undoing some of the achievements of Poland’s well-functioning and decentralised local and regional governance.
For these reasons, the rapporteurs conclude that Article 3.1 of the Charter is only partially respected in Poland.
Portugal [Article ratified - Report adopted on 28 September 2020 ]
In the view of the rapporteurs, the Constitution precisely regulates everything to do with local authorities: it expressly lays down the principles of devolution. Title VIII of Part III of the Constitution is devoted to local authorities, stating that they are territorial bodies corporate, possessing representative bodies, with the aim of upholding the interests of their communities (Art. 235); the categories of local authorities are parishes (freguesias), municipalities (municípios) and administrative regions (Art. 236), and they have specific powers conferred upon them, defined by law in accordance with the principle of administrative devolution (Art. 237).
The principle of autonomy in the area of finances and assets is recognised: local authorities have their own assets and finances (Art. 238); the organisational structure of each local authority comprises a deliberative assembly and a collegiate executive body (Art. 239), and local authorities have their own regulatory power within the limits laid down by the Constitution, laws, regulations of
page 66 / 796 higher-level local authorities and those established by oversight authorities (Art. 241).
Oversight of local authorities, defined as supervision of lawfulness (verification of local authority bodies’ compliance with the law), may be exercised only in certain cases and in certain forms stipulated by law (Art. 242); local authorities have their own staff, and the rules governing state staff and officials are applicable to them (Art. 243).
Consequently, the rapporteurs consider that Article 3 paragraph 1 of the Charter is complied with.
Republic of Moldova [Article ratified - Report adopted on 4 April 2019 ]
The analysis of this article deserves a nuanced assessment in the case of Moldova. On the one hand, the rapporteurs are convinced that local bodies (councils and mayors) are for the most part free and autonomous in adopting decisions, plans and budgets at local level. In this sense, they heard unequivocal testimony that, in general, local rulers feel free to take decisions, in their day-to-day activities, and that there is room for autonomy. The rapporteurs are of the opinion that, for the most part, Moldovan local authorities are “autonomous” in the sense that they can take decisions freely.
However, and for the sake of this provision of the Charter, the main question is whether, in the present situation, Moldovan local authorities regulate and manage a “substantial share of public affairs”, in the light of the most common standards across Europe. This share may be substantial considering the political and economic situation of the country, but certainly not when compared to the most general standards across Europe. The rapporteurs consider that in the Republic of Moldova the substantial scope of local autonomy is too limited. This assessment is based on different elements, that will be developed further below, but which can be enumerated here: a. the relatively low level of local competences; b. the total dependency on financial transfers and subsidies from the state; c. the de facto incapability of framing and implementing real public policies in the interest of the local residents d. the lack of human resources; and e. the small amounts of the local budgets and the low level of local expenditure in the context of the general public sector expenditure. In this sense, Moldovan indices and figures are below the average figures in Europe.
In the light of the above, it may be concluded that Article 3.1 of the Charter is respected in the Republic of Moldova, but there is room for substantial improvement.
Romania [Article ratified - Report adopted on 3 March 2011 ]
Consult reply indicated at article 2
Russian Federation [Article ratified - Report adopted on 30 October 2019 ]
Reform of local self-government began in 2003 when local autonomies were restored in rural settlements and cities after they had been practically abolished during the period known as “phased constitutional reform” in 1993 and 1994. By the beginning of the 2000s, local self- government bodies had been absent in more than half of Russian cities and most rural areas. Heads of local administrations were appointed by governors; there was no accountability of the local executive to local deputies and citizens.
Threats to local self-government also emerged after the 2003 reforms. The rapporteurs note that the norms introduced by Law No. 136-FZ allow the Entities of the Federation to withdraw practically any competence from municipalities (in the fields of territorial planning and development, land use, and utility services); municipalities have lost a number of powers and
page 67 / 796 responsibilities that have traditionally been inherent in local government, for example, social security and now public health (as of 2011).
The rapporteurs received information that several tasks have been taken away from local authorities. On the other hand, during the monitoring visit, interlocutors from federal authorities and authorities of autonomous republics mentioned several cases of devolution or delegation of tasks. It is also obvious that in view of the size of the country and the extremely uneven population density, different types of local authorities and corresponding tasks exist. Therefore, the rapporteurs are not convinced that the Russian authorities could systematically restrict the scope of competence assigned to local authorities in general. On the other hand, they are convinced that there are many opportunities for increasing the share of local authorities in the regulation and management of public affairs.
The situation in Moscow, where municipalities are deprived of basic functions and resources, is certainly at odds with the provisions of the Charter. The fact that Moscow city is a federal subject does not mean that one tier is sufficient for a territory of 12 million inhabitants. Cities that are federal subjects also exist in other federations, such as Germany (Bremen, Hamburg and Berlin), but in these cases they include a lower level where strong local government exists and this is not the case in Moscow, nor (to a slightly lesser extent) in Saint Petersburg.
During the consultation procedure, representatives of the city of Moscow highlighted “that the role of municipal deputies has increased significantly, the range of tasks and powers has become wider. Deputies are personally involved in the implementation of works on the improvement of the territories of districts, on the renovation of housing stock in Moscow.”
The rapporteurs however consider, on the basis of the above mentioned information provided during their visits, that the Russian Federation partially complies with Article 3, paragraph 1, of the Charter. In particular the situations in Moscow and Saint Petersburg are seen by the rapporteurs as quite problematic in this respect. The management of the share of public affairs should be globally improved in practice.
San Marino [Article ratified - Report adopted on 28 March 2018 ]
Taking into consideration the very small size of the country and the proximity of the state authorities to the citizens, it is obvious that local government in San Marino cannot have the range of responsibilities that is appropriate in other countries. This cannot mean, however, that local authorities should barely have any decision-making responsibilities. This seems, unfortunately, to be the case in San Marino: In this respect, very little has changed since the last Congress information report on San Marino (1999), when the rapporteur stated that the townships: do not “...have decision- making powers or competency in certain specified areas of activity... they nevertheless participate in the administrative process by drawing up reports or preparing opinions (pareri) on various issues (opening of premises of plants, urban development etc.), the final decision being taken by the central authorities. In general, these reports and opinions have purely consultative status. In a few cases, for example travelling markets, the central authorities are obliged to comply with the parere”.
Today Art. 22 of Law No. 127/2013 stipulates that the Council decides autonomously, within the limits of its annual budget, on: interventions of a humanitarian or social solidarity nature; financing of cultural, recreational, sporting and social initiatives, also in collaboration with other entities, institutions, institutes and associations, public and private; design and construction of public works as specified in Article 28 and Article 32 (green spaces and parks; maintenance of local roads, street lighting and paths by the state public works entity AASLP, and in emergency situations, also by
page 68 / 796 private companies after decision of the Mayor (“Capitano”) The Councils are also responsible for co- ordinating cultural, recreational and social initiatives in their township and facilitating collaboration between the various operating agents in their territory. Social centres which benefit from state funding co-operate with the township councils on the basis of an annual schedule based on the joint agreement between the Councils and the responsible Secretary.
Furthermore, according to Art. 23 of the same law, the township councils submit binding opinions on travelling trade and issue directives on the organization and operation of markets and on the establishment of businesses in the case of a disruption in the supply of goods.
The democratic legitimacy of local government bodies is ensured through the direct election of Mayors (Capitani) and Councillors. As already mentioned, 22,172 voters were registered for the last municipal elections in 2014. The total population of the Republic is approximately 33,000 inhabitants, of whom nearly 5,000 (more than 15%) are foreigners, mostly Italians. The Republic of San Marino has not ratified the Additional Protocol to the European Charter of Local Self-Government on the right to participate in the affairs of a local authority. The Republic of San Marino should be encouraged to ratify the Additional Protocol on the right to participate in the affairs of a local authority.
The ratification of the Additional Protocol is made easier by the fact that the Republic of San Marino has already developed a wide range of institutes of direct democracy, including direct accountability to the citizens (“Instanza d’ Arengo”), legislative initiative by citizens (Art. 30 of Law No.1 of 29. May 2013) and the three different types of referendum procedures (referendum propositivo o di indirizzo, referendum confermativo, referendum abrogativo). Furthermore, the small size of the country and the small size of local authorities (only the biggest municipality, Serravalle, has more than ten thousand inhabitants) would further facilitate the introduction of additional participatory institutions
The rapporteurs conclude that there is a formal compliance with Article 2 of the Charter since the principle of local government is recognized in domestic legislation. In addition, Article 3 paragraph 2 is respected in San Marino, since the bodies of the townships are directly elected. There is also a strong institutional arsenal of instruments and procedures promoting direct democracy. The rapporteurs would therefore encourage further development of participatory institutions at local level, including the introduction of municipal voting rights for foreign residents in San Marino.
It should be noted that the townships still have very few decision-making powers. The law of 2013 bypassed this enormous deficit of municipal competence which cannot be overlooked because of the well-known particularities and the size of the country. Eighteen years ago, Recommendation 63 (1999) stated that there seemed to be no constitutional or political barriers to consolidating a local government system that includes municipal competence in areas that are important to the local communities. Unfortunately, the laws still prevent the townships from regulating and managing local affairs such as basic local infrastructure and services that belong to the standard repertoire of municipal competences in all European countries. The rapporteurs therefore conclude that Article 3, paragraph 1 is not respected in the Republic of San Marino.
Serbia [Article ratified - Report adopted on 18 October 2017 ]
According to the requirements set out in the first paragraph of Article 3, local government should be in charge of a substantial part of public affairs. The functions of the autonomous provinces and local self-government units are listed in the Constitution as well as in other relevant laws. In economic terms, local government expenditures have been estimated to correspond to approximately 15% of total public sector expenditure. This figure does not include the province of Vojvodina or municipal enterprises financed by other sources of revenue.
page 69 / 796 The second paragraph underlines that local self-government must be carried out through elected councils or through means of direct democracy. As stated in the Constitution (Article 176), the Autonomous Province of Vojvodina and the municipalities and cities all have decision-making assemblies consisting of elected members. The only exceptions are those assemblies which, in accordance with law, have been temporarily dissolved by the government. This issue will be further expanded upon in the section on Article 8.
Serbia also has means for provincial and local government units to consult their citizens. The Law on Local Government provides for three forms of direct participation by citizens – citizens’ initiatives, citizens’ gatherings and referendums. According to the Ministry of Public Administration and Local Self-Government, these means will be reinforced in the amended Law on Local Self-Government.
Given the significant number of functions carried out by provincial and local government, together with the economic relevance of these activities for the country as a whole, the rapporteurs consider that local authorities do carry out a substantial share of public affairs under their own responsibility. Although an established definition of “substantial” is lacking in both the Charter and its Explanatory Report, provincial and local government units have a share that corresponds to what is common in other countries in South-East Europe. Therefore, the rapporteurs conclude that Serbia meets the requirements of Article 3 of the Charter.
Slovak Republic [Article ratified - Report adopted on 24 March 2016 ]
Concerning Article 3 para 1, the main question that must be addressed under this heading is whether, in the present situation, Slovak municipalities do regulate and manage a “substantial share of public affairs”. The impression of the rapporteurs is that this is so, in the light of the number and importance of local competencies, the fact that they have to power to enact binding local regulations, and the lack of “a priori” controls from State agencies and departments, for most of the decisions taken by municipalities (see, infra).
Slovenia [Article ratified - Report adopted on 6 November 2018 ]
In the opinion of the rapporteurs, local municipalities in Slovenia continue to independently and autonomously regulate and manage substantial share of public affairs, as it is set by the Constitution and domestic laws.
This conclusion is reached in view of the number and importance of local competencies and since the local authorities have been entrusted with typical powers (e.g. power to enact binding local regulations and to impose sanctions and fines). Furthermore, Slovenian local authorities may approve necessary development plans and freely formulate local public policies. It was found that State agencies and departments exercise control over the municipal decision in the frameworks set by the legislation.
Another indicator of political and social role of local self-government in a country is the local government expenditure as a part of public expenditure. According to Eurostat data, total public expenditure is around 47% from GDP (2015), while local government expenditure share is approx. 18%. Revenue autonomy at the local level of Slovenia is slightly higher than the EU average (Slovenia- 59%, EU- 53%).The dependency on central government transfers in Slovenia is lower than the EU average (Slovenia - 41%, EU - 47%). Local own revenues represent 13% of total government revenues, which is in line with the EU average (13%).
The rapporteurs therefore conclude that Article 3.1 of the Charter is complied with by Slovenia.
page 70 / 796 Spain [Article ratified - Report adopted on 20 March 2013 ]
The Spanish Constitution of 1978 explicitly recognises local self-government (autonomía local) but does not provide a definition of it. Section 137 identifies the basic local government units that are present in the country and recognises them as constituent parts of the State. The concept of “local autonomy” in Spain is difficult to summarise in a precise and detailed legal way. But different legal instruments are relevant: (a) the European Charter of Local Self Government (b) the Spanish Constitution; (c) the laws and regulations approved by the national and regional Parliaments and executives; (d) the case-law of the Spanish Constitutional Court; (e) the case-law of the Supreme Court. It is important to mention that the case-law of the Supreme Court and, especially, that of the Constitutional Court is an essential element of Spanish local government law. As the Constitution merely states general formulae as regards local autonomy one can perfectly support the proposition that the Constitutional Court is the ultimate recipient of the idea of local autonomy. Since 1981, the Court has issued key rulings in the field, and has built the actual constitutional concept of local autonomy.
The delegation is aware of the fact that Spain made only one declaration upon ratification of the Charter by stating that it does not consider itself bound by Article 3, paragraph 2 of the Charter, which declares that the system of direct election should be implemented in all local authorities falling within the scope of the Charter. This declaration reflected Spain’s view that the direct election principle should not be extended to the Provincial Councils (diputaciones), whose members are not directly elected by the voters.
The diputaciones, though a separate level of government, do indeed possess a distinct legal personality, and actually fulfil only responsibilities established by the law (at national and regional levels) assigned to the municipal level. In a way, the second tier system is justified by the fact that the diputaciones are not a direct expression of a territory’s population, but of its municipalities. Later on, further transformation of the legislation on diputaciones might be considered as a means of reorganising local government in order to cope with the financial crisis.
This being said and contrary to the prevailing situation in other Spanish autonomous communities, the parliaments of the provinces of the Basque Country are elected by a direct universal suffrage system. These parliaments, called juntas generales correspond to the three provinces of the Basque Country, namely: Álava, Vizcaya and Guipúzcoa
The rapporteurs will not comment on the compliance with Article 3.2 in this respect, since it was the subject to a reservation formulated by Spain when it ratified the Charter.
Sweden [Article ratified - Report adopted on 2 April 2014 ]
Consult reply indicated at article 2.
Switzerland [Article ratified - Report adopted on 20 October 2017 ]
Swiss municipalities are characterised by extreme diversity, not only in terms of size and socio- economic structures, but also in terms of the scope of their autonomy since they are governed by the cantonal constitutions and laws. The latter accord the municipalities own competences, the extent of which varies depending on the canton. The responsibilities most often assumed by the municipalities concern the education sector (nurseries, primary schools and secondary schools), the health sector and the social sector (social assistance, home care services, care for the elderly,
page 71 / 796 responsibilities linked to the social insurance system), water and electricity supplies, waste water and rubbish treatment, public transport, construction (local development planning, building regulations and permits, conservation of the landscape and historic monuments, road networks, and sport and cultural facilities), the local police (fire department, traffic police, regulation of trade and commerce), financial matters (setting the tax rate, drafting the budget, managing municipal property) and citizenship (granting civil rights to foreign residents).
In municipalities without a parliament, municipal citizens elect the members of the executive council and vote on all municipal legislation as well as the municipal budget and accounts. Citizens normally exercise their political rights within the municipal assemblies (Gemeindeversammlung), which meet several times a year. Therefore, they directly participate in municipal decision-making along with the members of the executive council. This type of direct democracy is very widespread at municipal level. However, it transpires that citizen participation in these municipal assemblies is often limited. For example, in the municipality of Oetwil an der Limmat (Canton of Zurich), which the delegation of the Congress was able to visit, approximately 1700 citizens have the right to vote (out of 2363 inhabitants), but municipal assemblies are attended by only 60 to 100 people, a fact that may be considered a sign of confidence in the municipal council, which has only five members.
In municipalities with parliaments, municipal citizens elect deputies to the municipal parliament. In most cantons, the municipality can choose the electoral system, often opting for proportional representation. The number of members in the parliament varies depending on the population of the municipality. Executive council members are also elected by the citizens, except in Neuchâtel where they can be elected by the parliament. Municipal citizens also participate in direct democracy procedures where these exist (signing requests for a referendum and initiatives).
The composition of the municipal electoral body is determined by cantonal law, but a certain degree of autonomy may be left to the municipalities. For their part, the cantons must respect Article 39, paragraph 2, of the Federal Constitution, which provides that political rights are to be exercised in the municipality in which a citizen resides, and paragraph 4 of the same article, which adds that a citizen shall be entitled to vote, notably in municipal matters, no later than three months after moving there. Most cantons make active and passive electoral rights in municipalities (the right to vote and the right to stand for election) subject to the same conditions as those that determine the rights of cantonal citizens: Swiss nationality, age (in the Canton of Glarus the minimum age is set at 16 years old), residence and no deprivation of civic rights. In five cantons (Neuchâtel, Jura, Vaud, Fribourg and Geneva), cantonal law directly grants foreigners the right to vote in municipal matters. In the Cantons of Appenzell Ausserrhoden, Grisons and Basel-Stadt, cantonal law allows municipalities to grant these rights to foreigners, while in the Canton of Thurgau, foreigners are entitled to participate in debates on municipal affairs.
The rapporteurs consider that the situation in Switzerland is in compliance with Article 3 of the Charter.
Turkey [Article ratified - Report adopted on 1 March 2011 ]
The analysis article by article is currently unavailable
Ukraine [Article ratified - Report adopted on 31 October 2013 ]
According to article 140 of the Constitution and article 2 of the Law on local self-government of 1997, local self-government is "the genuine capability and right, guaranteed by the State, of a territorial community – ie residents of a village or a voluntary association of residents of several villages,
page 72 / 796 residents of a settlement or of a town/city - to independently resolve issues of a local nature within the limits of the Constitution and the laws of Ukraine".
So self-government must be exercised by territorial authorities, and therefore by citizens, directly or through the intermediary of councils of towns/cities, settlements and villages and their executive bodies, as well as through the councils of rayons or oblasts, representing the common interests of territorial communities of villages, settlements or towns/cities. This results in a fairly complex legal and administrative context, as regards both the content and scope of self-government and the bodies executing the decisions, with the latter being differentiated by the position of the authority concerned within the country's vertical administrative structure.
Regarding content, Ukrainian legislation is, at first sight, more restrictive than article 3 paragraph 1 of the Charter, as it limits autonomous decision-making and management to "matters of local importance", whereas the Charter refers to "a substantial share of public affairs". Furthermore, the basic principles defined in article 4 of the Law on local self-government include the "principle of combining local and national interests" in the exercise of self-government. Here we can see a certain entanglement between the levels of competence and the steering of local action towards the national interest.
It should further be noted that article 24 of the Law on local self-government stipulates that "the legal status of local self-government in Ukraine shall be determined by the Constitution, the present law and other laws, whose provisions must not run contrary to those of the present law". The associations are calling for closer compliance of Ukrainian legislation with the Charter in order to implement the principle of consistent local authority involvement where local affairs are concerned. The rapporteurs note that the legislation partly complies with the Charter on this point and invite the Government to reinforce subsidiarity, for example by granting a power of general competence to local authorities.
The Ukrainian authorities are committed to promoting the development of civil society in Ukraine in order to adapt Ukrainian legislation to European standards. The Decree 342/2013 contains a series of obligations and recommendations to local authorities. The rapporteurs consider that reinforcing civil society activity creates a favourable environment for the rights of citizens within the meaning of Article 3 of the Charter and can improve the democratic process within local communities.
United Kingdom [Article ratified - Report adopted on 26 March 2014 ]
Consult reply indicated at article 2
Article 3.2 Concept of local self government
This right shall be exercised by councils or assemblies composed of members freely elected by secret ballot on the basis of direct, equal, universal suffrage, and which may possess executive organs responsible to them. This provision shall in no way affect recourse to assemblies of citizens, referendums or any other form of direct citizen participation where it is permitted by statute.
Albania [Article ratified - Report adopted on 31 October 2013 ]
page 73 / 796 Consult reply indicated at article 2
Andorra [Article ratified - Report adopted on 28 March 2018 ]
As for article 3, paragraph 2, the right to self-government is exercised in Andorra by elected bodies, the Comuns. All the members are elected, for four years, in single multi-member districts, consisting of the whole Parish, using closed lists. Half of the seats are allocated to the party that received most of votes.The other half of the seats is allocated proportionally to the votes obtained by the different parties, including the list that has won. With this system, the winning party obtains an absolute majority. A Cònsol major (mayor) and a Cònsol menor (deputy mayor) are elected among the councillors for four years: they are usually members of the winning party. They must resign if they are affected by a motion of censure, which includes a candidate mayor, approved by the absolute majority of the Council.
It should be mentioned that during the meetings the rapporteurs heard complaints of the limited role of the opposition and minorities in the local councils in practice due to the specificity of electoral system according to which 30 - 40% of votes is sufficient to obtain the absolute majority of seats. The second most voted list, with 25-30% of votes, could elect only one or two representatives. The delegation was informed that the limited number of councillors makes the work of the opposition difficult since it does not have any budget and is unable to participate in all the committees. In addition, some meetings can be scheduled on a very short notice, as part of a procedure authorised by the Order on organisation and functioning adopted by the Comuns in 2011. Rapporteurs were told that a law, establishing some basic principles on the functioning of the Comuns, would be necessary.
During the consultation process the government informed the rapporteurs, with regard to the lack of representation of minority parties in the Comuns, that the representation of these parties is established directly by the Qualified Law on the electoral system and referendums. Any amendment to this law must be approved by a dual majority of both the councillors elected to parishes and the councillors elected at national level. The government also stated that the municipal election system established by the Qualified Law on the electoral system and referendums of 1993 has brought stability to the Comuns ever since and has made it possible for power to change hands regularly between the political parties.
The rapporteurs consider that the system currently in force in Andorra meets the requirements of Article 3.2, whose purpose it is to guarantee the exercise of local self-government by democratically elected bodies.
However, the rapporteurs consider it necessary for the remarks they heard during their visit to be taken into consideration so as to improve the effectiveness and smooth running of councils.
Armenia [Article ratified - Report adopted on 15 June 2021 ]
Article 3.2
2 This right shall be exercised by councils or assemblies composed of members freely elected by secret ballot on the basis of direct, equal, universal suffrage, and which may possess executive organs responsible to them. This provision shall in no way affect recourse to assemblies of citizens, referendums or any other form of direct citizen participation where it is permitted by statute.
page 74 / 796 149. The democratic character of local authorities, based on their direct legitimacy and the holding of free elections, is a core value of the Charter as it is entrenched in Article 3, paragraph 2.
150. In Armenia, the main legislative and decision-making body of municipalities, the Community Council, is elected by secret ballot, on the basis of a direct, equal and universal right to vote.
151. In each community, the Chief of Community (the mayor) is the main executive body. In a formal sense, he or she is responsible to the council, as far as the representative body, under certain conditions (for example, no council meeting is summoned in a six-month period), may initiate the removal of the mayor (LGA, Article 26). A decision is sent to the government for follow-up and for planning the election of a new mayor. However, the local council does not have a final say in this highly important matter, as the government decides on the initiative. Such an intervention by the central government in the organisational affairs of the local government seems unjustified. In principle, this power could arise from the government’s oversight over local governments, but even in this case, the possibility of the removal of a democratically elected mayor by central government would be problematic in respect of the Charter. When the community is reorganised by law into another administrative unit, early termination of powers of the mayor may also occur and is followed by local elections.
Austria [Article ratified - Report adopted on 28 September 2020 ]
As presented above (section 3.1), all Austrian Länder guarantee the principles incumbent on local representative democracy. In all cases, municipalities are represented by freely elected councillors and mayors and the meetings of the deliberative bodies are usually public and open to external scrutiny.
In addition, in all municipal codes, just as advised by the Charter and its Explanatory Report, there are several instruments available to hold elected officials administratively and politically accountable. The following paragraphs present a non-exhaustive overview of such instruments.
For Burgenland, Article 51 of the Municipal Code regulates the town meetings (Gemeindeversammlung), Article 52, the consultation of the people (Volksbefragung), Article 53 the citizens’ initiative, Article 54 the referendum (Volksabstimmung) and Article 55 the right to petition and appeal the municipal decisions.
In Carinthia, section 11 of the Municipal Code describes the rules on the consultation of the people (Gemeindevolksbefragung) and section 12 regulates the citizens’ meetings as instruments for holding the elected officials accountable.
In Lower Austria, the Municipal Code recognises the right of initiative to all municipal voters (Article 16), while section 5 regulates the consultation of the people (Volksbefragung).
The Municipal Code of Upper Austria regulates the referendum (Volksabstimmung) in Article 31a, Article 38, the consultation of the people (Volksbefragung) in Article 38, and the citizens’ initiative in Article 38b.
In Salzburg, the Municipal Code speaks of the town meetings (Article 66), referenda and consultations of the people (Articles 67, 69 and 70), as well as citizens’ initiatives (Bürgerbegehrens) (Articles 71 to 74).
The Styrian Municipal Code recognises the ability of the municipal council to express distrust in the mayor (Article 36), while the citizen involvement in policy-making is regulated in section 6 of the
page 75 / 796 Constitution of Styria (Citizens’ rights in municipality).
Articles 61 to 65 of the Municipal Code of Tyrol regulate the consultation of the people (Volksbefragung), Article 66 the town meetings and Article 67 the right to petition.
Finally, in Vorarlberg, Article 21 regulates the requests, Article 22 the referendum, Article 23 the consultation of the people, and Article 25 the right to petition.
Bearing the above into consideration, the rapporteurs consider that Austria complies with this paragraph.
During the monitoring visit, the rapporteurs observed, on several occasions, that local participatory democracy is deeply rooted in the daily life of Austrian municipalities. However, the rapporteurs take note of the fact that Austria has not yet signed nor ratified the Additional Protocol on the right to participate in the affairs of a local authority (CETS No. 207). Considering that there are no envisaged technical impediments, and in light of the positive examples of public participation in local decision- making, the rapporteurs strongly encourage Austrian authorities to sign and ratify the said Protocol.
Azerbaijan [Article ratified - Report adopted on 17 June 2021 ]
Local self-government is exercised be two different and separate institutions, the local executive bodies that are part of the state administration and municipalities as elected organs that are not part of the administrative structure of the country.
Having regard to the municipal level only, the requirements of Article 3.2 are formally respected as municipalities consist of members elected by secret ballot in direct, equal and universal suffrage. Municipal councils elect a chairperson responsible to them and the legislation, including in particular the Law on Public Participation, provides for opportunities to resort to referendums and other forms of citizens’ involvement in local issues (see above).
As to the “responsibility” of the chairpersons to the councils, no information could be obtained by the delegation on the means of supervision of the chairperson by the council, such as the number of oral and written questions put to them, or whether the municipal charters provide for some reserved sitting time for discussing proposals (even less of proposal by the opposition, which generally does not exist in most municipalities).
Article 146 of the Constitution, as amended in 2016, provides that the municipalities and municipal servants bear civil responsibility for the damage caused to human rights and liberties, as well as the guarantees thereto, in the result of the activity or inactivity, which contradicts the legislation, committed by municipal servants. The Constitutional Court reported that this provision has been used a few times to suspend municipal councillors, notably in property cases regarding the distribution and selling of land plots that resulted in in property violations of the citizens. in any case the responsibility cannot go as far as to lose an elective mandate and members of municipal councils cannot be removed.
As the Contemporary commentary clearly points out (Paragraph 37), the two paragraphs of Article 3 of the Charter are closely related and “local self-government” is shaped in terms of “local democracy”. This means that the shortcomings highlighted with regard to Article 3.1 cast their shadow on Article 3.2 as well.
In light of this close link, the requirements of Article 3.2 of the Charter are only partly met in Azerbaijan.
page 76 / 796 Belgium [Non ratified - Report adopted on 15 October 2014 ]
Flemish Region (Vlaanderen)
Belgium has not ratified the provision of Article 3.2, but the rapporteurs would like to mention that the explanatory memorandum to the draft municipal decree, which subsequently became the Municipal Decree of 15 July 2005, provided for the direct election of the burgomaster by the local inhabitants entitled to vote. However, the direct election of the burgomaster is not mentioned in the final text of the municipal decree and the rule on the appointment of the burgomaster by the Flemish government remains in force. The rapporteurs point out that both Recommendation 131 on local democracy in Belgium, adopted by the Congress in 2003, and Recommendation 258, adopted in 2008, urged the adoption of the system of the election of burgomasters by the municipal council or the citizens, which, as indicated in the aforementioned recommendations, would have had the effect of relaxing the conditions of the supervision of the municipalities by the regional authorities.
However, the Municipal Decree of 15 July 2005 gave the municipal council an important role in the process of appointing the burgomaster: Article 59.1 states that municipal councillors can propose candidates for the office of burgomaster, and a proposal document duly dated must be submitted to the governor of the province for this purpose. In order to be admissible, the proposal document must be signed by more than half of the elected representatives on the lists of those who stood in the elections and by a majority of the persons elected on the same list as the burgomaster’s candidate proposed.
In contrast to Wallonia, the German-speaking Community and the Brussels-Capital Region, which are of the opinion that Belgium should ratify this provision, Flanders believes that paragraph 2 of Article 3 should not be the subject of ratification.
The rapporteurs conclude that Article 3.1 is generally respected in Flanders, but in view of the specific nature of the principle of local self-government in Belgium and of the principle of supervision the Flemish authorities should give the municipalities more responsibilities and autonomy and strengthen their administrative powers.
Walloon Region and German-speaking Community
Belgium has not ratified Article 3.2 of the Charter, which enshrines the principle of the free election of members of the local assemblies by secret ballot on the basis of direct, equal and universal suffrage. This paragraph also provides for the existence of an executive accountable to the deliberative assembly.
These principles are crucial in the democratic representation of local government political bodies and are also enshrined in Article 162 of the Constitution.
The existence of an assembly of directly elected representatives is also a determining factor enabling the local and provincial authorities to have their own financial resources since only institutions possessing the legitimacy of the direct election of their members can decide to levy a tax.
The provinces are therefore worried about the provisions in the Walloon Regional Government’s agreement envisaging the transformation of the provinces into “territorial communities” run by indirectly elected representatives, which would undeniably be a retrograde step in terms of local self- government and democratic legitimacy.
page 77 / 796 Article 3.1 is complied with both in Wallonia and the German-speaking Community. The principle of the direct election of assemblies is enshrined in the Constitution and the burgomaster can be considered to be directly elected by the citizens. Both the representatives of the provinces and the municipalities in Wallonia would like Belgium to accede to the whole of Article 3 of the Charter.
Brussels-Capital Region
Belgium has not ratified paragraph 2 of Article 3. Nevertheless, at the regional level the Brussels Parliament consists of 89 members elected by universal suffrage every five years by adult Belgians resident in the Brussels-Capital Region. As for the municipal level, the organisation and management of a municipality are based mainly on three bodies:
- A municipal council consisting of representatives elected every six years in municipal elections;
- A municipal executive comprising the burgomaster and échevins, which looks after the municipality’s day-to-day administration; it exercises its responsibilities collectively;
- A burgomaster appointed by the government of the Brussels-Capital Region from among the municipal councillors.
During the rapporteurs’ visit, the representatives they met from the Brussels-Capital Region expressed the view that paragraph 2 of Article 3 could be ratified by Belgium.
The principle of local self-government set out in Article 3, paragraph 1, of the Charter calls for closer consideration by the regional authorities of the Brussels-Capital Region in order to ensure a greater degree of self-government for the Brussels municipalities.
Bosnia and Herzegovina [Article ratified - Report adopted on 31 October 2019 ]
The structure of municipalities is similar to other European countries: there is an elected council and a mayor, elected through different electoral processes. Elections are held every four years, and the last local elections were held on 2 October 2016. Elections are regulated by the constitution and by the Electoral Code. Every person who is a citizen, has reached the age of 18 and has been registered has the right to vote in local elections. Local elections have been subject to observation by the Congress and other international organisations and bodies. The general appraisal was that they were fair and regular.
Specific ethnic, or “national” representation: According to the Constitution of the State and of the Entities, the public authorities have to be „generally representative“ of the population, i.e. the three constituent peoples and „Others“. While in the Brčko District this is guaranteed by quotas (see below), in Banja Luka and Republika Srpskamunicipalities, there are no quotas for the direct election of the City Council. However, if “Others“ count for more than 3% of the local population, one seat in the assembly is guaranteed for them through a special ballot (currently: 30 + 1).
A problem is the reference data for proportional representation, as for decades the last census before the war (1991) was the basis and the new census (2013) has been declared illegal by the Republika Srpska National Assembly. This has created considerable uncertainty. Banja Luka has around 190.000 inhabitants, but over 200.000 registered voters (actually, this is the number of issued ID cards) which is a difference of 30‑40.000 persons (considering the voting age).
In the Brčko District, collective rights are protected differently compared to the rest of the country.
page 78 / 796 The Brčko District had been directly governed by the (Deputy) OHR. “National interests” are protected by affirmative action in government and a guaranteed minimum number of votes (quorum), but the statute determines which specific issues are considered “vital interests” of the groups, such as educational issues, culture, language, spatial and town-planning. In practice, the veto-power has never been used so far, but the (political) threat makes agreement necessary on practically all important issues.
Participation of citizens in local affairs in between local elections is guaranteed in both Entities (and Cantons), in particular through provisions on local referenda.
However, the rapporteurs would like to stress the urgent need to redress the situation in Mostar, where no local elections have been held since 2008. This situation is in violation of Article 3.2 of the Charter which requires that the right to local self-government shall be exercised by councils or assemblies composed of members freely elected by secret ballot on the basis of direct, equal, universal suffrage. Given the importance of the Mostar issue for the general functioning of local democracy in Bosnia and Herzegovina, the detailed analysis of the situation in Mostar is given separately at the end of the present report.
The rapporteurs consider that the requirements of Article 3.2 cannot be met in Bosnia and Herzegovina until the workable solution to the situation in Mostar has been found and the city residents can enjoy their right to choose their representatives at the local level. In the opinion of the rapporteurs, attention should also be given to the implementation of the 2013 census with the objective of creating certainty by reference to clear and accepted data.
Bulgaria [Article ratified - Report adopted on 21 January 2021 ]
Article 3.2
1. The right of self-government must be exercised by democratically constituted authorities. The Charter prioritises a system of representative democracy at local level, in which the decision-making power is exercised by councils or assemblies directly elected by the people. Direct democracy plays a complementary (and not substitutive) role. Thus, local elections play a key role in local democracy: local representatives must be directly elected in free elections, by secret ballot based on direct, equal, universal suffrage. In addition, the right to participation that has been especially developed in the Additional Protocol, considers both forms of participation: a) as voters or candidates in local elections; b) direct involvement in consultative processes, local referendums, and petitions26.
1. As for the structure of government at local level, the Charter does not express an option in favour of one specific form of local political organisation, leaving the choice in the hands of domestic legislation. The Charter only points out the central role that must be recognised to elected councils and assemblies. The representative body is indeed the organ required to deal with matters of the greatest importance to the local community, such as budgetary or tax matters. But the Charter does not refer to the necessity of having executive bodies, or to the way in which they are appointed: it is only stated that elected councils or assemblies “may possess executive organs responsible to them”27.
1. The Charter underlines that existing executive organs are “responsible” to the elected councils or assemblies. The interpretation of the notion of “responsibility” has important consequences for the local form of government. In any case, the primacy of the directly and universally elected council or assembly means that this body takes the most relevant decisions and that there should be some tools to make the executive body accountable to
page 79 / 796 the council. The concept of “responsibility” does not necessarily mean that the executive must be dismissible by the assembly. The minimum that is necessary for the “responsibility” requirement to be met is the introduction of a system of effective supervision of the executive by the assembly, allowing regular scrutiny of the executive’s activities28.
1. In Bulgaria, the constitution itself defines in Article 138 that “the body of local self- government within a municipality shall be a municipal council elected directly by the populace for a term of four years by a procedure envisaged by the law”. Thereupon, Article 139 clarifies that “(1) The mayor shall be the executive power within a municipality. He shall be elected for a term of four years by the populace or by the municipal council in a manner established by law. (2) In his activity a mayor shall be guided by the law, the acts of the municipal council and the decisions of the populace.”
1. The LSGLA provides a comprehensive framework for the interaction between the two local authorities’ bodies. The municipal council shall formulate the policy of the municipality’s growth and development in connection with the activities provided by the LSGLA (Articles 17 and 21), as well as in connection with other activities provided by law. It will furthermore resolve other issues of local importance that do not fall within the exclusive competence of other bodies.
1. The municipal council exercises control over the work of the local administration through the possibility to address different questions to the mayor of the municipality. The municipal council may annul administrative acts of the mayor that contradict their acts, as well as challenge illegal ones before the court. The municipal council and its standing committees may request references, reports, information and other materials related to the implementation of the decisions taken from the mayor of the municipality, deputies and the municipal administration.
1. The mayor of the municipality is a body of the executive power in the municipality (Article 38, LSGLA). In his or her activity the mayor is guided by the law, by the acts of the municipal council and by the decisions of the population. At the same time, the mayor is obliged to perform functions assigned to him or her by the central State bodies, but only when this is determined by law (Article 44, paragraph 4, LSGLA).
1. The mayor of the municipality shall send to the municipal council his or her acts, issued in implementation of the council’s decisions, the contracts and their amendments and supplements, within three days from their issuance. The mayor of the municipality is obliged to organise the implementation of the acts of the municipal council by submitting a report on their implementation twice a year.
1. The mayor is the only body that can assess the expediency of the acts of the municipal council, return the inexpedient ones for a new discussion (Article 45, LSGLA) and challenge them before the administrative court. The act referred for new consideration shall not enter into force and shall be considered by the municipal council within 14 days after its receipt. The municipal council may rescind, amend, or adopt the act referred back for a second consideration. The act referred back for new consideration shall be adopted again with a majority specified by law but not less than one half of the total number of municipal councillors. The amended or adopted for a second time administrative act may be contested before the respective administrative court under the procedure of the Administrative Procedure Code (APC).
1. The right to participate in the affairs of a local authority is currently regulated in the
page 80 / 796 Constitution of the Republic of Bulgaria (Article 136(1) “…Citizens shall participate in the government of the municipality both through their elected bodies of local self-government and directly, through a referendum or a general meeting of the populace”), the APC, the Electoral Code, the Law on Direct Participation of Citizens in State Authority and Local Self- Government, LSGLA, the Access to Public Information Act, the Public Finance Act (PFA) and the Municipal Debt Act. The right to participate in the affairs of a local authority is applied in the local acts and activities of the Bulgarian municipalities. According to information provided by the NAMRB, ordinances for civic participation in the affairs of the respective municipality have been adopted in a number of municipalities, and separate ordinances for specific policies specify the manner of participation of the local community. The Additional Protocol does not provide for the possibility for the member States of the Council of Europe to express reservations and declarations under its provisions, so that the Republic of Bulgaria is bound by all its provisions.
Croatia [Article ratified - Report adopted on 20 October 2016 ]
Article 133 of the Constitution of Croatia states that: “The right to local and regional self-government shall be exercised through local and/or regional representative bodies, composed of members elected in free elections by secret ballot on the grounds of direct, equal and general suffrage”. The organic Law on Local and Regional Self-Government (2001, as amended in 2005) establishes the functions of the local representative body and also the right of the local representative body to define the structure and method of local administration.
Article 39 of this law also states that “The head of the municipality, the city mayor and county prefect are the executive bodies of the unit of local and the unit of regional self-government (Article 39). Article 42 of the same law states that “The head of the municipality, mayor or county prefect are responsible to the central bodies of state administration for the performance of the tasks of state administration transferred to the scope of the bodies of the municipality, town or county”.
Croatia places high legitimation on the mayor/prefect being elected by a direct ballot and therefore is directly answerable to the electorate, as the top executive of the local and regional self- government, while still being accountable to the council which can propose a motion for recall, which must be confirmed by a local recall referendum.
The rapporteurs therefore conclude that Croatia fully conforms to Article 3 paragraph 2 of the Charter.
To summarise, the rapporteurs’ conclude partial conformity on Article 3 paragraph 1 where the necessary legislation is in place but where further efforts need to be made so that local authorities are able to regulate and manage a substantial share of public affairs under their own responsibility. They conclude full compliance by Croatia with Article 3 paragraph 2 of the Charter.
Cyprus [Article ratified - Report adopted on 20 October 2016 ]
Regarding Article 3 paragraph 2 of the Charter, the Cypriot legal system recognizes certain forms of citizen participation like local referendum and public hearing. As it was referred to above, local referendum has to be held before any decision about the amalgamation or the change of administrative status of local authorities. Furthermore, consultative referenda can be held also in order to ascertain the opinion of local population on serious matters of public interest. In our knowledge, such a referendum is only rarely called; one well-known example was the municipal referendum in Nicosia on the restoration and transformation of the old stadium in 2008. According to
page 81 / 796 the Town and Planning Law of 1972, public hearing can be organized in the course of planning permit procedures.
Czech Republic [Article ratified - Report adopted on 8 March 2012 ]
The requirements under Article 3 (2) of the Charter that the right to self-government be exercised by councils elected through free elections of free elections, gives rise to no particular concern as far as the Czech Republic is concerned. Because the executive organs are elected by the relevant councils, the same goes for the requirement about responsibility towards the council.
Denmark [Article ratified - Report adopted on 31 October 2013 ]
Consult reply indicated at article 2
Estonia [Article ratified - Report adopted on 29 March 2017 ]
Concerning conformity with Article 3, paragraph 2, of the Charter, the rapporteurs have heard no criticism with respect to this provision, except for the Tallinn city representatives who criticised state legislation fixing the number of councillors to “no fewer than” 79 members. In their opinion, the number of councillors is too high, particularly in comparison with the number of members of the Estonian Parliament (101). The rapporteurs concur with the starting point of the city, that all local (and state) institutions should be organised in such a way as to simultaneously permit optimum functionality and budget economy. With regard to the details, Article 154 of the Estonian Constitution refers to the national legislation, as well as Article 3 of the Charter. Therefore, the national legislature is free to organise the framework of local authorities’ activities and to set the number of local councillors.
Concerning Article 3, paragraph 2, of the Charter with respect to direct citizen participation, the rapporteurs refer to Chapter III, point 6, of the new government’s “Basic Principles” and support the government’s initiatives to strengthen all instruments of direct or indirect citizen participation at local and, if necessary, at state level.
The rapporteurs believe that, in general, Estonia is in line with the provisions of Article 3 of the Charter. However, they underline the need to strengthen local democracy with a clear distinction between state and local authorities’ powers. The government’s approach to strengthening local democracy through merged greater territorial units needs to be completed by strengthening local authorities’ powers and finances.
Finland [Article ratified - Report adopted on 28 March 2017 ]
Consult reply indicated at article 3.1.
France [Ratified with reservation - Report adopted on 22 March 2016 ]
Consult reply indicated at article 3.1
Georgia [Article ratified - Report adopted on 7 November 2018 ]
According to Article 74, paragraph 1, of the constitution, “The citizens of Georgia shall regulate affairs of local importance through local self-government representative and executive bodies. A
page 82 / 796 representative body shall be elected on the basis of universal, equal and direct suffrage, by secret ballot, for a term of five years. Local self-government executive bodies shall execute the decisions of representative bodies and shall be accountable to them”.
The appointment of deputy mayors by the mayor without the consent of the Sakrebulo seems to interrupt the line of accountability. Such a unilateral and absolute power of the mayor weakens the position of the representative body (with the exception of Tbilisi). NALAG proposed pertinent changes in the Code in 2017, suggesting the introduction of the Tbilisi model (where vice-mayors and heads of departments are nominated by the mayor and approved by the Sakrebulo) in all municipalities. This recommendation has been submitted to the ministry of regional development and infrastructure and the parliament, but final decisions are still pending.
After July 2015, when the Code introduced new mechanisms for citizen participation in the self- governance process, municipalities began enacting relevant normative documents. The number of citizens using their new rights was low in the second half of 2015, but the process speeded up in 2016 and was augmented by the fact that the ministry of regional development and infrastructure started drafting relevant guidelines.
Civil society also began getting involved in the awareness-raising process. Furthermore, the heads of several municipalities took the initiative to boost the use of the new mechanisms for citizen participation. This is particularly true for such forms of participation as general assemblies in settlements, and councils of civil advisors (Articles 85.1 and 86.1 of the Code). According to data from the ministry of regional development and infrastructure as at 1 January 2017: general assemblies were convened in 415 villages (which account for 11.78% of all the village settlements in Georgia). Village elects were chosen at about 10% of those meetings; in 2016, citizens filed 55 petitions with local self-governing units; this figure exceeds the total number of petitions filed during the last decade; councils of civil advisors were set up in all municipalities and in all districts of Tbilisi.
Concerning the councils of civil advisors, according to Article 86.1, paragraph 1, of the Code, a council of civil advisors is a deliberative body of a municipal council and is composed of representatives of entrepreneurial legal entities, non-governmental organisations and representatives of the municipal population. According to the Code, “The Gamgebeli/Mayor of a municipality shall be obliged to submit for discussion to the council of civil advisors, [a body] approved by him/her, a draft municipal budget, documents relating to the municipality spatial planning, proposals on giving names to the municipality geographical features, as well as other significant draft administrative-legal acts, and infrastructural and social projects. Other powers of the council of civil advisors approved by the Gamgebeli/Mayor and the rules of its operation shall be determined by the statute of the council of civil advisors, which shall be approved by the municipality Gamgebeli/Mayor. (Article 86-3, of the Code).
The level of activity varies among municipalities. Cities/towns and rural communities which were active in lodging citizen petitions were the cities of Batumi and Ozurgeti. Regrettably, there are no precise statistical data about citizen participation throughout 2017. In general, it is safe to say the process continued even more actively. Some local leaders used their legal powers positively to initiate additional mechanisms of citizen participation. A relevant example is the municipality of Marneuli, which implemented participatory budgeting (the so-called Brazilian or Sopot model) in 2015-17. Other examples include municipalities (such as Gori, Zugdidi, Lagodekhi, etc.) where electronic petition systems have been put in place. In the municipality of Gori, acting on its own initiative, the local government began publishing more documents.
The regrettable aspect of the process is that the general assemblies and the councils of civil advisors as advisory bodies have no real power in practice. Since forms of citizen participation carry only
page 83 / 796 consultative power, the level of participation dropped once citizens saw that they were not making an actual difference. In addition to a lack of real rights, there is also a technical issue related to organising meetings: a general assembly can take decisions if 20% of registered voters in the settlement attend; however, in practice, it is almost impossible to reach this number of attendees, both in medium-sized and large settlements.
The Council of Europe has actively supported public policy for citizen participation in Georgia, also through a project that finished in December 2017 and gave rise to: the Handbook on Transparency and Citizen Participation in Georgia (English–Georgian): it aims to support local and regional authorities in their efforts to make communities more open, ethical and citizen-oriented. It outlines the legislative frameworks in Georgia and provides practical guidance for preventing corruption risks and implementing transparency and citizen participation mechanisms. the study on Institutionalised citizen participation: an assessment of existing mechanisms in Georgia which was undertaken to support NALAG in advocating for improvements in the consistency and coherence of legislative frameworks for citizen participation.
Further improvements are being considered under the new decentralisation strategy, for which a process of public consultation was launched in January 2018. The Government of Georgia presented the concept of the new decentralisation strategy in early 2018. Citizen participation will be fostered within this strategy and it is currently being debated whether to give legal status to online petitions. For the time being, there is a new online governmental portal through which citizens can register petitions to central and/or local governments.
Today, Georgian legislation includes provisions on citizens’ participation in local affairs which originated in the Additional Protocol to the European Charter on the right to participate in the affairs of a local authority. As there is no legal or conceptual inconsistency between the additional protocol and the Georgian legal framework, it seems that ratification of the additional protocol is only facing technical obstacles, and Georgian interlocutors (including the chairman of the parliament) confirmed their willingness to ratify it. Recently, the Committee on Regional Policy and Local Self-Governance of the Parliament of Georgia started a public debate on the ratification of this protocol, and positive moves in this direction are expected in the very near future, possibly before the end of 2018.
In general, Georgia complies with Article 3, paragraph 2, of the Charter. However, it is recommended that a new provision be introduced into the Code concerning the approval of the appointment of deputy mayors by the Sakrebulo, as is already the case in Tbilisi. Moreover, the Georgian authorities should be encouraged to proceed with the ratification of the Additional Protocol to the European Charter of Local Self-Government on the right to participate in the affairs of a local authority.
Germany [Article ratified - Report adopted on 14 March 2012 ]
Consult reply indicated at article 2
Greece [Article ratified - Report adopted on 26 March 2015 ]
The right to self-government is exercised in Greece by elected bodies: Article 102, para 2 of the Constitution provides that the institutions of local authorities (of first and second level) “shall be elected by universal and secret ballot, as specified by law”. At municipal level both the council and the mayor are freely elected by secret ballot on the basis of direct, equal, universal suffrage. The mayor, as mentioned before, is the executive organ and is not responsible to the council. The electoral system, taken in conjunction with the fact that the mayor, elected for a five-year term, does not need the declared confidence of the majority of the municipal council (a quasi-presidential, non-
page 84 / 796 parliamentarian system at the local level), determines a dominant role of directly elected mayors.
The Kallikratis reform tried to introduce in the organisational structure bodies that could counterbalance the power of the mayors. Among these, the following may be mentioned: 1.) the executive board, which is a kind of city cabinet that monitors and coordinates the implementation of municipal policies, 2.) the economic committee, which is responsible for financial planning and control as well as for public procurement, and 3.) the quality of life committee (in municipalities with more than 10 000 residents) which is responsible for environmental, city planning, and certain permitting matters.
In addition, new institutions were introduced as elements that should increase the accountability, transparency, and participation of the citizens in local issues and that were expected to upgrade local government performance. To this end, Kallikratis stipulated that local authorities are obliged to make all their decisions public on the internet, as a requirement for their validity.
The establishment of a local mediator in every municipality to support citizens is an attempt to reduce mismanagement and eliminate sources of corruption as this institution will examine relevant allegations. He is elected by 2/3 municipal council decision (an analogous mediator is provided at regional level). The local and regional mediators are responsible for protecting citizens and enterprises against municipal and regional acts of maladministration and from the maladministration of their legal entities and enterprises; they are also responsible for mediating in order to address relevant problems.
Α consultation committee should be created in municipalities with more than 10.000 residents as well as in municipalities with a population of less than 10.000 inhabitants, upon decision of the municipal council. It is composed of representatives of professional organisations, scientific entities and organisations, workers' and employers' organisations, cultural and sports organisations, civil society organisations, registered municipal residents, etc. It acts as an advisory body on various issues of local interest and offers advice to the municipal council (a similar organ is set up at the regional level providing advice on issues of regional interest).
Hungary [Article ratified - Report adopted on 12 February 2021 ]
As for Article 3, paragraph 2, the right to self-government is exercised in Hungary by elected bodies.
According to Article 33 of the Fundamental Law, “(1) The functions and powers of a local government shall be exercised by its representative body. (2) A local representative body shall be headed by the mayor. The president of a county representative body shall be elected by the county representative body from among its members for the term of its mandate”. Article 35 establishes that: ”(1) Local government representatives and mayors shall be elected by universal and equal suffrage in a direct and secret ballot, in elections which guarantee the free expression of the will of the voters, in a manner laid down in a cardinal Act”.
The representative governing body at municipal level is the municipal assembly, while the municipality’s executive organ is the mayor. Both of them are directly elected by citizens, for a term of five years (since 2014, it was four years before 2014). Although the assembly cannot dismiss the mayor, it can enforce his/her responsibility. Actually, representative bodies may declare their own dissolution, as provided for by a cardinal act (Article 35.4 Fundamental Law). Upon a representative body dissolving itself or upon it being dissolved, the mandate of the mayor shall also terminate (Article 35.6). Therefore, for the municipal assembly to early terminate the mandate of the mayor, its own dissolution is required, in accordance with the principle “simul stabunt, simul cadent”.
page 85 / 796 In the counties, the president is elected by the assembly among its members. He or she cannot be dismissed earlier, although it would be possible, as at municipal level, an earlier dissolution of the assembly by the way of a declaration of its own dissolution, which implies also the termination of the mandate of the president of the county.
In conclusion, it seems to the rapporteurs that the requirements of Article 3.2 are satisfied in Hungary.
Iceland [Article ratified - Report adopted on 29 March 2017 ]
Iceland (as other Nordic countries) follows the monistic model of local government, in which, all powers of local government rest with the elected council. Municipal council are elected every 4 years in democratic elections by their residents in accordance with the Local Government Elections Act (Article 1.2 Law 138/2011).
Apart from this fundamental feature, the administrative organization of the municipalities varies to some extent from one municipality to another, according to the “ordinance on the governance of the municipality”, that is passed by each municipal council (Article 9).
After the elections the council usually appoints (normally for the entire electoral term) a chief executive (or a mayor) that can be hired from within the council (then usually it is the leader of the leading party), or from outside the council (with or without party connections). S/he is the head of the administration and manages the municipality on a daily basis. S/he prepares and attends council meetings and the meetings of the executive board but without the right to vote (except those who also hold a seat in the council). Although only a small number of the Icelandic mayor would count as a political figure in the classical meaning of the phrase as a substantial number of them are not elected by the public; their role is highly political as they are hired and fired by the council and their persona is very often closely knitted to the majority in the council.
The municipal council (with 7 or more councillors) may elect, for one year, an executive board, that, together with the chief executive officer, shall see to the management and financial management of the municipality to the extent that these responsibilities are not entrusted to others. It shall supervise the administration and financial management of the municipality, compile draft budgets and supplements thereto and submit these to the municipal council.
One of the most important changes introduced by Law n. 138/2011 addresses citizen participation (Chapter X). According to Article 102, “1. The municipal council shall strive to ensure the residents of the municipality and those who receive its services the chance to participate in, and influence, the governance of the municipality and the preparation of its policies. 2. Residents’ influence may be ensured by means including: 1. the active provision of information to the residents, 2. consultation with the residents, e.g. at citizens’ meetings or residents’ conferences and in referendums, 3. the appointment of residents’ and consumers’ councils, 4. the structuring of the operation of the municipality according to local premises and conditions, 5. collaboration with, or assistance of another type for, residents who wish to make a contribution towards municipal affairs”. New rules (Article 108) provide for citizen initiative based on referendums (on request of 20% of those who have the rights to vote) and public meetings (10% of those who have the right to vote). Local authorities are also obliged to provide their citizens with information on local government issues and procedures (Article 103).
The rapporteurs consider that the requirements of Article 3 para. 2 of the Charter are fully satisfied in Iceland.
page 86 / 796 Ireland [Article ratified - Report adopted on 31 October 2013 ]
Consult reply indicated at article 3.1
Italy [Article ratified - Report adopted on 18 October 2017 ]
Consult reply indicated at article 3.1
Latvia [Article ratified - Report adopted on 27 March 2018 ]
The internal structure and organisation of local authorities are regulated by the Law on Local Governments (art. 18 and ff.) and are the same for novadi (municipalities) and pilsētas (cities). In the light of this legal framework, the main bodies of the municipality are:
The representative body is the council (city council – municipality council), composed of “councilors” or “deputies” (English-translated terminology). The local council is the body for debate and decision- making, and its members are elected by the citizens of the municipalities, through a process of secret, general, and direct voting. Elections are called every four years at national level on the first Saturday in June, the last local elections having been held in June 2017 and the turnout was 50,39%. The voter turnout in local elections has evolved from 58.5% in 1994 to 62% in 2001 (peak in participation) to 46% in 2013. In 2015, 25.1% 14th highest in EU.
Local elections are regulated by a different and specific piece of legislation, namely the Law on Elections of the Republic City Council of 13 January 1994, as amended. This statute also sets the number of councilors in the local councils, which is proportional to the local population, although different rules apply for novads and pilsÄ“tas. In the case of “municipalities”, 9 Council members are elected when the local population is up to 5,000 residents. This number raises to 15 in the case of local entities having between 5,001 and 20,000 residents; 17 if the population ranges from 20,001 to 50,001 inhabitants and 19 if the local population is higher than 50,000 residents.
In the case of pilsētas (cities), there are 13 deputies when the number of residents is up to 50,000 residents, and 15 for 50,000 residents. Special rules are set for Rīga, whose council has 60 members.
Every person who is a citizen of Latvia or a citizen of an EU country (dully registered), has reached the age of 18 and has been registered on the Voters register at least 90 days before the day of the election has the right to vote in the local elections. The Law on Local Elections also stipulates who can run as candidate in those electoral processes.
The local council adopts the most important political decisions affecting the municipality or city: the local budget, the local internal by-laws, the local master plan, the local generally binding regulations, the local economic and development plans, the name of the streets and public places, the remunerations of the council members and of the mayor, etc. In this sense, the Law on Local Governments lists up to 27 different competences for the council, plus any other competence that could be provided by the sectoral legislation (art. 21). The sessions of the council are public. The city council approves its own internal by-laws and rules of procedure. The councils should meet at least once per month.
The mayor is the top executive authority of the municipality. This word is in italics because it should be noticed that Latvian law does not use the word “mayor” or any other equivalent, but that of
page 87 / 796 “Council Chairperson”. That is, the mayor is in Latvia primarily the Chairman or the Chairwoman of the Council.
The mayor is elected by the members of the local council and he runs and organises the work of the local council (calling of the meetings, forming the agenda, proposing decisions, organising the debates, etc.). He represents the local entity in any forum or procedure. He is the responsible person for the execution of judicial rulings affecting the local entity, etc. The Law on Local Government provides for different competences of the Chairperson (art. 62). However, Latvian mayors are in reality more than simple “chairmen” of the local council, and they have a clear political leadership capacity and executive functions, as a Latvian scholar points out.
Apart from the Council and its “chairperson”, the Law on Local Governments provides for other bodies such as standing committees, and especially a Standing Committee on finances, which, inter alia, provides opinions on draft budgets or recommendations regarding the management of local government property.
The “execution” of the local policies and decisions is entrusted to officials elected or appointed by the council and by local government institutions. Among those officials, the most important is the “executive director”. The executive director is an obligatory position in the local entities having more than 5,000 residents, in the rest this position may be discharged also by the mayor. The executive director manages the local administration and executive functions. For instance, he has the power to conclude contracts of minor value (see, art. 69 of the Law on Local Governments).
Apart from the “formal” bodies for decision-making, Latvian legislation provides specifically for citizens’ participation. There are different ways and procedures for channeling such participation: in addition to the regular voting rights in local elections, local resident may attend the city council and have access to the agenda and the minutes of such meetings on the municipality’s website. Local leaders declared that citizens‘participation is good in general terms and that in recent years it has been boosted by electronic procedures.
In the light of the precedent, the Delegation draws the conclusion that the provisions of article 3 of the Charter are respected in Latvia.
Liechtenstein [Non ratified - Report adopted on 28 March 2018 ]
Consult reply indicated at article 3.1
Lithuania [Article ratified - Report adopted on 6 November 2018 ]
As for Article 3, paragraph 2, the right to self-government is exercised in Lithuania by elected bodies. According to Article 119 of the Constitution, “The members of municipal councils shall be elected for a four-year term, as provided for by law, from among citizens of the Republic of Lithuania and other permanent residents of the administrative unit by the citizens of the Republic of Lithuania and other permanent residents of the administrative unit, on the basis of universal, equal and direct suffrage by secret ballot. The procedure for the organization and activities of self-government institutions shall be established by law. For the direct implementation of the laws of the Republic of Lithuania, the decisions of the Government and the municipal council, the municipal council shall form executive bodies accountable to it”.
Article 4 of the Law on Local Self-Government lists, among the fundamental principles, the representative democracy; the supremacy of the municipal council over accountable executive
page 88 / 796 institutions of a municipality; the accountability of executive institutions of a municipality to the municipal council.
According to the Law on Elections to Municipal Councils, the members of municipal councils are elected for a four-year term by universal and equal suffrage, in a secret ballot at direct elections. After more than 10 years of discussion, in 2014 then Law was amended to introduce the direct election of the mayors: therefore, all members of a municipal council, except the mayor, are elected according to a proportional electoral system, while the mayor is elected using an absolute majority electoral system. The first direct elections of municipal mayors took place in Lithuania on 1 March 2015. Previously, mayors were elected by the municipal council among the councilors.
The municipal council discharge the most important duties within the municipality: it approves the budget, adopts the decisions to levy taxes, adopts decisions concerning municipal property and to institute municipal corporations, public institutions and stock companies etc. The powers of the mayors have not been improved and remain limited to the representation of the municipality and the activities he discharges as president of the municipal council. The executive power is vested in the director of the municipal administration, a civil servant, appointed by the council upon the recommendation of the mayor, for a period of the powers of the municipal council on the basis of political (personal) confidence. He/she is subordinated to the municipal council, accountable to the municipal council and the mayor.
During the monitoring visit, the rapporteurs were told that the failure to increase the power of the mayors could undermine the strengthening of mayors induced by the direct election. The introduction of the direct election of mayors by a legislative act raised also the problem of its compatibility with the Constitution, which does not consolidate the institution of mayors and their direct elections and consider the status of all municipal council members as equal.1
In conclusion, the rapporteurs consider that the requirements of Article 3 are satisfied in Lithuania.
Luxembourg [Article ratified - Report adopted on 21 October 2015 ]
Communal councillors are elected directly by the local electorate. Every commune in Luxembourg (there are 105 communes and 105 electoral wards) possesses a communal council from which the college of the mayor and aldermen is appointed. Voting is compulsory for everyone on the electoral roll. Voters may not ask somebody to vote in their place. A system of postal voting, available to certain voters under certain conditions, has been introduced to prevent abstention. A voter who wishes to vote by post must notify the college of the mayor and aldermen of the commune where he or she is registered and request, by ordinary letter or using a form provided by the commune, the requisite ballot material. Postal voting is available solely for voters over the age of 75, Luxembourg citizens resident abroad and those who for duly justified professional or personal reasons are unable to vote in person in the polling station they are assigned to. Those who cannot take part in the vote must notify the state prosecutor with territorial jurisdiction of their reasons and provide the necessary supporting documents. Unwarranted abstention is punished by a fine. Non-Luxembourg citizens, whether EU nationals or not, who have been residing in the Grand Duchy of Luxembourg for five years or more at the time of the application to be included on the electoral roll have the right to vote and to get elected in communal elections without losing their right to vote in the municipality of their country of origin.
In this respect, the constitutional and legislative provisions on the concept of local self-government (Article 3 of the Charter) are in compliance with the Charter.
Malta [Article ratified - Report adopted on 29 March 2017 ]
page 89 / 796 Article 3, paragraph 2 of the Charter provides that the right of local authorities to regulate and manage a substantial share of the public affairs must be exercised by councils or assemblies composed of members freely elected by secret ballot on the basis of direct, equal, universal suffrage, which may possess executive organs responsible to them. This provision does not affect recourse to assemblies of citizens, referendums or any other form of direct citizen participation where it is permitted by statute.
Article 115A of the Constitution secures that Councillors shall be elected by the residents of each locality, including citizens of other Member States of the European Union residing in the locality as per Article 5 of the Local Councils Act. To this extent the requirements of Article 3, paragraph 2 of the Charter are complied with.
Nevertheless, apart from the right of the residents of each locality to elect their representatives in the local council, the main issues calling for consideration are the following: Whether or not the local council as a body has the power to regulate and manage a substantial share of the public affairs, as well as whether or not such powers are exercised in practice by the Councillors or the executive organs of the local councils, and Whether or not sufficient accountability mechanisms are in place in order to keep such executive organs accountable to the local councils.
According to Articles 26 and 27 of the Local Councils Act, the two executive organs of each Local Council is the Mayor and the executive secretary. The Mayor is the representative of the Council for all purposes under the Local Councils Act, he presides over all the meetings of the Local Council and supervises all the functions of the local council. Furthermore, under Article 27 of the Local Councils Act, the Mayor has the legal and judicial representation of the Local Council together with the executive secretary.
The Local Councils Act provides an accountability mechanism for the Mayor. Article 29(1) of the Local Councils Act states that the Mayor or the Deputy Mayor shall cease to hold office in the event that a vote of no confidence is delivered by a majority of the Councillors in office. The remaining sub paragraphs of the Article describe the mechanism through which such a vote may be passed. Hence, the Mayor and the Deputy Mayor are answerable and accountable to the local council, as a body, and they may be removed from office in the event that they don’t enjoy the approval or confidence of the majority of the Councillors in office.
The executive secretary is a public officer who is appointed by the local council upon the approval of the Minister responsible for Local Government. According to Article 52(1) of the Local Councils Act, the executive secretary is the executive administrative and financial head of the local council, having the power and the competence to issue all notices, prepare the agenda in consultation with the Mayor, attend all meetings of the local council, draw up and sign the minutes of the local council and the committee meetings, submit detailed annual administrative reports to the Mayor, cause to be submitted to the local council estimates of the income and expenditure of the local council during the following financial year, carry out any other administrative duties as may be detailed by the Mayor, issue all orders bearing an expense as approved by the local council, execute legitimate decisions of the local council and stop any activity or initiative planned by the local council which is in breach of the law, regulations, national or local strategies or policies, or any activity or initiative which has not been approved by a local council decision.
An accountability mechanism is also provided under the Local Councils Act as to the executive secretary. According to Articles 49(5) and 49(6) of the Local Councils Act, the executive secretary
page 90 / 796 may be removed by the Minister responsible for Local Government at the request of the local council upon approval of a motion put forward before the local council stating the reasons for his removal. Furthermore, the Minister responsible for Local Government has the power to transfer the executive secretary to another local council. The wording of the aforesaid Articles of the Local Councils Act gives discretion to the Minister responsible for Local Government to decide as to whether or not to remove the executive secretary. In the event that the local council disagrees with the decision of the Minister responsible for Local Government, then the local council may seek to challenge the said decision through judicial recourse, whereas the executive secretary seems to be able to seek judicial redress under labour and/or administrative law.
Both, the wording of the Local Councils Act and the impression obtained by the Congress delegation during the Monitoring visit in the Republic of Malta were that the running and operation of the local council and the execution of its functions are essentially carried out by the executive secretary of each local council, leaving only a limited number of decisions to be taken by the Councillors. In other words, the role and competences of the executive secretary, who is appointed by the central government, are so wide that limit the power of the Council, as the democratically elected body, to regulate a substantial share of the public affairs or at least those functions granted to each local council by the Local Councils Act.
The appointment and removal procedure of the executive secretary, as well as the role of the executive secretary have attracted considerable concern and criticism.
Drawing up a pool of candidates for the position of the executive secretary essentially means that the Local Council’s freedom to choose their own secretary depends on the size and composition of the pool of potential executive secretaries.
The Minister’s power to appoint, transfer or remove the executive secretary and his involvement in the local council’s affairs through the approval or disapproval of the choice of the executive secretary, including his power to remove or transfer the executive secretary to another local council, attracts considerable criticism as a type of unnecessary intervention of the central government in the local affairs.
Given the organic nature of the executive secretary’s position in the operation and administration of the local council, the decision for the appointment of the executive secretary should be borne and taken exclusively by the local council, without any interference or approval or involvement of the Minister responsible for Local Government or the central government. Instead of requiring the approval of the Minister responsible for Local Government, provision could be made for mere notification of the said Minister after the appointment of the executive secretary, without any veto power or right on the Minster’s behalf.
As to the power of the Minister responsible for Local Government to remove the executive secretary, despite the fact that such a removal shall be made after the recommendation or motion and approval of the council, still it may be argued that the Minister’s power to remove the executive secretary is incompatible with the aim of the Charter to afford local councils with the ability and power to regulate a substantial share of the local affairs, as well as choose their employees as autonomous organs of local self-government. The requirement of the Minister responsible for Local Government to approve the appointment and removal of the executive secretary of the local council should be abandoned and the local councils should be afforded the freedom to decide on the issue without the interference of the central government or any government actor.
In light of the increased executive and administrative role of the executive secretary, the power of the Minister responsible for Local Government to remove or transfer him/her to another local council
page 91 / 796 and the requirement for the approval of his/her appointment by the Minister responsible for Local Government, there is limited compliance with Article 3, paragraph 2 of the Charter and the aforesaid issues need to be addressed by the Republic of Malta.
Monaco [Article ratified - Report adopted on 28 March 2018 ]
Paragraph 2 of Article 3 refers to the presence of assemblies comprising members freely elected by secret ballot on the basis of direct, equal, universal suffrage, and which may possess executive organs responsible to them.
The Municipality of Monaco is run by a Municipal Council of 15 members, elected for four years through direct universal suffrage. This body appoints a Mayor and his/her deputies from among its members (Articles 79 and 80 of the Constitution).
The rules on the election of the Municipal Council are contained in Law No. 839/1968, according to which “elections to the Municipal Council shall be by a two-round, plurinominal majority ballot with the possibility of vote-splitting but no preferential voting” (Article 20.5). “A person may not be elected municipal councillor in the first round of voting unless they obtain: (1) an absolute majority of the votes cast; (2) a number of votes equal to a quarter of registered voters. In the second round, a relative majority shall be sufficient, regardless of the number of voters. In the event of an equal number of votes, the oldest candidate shall be elected” (Article 21).
These elections clearly correspond to the expectation of paragraph 2 of Article 3, as also shown in satisfactory voter turnout: 54.68% in 2011 and 60.61% in 2015. However, it must be highlighted that the chosen electoral system may lead to all the seats being allocated to one list, which happened in the 2011 and 2015 elections. This weakened the representative nature of the Municipal Council and the political interplay in its activities.
The Mayor and the deputies, comprising the municipal executive, are elected by municipal councillors for the same duration as the Municipal Council (Article 7, Law No. 959/1974). Once elected, the Mayor and the deputies may only be removed from office by a ministerial order, after consultation with the Council of State (Article 36, Law No. 959/1974). The Municipal Council is not authorised to hold a vote of no confidence in the Mayor or his/her deputies.
The fact that the Municipal Council is not entitled to hold a vote of no confidence in the Mayor (elected by the Council), or to remove him/her from office by any means, makes it difficult to believe that the executive body is responsible to the assembly, as required by paragraph 2 of Article 3. The country’s specific institutional and geographical characteristics do not seem to justify this form of government, which in this respect, resembles the form of government applied in the Principality, except that at municipal level, one of the aspects of the state political system is missing, namely the fact that executive power is exercised by “the high authority of the Prince” (Article 3 of the Constitution). The Princely Government pointed out during the consultation procedure that “a vote of no confidence is an unknown concept for the Monegasque law and institutions and cannot therefore be applied at the local level”. The rapporteurs believe however, that there is no specific characteristic preventing Monaco from steering the Municipal executive body towards the introduction of a vote of no confidence or other means to enforce political responsibility.
Consequently, the rapporteurs conclude that Monaco does not comply with Article 3.2 of the Charter.
Montenegro [Article ratified - Report adopted on 21 October 2015 ]
page 92 / 796 See answer indicated at article 3.1
Netherlands [Article ratified - Report adopted on 26 March 2014 ]
Municipal Councils
The rapporteurs would call to mind that there is a governmental project consisting in reducing the number of municipal council members. In total, roughly 1500 councillors are concerned nationwide. The government has provided several reasons for this initiative: to correct the unintended side-effect of dualisation in 2002, whereby municipal councils were expanded by the number of council members who had previously been appointed as aldermen; to make savings and to strengthen appropriate representation. At present, this type of initiative is also taking place in other European countries (Greece, Spain, etc.).
The government’s proposal has been accepted by the VNG on the provise that the income generated thereby is used for professionalisation. Against the background of the transfer of three decentralisation programmes (youth, care, and Exceptional Medical Expenses Act, AWBZ) to municipalities, the importance of professionalisation is expected to increase further. There is no guarantee, however, that this will take place. On the other hand, other interlocutors expressed their concern and their disapproval of the measure, which they think was unjustified since most local councillors devote a lot of time to their job for which they are not “paid”. The Rapporteurs have been informed since then that this proposal was rejected by the Senate in July 2013.
Mayors
The fact that Dutch mayors are neither directly elected by the local residents nor by the municipal council is a well-known feature of local democracy in the Netherlands. As the Municipalities Act puts it in its Article 61: “The mayor is to be appointed for a period of six years by Royal Decree on the recommendation of Our Minister” (the Minister of the Interior and Kingdom Relations). Following the amendments to the Municipalities Act in 2001, the municipal councils now fulfil a clear role in choosing the new mayor. This has proved to be an effective system, according to local leaders.
The issue of the appointment of mayors was discussed in depth by the 2005 Monitoring report (Part II, paragraphs 11-27). At that time, two bills had been prepared and submitted to the House of Representatives. One bill (Tweede Kamer der Staten-Generaal, Vergaderjaar 2004-2005, Wet verkiezing burgemeester, nr. 29865) concerned the election of the mayor which would be held in the first round at the same time as the election of the council; the second bill (Tweede Kamer der Staaten-General, Vergaderjaar 2004-2005, Wet introductie gekozen burgemeester, nr. 29864) contained changes in the municipal law consequent to the introduction of the directly elected mayor. However, those bills were eventually not approved by the legislature.
Since no substantial changes have happened since that date, it does not seem necessary to repeat what was said in the last monitoring Report. However, the question remains as to the necessity to revisit the traditional Dutch arrangement for the appointment of mayors complies with the letter and spirit of Article 3 para.3 of the Charter, which requires that local government “shall be exercised by councils or assemblies composed of members freely elected by secret ballot on the basis of direct, equal, universal suffrage, and which may possess executive organs responsible to them”. These last words naturally raise the question whether a regular Dutch mayor (“executive organ” under Article 3 para.3) can be considered to be responsible to the Municipal council. This would mean not only that mayors have to inform and “respond” for their management to councils, but whether councils can dismiss mayors and finalise their term of office in cases of loss of confidence or bad political communication.
page 93 / 796 The reply to both questions must be positive, in the light of the applicable provisions of the controlling statute in the field, namely the Municipalities Act. Certainly, Dutch mayors have an institutional profile that is unique in comparative Law. In the Netherlands, mayors cannot be depicted as independent managers, although they have their own profile and duties, independent from the council (they even can seek the annulment of a council decision before the Minister of the Interior). Under the Municipalities Act, it is evident that there is a clear relation of “dependence” of mayors with respect to councils. This can be seen in different aspects of their mandate, and even for what concerns their continuance in office.
In this sense, the Municipalities Act provides that “the mayor is to receive remuneration from the municipality regulated by, or pursuant to, an Order adopted in Council”(art. 66.1); that “the council is to enact a code of conduct for the mayor” (art. 69.2); that the mayor is obliged to live in the municipality, and that only the council can lift that obligation (art. 71.2 ); that, “by means of a bye- law, the council can grant the mayor the power temporarily to have groups of persons specified by the mayor detained at a location specified by the mayor” (art. 154a). The key provision in terms of the political responsibility of the mayor is Article 61b.2 of the Municipalities Act, which states that “if a seriously impaired relationship should exist between the mayor and the council, the council can send a recommendation for dismissal to Our Minister through the intervention of the King’s Commissioner” (art. 61b.2), a recommendation which is usually followed. Therefore, it is clear that the council can terminate the duties of the mayor, and there is here a clear “responsibility”, on political or personal competence ground.
During the visit, the Congress delegation asked local leaders about this topic. The general understanding was that the present system of appointing mayors fits the Netherlands, and that the influence of the town council in “selecting” the mayor is considered sufficient. On the other hand some attempts to introduce “democracy” ingredients in the process of nominating mayors proved to be unsuccessful: in 2001, provision was made in the law for municipal councils to be able to hold a consultative referendum among their residents prior to issuing the government with a recommendation for the vacancy of the mayor. Since that date, only eight referenda have been held, and the actual rate of participation was very low. The rapporteurs did not find or hear claims in the sense that the system should be changed towards a direct election of the mayor. In the Netherlands, given its long history of coalitions, negotiations and compromise, we expect a mayor to be able to rise above individual party politics and take on rather the role of mediator. In general, the current system is seen as a reasonable one, consistent with the national tradition and culture. On the other hand, no significant claim or movement in favour of the direct election of mayors was detected by the Congress delegation, although a noteworthy recent initiative has crystallised in this field.
The House of Representatives member Mr Schouw (D66 Party) has submitted a legislative proposal aimed at amending the Constitution, so that the manner of appointment for mayors and Kings Commissioners should be regulated by Act of Parliament instead of by the Constitution. This proposal of “de-constitutionalising” the way mayors are appointed is backed by the present Cabinet in its Coalition Agreement. It remains to be seen whether this bill will manage to get through the legislative process.
North Macedonia [Article ratified - Report adopted on 26 February 2013 ]
Consult reply indicated at article 2
Norway [Article ratified - Report adopted on 26 March 2015 ]
Consult reply indicated at article 3.1.
page 94 / 796 Poland [Article ratified - Report adopted on 2 April 2019 ]
As for Article 3, paragraph 2, the right to self-government is exercised in Poland by elected bodies. According to Article 169 of the Constitution, “1. Units of local government shall perform their duties through constitutive and executive organs. 2. Elections to constitutive organs shall be universal, direct, equal and shall be conducted by secret ballot. The principles and procedures for submitting candidates and for the conduct of elections, as well as the requirements for the validity of elections, shall be specified by statute”.
As previously indicated, the representative governing body at municipal level is the municipal council, while the municipality’s executive organ is the mayor. Both of them are directly elected by citizens, for a term of five years (since 2018).
Although the council cannot remove the mayor, since a municipal referendum is necessary, especially after the passing of the 2018 amendments to the Law on Municipal Self-Government it exerts a control over the mayor.
The 2018 law has strengthened the council’s control powers over the mayor, as well as the direct popular participation. Among the new provisions, we could mention the duty of the mayor to present to the council every year, before the 31 of May, a report on the state of the municipality (Article 28aa). The report must include a summary of the municipality’s activities in the previous year, and especially the implementation of policies, programs and strategies, resolutions of the municipal council and the civic budget. In the debate on the report on the state of the municipality, councilors take the floor without time limits.
After the debate on the report on the state of the municipality is over, the municipal council, in a resolution, decides whether to grant or withhold a vote of confidence in this respect (Article 18.2, 4a). A successful resolution granting a vote of confidence to the mayor of a municipal council must be supported by the absolute majority of votes of the statutory composition of the municipal council. Failure to adopt a resolution granting a vote of confidence to the mayor of a municipality is tantamount to passing a resolution withholding the confidence to the mayor of a municipality. As already provided by the previous legislation, if a vote of confidence is not granted to the mayor of a municipality for two subsequent years, the municipal council may adopt a resolution to hold a referendum for the recall of the mayor.
Another new provision entrusts the council with the role of addressing citizens’ complaints. According to Article 18b, “The municipal council examines complaints about actions of the mayor of a municipality and municipality organizational units; applications and petitions from citizens; to this end, it sets up a committee of complaints, applications and petitions”.
In the case of powiaty, the basic institutional organisation includes the council and the executive board. According to Article 9 of the Law on powiaty, “The district council is the district's governing and controlling body”. According to Article 27, “1. The district council elects a district executive board in the number of 3 to 5 persons, including the starosta and deputy starosta”. The executive body is accountable to the council, which can dismiss it by voting a no-confidence motion, by a 3/5 majority, at the request of at least 1/4 of the statutory members of the council (Article 31).
In addition, it should be mentioned that Poland constitutes also an example of a country where a number of institutions allowing citizens a more direct involvement in decision-making processes exists and that the number of such institutions has been significantly increased in recent times. Therefore, to a certain degree, a shift from representative democracy to participative and
page 95 / 796 deliberative democracy can be observed, especially in large, urban municipalities.
In conclusion, the rapporteurs consider that the requirements of Article 3.2 are satisfied in Poland.
Portugal [Article ratified - Report adopted on 28 September 2020 ]
Under the Constitution, the members of elected local authority bodies are elected by universal, direct and secret suffrage on a periodical basis, under the proportional representation system (Art. 239). However, not all of them are elected directly, as the parish committee chairs are ex officio members of municipal assemblies.
Competence to legislate on local elections, the status of members of local authority bodies, direct consultations of voters at local level, the system for creating and abolishing local authorities and finally changes to their territory lies exclusively with the Assembly of the Republic (Art. 164). The general rules governing the drawing up and organisation of local authority budgets, the statute of local authorities (including the system of local finance) and the participation of citizens’ organisations in the exercise of local authority are also matters lying within the remit of the Assembly of the Republic. This means that the government can intervene in these spheres only if expressly authorised to do so by the Assembly (Art. 165).
Finally, laws revising the Constitution must respect not only universal, direct, secret and periodic suffrage for the appointment of elected local authority office-holders but also the autonomy of those local authorities (Article 288); foreigners and stateless persons staying or residing in Portugal enjoy the same rights and are subject to the same obligations as Portuguese citizens, meaning that they have the right to participate in local elections and seek election as local representatives themselves.
The rapporteurs also note that, where the use of direct democracy mechanisms in local authorities is concerned, holding a local referendum has been a possibility since 1990 with respect to any important question falling within the exclusive competence of a local authority. The result of a referendum has the value of a binding decision if at least half of the registered voters turn out. However, certain matters (such as the budget) may not be put to a referendum. Any local referendum initiative requires prior authorisation from the Constitutional Court. Beyond that mechanism, there are other more conventional means of ensuring that citizens are involved in decision-making by Portuguese local authorities: opening meetings of deliberative bodies to the public, possibility for voters to demand the convening of an extraordinary meeting, publishing of deliberations, right of petition, application to the Ombudsman, court actions and popular action for example.
In the view of the rapporteurs, Article 3 paragraph 2 of the Charter is therefore complied with, as the relevant provisions are largely covered in the Constitution.
Republic of Moldova [Article ratified - Report adopted on 4 April 2019 ]
The structure of Moldovan local authorities is similar to other European countries: there is a council and a mayor, elected through different electoral processes. Elections are held every four years at national level, and the last local elections were held in June 2015. Elections are regulated by the constitution and by the Electoral Code. Every person who is a Moldovan citizen, has reached the age of 18 and has been registered on the voters register has the right to vote in local elections. Moldovan local elections have been subject to observation by the Congress and other international organisations and bodies. The general appraisal was that they were fair and regular.
page 96 / 796 In the local authorities of the first level (villages/towns) the representative body is the council (48 towns with city councils, and 850 communes with local councils) composed of “councillors”, whose number is proportional to the number of local residents. The council is the body for debate and decision making; it adopts the most important political decisions: the local budget, the local internal by-laws, the local master plan, etc. Its members are elected by the citizens of the municipalities, through a process of secret, general and direct ballot.
The mayor (primar) is also elected directly by the local residents in a specific electoral process, different from that of the council but which also takes place every four years. The elections for mayors are based on a two-round system, where if no candidate obtains 50% of the vote, a second round is organised among the two candidates that obtained the most ballots in the first round. Once the elections have taken place, the Central Electoral Commission must validate the results. It is only after this validation that the elected mayor can become the effective mayor and take the oath of office. The mayor is the top executive authority of the town/village/city/municipality and has a clear political leadership capacity and executive functions: the awarding of contracts, the execution of laws and regulations, the management of staff, etc.
In the case of the second-level local authorities (districts or Raioane) there is a council and a president. The council is also elected by means of a universal, equal and direct suffrage by secret ballot for a term of four years. The president of the Raion, however, is elected for a term of four years, and is the executive head of the Raion.
Apart from the formal bodies for decision making, Moldovan legislation provides for other forms of citizen participation, such as local referendums. The most controversial form of local referendum is the one that may be organised to recall or dismiss the mayor of the city/village/municipality (Article 177 of the Electoral Code). The Congress and the European Commission for Democracy through Law (Venice Commission) have already analysed this peculiar feature of the Moldovan system (see the explanatory memorandum to Recommendation 411 (2018), drafted after the fact-finding mission carried out in December 2017 and further comments will be made, below, under point 6).
In the light of the above, the delegation draws the conclusion that the provisions of Article 3.2 of the Charter are respected in the Republic of Moldova.
Romania [Article ratified - Report adopted on 3 March 2011 ]
Consult reply indicated at article 2
Russian Federation [Article ratified - Report adopted on 30 October 2019 ]
During the consultation procedure the rapporteurs were informed by the representatives of the Republic of Tatarstan that the majority of the heads of municipalities are elected among members of municipal council (in Russia – 8 896 heads, 41.0%), or elected directly by universal, equal and direct election (in Russia – 6 718 heads, 30.9%). In the Republic of Tatarstan, for example, all 43 heads of municipal districts and two city mayors are elected among members of respected municipal councils. The rapporteurs observe that Law No. 8-FZ of 3 February 2015 has established a new model for the “election of the head of a municipality”: the status of the mayor can be acquired now by a person selected by a selection board originally established to fill another position, the head of a local administration. Thus, the head of a municipality is not subject to the procedure of election by the population or by the municipal council. Furthermore, the share of the selection board members appointed by the governor has increased to 50% and the governor also has the right to present candidatures for the position of mayor. So, the heads of municipalities are in fact appointed at the
page 97 / 796 governor’s initiative and instruction.
The rapporteurs conclude that Article 3, paragraph 2, of the Charter is not respected.
On the basis of their exchange of views with various interlocutors the rapporteurs received information that direct elections have become the exception rather than the rule: local governments are prescribed to renounce direct elections (heads of municipalities are elected from among the councillors or – more often – appointed, following a contest). Only four federated entities provide for the opportunity to determine independently the structure and organisation of local governments. Among 80 regional capital cities, only eight of them have retained direct election of mayors (while the number of the heads selected through a contest has reached almost 50%). Besides, the regions very often abolish direct elections for the local government representative bodies at the level of municipal raions and town districts, which have intercity municipal formations (this refers to three city districts), replacing them by delegation.
Recently, in March 2019, the State Duma planned to examine the draft federal law No. 631751-7 “On Amendments to the Federal Law ‘On General Principles of Organisation of Local Self-Government in the Russian Federation’ (especially the Part referring to Issues of Territorial Organisation of Local Self- Government)”. According to criticism from the Yabloko party, the “election of mayors of cities and heads of districts has removed almost everywhere. The bill gives the right to the Russian regions (and, virtually, the governors) to liquidate local self-governments in cities and rural settlements by giving municipal districts the status of a municipal territory, which does not envisage having a local self-government in cities and rural settlements that used to be part of the municipal district”. These provisions of the draft law would “directly contradict the Constitution of the Russian Federation, according to which local self-government is guaranteed in the Russian Federation and is carried out in urban and rural settlements and other territories through elected bodies of local self- government”.[18]
According to recent information provided by the Russian National Delegation to the rapporteurs after the second visit, amendments to the legislation regarding the direct mayoral elections in the Russian Federation were about to take place. Voters may now choose in which way the mayor should be elected. As was explained by the members of the delegation, in accordance with the law, there are four different definitions of a mayor.
1. A mayor who is elected from among the members of the representative body/municipal council. About 20% of mayors throughout the Russian Federation are elected this way.
2. A mayor who is elected through a direct election. In this case the mayor can be a head of either a representative or of executive power.
3. There is the provision for a mayor to combine the functions of a head of both the representative and executive powers. This is mostly practised in small rural constituencies (with small populations).
4. The last option is currently being explored as an experiment in 2 to 3% of municipalities – election of a mayor by conducting a tender. For the selection of the mayor, a special committee is created, set up by deputies.
The choice of one of these four options is to be made by the voters. They are informed about it through public hearings, mass media and other ways of increasing of public awareness. After the
page 98 / 796 public consultation, the judicial bodies register the method of mayoral election chosen by the population.
However, during the consultation procedure, the State Duma informed the rapporteurs that the draft law to which the National delegation referred to, will not be considered by the State Duma, notably because, in its opinion, “it does not comply with the institutional principles of the Russian legislation”.
Under the Federal Political Parties Act, a political party is freely established without the permission of State authorities or officials. A political party may be established at the constituent congress of a political party (Article 11). Federal Law No. 28-FZ of 2 April 2012 “On Amending the Federal Law ‘On Political Parties’” reduced the required minimum number of political party members from 50 000 to 500 people. A member of a political party may be a member of only one regional branch of a given political party – at the place of permanent or primary residence. The charter of a political party may establish requirements for the minimum number of members of a political party in its regional branches (Article 3, paragraph 2, and Article 23, paragraph 6, of the federal act on political parties).
A political party (Article 3.2 of the federal law “On Political Parties”) must have regional branches in at least half of the constituent entities of the Russian Federation. The governing and other bodies of a political party, its regional branches and other structural subdivisions must be located in the territory of the Russian Federation. In 2012 the requirements with regard to the number of political parties were eased which resulted in the registration of 60 new parties. In reality, many parties operate in a few regions, although they have a federal status. Quite a few of them have been abolished by court decisions, because the number of their regional branches had dropped below the minimum.
Article 2, paragraph 25, of Federal Act No. 67 of 12 June 2002 on basic guarantees of electoral rights and the right to participate in referendums for citizens of the Russian Federation (hereinafter – Federal Law No. 67-FZ) provides for participation in local elections as electoral associations not only of political parties and their structural subdivisions but also of other public associations, established in the form of public associations and public movements and registered in accordance with the established procedure (including regional and local), whose charters provide for their participation in elections.
Recommendation 297 (2010) of the Congress had pointed out difficulties faced by new parties for registering at local and regional level and it asked the Russian authorities to prevent the use of closed lists in local and regional elections, while it also suggested measures to ensure that independent candidates may stand in these elections everywhere. During the first part of the monitoring visit in 2018, some local independent experts criticised legal provisions prohibiting regional and local parties since only federal parties having their branches in more than half of the regions can participate in local elections.
At the same time, however, the right to run for local elective office has been attributed to public organisations (associations and movements).
In fact, “closed lists” (party lists) are used in many European countries, but rather in national (parliamentary) elections. According to information provided by the Federation Council, the open-list system, in which voters were given the opportunity not only to vote for a list but also to express preference for one or more candidates from the selected list, was practised during the election of deputies to legislative (representative) bodies in the 1990s and 2000s in some constituent entities of the Russian Federation (Kaluga and Tver regions, Chukchi Autonomous Okrug). However, it was not widespread due to the difficulties in organising and conducting voting. Open lists were used only in
page 99 / 796 four regions in the 2003 and 2005 elections, following which they were abolished by law in all regions where they were allowed. Open lists were allowed in four regions in the 2010 local elections if local authorities wished to have them. But in recent years, they have been abolished in the Republics of Saha (Yakutia), Tuva and Ulyanovsk Oblast. For a short period of time, open lists were provided for by the law of Tver Oblast, but they were also later abolished. In 2013, the Constitutional Court of the Russian Federation ruled that the system of closed lists did not violate the constitution nor was it at odds with European standards.[19]
At present, open lists are still available in only one region – the Samara Oblast. But no municipality has made use of such an alternative.
The proportional electoral system has become widespread at the regional and local levels, mainly as a part of the mixed electoral system (providing for the election of one part of the deputies from the lists of candidates in proportion to the votes cast for these lists, the other part – from single-mandate or multi-mandate constituencies). According to Federal Law No. 67-FZ/2002, the adoption of a proportional electoral system for the election of all members or for parts of the legislative (representative) bodies of the constituent entities of the Russian Federation or of local self- government assemblies was left to the discretion of the constituent entities.
In accordance with Article 35.19 of Federal Law No. 67-FZ/2002, elections to the assemblies of rural and urban settlements (excluding urban districts) with a population of less than 3 000, as well as to assemblies of rural and urban settlements (including the representative bodies of urban districts) with a population of less than 15 000 shall be held only in single-mandate and/or multi-mandate constituencies. In these elections there is no provision for applying a proportional electoral system, in which, following the election results, the deputy mandates are distributed between the lists of candidates nominated by political parties and other electoral associations. Thus, this legal provision prohibits the nomination of candidates by means of lists of candidates from any political party or electoral association, including the application of “closed lists” in these elections. According to the Federation Council, a steady trend that emerged in 2011 and 2012 and intensified after the adoption of the federal law of 2 November 2013, No. 303-FZ “On Amending Certain Legislative Acts of the Russian Federation”, is the reduction in the use of both a purely proportional and mixed electoral system in municipal elections and its replacement by a majority electoral system with single- and/or multi-member electoral districts.
Concerning the legal right for independent candidates to stand in local or regional elections, it should be noted that Russian citizens may be nominated directly (a candidate in a single-mandate or multi- mandate constituency) or as part of a list of candidates (in a single constituency). The direct nomination of candidates may be done through self-nomination or through nomination by an electoral association. Candidates may be nominated as part of a candidate list by a political party entitled under federal law to participate in elections or by its regional branch or other structural subdivision entitled under federal law to participate in elections at the appropriate level (Article 32, paragraphs 1, 2 and 3, of Federal Law No. 67-FZ). Federal Law No. 67-FZ provides for the possibility of independent candidates participating in elections at both regional and local levels by self- nominating. An exception is the election to the “highest offices” (heads of the highest executive bodies) of the State in the constituent entities of the Russian Federation. In these cases, the possibility of candidature by self-nomination in accordance with paragraph 2 of Article 32 of Federal Law No. 67-FZ is left to the discretion of the constituent entities of the Russian Federation. But following a return to direct elections of the governors in 2012, regional laws did not envisage independent candidates, and this is true for most regions. Independent candidates are not provided for in the regional elections held on a proportional basis.
According to the view of some critics, there have been obvious efforts to exclude independent
page 100 / 796 candidates from the elections. Two instruments have been used for this end:
–A mechanism aimed at excluding independent candidates from the elections by sorting out the fake signatures from among the electorate or removing candidates because of faulty documents (for example, an attempt to remove Konovalov, a candidate running for a position of governor in Khakasia, by the Procurator’s Office on the pretext that there was a mistake in the name of the Communist Party branch which put forward his candidature for the election).
–The absence of any opportunity for an independent candidate to carry out an advertisement campaign: even if a candidate could afford to pay the high prices for publishing promotional material, the mass media would deny him the right to do so: tough measures rule out advertising in the streets and on houses, and billboard advertisements are torn off by special groups whose organisers and sponsors cannot be identified. Street rallies and meetings with the electorate are also banned.
There were also complaints, coming both from experts and representatives of opposition parties and independent deputies, that several kinds of resources available to the administration are used for the benefit of incumbent politicians who are standing as candidates. Concerning fairness and transparency of election campaigns, according to information provided by the Accounts Chamber of the Russian Federation, Federal Act No. 67 of 12 June 2002 on basic guarantees of electoral rights and the right to participate in referendums for citizens of the Russian Federation (Article 24, paragraph 10, sub-paragraph “e”), provides that the election commissions of municipal entities are vested with the authority to take measures in the territory of the municipal entity to finance the preparation and holding of local government elections and local referendums. They can also take appropriate measures for the distribution of funds allocated from the local budget and (or) the budget of the constituent entity of the Russian Federation, the financial support for the preparation and holding of local government elections, local referendums, as well as monitoring the use of those funds for their intended purpose. In addition, Federal Law No. 6-FZ (Article 9) entrusts the accounting authorities of the constituent entities of the Russian Federation and municipal entities with the authority to monitor the implementation of the budgets of the constituent entities of the Russian Federation and municipal entities, the legality, efficiency (effectiveness and economy) of the use of the funds of these budgets, as well as the funds received from other sources provided for by the legislation of the Russian Federation, and control over compliance with the established procedure for managing and disposing of State (municipal) property.
One of the suggestions included in Recommendation 297 (2010) was the ratification of the additional protocol on the right to participate. The Federation Council commented that the protocol “does not have a new, broader legal content than the current legislation of the Russian Federation regulating legal relations related to the implementation of local self-government in the Russian Federation”. The legal norms available in Federal Law No. 131-FZ regulate the relations on the realisation of the right to participate in the affairs of local authorities. Thirteen articles of the federal act (Articles 22-33 and 251) set out a wide range of “participatory procedures” – specific forms of direct citizens’ involvement and forms of participation (local referendums, public hearings, citizens’ gatherings, citizens’ meetings, citizen surveys, citizens’ law-making initiatives, territorial public self-government, etc.). Article 33 of Federal Law No. 131-FZ provides that citizens have the right to participate in the affairs of local self-government in any form that does not contradict the Constitution of the Russian Federation, the federal laws and the laws of the subjects of the Russian Federation.
page 101 / 796 According to information provided by the Federation Council, public hearings and public discussions can be initiated by both local authorities and the population, and they are held with the participation of residents to discuss drafts of municipal legal acts. An important feature is that drafts of some acts of the municipal entity, such as those governing its charter and local budget, have to be submitted to public hearings. A citizens’ meeting may be held to discuss issues of local importance, to inform the public about the activities of local self-government bodies and to implement territorial public self- government. At the meeting it may be decided to apply to the local self-government bodies, and persons authorised to represent the meeting of citizens in relations with local authorities may be elected.
An important form of direct citizens’ participation is the local referendum (Article 3, paragraph 2, of the Charter). Citizens, election associations, public associations or the representative body of a municipal formation can initiate a referendum. The most important issues related to the organisation of local government, such as early termination or extension of the term of office of local government bodies, early elections to local government bodies, adoption or amendment of the local budget and fulfilment of financial obligations of the municipality, can be the issues of such a referendum. Decisions taken in a referendum are mandatory throughout the entire territory of a municipal entity. Laws of several constituent entities include detailed provisions on local referendums. For instance, in Leningrad oblast, the law of 9 June 2007 “On local referendums in Leningrad oblast” was adopted, which establishes the procedure for preparation and holding of local referendums in municipalities. In addition, Regional Law No. 44-oz of 8 May 2009 “On the referendum of the Leningrad Region” defines the procedure for the preparation and conduct of the regional referendum at the level of the Leningrad Region. During the consultation procedure the representatives of the Leningrad region highlighted that in the Leningrad Region referenda on local issues are regularly held. For example, in September 2016 there were 3 referenda in Lomonosov Municipal District and in Tosno Municipal District. However remain cautious about the extent of the practical relevance such forms of citizens’ participation have in reality, taking into consideration the experience of Moscow, where the ability to hold a referendum was barely exploited.
During the consultation procedure, again the rapporteurs were also informed that in Leningrad Region over the past five years, special attention has been paid to the development of local self- government in such forms as village elders, public committees, initiative commissions (since 2018). Village elders contribute to communication between municipal administration and people. It is especially useful in remote areas where the communication infrastructure is not well developed. Local initiatives from village elders are supported through regional, municipal budgets.
Laws of constituent entities of the Russian Federation and normative legal acts of local self- government bodies may create new forms of citizens’ participation as long as they comply with the existing federal or regional laws. For example, participatory budgeting and the institution of elders first emerged through popular initiative and were supported by deputies of the representative bodies of municipal entities. Nevertheless, representatives of the Federation Council argued, as already mentioned, that the existing level of citizens’ participation would not need the backing of the additional protocol.
The rapporteurs would like to express their satisfaction at several positive changes that have been introduced, following Recommendation 297 (2010). For instance, minimum numbers of members for the registration of parties was drastically reduced, registration of candidates supported by associations and groups is allowed and the direct election of governors was reintroduced. The introduction of single-mandate constituencies in municipalities for the election of deputies could also promote accountability of representatives. Closed lists deprive voters of the opportunity to take advantage of preferential voting but they do not directly violate the provisions of the Charter. In fact, the free election of assembly members provided by Article 3, paragraph 2, of the Charter does not
page 102 / 796 necessarily include a right for voters to carry out preferential voting. On the contrary, legal requirements for candidates to gather a considerable number of signatures supporting their candidature and, even more so, the municipal “filter” for candidatures at the level of constituent entities (federal subjects) pose serious obstacles to election freedoms and should be abolished. Methods of citizens’ participation that have been introduced constitute positive developments, even though it seems that instruments like local referendums are formally provided for but barely implemented.
As regard the “municipal filter”, the Ministry of Justice of the Russian Federation stressed during the consultation procedure that “the presence of a “municipal filter” stimulates political competition at the local level, forcing political forces to work with local problems and nominate political leaders from their midst who are ready to take responsibility for solving the problems of local communities and cooperate with higher authorities. Thanks to the “municipal filter”, local self-government becomes a “school of democracy” and the elected head of the subject of the Russian Federation is forced to take municipal interests into account in its activities.”
The rapporteurs do not share this opinion and in view of the aforementioned facts, the rapporteurs’ opinion is that the Russian Federation partly complies with Article 3, paragraph 2, of the Charter and should therefore abolish the provision for considerable numbers of signatures as a precondition for registration of candidatures, as well as the “municipal filter” for candidatures at the level of constituent entities. Finally, it should also be stressed that the fact that the several participatory instruments have formally been introduced is a strong argument for the ratification of the additional protocol by the Russian Federation.
San Marino [Article ratified - Report adopted on 28 March 2018 ]
Consult reply indicated at article 3.1
Serbia [Article ratified - Report adopted on 18 October 2017 ]
Consult reply indicated at article 3.1
Slovak Republic [Article ratified - Report adopted on 24 March 2016 ]
Concerning Article 3 para 2, the internal structure and organisation of local authorities stem directly from art. 69 of the Slovak Constitution, whose provisions have been supplemented and defined by the laws that have been passed since 1990, mentioned supra. In the light of this legal framework, the main bodies of the municipality are the city council and the mayor.
The representative body composed of “deputies”, elected through a process of secret, general, and direct voting. The municipal council is the body for debate and decision-making, and its members are directly elected by the citizens of the municipalities. The number of the council members is proportional to the town’s population. The council adopts the most important political decisions affecting the municipality: the local budget, the local master plan, and the generally binding regulations. These legal regulations or ordinances must be approved by a qualified majority. The sessions of the council are public. The city council approves its own internal by-laws and rules of procedure.
In some large cities (like Nitra) there are boroughs, which, contrary to what happens in Bratislava, are not considered to be local authorities. In each of the boroughs there is a committee, comprised of local councillors and regular citizens.
page 103 / 796 The mayor (Starosta in most municipalities, “Primator” in Bratislava and Košice and in other 140 municipalities that have city status) is the top executive authority of the municipality. He is the head of the local authority personnel, he discharges all the executive functions and executes the budget. He is also elected directly (and independently from the council) by the citizens for a four-year term, through a secret and general voting process. Therefore, and contrary to what happens in many European countries, in Slovakia the two key bodies of the municipalities enjoy full and direct democratic legitimacy. In both cases, the electoral law (basically: Act No. 180/2014, on conditions of performance of suffrage and Act No. 181/2014 on political campaign) is based on a majority system, under which the elected members of the council or the mayor of the community are those candidates who get the highest number of valid votes in their respective constituency. The last local elections were celebrated on 15 November 2014. They had a turnout of 48.34 % and they saw a massive success for independent candidates, including the independent mayoral candidate in Bratislava.
The Act No. 253/1994, as amended, defines the legal status and the salaries of mayors, and they are considered infra. The mayor cannot be dismissed either by the State or by the city council. The grounds for the dismissal of the mayor of the municipality are exhaustively set out in the Act 369/1990 (§ 13a, paragraph 1). These grounds are: the expiry of his term of office; resignation; a final conviction for an intentionally committed criminal offence or a final conviction for a criminal offence, or the deprivation of his legal capacity or restriction of legal capacity.
Apart from the “formal” bodies for decision-making, the Slovak Constitution provides specifically for citizens’ participation: in addition to the regular voting rights in local elections, the local residents may vote on important questions of municipal life through local referenda (art. 67). One special type of this referendum is the one by which the local population may dismiss the mayor, a possibility that has happened only in rare occasions.
Local residents may also participate in the regular meetings of local bodies and assemblies. They may also file motions and complaints against local authorities. Citizens’ participation is generally regarded as fairly appropriate regarding the existence of formal mechanisms, but it is not very developed in practice.
In the light of the precedent considerations, the Slovak Republic does fully comply with Art. 3 of the Charter.
Slovenia [Article ratified - Report adopted on 6 November 2018 ]
The internal structure and organisation of local authorities are regulated by the Local Self- Government Act (chapter IV). According to the legal framework, the main bodies of the municipality are a council, a mayor and a municipal administration.
The representative body is the council – composed of the councillors. The municipal council is the decision-making body on all matters concerning municipality. Municipal councillors are elected by the citizens through a process of secret, general and direct voting. The Local Elections Act regulates elections to municipal councils, elections of mayors and elections to the councils of district, village and urban communities. Elections are called every four years and the latest local elections were held in 2014.
According to first two paragraphs of Article 5 of the Local Elections Act, “all citizens of the Republic of Slovenia who on the polling day have reached 18 years of age shall have the right to vote for and be elected as members of municipal councils”.
page 104 / 796 Under the conditions referred to in paragraph one of this Article, “the right to vote for and be elected as members of municipal councils shall also apply to citizens of other Member States of the European Union holding a permanent residence registration certificate and having registered permanent residence in the Republic of Slovenia, or a residence registration certificate and registered temporary residence in the Republic Slovenia».
At the same time, the Local Elections Act provides two types of principles regarding elections of municipal councillors - the principle of majority (majority elections) and the principle of proportionality (proportional elections). Councillors are elected according to the majority principle, if a municipal council has fewer than 12 members. If a municipal council has more than 12 members, then councillors are elected according to the principle of proportionality. Regarding municipalities with mixed ethnicities, the Local Elections Act states that members of municipal councils - representatives of the Italian, Hungarian national communities and the Roma community - shall be elected according to the principle of majority.
According to the principle of majority, individual candidates and candidates who receive the most of votes are elected, whilst the principle of proportionality envisages voting lists of candidates in electoral units. In this case, voters may only vote for one list of candidates and chose a candidate to whom they give preference in the election.
The local election procedures have introduced a gender mainstreaming policy as well. The Local Elections Act states that each list of candidates must include at least 40% of candidates of the opposite gender, while spots in the first half of the list shall be allocated alternately by gender. The 40% quota was fully implemented in the recent 2014 local elections. In the 2014 local elections, there were 1,069 elected women councillors (a share of 31.8%), compared to 730 women elected in 2010 elections (22% share).
The municipal council is the highest decision-making body and according to the Local Self- Government Act (Article 38) consists of 7 to 45 members depending on the number of residents in the respective municipality.
A local council adopts the most vital decisions affecting the municipality such as local budget, local internal regulations, internal structure of the municipal administration, local spatial plan, local economic and development plans, generally binding regulations, the remuneration of the council members and of the mayor, etc. The Local Self-Government Act sets up to 23 different competences of the municipality.22 In addition, sectoral legislation may provide for other competences.
The mayor is the top executive authority and official representative of the municipality. Under the Local Elections Act, mayors are elected by direct elections for a period of four years by the citizens having permanent residence in the municipality. Usually, regular mayoral elections take place at the same time as regular municipal council elections.
A municipal council appoints members of a supervisory committee which is the highest body of supervision of public expenditure in a municipality. In the context of its competences, the supervisory committee shall perform supervision of the disposal of municipal property; oversee the purposefulness and sense of the use of budgetary funds as well supervise the financial operations of the users of budgetary funds as set by the Local Self-Government Act. Within the sphere of its competence, the supervisory committee may determine violations of regulations or irregularities in the municipality’s operations, and if this is the case, inform the competent ministry and the Court of Auditors.
According to the Local Self-Government Act, the mayor shall propose that the municipal council
page 105 / 796 adopt the municipal budget and the final account of the budget, decrees and other acts within the competence of the municipal council, and shall be responsible for the implementation of decisions passed by the municipal council. At the same time, the mayor shall withhold the implementation of a decision by the municipal council which he believes to be illegal or in conflict with the statute of the municipality. In such cases, the mayor proposes that the municipal council adopt a new decision. Although, the mayor shall notify the ministry of the apparently illegal decision. However, if the municipal council adopts the same decision again despite the mayors concerns, the mayor may file a procedure to the administrative court. This provision in the law indicates a strong position of the mayor in the local-self-government system of Slovenia. Some studies show that mayors are the most powerful actors in municipalities according to their self-perception and their influence is unusually high in Slovenia (which is listed together with Hungary and France among top three countries in Europe having “strong mayor form”).
The recent local elections in Slovenia were held in October 2014. During the consultation procedure, the Association of Municipalities and Towns of Slovenia pointed out in particular that 115 out of 212 elected mayors participated in the 2014 elections not as members of any political party but as independent candidates or with the support of groups of voters.
A municipal administration is established in each municipality to implement local policies. A mayor is the head of the municipal administration. Everyday operation of the municipal administration is managed directly by the secretary of the municipality, who is appointed and dismissed by the mayor.
Article 44 of the Constitution provides for direct citizen participation in the decision-making. In addition, the Local Self-Government Act states that citizens can use several forms of direct participation, i.e. they shall discuss individual matters, form standpoints, give proposals, initiatives and opinions, and make decisions at municipal meetings according to the law or the municipal statute.
New Article 48a introduces the possibility of participative budget: “In the procedure of drafting the budget, the municipality may determine the amount of funds intended for financing projects proposed by members of the municipality. The municipality shall carry out consultations on the proposed projects with members of the municipality no later than by the submission of the budget to the municipal council for adoption”.
There are specific guidelines designed for public participation on the local level where particular methods of public participation are explored. Guidelines discuss such methods of direct participation as questionnaires, surveys, consultation, focus group discussions, online chats, facilitated workshops and meetings with interest groups. Research data shows that residents most commonly use writing form, website of the municipality or to speak in person with representatives of municipality in order to express their view on local regulations.
Based on the above, the rapporteurs conclude that the provisions of Article 3.2. of the Charter are met in Slovenia.
Spain [Non ratified - Report adopted on 20 March 2013 ]
Consult reply indicated at article 3.1
Sweden [Article ratified - Report adopted on 2 April 2014 ]
page 106 / 796 Consult reply indicated at article 2.
Switzerland [Article ratified - Report adopted on 20 October 2017 ]
Consult reply indicated at article 3.1
Turkey [Article ratified - Report adopted on 1 March 2011 ]
The analysis article by article is currently unavailable
Ukraine [Article ratified - Report adopted on 31 October 2013 ]
Consult reply indicated at article 3.1
United Kingdom [Article ratified - Report adopted on 26 March 2014 ]
Consult reply indicated at article 2
Article 4.1 Scope of local self government
The basic powers and responsibilities of local authorities shall be prescribed by the constitution or by statute. However, this provision shall not prevent the attribution to local authorities of powers and responsibilities for specific purposes in accordance with the law.
Albania [Article ratified - Report adopted on 31 October 2013 ]
Basic functions and competencies of local self-government units are prescribed in the Constitution of Albania (Part VI) and in Laws No. 8652 and 8654. Local self-government units have own (exclusive), shared and delegated functions. Local councils have the right to make decisions on all types of powers assigned to them and LGUs of the first tier can delegate their functions to the upper tier of local self-governance. Local government associations are consulted by central authorities on the subject of allocation of new functions to LGUs. The Rapporteurs would say that Albanian legislation is in compliance with paragraph 1 of Article 4 of the Charter, although there are some issues, which need more clarity and coherence (see the following paras. 140 – 143). However, the Rapporteurs would also note that they have heard complaints from the representatives of Albanian communes and municipalities that these consultations have a sporadic nature and local officials are prevented from active participation due to the setting of strict deadlines.
Andorra [Article ratified - Report adopted on 28 March 2018 ]
Article 4, paragraph 1 of the Charter requires that the basic powers and responsibilities of local authorities are prescribed by the constitution or by statute. Article 80 of the Constitution of Andorra lists the matters in which, at least, the Qualified Law should recognize powers and responsibilities to the municipalities. By way of implementation of this constitutional provision, Article 4 of the Qualified
page 107 / 796 Law on local competences adopted on 4 November 1994 determines the competences of the Comuns.
Armenia [Article ratified - Report adopted on 15 June 2021 ]
Article 4.1
1 The basic powers and responsibilities of local authorities shall be prescribed by the constitution or by statute. However, this provision shall not prevent the attribution to local authorities of powers and responsibilities for specific purposes in accordance with the law.
153. It is an important guarantee of local autonomy that only the national constitution or legislative acts may specify mandatory tasks for local authorities.
154. As a matter of fact, Article 182, part 1, of the Constitution of Armenia states that: The powers of the local self-governing bodies are their own in order to solve the obligatory and voluntary tasks of the community, as well as delegated by the state. Mandatory community tasks are set by law, and voluntary tasks are determined by community councils. In addition, Article 12 of the Law on Local Self-Government defines 20 obligatory community tasks.
155. Still, other pieces of legislation, such as sectoral laws, assign compulsory tasks to local authorities, so it can be said that this requirement is, at least formally, met by the Armenian legal system, as Article 182(5) declares that “the powers of local self-government bodies shall be prescribed by law”.
Austria [Article ratified - Report adopted on 28 September 2020 ]
As presented in above, section 3.2.1 the Federal Constitution (B-VG) and the Municipal Codes of Austrian Länder regulate the allocation of legislative powers between the Federation, the Länder and the municipalities.
Considering the exchanges between the rapporteurs and representatives of the National Associations and the National Delegation of Austria to the Congress, and following the documentation on the implementation of local self-government in Austria, the rapporteurs acknowledge that there is a high degree of complexity in the allocation of powers between the Länder and the Federation, and that municipalities are, to some extent, peripheral.
However, the rapporteurs appreciate the wording of the Explanatory Report to the Charter, namely, that: “it is not possible, nor would it be appropriate to attempt, to enumerate exhaustively the powers and responsibilities which should appertain to local government throughout Europe”. Therefore, they conclude that Austria complies with this provision.
Azerbaijan [Article ratified - Report adopted on 17 June 2021 ]
As mentioned, a basic list of tasks and responsibilities of municipalities is laid down in the Constitution and in the legislation, which have set up a two-tiered system. The local executive authority is an extension of the executive power of the state. The legal status of local state administration in Azerbaijan is regulated mainly by the Law on Local Executive Authority and by the President’s Regulation from 2012, which has further strengthened the already dominant position of local executive authorities in local affairs.
page 108 / 796 According to Article 124 of the Constitution and of the Law on Local Executive Authority, the head of these authorities perform the following functions: carry out orders of the President of Azerbaijan; implement state programmes authorized by the President of Azerbaijan as well as local programmes; establish and dissolve local state administration departments, services, enterprises and organizations; appoint and dismiss their heads; annul any documents that run counter to existing legislation; organize elections, national referenda and public discussions as established by legislation; submit issues and proposals concerning local development to the appropriate executive bodies; execute other duties as established by the legislation.
Chapter 9 of the Constitution (Articles 142-146) lays down the main principles of local self- government, such as the legal status of municipalities, their basic powers and their relationships with other entities. The functions assigned to municipalities are the following: recognition of mandate of municipality members, loss of their mandate and termination of their mandate according to legislation; approval of in-house regulations of municipality; election of the chairman of municipality, his/her deputies, permanent and other commissions; establishment of local taxes and duties; approval of local budget and reports on its implementation; use and disposal of municipal property; acceptance and implementation of local programmes of social protection and social development; acceptance and implementation of local programmes of economic development; acceptance and implementation of local ecological programmes. Additional powers can be transferred to municipalities by the state administration, allocating appropriate financial resources to exercise them. In such case, the implementation of such functions is subject to control by the local or central executive authority.
In practice, as pointed out by the Committee of the Regions of the European Union the responsibilities carried out by municipalities are only the following:
maintenance of cemeteries; local road maintenance (shared with local executive authorities); renovation activities and gentrification (shared with local executive authorities) parking; allocation of land plots for individual house building (shared with local executive authorities) parks and vegetation (shared with local executive authorities).24 Keeping record of family farms.
The Law on the Status of Municipalities pays attention to the adoption and execution of municipal programmes concerning social protection, social and economic development and the local environment. At the same time, almost all socio-economic functions fall within the scope of the local executive authorities, as mentioned above (Article 3). On some issues, local executive authorities are required to take into consideration the views and suggestions of municipalities, although it is not clear how this happens nor there seems to be a formal procedure to do so. The role of municipalities is limited in practice also because funding from state budget directly goes to the local executive authorities, and this branch of power rather than municipalities is responsible for submitting proposals to the state.
While the Constitution (art. 144) and the legislation formally lay down some – albeit limited – powers reserved to municipalities, the problem remains of ill-defined roles, responsibilities and competences of the local executive authorities and municipalities. The current framework leaves municipalities little discretion over a significant portion of the responsibilities granted to them by the Law on the Status of Municipalities. The division of powers and duties between the local executive authorities and the municipalities is so disproportionate and uneven that the latter are not in a position to carry out most of the functions they could perform according to legislation. A quicker and more effective transfer of functions would be possible if the local and executive authorities were democratically
page 109 / 796 elected by the citizens.
It must be reminded that, Article 4.1 of the Charter “requires clarity and legal certainty for the regulation of the “basic powers and responsibilities” of local government bodies”(see the contemporary commentary in this respect) which is missing in the case of Azerbaijan, despite being provided for in legislation, as the provisions remain largely unimplemented.
For these reasons, the commitments under Article 4.1 of the Charter are to be considered as only partly respected in Azerbaijan.
Belgium [Article ratified - Report adopted on 15 October 2014 ]
Flemish Region (Vlaanderen)
As far as Article 4.1 is concerned, local self-government is enshrined in the Constitution and the local authorities’ powers and responsibilities are duly enshrined in the law, although a number of responsibilities are assumed in partnership and in co-operation with higher authorities.
Walloon Region and German-speaking Community
With regard to the first paragraph, the basic powers and responsibilities of local authorities are clearly laid down by the Belgian Constitution and the legislative and regulatory instruments of the Walloon Region and the German-speaking Community, by the Code of Local Democracy and Decentralisation and by the Decree on the exercise of certain functions of the Walloon Region by the subordinate authorities in the German-speaking Community.
Brussels-Capital Region
Section 4.1 of the special law of 12 January 1989 on Brussels institutions provides as follows: ‘The Brussels-Capital Region shall have the same powers and responsibilities as the Walloon Region and the Flemish Region. The powers assigned to regional councils shall, in the case of the Brussels- Capital Region, be exercised through ordinances.’ The ordinance of 5 March 2009 amending the new Municipalities Act introduced a local governance plan designed to modernise government and improve the quality of public services delivered.
As part of the Sixth State Reform, the Brussels-Capital Region has undergone large-scale reorganisation which has strengthened it through refinancing and the fact that it has received the same powers and responsibilities as the other two regions.
The regional bodies in Brussels simultaneously hold:
- the same regional powers as in Flanders and Wallonia;
- Community powers for ‘bicommunity’ matters relating to individuals.
In 2012 the Brussels-Capital Region was given the freedom to determine certain aspects of its own organisation, which it does by a two-thirds composite vote (as in the other regions) but also by a majority in each linguistic group. It can now organise its own institutions and divide and streamline exercise of powers between the Region and the 19 municipalities (for planning, social housing, mobility, street cleaning and refuse collection, security and tourism). One principal facet covers security in the region while another relates to a redistribution of powers between the Region and the municipalities.
page 110 / 796 Bosnia and Herzegovina [Article ratified - Report adopted on 31 October 2019 ]
The three headings on competencies, their exercise in full discretion and on their exclusive character are treated together due to the situation in practice, in particular in the Federation of Bosnia and Herzegovina.
The competencies of municipalities are regulated in legislation of both Entities (and Cantons).
In the Federation of Bosnia and Herzegovina, Article 8 of the Law on Principles of Local Self- Government provides for a huge number of powers, listing 29 different competencies. However, not all of these have been fully respected or correctly implemented (yet; since adoption of the Federation of Bosnia and Herzegovina Law on Principles of Local Self-Government in 2007). Also, Cantons can transfer competencies to municipalities without the allocation of appropriate funds and so, despite Article 11 of the Federation of Bosnia and Herzegovina Law on Local Self-Government principles establishing the contrary: according to estimations by the Association of municipalities and cities of the Federation of Bosnia and Herzegovina, in practice, only 20% of the necessary funds are allocated. Thus, the system is characterized by “significant confusion and frustration due to joint and overlapping competences between the two layers of government (and) by a municipal perception that unfunded mandates are handed down to them (as well as by) a failure to overcome latent inefficiencies in the assignment of responsibilities”.[13] In the Federation of Bosnia and Herzegovina, interlocutors expressed the opinion that local self-government competencies should include matters such as social and health care, pre-school and primary schools as well as public order as original competencies (and not as delegated ones), for which sufficient funds should be provided. This was labelled by most interlocutors as wishful thinking, as every level of government would try to “highjack” and keep as many competencies as possible.
Within the Federation of Bosnia and Herzegovina, it appears that Cantons do not implement decisions of the Constitutional Court. The rapporteurs were informed that there are no (sufficient) enforcement mechanisms or sanction in place to ensure the implementation of judgements.
In Republika Srpska, the allocation of competencies between only two levels of government is much more clear, due to the two-tier structure. The case of the “City of Eastern Sarajevo” (Republika Srpska), consisting of 6 “joint” municipalities, is special: it can also exercise competencies regarding the following subjects: public transport (subsidized), fire brigade, secondary school education, (promotion of) tourism, traffic signalization.
The Brčko District can exercise all competencies of the Entities, except for pension funds (see Article 9 of Brčko District statute). Its competencies seem clearly delimited from those of the State, e.g. health care, social protection and police are independent and under the supervision of the Brčko District Assembly. The same is true for the judiciary which forms a system of its own.
Although some progress has been made since 2012, in particular in the economic sector, recently municipalities have to cope with a number of additional problems, in particular providing care and housing for migrants, which exposes systemic problems: it appears that all levels of government can add (and add) obligations to municipalities’ tasks and cut their finances. It also seems that every level of government tries to keep competencies rather than transferring or delegating them in a subsidiarity logic. A particular problem is the divided competencies in the Federation of Bosnia and Herzegovina between Entity and Cantons as well as the lack of harmonisation of their legislation.
Therefore, the rapporteurs consider the requirements of Article 4.1 are generally respected while systemic problems persist regarding Articles 4.2. and 4.4 due to the lack of clarity and certainty of
page 111 / 796 assignment of tasks and functions in practice, in particular in the Federation of Bosnia and Herzegovina (given the role of Cantons).
Bulgaria [Article ratified - Report adopted on 21 January 2021 ]
Article 4.1
1. Article 4.1 requires clarity and legal certainty for the regulation of the “basic powers and responsibilities” of local government bodies. They should be prescribed by the constitution or by statute, so as to provide predictability, permanence and protection for the benefit of local self-government. Therefore, the tasks of local authorities should not be assigned on an ad hoc basis and should be sufficiently enshrined in written parliamentary legislation. Establishing local powers and competences by means of administrative regulation should be avoided and goes against the spirit of the Charter. This general rule is not incompatible with the attribution to local authorities of powers and responsibilities “for specific purposes” in accordance with the law.
1. National legislation follows different patterns on regulating the allocation of local responsibilities. In some countries, there are general statutory provisions that use broad terms in order to describe the “matters” or domains of such responsibilities (e.g. “elementary education”, “green spaces”, etc.). Then, in a second step, sector-specific legislation precisely identifies the concrete tasks to local governments. In other countries, there are no general provisions and the concrete tasks and responsibilities of local governments are singled out in a wide range of sector-specific legislation. In such cases, it is nearly impossible to get a comprehensive picture, a situation that could frustrate transparency and obstruct efficient consultation of local authorities according to Article 4.6.
1. Τhe fundamental powers and responsibilities of municipalities are mainly set out in Articles 17, 21 and 44 of the LSGLA that introduces a system for allocating powers between the different organs of an authority (council, mayor). An emerging question is which powers and responsibilities can be “basic” and do require, in principle, systematic regulation. But the definition of “basic” powers cannot be the same in the different countries and national authorities have a wide margin of discretion in defining these “basic” powers. Traditional tasks characterising local government operation in a specific country would certainly be part of those basic powers.
1. Apart from the LSGLA which mentions some important responsibilities of local government, the distribution of competencies between central and local authorities is regulated in a number of laws and other normative acts in the respective spheres of activity. According to information provided by the Ministry of Regional Development and Public Works, responsibilities of local authorities are currently regulated in eight codes, 131 acts, over 500 bylaws. Thus, the municipalities are engaged in the implementation of the national sectoral and horizontal policies on their territory.
1. The NAMRB has prepared some key proposals formulated under the framework for the preparation of a programme for implementation of the strategy for decentralisation of public administration for the period 2021-25. Concerning the “Protection and development of the own sphere of activity of the local self-government”, the NAMRB has proposed, inter alia:
granting/expanding the powers to manage activities important for the local community, including some of the delegated ones (in the field of secondary education, in the management of water supply and sewerage associations, in the control of compliance with
page 112 / 796 local regulations, etc.); providing the management, respectively the revenues of resources with local importance – natural, cultural, historical and others (caves, mineral waters, etc.); expanding the powers of local authorities to act in emergencies and extraordinary situations; more tools to encourage investments of local importance in the construction of industrial parks, and so forth.; stimulation of public investments by creating funds and programmes for financing municipal infrastructure.
Croatia [Article ratified - Report adopted on 20 October 2016 ]
Article 135 of the Constitution of the Republic of Croatia establishes that units of local self- government (towns and municipalities) shall administer affairs of local jurisdiction by which the needs of citizens are directly fulfilled. Under the same article, regional self-government shall administer affairs of regional significance. The constitution lists the purview of both local and regional self-government. Article 135 further defines that when powers are delegated, priority shall be accorded to the bodies which are closest to the citizens.
The Law of Croatia on Local and Regional Self-Government specifies the powers of local self- government. Article 19 defines the following as competence of a town and municipality: Organization of settlements and housing, Town and urban planning, Utility services, Child-care, Social welfare, Primary health protection, Pre-school and primary-school education, Culture, physical culture and sports, Consumer protection, Protection and improvement of natural environment, Fire-protection and civil defence Transport in their area Other activities in accordance with special laws.
Article 19a of the same law lists the competences of big cities (more than 35 000 residents) and county seats with less than 35,000 inhabitants.1 These are the same as for municipalities as above and add public roads maintenance and the issuing of building and location permits.
The Law of Croatia on Local and Regional Self-Government defines as competences of regional self- government bodies the following: Education, Medical care, Town and urban planning, Economic development, Traffic and traffic infrastructure, Maintenance of public roads Planning and development of the network of educational, medical, social and cultural institutions. Issuing of building and location permits and other document in relation to construction in the county area excluding the area of a big city Other activities in accordance with special laws
Both articles of the law include a record saying that special laws will define the rules and procedures for exercising the powers of local and regional self-government and establish which structural subdivision of the specific self-government is responsible for exercising a specific task within the scope of specific powers.
The rapporteurs conclude that Croatia’s legislation is in line with Article 4 paragraph 1 of the Charter. They would like to point out however that this conclusion is tempered by their findings on Article 4 paragraph 3 infra concerning decentralisation.
Cyprus [Article ratified - Report adopted on 20 October 2016 ]
In theory, the legal definition of local government powers and duties correspond to the requirements of the Charter, as they are defined in the following way: “[the] municipalities shall have competence to administer all the local affairs thereof and all the powers lawfully vested in a municipality shall be exercised by the council and the mayor”. However, the relevant laws (mainly the Municipalities Law
page 113 / 796 and Communities Law) confer to local authorities only minimal responsibilities. As it was already discussed, most important and costly public services are carried out by central government agencies, rather than local authorities. Despite public health, social and welfare services, education belong to the most important local public affairs, the local authorities do not have any responsibilities in fulfilling these tasks, or they have only minimal functions (like maintenance of school buildings).
The main and recurrent explanation of the representatives of the Cypriot central government the Congress delegation heard was that local authorities do not have enough capacity and resources (including sufficient financial means, staff and expertise) to tackle these core functions. However, even though it can be true, this argument can be used for the claim for strengthening local authorities, and making them able to cope with these tasks. Municipalities – in particular the great cities having significant economic potential – should get sufficient financial and other kinds of resources for managing and administering the most important tasks of the local community.
The Congress delegation found that the “own” tasks and the delegated powers often are not clearly separated, which has negative effects on both the accountability and the finance of local communities. Undoubtedly, the scope of local autonomy is much wider when a function falls within the responsibility of local government, while the pure execution of a centrally delegated task makes a local community in a subordinate position to the central authorities.
The current system of local government of Cyprus hardly meets the requirements of Article 4 paragraph 4 of the Charter, as most powers of local authorities are not exclusive and full. In fact, some of the powers of local authorities, like the issuing of planning permits are delegated, or strictly controlled by the central government. The regulatory power of the municipalities and the communities, for instance, is fully submitted to central government, as all local regulations are to be approved by the Council of Ministers with the goal, according to the government, of ensuring legality control. Through the direct elections of mayors and councillors, the representative bodies of local authorities have sufficient democratic legitimacy to exert public power and to make public policy in an autonomous way, without central tutelage.
As for the requirement of the Charter on the rights of local authorities to be consulted “in due time and in an appropriate way” in the matters which concern them directly, the relevant laws recognise this principle in general. However, there are no available information about the existence of an institutionalised and regular consultation system between the central government and local authorities guaranteed by law. The national delegation to the Congress stressed during the consultation procedure on the present report that although local authorities and their unions are consulted from time to time, they do not consider the extent and quality of consultation as being adequate or timely, as frameworks of these talks have been guided by the central government.
To summarise these findings, the rapporteurs express their opinion that non-compliance problems arise with the implementation of paragraphs 2 and 4 of Article 4.
Czech Republic [Article ratified - Report adopted on 8 March 2012 ]
The Czech Republic meets the requirement under Article 4 (1) of the Charter in that the basic powers of local and regional authorities are prescribed by law. As already pointed out, not only the constitutional provisions but also the statutory instruments adopted in or around 2000 are compatible with the Charter.
Denmark [Article ratified - Report adopted on 31 October 2013 ]
page 114 / 796 According to the Ministry of the Economy and the Interior, the powers and responsibilities of local authorities are not always prescribed by statute. Local authorities can manage specific tasks in pursuance of municipal decrees, which constitute a set of non-written rules and principles relating to the municipalities’ non-statutory responsibilities. Initiatives relating to leisure, cultural and sports activities are classic examples of tasks (responsibilities) which, by virtue of municipal decrees, must be managed by a local authority. Such decrees follow the principle that local authorities cannot exercise profit-making activities (trade, crafts, production of goods and services, etc). Municipal decrees are subordinate to written law.
Municipal decrees comprise a number of vague rules which often overlap. This makes it difficult to pinpoint which fields fall within the remit of a municipality under the terms of such decrees. They generally specify that the tasks to be carried out or managed by the local authorities must have a public interest. The local authorities cannot transfer such tasks to individuals or private companies, unless provided for by law.
The 2007 reform was primarily based on the principle of subsidiarity, according to which the various tasks facing Danish local authorities must be assigned to the authority closest to the citizens, with due respect for the nature and budgetary and professional demands of the different tasks. Another principle of the reform was that overlapping of responsibilities should be avoided.
Most social welfare functions were transferred to municipalities by two major local government reforms, in 1970 and in 2007. Municipal and regional responsibilities are set out in sectoral laws (legislation on schools, social affairs, etc). These texts grant the local and regional authorities a greater or lesser degree of autonomy in deciding on the level and scope of services and benefits.
In some cases, framework laws provide a wide range of possible means of implementing them. Other types of law assign the municipalities or regions clearly-defined tasks, leaving the individual authorities responsible for implementing them, limited discretion. Lastly, municipalities are responsible for a number of tasks which are not specified in legislation, as well as for other duties which the State delegates to them, such as keeping civil status registers.
Local authorities have full discretionary powers in the exercise of most of their functions. Exceptions to this rule are certain social security benefits (including old-age pensions), some of the costs of which are covered by the central Government. According to the LGDK, the 2007 reform further reinforced municipal self-governing powers by assigning them, for instance, responsibility for such fields as planning and environment. Spatial planning and management of the environment and water resources were generally devolved to the municipalities, although responsibility is shared by the counties and the local authorities. Management of highways now comes primarily under the responsibility of the municipalities, which look after 90 % of the Danish road network.
Some examples of highly decentralised or centralised responsibilities were brought to the rapporteurs’ attention. The decentralised responsibilities include primary education, social welfare services, health, public services, environment and spatial planning and road management. The highly centralised responsibilities include supervision of foodstuffs, which has become a completely centralised function despite the two wide-ranging local government reforms. The tax administration system, which was a shared responsibility prior to the reform, has now become a centralised function exercised by the Ministry of Taxation.
The local authorities’ right of consultation is fully respected at both regional and municipal level, and also vis-à-vis their respective associations. The municipalities, through the intermediary of their association, LGDK (which covers all municipalities), and the regions through the intermediary of their association, Danish Regions, are consulted formally, and exert their greatest influence, during the
page 115 / 796 annual budgetary negotiation procedure.
The rapporteurs can therefore conclude that local and regional councils are fully responsible for the administration and management of their municipalities or regions, particularly in the wake of the 2007 reform, which further raised the level of local autonomy. However, it would appear that local authority responsibilities are still not provided for by law. Consequently, a number of competences laid down in municipal decrees are still fairly vague and often overlap. This makes it difficult to pinpoint which fields a municipality can manage under these decrees. The rapporteurs consider that the question of local authority competences ought to be reviewed in the light of Article 4 para.1 of the Charter.
Estonia [Article ratified - Report adopted on 29 March 2017 ]
Consult replies indicated at articles 4.2, 4.3, 4.4 and 4.6.
Finland [Article ratified - Report adopted on 28 March 2017 ]
Local governments in Finland are featured with their vast sphere of activities and their place at the heart of the activities of administrative institutions working directly for public well-being. With regard to the exercise of local government responsibilities (para. 2 and 3 of Art. 4 ECLSG), during the visit to Raasepori, the Mayor pointed out that in the field of social services, the town delivers all services independently except for the assistance component of its disability services, which functions as a mixed service. When it comes to services governed by the Social Welfare Act, the town delivers most services independently apart from high-intensity sheltered housing, for which the municipality makes use of services supplied by other organisations or providers. Most social services are local authority tasks, which mean that both the powers and the responsibility lie with the municipality.
The members of the Constitutional Law Committee said that the Left Alliance Party and the Social Democratic Party have concerns regarding the government's plan to open up public social and health care even further to competition, making it possible for multinational companies to provide services in these sectors. The Left Alliance parliamentary group has outlined its views in a statement. The starting point for social and health care reform should be to strengthen primary healthcare. The transition from primary care to specialist care should be smooth, as should be the movement between social and health services. The Left Alliance Group does not accept the government's argument that all public social and health services should be organised as private companies as it believes that this would make healthcare unnecessarily open to competition. Social and health services should instead be provided mainly by the public sector.
Although it is still not clear what the specific choices will be for the legal framework of the future self- governed regions, there is some evidence that these regions will not have a general competence like municipalities do (Article 4 para. 2 ECLSG). A special Finance Act for the regions will be drawn up. According to governmental project, the new regional entities will be able to organise their own services and choose how to provide them (e.g. also through outsourcing and contracting) but they will not have their own tax revenue (Article 9, paras. 1 and 3). At the Ministry of Finance it was made clear that financial considerations are probably the most important drivers of the reform: Costs for social welfare and health care would increase by 2.4% per year. If 300 municipalities in Finland retained the corresponding responsibilities, these costs would soon rise further, in line with population growth, by 6-7% every year, and the Finnish government would not be able to control the increase.
Concerning the right to be consulted (Article 4, para. 6, Article 5 and Article 9, para. 6, ECLSG), the
page 116 / 796 Chairperson of the Constitutional Law Committee pointed out that, under the Parliament’s Rules of Procedure, committees handling government proposals and bills may hear experts’ opinions. This usually means that organisations, bodies or institutions that will be affected by the bill are heard by the committee. It would be considered extremely odd if a committee did not hear the municipalities and the AFLRA for example when a bill related to self-government or local democracy. The Constitutional Law Committee would also make a statement on any government proposal affecting municipalities as section Section 121 of the Constitution contains strong guarantees in their respect.
Furthermore, central government and the local authorities maintain close ties with each other in Finland. Up to 75% of parliamentarians are members of municipal councils as well. In some respects, this reflects the fact that municipal democracy and all its aspects are taken into consideration in practice when central government takes decisions on reforms influencing local democracy. The ongoing reform is being prepared in several working groups, which comprise members representing regional and local authorities. There is also widespread discussion about the reform outside these working groups and the regional and local authorities are actively involved in this. Discussion has influenced and will continue to influence the proposals that government has been distributing for comment. The matter is also being discussed by the Committee on Economic Affairs and twice a week, one of the parliamentary committees or working groups consults AFLRA on the subject. The constitution provides that the municipalities have to be heard.
The relevant ministries, namely the Ministry of Finance and the Ministry of Social Affairs and Health, actively inform the general public and stakeholders on the progress of the reforms by various means and through various forums (website, events such as seminars, etc.). Regional and local authorities have already given their official comments on the boundary divisions of the future counties. Consultations on the legislation on health care and social welfare reform and county reform began in August and will end in November 2016. Local and regional authorities are among the largest interest groups which will make comments on the proposed legislation.
To sum up, the rapporteurs conclude that Finland complies with Article 4 of the Charter, while noting with satisfaction that particular attention is given to consultation of local authorities in Finland. Opening public welfare and healthcare to competition does not necessarily constitute an infringement of para. 4 of Article 4 provided that the local authorities are outsourcing service provision in order to reduce costs but maintaining control over priorities and the quality of these services. On the other hand, some of the options being considered as part of the planned regional reform raise concerns about compliance with various paragraphs of Article 4.
A particular point of concern would be the upward transfer of important municipal responsibilities to the regional level even in cases where very large municipalities are fully capable of dealing with them (e.g. Helsinki or other big cities). Paragraph 3 of Article 4 establishes the subsidiarity principle and such responsibilities should preferably be exercised by those authorities which are closest to the citizen, which is precisely the case in some large cities in Finland. Therefore, the rapporteurs are of the view that the possibility of making exceptions for large cities should be considered where the transfer of these tasks to the regional level does not seem necessary and would infringe the principle of subsidiarity and Article 4, para. 3, of the Charter. Furthermore, following the subsidiarity principle and considering the fact that Finnish municipalities are very different in size and that the range of services actually provided by largest cities is much broader than in small rural municipalities, the rapporteurs consider it justified, given the specific problems that the capital city is facing, that Helsinki be granted a special status.
France [Article ratified - Report adopted on 22 March 2016 ]
In France there has been an ongoing procedure of decentralisation since the early eighties. Many
page 117 / 796 additional new tasks have been transferred from the state to local and regional government. Although basic powers and responsibilities of territorial collectivities are not mentioned in the French Constitution, there are extensive provisions in several decentralisation laws as well as in other laws, such as the protection of the environment, education, social cohesion etc. Furthermore, French municipalities and departments traditionally fulfil several tasks on behalf of the state.
The so-called “general clause of competence” (clause générale de compétence) (see above, Chapter 3) that was temporarily abolished in France – and certain interpretations connecting this clause to the constitutional principle of free administration – appear harmonised with Article 4, paragraph 2 of the Charter, whereby local authorities should have full discretion to exercise their initiative for matters not excluded from their competence nor assigned to any other authority. The abolition of the general clause, had it taken place, could have constituted a violation of Article 4 paragraph 2 of the Charter, no matter whether it affected the municipal, the departmental or the regional level. The new law NOTRe (“Nouvelle Organisation Territoriale de la République” – see above) aims at rationalising and specifying the distribution of responsibilities among the sub-national tiers. There was much debate as to whether the final version of this law would clarify whether the general clause principle would be abolished, or whether it would be better defined in order to avoid competence overlap but at the same time leave enough room for local discretion to take initiative for matters not excluded from local authorities’ own competence according to Article 4 paragraph 2 of the Charter. In fact, after an appeal filed on the 22 July by at least 60 senators and 60 deputies, the Constitutional Council, in its decision of the 6 August 2015 criticised the method of election of the metropolitan councillors in the Greater Paris metropolitan area (Métropole du Grand Paris). The final version of the law NOTRe finally abolished the general clause of competence for regions and departments, while reinforcing the role of regions in economic development.
Article 4, paragraph 3 of the Charter introduces the subsidiarity principle whereby public responsibilities should be exercised “in preference” closest to the citizen. The same paragraph introduces the criteria whereby of the extent and nature of tasks, as well as the requirements of efficiency and economy should be taken into account in the allocation of responsibilities. The French Constitution states that territorial authorities should decide on all competence that can “better be dealt with at their level”. The decentralisation principle (Article 1 of the French Constitution) also supports the transfer of all tasks that can be performed at a sub-national level to a decentralised entity. The French Constitution does not explicitly introduce the principle of subsidiarity (as Article 4 paragraph 3 of the Charter does), since neither the decentralisation principle nor the rule of Article 72 paragraph 2, concerning the distribution of competence, incorporate subsidiarity. In practical terms this would mean that, including within sub-national governments, lower tiers would own a kind of prerogative of competence, since they would be “closer to the citizen” than the upper tier.
However, it seems clear to the rapporteurs that the up-scaling of competence and re-centralisation of responsibilities would not only face the restraints set by the aforementioned criteria of Article 4.3 of the Charter, but further obstacles created by the principle of decentralisation in the French Constitution. On the other hand, it should be clear that up-scaling of competence or even re- centralisation may be compatible with these principles and conditions when the nature and the extent of a task (e.g. concerning environmental protection) has drastically changed.
A point that was raised by most of the interlocutors that the rapporteurs met during their visit in France (including by the representatives of the Cour des Comptes) was the question of overlapping responsibilities and blurred competences. In some cases the application of the general competence clause across all tiers of local government has been blamed for this, and sometimes (as was the case in the Balladur report) the very design of the territorial organisation in France, including at least 4 sub-national tiers (including inter-municipal entities) and a plethora of specialised procedures could explain the hydra of overlapping responsibilities in France – which is an issue also in connection with
page 118 / 796 paragraph 4 of Article 4 of the Charter. The new law NoTRE aims to clarify the distribution of responsibilities.
The provision of the Charter in Article 4 paragraph 6 about timely and appropriate consultation of local authorities when planning and decision-making processes directly concerning them has also been in the background of several discussions between the rapporteurs and representatives of associations or of single local and regional authorities. While most interlocutors agreed that the presence of many local politicians in the senate and consultation procedures with representatives of local/ government associations do have an important impact, there were complaints that single authorities are not heard (although some territorial collectivities are particularly affected), or even that local politicians change their views and attitude when they act as Senate members or at times when they are out of office. The latter should be no surprise, since senators have to adapt to their institutional role, namely to be part of parliamentary procedures and defend general interests of territorial collectivities and the local level, and not to promote particular interest of single authorities (see also para. 170 above).
In the literature about the French local government system, it is often stated that in reality, the French model is essentially based on co-operative decentralisation. On the political side, there is the strong representation of local and regional leaders in Parliament, especially in the Senate. Local politicians are also the law-makers. They have always had a strong grip on national policies because of a typical character of the French political system: multiple mandates, meaning that the same person can be elected for different positions and not have to give any up: mayor, department counsellor, senator or deputy and minister. National representatives identify themselves with their territorial constituencies. Most presidents of the departments are senators, which makes them a powerful party lobby in Parliament. Furthermore, the Senate has a special role of representation of territorial communities. Not to mention the influence of national associations of mayors (created in 1907), of departments, of regions, of great cities, of touristic or forest-municipalities, etc. Ministries ask always their advice when preparing new projects. They make also direct proposals and work with parliamentary committees. Pressures from the central government, though, often succeed in having the Parliament adopt laws that are not welcome by local government practitioners - the 2009 business tax reform was an example, but this is commonplace in politics. A further example concerned the recent law on the regional merger which cause vehement reactions by many regions and was rejected by the Senate but finally passed through narrow majority vote of the National Assembly (see above, para. 170 et seq.).
There is a clear need to organise and institutionalise consultation channels and procedures. This is already the case concerning finance and sometimes other important aspects of local government performance. There are many institutions of co-operation between the State and the local governments. For instance, the very important National Committee of Local Finances, composed of representatives of ministries and local and regional authorities and chaired by a local politician. This committee has certain powers in the distribution of grants and must give advice on all regulatory decisions of the central government that have a specific impact on local finances. A further committee evaluates the compensation disbursed when new competences are transferred from the State to local and regional authorities. Another committee discusses the rules to be established for local government civil service, and so on. The logistic of local finances, treasury and tax administration are in the hands of State administrations, but they are in constant working relations with the territorial collectivities. As a final finding, it can be stated, however, that the organisation of institutionalised consultation concerning other matters could be improved in a way that would also offer to single authorities easier access and more chances to be heard. The provisions of the Constitution concerning consultation with representatives of the territorial collectivities for overseas areas (e.g. in Article 72-4 of the Constitution) can be seen as good practices and good examples.
page 119 / 796 In conclusion France fulfils the requirements of Article 4 of the Charter.
Georgia [Article ratified - Report adopted on 7 November 2018 ]
The new Code of Local Self-Government (2014) provided for additional responsibilities of municipalities, but at the same time, fire safety and rescue functions were removed from their fields of competence. The duty to ensure the operation of agricultural information and advice centres, which had been delegated to them in 2012, was also taken away. Nowadays, the Georgian Government is considering further steps towards decentralisation. The ministry of education and science has since come forward with an initiative to delegate the administration of public schools (including construction, repairs, equipment, school transport, etc.) to local self-governing units.
In March 2018, the prime minister and the speaker of the parliament announced in parliament that a reform strategy would be presented to the public during the summer of 2018 and be adopted by the end of that year. Emphasis is now being made on delegating more powers, and the first stage of the reform is supposed to be completed by 2025. The ministry of regional development and infrastructure of Georgia is working on a project for decentralisation and good governance strategy. The representatives of the respective government agencies and representatives of the relevant committee of the Georgian Parliament, together with experts from international and non- governmental organisations, are involved in the preparation of the draft strategy, which is planned to take place, along with the launch of a wide range of discussion forums, by the end of 2018.
In general, the Georgian legal framework for local self-government has considerably improved since 2014. Local authority competences have been strictly differentiated from the mandate of central government and the municipalities have obtained the right to claim any competence that has not been allocated to any other level of government (see below).
Georgia therefore fully complies with Article 4, paragraph 1, of the Charter.
Germany [Article ratified - Report adopted on 14 March 2012 ]
As also discussed in Chapter 3 of this report, local authorities have, as a major rule, responsibilities in their own area. Although some tasks and functions are divided between the different levels of government, the Charter’s requirement for full and exclusive local government powers is a principle requiring discretionary power for local authorities, rather than a strict rule excluding cooperation with administrative organisations. The general competence principle (Allzuständigkeit) complies fully with the related provision of the Charter. The prevalence of this principle is reinforced by the freedom of local governments to undertake more tasks for the welfare of the local population on a voluntary basis.
The Charter also requires that local authorities should have discretionary power even as regards delegated powers, so as to adapt their exercise to local conditions. The delegation of tasks is practised in each Land. Although central supervision in these cases extends not only to the lawfulness, but also to the effectiveness of local authorities’ action. Still, the successful fulfilment of such duties needs a strong cooperation between the central and local authorities, allowing some discretion to the latter. Problems arise from the financing of delegated tasks, which was repeatedly evaluated by mayors, local representatives and officials as insufficient during the visit. But the scarcity of finances does not relate to this Article of the Charter, and will be discussed below (see section 10.6.).
Greece [Article ratified - Report adopted on 26 March 2015 ]
page 120 / 796 The Greek Constitution regulates the scope of local self-government in Article 102, para. 1. After establishing that: “The administration of local affairs shall be exercised by local government agencies of first and second level”, it provides that “For the administration of local affairs, there is a presumption of competence in favor of local authorities”, accepting the principle of Article 4, paragraph 3 of the Charter. The same Article 102, para. 1 adds that “The range and categories of local affairs, as well as their allocation to each level, shall be specified by law”. Therefore, it is the law that determines the competences of local authorities and especially the Municipal code of 2006 (Law 3463/2006, art. 75). The Municipal code has been deeply amended by Kallikratis reform and at the moment a new code is under elaboration.
The rapporteurs were informed by the representatives of the Greek Parliament that in 2013, due to the strict limitations on the budget set by the Medium-Term Fiscal Strategy 2013-2016, the government was forced to suspend the transfer of a number of significant powers to local government authorities (Law 4147/2013). However, it is the government’s intention to proceed with the full implementation of the “Kallikratis” Program as soon as the fiscal situation permits it.
Accordingly, Article 4, para. 1 of the Charter that establishes that “The basic powers and responsibilities of local authorities shall be prescribed by the Constitution or by statute”, should be considered formally respected, although in the practice the transfer of the new competences has not yet been completed. In addition, it should be noted that, in practice, not only major, but also sometimes even minor decisions tend to be taken at the highest administrative or political level. Some of the most important public service delivery systems, such as public education, public health services, and social protection are still subject to direct and comprehensive control by the central government.
The consequence of the Greek tradition of centralisation and the existing legal and factual framework are not in line with full discretion (Article 4, para. 2 of the Charter) and to the fullness, comprehensiveness and exclusiveness of responsibilities (Article 4, para. 4 of the Charter) as stipulated in the Charter . It is sufficient to mention the role played by the deconcentrated State administration. While in some countries it is considered that it is not necessary for the government to set up its own field offices, the prevailing view in Greece argues that the implementation of major government policies and their adaptation to local circumstances should be entrusted to deconcentrated state administrations, thus safeguarding an unbroken line of unitary political responsibility and control through the central government that is trusted by the national parliament.
However, regions have no legal authority to regulate, control or simply exercise influence over the first tier of local government, the municipalities. In fact, regions often co-operate with municipalities and often offer resources and assistance to municipalities but the law explicitly states that there is no subordination or any form of “hierarchical relation” between municipalities and regions. From this point of view, art. 4, para. 4 of the Charter is respected.
As for Article 4, para 5 of the Charter, it should be pointed out that Article 102, para 1 of the Constitution provides also that “Law may assign to local authorities the exercise of competences constituting mission of the State”, although in many fields, as pointed out above, the delegation of powers to local authorities is still not admitted by the case-law of the Council of State. When delegation is possible, it is regulated in the framework of Article 43 of the Constitution, as any delegation in favor of “organs of the executive function”: thus the space of discretion left to local authorities is narrow.
page 121 / 796 Finally, Article 4 para. 6 of the Charter provides that “local authorities shall be consulted, insofar as possible, in due time and in an appropriate way in the planning and decision‑making processes for all matters which concern them directly”. This issue was addressed in Recommendation 247 (2008), according to which the Greek authorities responsible for local and regional self-government have to “consult both levels of local authorities as broadly as possible, taking account of their interests, when preparing and introducing the reform”. As a matter of fact, rapporteurs were told that local authorities’ representatives (by now KEDE for municipalities and ENPE for regions, see infra) were deeply involved in the preparation of Kallikratis reform.
From a legal point of view, there is no constitutionally-established process of consultation between central and local government. However, some interlocutors told the rapporteurs that the Ministry of the Interior is in constant communication with local government representatives and always consults with them before taking any legislative initiatives. Regarding the Parliament, its members are informed through the Special Standing Committee on the Regions on the functioning of local government authorities, particularly on the issues concerning the design and implementation of regional development policy. They also consult with local government representatives in committee hearings when matters concerning them are discussed in Parliament.
The case-law of the Council of State has established that for every transfer of powers from central or regional authorities to local authorities and for the allocation of the local affairs to the different levels of decentralisation, it is necessary to acquire the opinion of the local authority in question, before the transfer of powers.
In conclusion, four basic remarks may be formulated in respect of the requirements of Article 4 of the Charter:
On the one hand, the number and importance of powers and competences presently enjoyed by municipalities do not seem too limited. In addition to the competences already listed in the previous legislation, Kallikratis reform transferred many new competences to municipalities. The main concern is the lack of adequate financial and human resources to adequately manage them.
On the other hand, fullness, comprehensiveness and exclusiveness of responsibilities seem not be respected. In many fields there is an overlapping of competences (and responsibilities) between deconcentrated State administration, regions, and municipalities. The role of 7 de-concentrated State authorities is especially controversial. Rapporteurs were told by different interlocutors (not only at local level, but also at national level) that they should be abolished.
In order to avoid overlapping responsibilities, it should also be considered that there are many matters in which competences can be neither transferred nor delegated to local authorities, due to the wording of the Constitution and to the interpretation given by the Council of State.
Finally, more institutionalised co-ordination and consultation processes at any level are needed, especially in areas with huge overlapping of competences (such as education or transportation).
Hungary [Article ratified - Report adopted on 12 February 2021 ]
Article 4, paragraph 1 of the Charter requires that the basic powers and responsibilities of local authorities are prescribed by the constitution or by statute.
The Fundamental Law contains some general principles in Article 32, whereas the Cardinal Act on Local Self-Government establishes, as a matter of principle, a list of tasks (Article 13), the content of which is determined by various specialized laws. The regulation makes a distinction between local
page 122 / 796 authorities, differentiating the tasks according to a territorial perspective.
Therefore, it appears to the rapporteurs that overall Article 4, paragraph 1, is respected in Hungary.
Iceland [Article ratified - Report adopted on 29 March 2017 ]
Although Icelandic municipalities hold many powers and responsibilities in several domains of local life, it should be pointed out that there is no comprehensive or codified set of competences for municipalities in the legal system of Iceland. The Local Government Act does not contain such a list and, although article 7, para.1 of the Act stipulates that each year the Ministry shall issue a guideline survey of the functions entrusted to the municipalities by law, classified according to whether they are obligatory or not, the Ministry has not yet issued such guidelines. The actual competences of municipalities in the different sectors of governmental action are identified by the applicable laws and regulations in each of those sectors. Therefore, a “hard core” of essential or “inherent” competences for municipalities is entirely absent from the legislation; nor could this “hard core” be derived by interpretation from article 78 of the Constitution, which refers to the “affairs” of municipalities, without defining them. Accordingly, the competences granted to local authorities in the different sectors of governmental activity may be increased or reduced by the State legislature.
In general, no major complaints were raised during the meetings about the attitude of the State legislature. The number and importance of powers and competences currently enjoyed by Icelandic municipalities are generally regarded as “fair” or “reasonable” by local representatives. Nothing would support the idea that municipalities do not truly represent a “key” and vigorous actor of public life. Accordingly, Article 4, para. 1 of the Charter which establishes that “The basic powers and responsibilities of local authorities shall be prescribed by the Constitution or by statute”, should be considered as complied with in Iceland.
Ireland [Article ratified - Report adopted on 31 October 2013 ]
In the rapporteurs’ opinion, this principle is not well respected in Ireland, especially with regards to discretion and consultation. Neither is the subsidiarity principle sufficiently incorporated into the Irish legal system. The ultra vires principle limits the right of local self-governments to manage their own affairs under their own responsibility. The LGA 2001 partly improved the situation, albeit not sufficiently.
Representatives of local authorities gave several examples of situations that should, under the principles of Charter, be under full discretion for local council decisions, but are very much centrally regulated, supervised or revoked. Discretion is highly circumscribed also by the use of national regulations, guidelines, statutory instruments, and frequent obligations to secure prior approval in advance of decisions being taken (see for example information about local public finance).
As already indicated, the application of the ultra vires principle to local authority functions has been significantly relaxed and an extensive range of central controls and requirements for prior approval have already been dispensed with or reduced (including various matters listed in Table 2 of Chapter 4 of the Action Programme). More significantly, it has been decided to extend further local authority discretion to a number of local authority functions, as set out in the Action Programme. The Government also claims that the operation of the principle of subsidiarity will be enhanced under the new arrangements, whereby a significant number of functions will be performed on a fully devolved basis at district level, without reference to county level.
The Chief Justice’s Office clarified the situation for the rapporteurs in a written comment, which
page 123 / 796 noted: “However, Article 4 para.1 of the Charter provides that the basic powers and responsibilities of local authorities shall be prescribed by the constitution or statute. In Ireland, such powers and responsibilities are set out in legislation and local councils can only exercise the powers and responsibilities that they are permitted to do in the legislation.”
This letter also explained the relations between managers and councillors further as follows in a telling example: “… most of the powers of local Councils are carried out by a public servant known as a City/Manager. Councillors can direct the Manager to do something. If they fail to do this, the Councillors can sue the Manager in court following a motion passed by the Council. Section 140 of the Local Government Act 2001 provides that the elected Councillors may pass a resolution requiring that any particular matter or thing specifically mentioned in the resolution and which the local authority or the Manager can lawfully do or effect to be done or effected in performance of the executive functions of the local authority, be carried out. It must be a matter which the Manager can lawfully do. This power was considered by the Supreme Court in the case of P & F Sharpe Limited v Dublin County Council [1989] IR 701. A case which illustrates the role of the Manager is East Wicklow Conservation Community Limited v. Wicklow County Council and Treacy [1997] 2 ILRM 72. The Council wished to build a landfill and commissioned consultants to find the most suitable location. On receipt of the report, the Councillors passed a resolution rejecting the proposal. The Manager confirmed that he did not intend to comply with the resolution of the Councillors. The Manager was of the view that legally he was obliged to provide a place for the deposit of domestic waste material collected by the Council. In the High Court, Mr Justice Costello held that the Manager was not required to comply with the Councillors’ resolution because the works were required under legislation. On appeal to the Supreme Court, M. Justice Blaney upheld this decision”.
A regular and standard system of consultations between central government and local authorities has not been functionally established. There are no general provisions in Irish law outlining a general principle or right for local authorities or their associations to be consulted by national government. However it should be noted that numerous specific provisions of Irish law do provide for consultation of local authorities in specific instances. The opinion of the rapporteurs is that the duty to consult all relevant matters with local authorities in a regular and systematic way is so important that, as a core principle, it should be part of local government legislation, and not only mentioned on a “piece by piece” principle.
The preparatory process for the “Action Programme” can be used as an example. According to the information from various interlocutors, there were some public meetings organised by the DECLG, a questionnaire was sent out to local authorities with a two-week deadline for replies, and the Minister held some separate meetings with the different associations. The responses to the questionnaire were analysed by an external agency and considered in the Action Programme.
The Lord Mayor of Dublin informed the rapporteurs that they were not consulted on the decision to establish a central water authority and to transfer this responsibility from the local to the central level. Apparently, Dublin authorities had proposed several changes to the existing legislation, none of which were either reflected in or incorporated into the policy paper. The Government explained that a comprehensive public consultation process had been conducted in 2012 regarding the proposed reform of the water sector and Irish Water had been established as an independent State- owned company. These opposing views are symptomatic of the issues that exist concerning the consultation process in Ireland.
That being said, all interlocutors confirm that the quality of consultation processes improved between the monitoring visit of the Congress in October 2012 and the follow up visit in May 2013.
Italy [Article ratified - Report adopted on 18 October 2017 ]
page 124 / 796 The analysis of the competences and functions of Italian local authorities needs to have in mind a couple of general principles. First of all, and for the purposes of Article 4, paragraph 1 of the Charter, the Constitution does not enumerate a more or less close list of competences for those entities. It certainly recognises regulatory powers to municipalities, provinces and metropolitan cities “as to the organisation and implementation of the functions attributed to them” (Article 117). Also, it recognises certain fiscal powers, such as the power “to set and levy taxes” and little else. But these are more “powers” than true “competences.
This means that there is not really a “core” of essential or nominated “competences”, in the technical sense of the word, guaranteed by the Constitution and that the legislators have a wide remit of discretion in order to identify precise competences, according to the political sensitivity of the moment. However, the Constitution lays down a fundamental principle at Article 118, when it states that “Administrative functions are attributed to the Municipalities, unless they are attributed to the provinces, metropolitan cities and regions or to the State, pursuant to the principles of subsidiarity…”. This means that there is a clear constitutional preference in favour of the municipalities as the best “governmental instance” to discharge administrative functions. This could be interpreted as a fair implementation of Article 4, paragraph 3 of the Charter. It is unclear, though, how this provision is ensured or observed by the legislators.
The other factor is the presence of the regions. Under the Constitution (Article 117, paragraph 2) the State has exclusive legislative competences to regulate the “fundamental functions” (funzioni fondamentali) of municipalities, provinces and metropolitan cities. This means that the “core” or uniform basic competences are identified by the State. However, regions have relevant legislative powers in a large list of matters (see infra). When they legislate on these matters, they may attribute competences to their own local authorities. This may introduce a factor of diversity in the national picture, for the competences of municipalities in region A may not be exactly the same as the competences of municipalities in region B. For instance, the leaders of Veneto region told the rapporteurs that this region has traditionally created a greater decentralisation of administrative functions to provinces and municipalities.
It is commonly accepted that powers granted to local authorities are full and exclusive, and that they enjoy autonomy in the discharge of those competences and duties. The overall feeling expressed to the delegation by the interlocutors met was that the depth and width of local autonomy is fair and reasonable. In this sense, municipal competences may be divided into “original” competences and “transferred” or delegated competences”.
Municipalities
There is no piece of legislation identifying in a comprehensive way all the competences of the municipalities, not even the Testo Unico. The Fiscal Federalism Act of 2009 identified an array of competences in the following fields: local police, public education (for children between 0 and 3 years), urban management, local road networks and transportation, and environment and social services. These are identified as “fundamental functions” or “obligatory services”. Apart from those, there are other municipal competences in the following fields: Social welfare, in particular personal social services and community assistance; culture and recreation, including museums, exhibition halls, cultural activities and theatre; town planning, housing, and land registry; local transport and maintenance of local roads; economic development, including drafting of plans for trade, programming and regulation of commercial activities, as well as establishment and management of industrial and trade zones; environment, including waste management, and local police.
page 125 / 796 Provinces
The competences of the provinces have been significantly reduced in recent years, as a result of the “structural reforms” undertaken by Italian authorities to combat the economic crisis. Among all local authorities, provinces are clearly those who have experienced a more dramatic downsizing.
Before the reforms, provinces were responsible for a bunch of competences in a variety of sectors: public education, concretely the management and maintenance of school facilities (edilizia scolastica), transportation, spatial planning, social and land-use planning, environmental protection (natural reserves and parks, water refuse, energy resources, pollution and waste collection), disaster prevention, civil protection, agriculture, fishing, some labour and market issues, protection of cultural heritage, technical and administrative assistance for municipalities, economic development, etc. The provinces would also coordinate municipal proposals in matters of regional economic, territorial and environmental plans.
As a consequence of the reforms (example: Decree Law 201/2011, but especially the Delrio Act) many of those competences were transferred either to the municipalities or to the regions. In this sense, the provisions of that statute were accompanied by regional legislation. All the regions having a regular or ordinary statue were required to approve a piece of legislation in order to lay down precise rules on the rearrangement of the provincial “non-core” functions and competences. The 15 “regular” regions did so during the year 2015 and 2016. For instance, the Veneto Region approved the regional laws 19/2015 and 30/2016).
Provincial leaders told the delegation that, currently, the provinces only discharge the following basic competences (or “fundamental functions”):
Management of buildings and facilities for the school system (secondary education only);
Provincial roads and transit management and transport; territorial planning; some competences in the field of environmental protection;
Collection of data, technical and administrative assistance to the local bodies.
The regions may attribute more competences to the provinces in specific sectors that fall under their competences. In this sense, all Italian regions have passed laws implementing the Delrio Act, by assigning competences to Provinces or Municipalities.
Metropolitan cities
As presented supra, metropolitan cities are supposed to replace in full the position, assets and competences of the corresponding former provinces in the metropolitan areas. Therefore, the metropolitan cities discharge the “fundamental functions” that are attributed to the provinces, plus some others that are singled out at Article 44 of the Delrio Act. The idea is that they will be strong in the domain of territorial planning and the economic development, as well as the coordination of local services.
In the light of the foregoing, the rapporteurs conclude that Article 4 of the Charter is respected in Italy.
page 126 / 796 Latvia [Article ratified - Report adopted on 27 March 2018 ]
According to the Law on Local governments, the competences of Latvian local entities are classified into different sorts (art. 6): a. “autonomous” functions prescribed by that Law b. “autonomous” functions prescribed by sectoral legislation c. “delegated State administrative functions” d. functions whose performance has been transferred to local governments e. “administrative tasks” that have been assigned to local governments by State administration f. and “autonomous functions” that are performed as voluntary initiatives.
Each one of the precedent types of “competences” is regulated in separate provisions of the Law on Local Governments (arts. 7 to 12). Each type is supposed to match its own funding source.
Local representatives made the claim that this classification of competences is not satisfactory. On the one hand, there are too many types of competences, and the differences between the different types are not clear sometimes. On the other hand, and this is a more serious claim, they allege that, when the legislator attributes competences to the local governments in the sectoral legislation, it is not always clear under what heading or category the granted competence is supposed to be. That is, the legislator does not clarify what type of competence is the new granted competence. This is not only confusing but has a negative impact on the system of financing, because some competences are financed under some rules while the other types of competences are financed in a different way.
The local competences may be sorted into two main groups: “own” functions (autonomous) and “delegated” functions. It is also usual to merge the local competences into “mandatory autonomous functions”, prescribed by Laws, autonomous functions performed as voluntary initiatives and delegated functions on behalf of the State.
The “autonomous functions” singled out by the Law on Local Governments are enumerated along 22 subheadings, which include, inter alia,; social welfare; transport; local roads, culture; maintenance of public services; education (pre-school, primary and secondary education; environmental protection and water provision; waste management; the running of public utilities; the provision of public services and running of local facilities, a “macro” heading that includes many other activities (streets, lightening, cleaning, reparation and maintenance etc); the participation in ensuring public order, and the registration of civil status documents.
In the domain of autonomous competences, it can be stressed that: some autonomous competences are characterised as “full and exclusive”. For instance: “to perform the registration of children residing in the local territory”. Other competences, though, are not “full and exclusive”, but they consist of “participation” or collaboration in the provision of a public service by the State. For instance: “to participate in ensuring civil defense measures”. In any case, the competences that are “full and exclusive” outnumber those that have a partial or “participatory” nature.
page 127 / 796 The Law provides that autonomous competences must be performed by local governments “in accordance with procedures laid down in relevant laws and Cabinet regulations” (art. 7.1). This point raises some concerns from the perspective of article 4 of the Charter, because the Government may establish many and detailed regulations governing the way how local governments must exercise their own competences and deliver the local public services. This fact seriously undermines the real capacity of local governments to design and to implement local public policies, and even triggers the question whether local “autonomous functions” may at all be considered as full and exclusive, in the scenario of over regulation. In this sense, our interlocutors made several claims that in many domains the Government issues such regulations, so that in practice the realm of discretion left to local government in discharging their own duties and in the delivery of local services is seriously limited. Several local representatives reported that every year there are more than 400 new laws and around 1000 cabinet, many of which deal with matters that are entrusted to the local governments. This impression is supported by scholars who assert, for instance, that “the trend to increasingly regulate the implementation of local government functions…exists in Latvia”.
Local governments not only enjoy “competences” in the regular meaning of the word but they have a large legal capacity and many important “governmental” powers, such as the power of internal self- organisation; they also have the legal capacity to found local companies and foundations; to acquire and sell movable and immovable property; to introduce local fees and decide on tax rates; to issue binding local regulations and to sue in courts.
Apart from “autonomous” functions, local governments may receive “delegated” tasks and functions from the State. The Law clearly provides for the condition or requirement that the Government, in delegating such tasks, must ensure the resources necessary for the performance of such tasks. This caveat is made explicit in two separate provisions of the Law on Local Governments (art. 11, second indent, and art. 13, first indent). However, some interlocutors claimed that in certain cases the Government does not grant specific or additional funding for delegated tasks.
Latvian local authorities also have large regulatory powers, since they can approve local binding regulations imposing duties, conditions and obligations on the local residents, as well as administrative liabilities (for instance, monetary fines) for those who violate them. The areas or matters where local authorities may approve local regulations is pretty large, under art. 43 of the Law on Local Government. For instance: buildings and urban planning, protection and maintenance of public forests and waters, markets and trading in public places, public order, the keeping of domestic animals, or the use of public means of transport.
Last but not least, the Latvian system of local government includes a provision that is unfortunately missing in some European countries and that may characterised as a “general residual clause”. Namely, art. 12 of the Law on Local Governments provides that cities and municipalities, in the interest of local residents, “may voluntarily carry out their initiatives with respect to any matter if it is not within the competence” of other State bodies and institutions, provided that “such activity is not prohibited by law” (art. 12). An example of such “voluntary” initiatives is the local police, which is not compulsory in all Latvian municipalities. This feature of the Latvian system of local government should be praised, and accordingly it makes Latvia comply with article 4.2 of the Charter.
As a result of this system of competences, “powers”, “tasks” and “initiatives”, the Delegation sees that the number of autonomous competences singled out in the Law of Local government is pretty large. Plus, any sectoral law (for instance, in the domain of transportation or urban planning and management) may attribute other autonomous functions to the local entities. This, coupled with other delegated “functions” and “tasks” form a notable set of competences, both from the
page 128 / 796 perspective of their number and of their relevance. In one compares this list of competences with the equivalent situation in many European countries, it is easy to arrive to the conclusion that Latvian local authorities have a high level of competences, thus largely complying with articles 2.1 and 4 of the Charter.
For these reasons, the Delegation comes to the conclusion that article 4.1 of the Charter (and, by implications, article 3) are complied with in Latvia.
Liechtenstein [Article ratified - Report adopted on 28 March 2018 ]
8. The responsibilities of municipalities are defined by the Municipalities Act of 1996. Local authorities are also in charge of other tasks and functions determined by sectorial laws and delegated powers. Liechtenstein thus fully complies with Article 4 paragraph 1.
Lithuania [Article ratified - Report adopted on 6 November 2018 ]
Article 4, paragraph 1 of the Charter requires that the basic powers and responsibilities of local authorities are prescribed by the constitution or by statute.
In Lithuania, Article 120, paragraph 2, of the Constitution establishes that “Municipalities shall act freely and independently within their competence defined by the Constitution and laws”. Several other Articles refer to the competences of municipalities, as pointed out by the Constitutional Court in its 24 December 2002 decision. The Court mentioned Article 40, paragraph 1, which indicates municipal establishments of teaching and education; Article 41, paragraph 2, which, inter alia, indicates municipal schools of general education, vocational schools, and schools of further education; Article 119, paragraph 4, which provides that for the direct implementation of the laws of the Republic of Lithuania, as well as the decisions of the Government and the municipal council, the municipal council forms executive bodies accountable to it; Article 121, paragraph 1, which provides that municipalities draft and approve their own budgets; Article 121, paragraph 2, which provides that municipal councils have the right, within the limits and according to the procedure provided for by law, to establish local levies, and that municipal councils may provide for tax and levy concessions at the expense of their own budgets; Article 122, which provides that municipal councils have the right to apply to a court regarding the violation of their right.
The Law on Local Self-government (Article 5) distinguishes the municipal into two major categories: independent and delegated and describes in details those function, by listing 44 independent functions and 38 delegated functions. Additional functions have been assigned or delegated by other laws.
As for Article 4, paragraph 2 of the Charter, according to which “Local authorities shall, within the limits of the law, have full discretion to exercise their initiative with regard to any matter which is not excluded from their competence nor assigned to any other authority”, (Article 6, n. 44) of the Law on Local Self-Government contains a “general residual clause”, referring to “other functions that are not assigned to state institutions” as independent functions.
Article 4, paragraph 3 of the Charter articulates the general principle of subsidiarity. It establishes that “Public responsibilities shall generally be exercised, in preference, by those authorities which are closest to the citizen. Allocation of responsibility to another authority should weigh up the extent and nature of the task and requirements of efficiency and economy”.
Recommendation 321 (2012) invited the Lithuanian authorities “to amend Article 4 of the existing
page 129 / 796 Law on Local Self-Government so that the principle of subsidiarity is specifically recognised in the field of local government, by being mentioned as one of its guiding principles”.
Even though the principle of subsidiarity has been laid down in the Law in 2016 (being included in Article 4, n. 14 of the Law on Local Self-Government), the local authorities still complain that it is not implemented in practice. For example, the protection of the rights of the child was quoted. This function (previously delegated to the municipalities), will be centralised after June 2018: all the departments for the protection of the rights of the child currently operating in the municipalities will be removed from the municipal structure and will be under the authority of the Ministry of Social Security and Labour. In the opinion of the municipalities, the centralisation of the function of the protection of the rights of the child violates the principle of subsidiarity and raises concerns whether the centralisation of this function will improve the well-being of children and their families.
Recommendation 321 (2012) pointed out also that “municipalities” competences have been reduced in certain areas (territorial planning, construction, ownership of land) by relegating them to the position of procedure-executing bodies rather than policy-makers in the field of competences and no compromise could be reached which would extend the municipalities’ rights to manage state-owned land in urban and rural settlements and allow elected representatives some authority in the planning policy for their area”. It invited the Lithuanian authorities to “consider extending the municipalities’ rights to manage state-owned land in urban and rural settlements and allow elected representatives some authority in the planning policy for their area”.
According to the ALAL, the recommendation was not fully implemented. An amendment to the Law on Local Self-Government allowing the mayor to change the main designation and way of land use has been introduced (Article 20, paragraph2, n.20). However, the Law on Land and the government regulations maintain this function within the competence of the director of administration.
The delegation was informed that no important progress has been made in giving more rights to the municipalities to dispose of State-owned land, although provisions are part of the current Government's programme and a draft amendment to the Law on Land was registered in the Seimas, according to which the function of the organisation of formation and rearrangement of land parcels in rural areas, till now performed by the National Land Service, is intended to be transferred to the municipalities. The Law on Forests was amended in 2017, transferring to the municipalities the State function of supervision, protection and management of the state forest land for the purpose of public recreation, thus eliminating legal barriers preventing the municipalities from the initiation of taking over the city forests.
The ALAL and municipal representatives expressed their opinion to the delegation, according to which it is crucial to ensure that the functions of the planning of land use and disposal of the State- owned land of the National Land Service would be transferred to the municipalities as quickly as, since only this will allow to create a favourable investment environment and promote territorial development. The State authorities pointed out that the existing situation should be considered as a transitional status, because the process of returning the public land to the previous owners or to their heirs has not been completed. The main problem the municipalities are facing, according to the Ministry of Interiors, is the length of the procedure in case they intend to rent lands to private investors, as it takes up to 8 months. At the moment, the Government is dealing with speeding up of the procedure, in order to not exceed six weeks.
On other issues, competences of the municipalities have been improved. The Law on Cash Social Assistance changed the function of cash social assistance to the independent functions of the municipalities. Sufficient financial resources were allocated. According to the ALAL, the reform has been highly successful.
page 130 / 796 Article 4, paragraph 4, raises the problem of overlapping responsibilities. In the interest of clarity, it provides that “Powers given to local authorities shall normally be full and exclusive. They may not be undermined or limited by another, central or regional, authority except as provided for by the law”. Article 4, paragraph 5, refers to delegated responsibilities, establishing that local authorities shall, insofar as possible, be allowed discretion in adapting their exercise to local conditions.
During the meetings with the delegation, the representatives of the municipalities and the ALAL pointed out that the regulation often limits the right of the municipalities to act independently and that in several matters no discretion is allowed in the exercise of delegated functions. Too detailed description of the independent functions implies that the municipalities do not have the right to implement them at their discretion, taking into account the local conditions as much as possible. As a result, the municipalities lack the financial and human resources for the implementation of the excessively cumbersome bureaucratic requirements established by the central authorities.
Among the examples presented, the fact that the municipalities are responsible for the organisation of the supply of heat and hot water. However, the role of the municipalities in the management of the heat sector has become merely formal, as the final decision on the pricing of heat and hot water is taken by the National Commission for Energy Control and Prices. Another example concerns the municipal competence on the collection and management of municipal waste and packaging waste. According to the ALAL, the current legal framework is so detailed that its implementation requires additional funds. After the Government resolution on the management of municipal waste No 711 came into force on 20 of April of 2017, the management of municipal waste is paid under a dual payment system. The calculation of such dual payment in the municipalities raises additional problems, as it requires additional human and financial resources.
The delegation was also informed of a new regulation of public services, requiring the municipalities to obtain a permission from the Competition Council before entrusting legal entities under their control to start an economic activity. This provision is problematic as for the right of municipalities to choose the most appropriate way of organizing a public service, due to a very wide definition of an economic activity used in the Law on Competition. In order to avoid this risk, a draft amendment has been introduced in the Seimas, aimed at clarifying which activities of municipalities would be regarded as economic activities and at introducing the possibility, but not the obligation, for the municipality to apply for an opinion of the Competition Council, asking in advance to assess whether the foreseen decision will not restrict competition.
During the consultation procedure, the Seimas underlined that the existing legal regulation with effect from 1 July 2017, under which the provision of a public service is treated as an economic activity, means that the municipality, before entrusting the implementation of a new economic activity to a legal person controlled by the municipality (either a new legal entity or an existing one), must obtain a authorization from the Competition Council. The Seimas also concluded that this limits the right of municipalities to choose the most appropriate method of organisation of the provision of public services.”
Taking into account the claims raised by the municipalities, the rapporteurs consider that the numerous interference by State authorities within the municipal independent functions undermines the attribution to local authorities of full and exclusive powers.
Finally, Article 4 paragraph 6 of the Charter provides that “local authorities shall be consulted, insofar as possible, in due time and in an appropriate way in the planning and decision-making processes for all matters which concern them directly”.
In Lithuania, municipalities have the right themselves and through the ALAL to take part in drafting
page 131 / 796 laws and other legal acts regulating local self-governance or determining functions of municipalities, and to submit their proposals and comments on the draft projects. According to the ALAL, 60 or 70% of their comments are incorporated in legislative acts and government regulations. Nevertheless, the ALAL complained that the deadlines established in the Government regulation for the coordination between institutions often do not give a chance to the associations to properly formulate a position of the municipalities.
The agreement between the Government of the Republic of Lithuania and ALAL on the activities of the bilateral commission bringing together the Government and ALAL, with the aim to balance the competing interests of the State and the municipalities, was renewed, resulting in the increase of the number of members of the commission from 3 to 4 from each side.
At the Seimas, the rapporteurs were informed that the Committee on State Administration and Local Authorities actively co-operates with the ALAL also by setting up inter-institutional working groups or advisory groups (for example, on the reform of the system of protection of children rights).
Although the system of consultation could always be improved and smoothed, the rapporteurs consider that Article 4, paragraph 6 is respected in Lithuania.
In conclusion, the rapporteurs consider that the requirements of Article 4, paragraph 1, 2 and 6 are satisfied in Lithuania, whereas the requirements of Article 4, paragraph 3, 4 and 5 are not fully satisfied by the present legal and factual situation in Lithuania.
Luxembourg [Article ratified - Report adopted on 21 October 2015 ]
Under Article 107 of the Constitution and Article 28 of the Communal Law, the communes regulate all matters of communal interest.
The Constitution itself directly assigns certain tasks to the communes, including the management of their territory and their assets, regulatory powers and the right to establish communal taxes (Article 107), civil status (Article 108) and the organisation of primary education (Articles 23 and 107).
Under Article 28 of the Communal Law, “the communal council shall regulate all matters of communal interest; it shall deliberate or give its opinion whenever its deliberation or opinion is required by the laws or regulations or called for by the higher authorities.” The work of the communal council varies according to whether it is working in the purely communal sphere or on matters which have been delegated to it by the higher authorities. In the former case, it takes decisions, in the latter it merely gives opinions. Sometimes there are shared powers, as in the case of communal spatial planning, where it can take regulatory decisions.
Over time various laws have consolidated the original tasks of the communes, assigned new mandatory tasks to local government or shared powers between the state and the communes. Currently the communes’ most important tasks are communal spatial planning and urban development, regulatory powers and policing, water management, various types of waste management, communal roads and traffic regulations, various activities related to environmental protection, the organisation of elementary education, civil status, social assistance and burials and fire services.
Alongside their mandatory duties, communes may also perform optional tasks insofar as their financial circumstances allow. Communes’ optional tasks are services that they have freely decided to make available to their inhabitants without being compelled to do so by legislation. These are
page 132 / 796 services which are useful or agreeable to the population but not indispensable. Communes’ optional tasks therefore fall within the designated framework of communal interests. Optional tasks currently being performed by communes include music teaching, sport, tourist facilities, housing, museums and cultural centres.
During their visit, the rapporteurs were told about some problems with regard to the distribution of powers between the state and the communes. For communal tasks to be clearly delimited, they need to be set out in clear and coherent legislation and grouped into a communal code. The rapporteurs were informed during the consultation procedure that the code has now been published by circular of the Ministry of Interior of 15 June 2015. This is a “compilation code” covering all the legislation applicable to communes. Local stakeholders are also calling for some optional tasks to be converted into tasks which are de facto mandatory, with the allocation by central government of corresponding financial resources.
In this respect, SYVICOL had already pointed in 2008 to the need to review the powers of the communes in relation to the outdated decrees of 1789 and 1790 and the need to make a sharper distinction between national and communal powers so as to create a framework within which communal self-government could be exercised and develop fully.
The rapporteurs point out that this process will most certainly have to be accompanied by an adjustment to the communes’ financial resources to take account of the diversification of their tasks. SYVICOL hopes that the reform will take shape soon and cites the government programme which states that it “intends to reform the legislation on communes and adapt their tasks to the new circumstances on the ground”.
SYVICOL has also called for an increase in the powers of municipal staff. According to the government programme, “the government will create a statutory basis for municipal staff to be better equipped to supervise and comply with communal regulations. For this purpose, municipal staff must receive the necessary training”. This part of the government programme satisfies a long- standing demand by SYVICOL, which points out how important it is to maintain law and order in the communes and to be able to punish conduct which can be qualified as petty local crime or vandalism.
As to compliance with the principle that local authorities must be consulted on all matters concerning them directly, the rapporteurs note that SYVICOL is involved in working groups whose aim is to suggest amendments to the legislation. One positive example is the “Omnibus” bill, which has important repercussions for communes and was finalised in consultation with the association of communes.
SYVICOL, however, told the rapporteurs of its desire for there to be more systematic consultation on all matters concerning the communes. It is for this reason that on repeated occasions since 2005, SYVICOL has suggested to the government that consultations with the communes be formalised by signing an agreement. This proposal can be found in a resolution of the SYVICOL Committee adopted on 24 September 2012. The resolution contains specific demands in relation to the principle of consultation:
- consultation by the relevant ministry in due course and in an appropriate manner on any proposal likely to have a significant impact at communal level, particularly draft laws and Grand Ducal regulations affecting communes’ powers, interests or financial resources, draft state instructions or recommendations at communal level or draft EU legislation relating to matters affecting the communes;
page 133 / 796 - a consultation process beginning as soon as draft laws or Grand Ducal regulations are devised and continuing throughout the legislative and regulatory procedure, with the requirement that SYVICOL’s opinion should be sought at the same time as that of the professional bodies;
- access provided by the government to information and documents, which should be guaranteed in respect of matters connected directly with the question or the proposal on which there is consultation;
- assessment of the administrative and financial impact of the new legislation on the communes. For example, bills proposing that powers be delegated by the state to the communes or that new powers be granted to the communes must give details of the financial resources which will be placed at the communes’ disposal to carry out the new tasks.
SYVICOL has informed the delegation that some texts have apparently been adopted by the government without prior consultation, including the following in particular:
- the Grand Ducal regulation of 19 December 2014 on the allocation of subsidies for building restoration work;
- the legislation on communal spatial planning, which has been substantially amended since the 2004 law without consultation of the communes, even though it is a shared responsibility;
- sectoral master plans which have led to the preparation of documents without prior consultation and which were communicated to the communes at the same time as they were announced to the public. On the latter point, SYVICOL has, however, acknowledged that the government had been receptive to the observations which it had made following the presentation of the draft sectoral master plans. In this respect, the lack of prior consultation was offset afterwards to some degree by the government holding meetings with many players concerned with the matter and by its declared intention to meet the communes either individually or jointly.
At the meeting with the Minister of the Interior, the minister informed the delegation of his undertaking to consult the communes regularly, namely about six times a year. This is significant progress compared to the practices under the previous government, which only consulted the local authorities from time to time. The minister also confirmed that the agreement proposed by SYVICOL in 2012 could form the basis for a working relationship provided it was established that these consultations would be co-ordinated by the Ministry. The rapporteurs regard this as positive news and are confident that some action will be taken on this point in the near future.
SYVICOL has said that co-operation between the communes and the offices of the Ministry of the Interior is functioning satisfactorily.
The rapporteurs’ view is that Article 4 is only partly respected in Luxembourg. There is a need to clearly delimit the powers of the state and the communes so as to establish a framework within which communal self-government can be exercised and develop fully. As to consultation procedures, the rapporteurs consider that they are applied in practice. They recommend, nonetheless, that exchanges should be placed on a formal footing with SYVICOL, which is the main discussion partner representing the communes, so as to ensure that this becomes a permanent practice in future. The agreement with the government proposed by the association in 2012 could serve as an appropriate working basis in this respect, while bearing in mind that it would be for the Ministry of the Interior to co-ordinate these consultation meetings.
Malta [Article ratified - Report adopted on 29 March 2017 ]
page 134 / 796 The Constitution of the Republic of Malta is silent on the aforesaid issue and the functions of local councils are prescribed in Article 33 of the Local Councils Act. Specifically, Article 33 of the said Act provides an exhaustive list of the functions of local councils as well as their excluded functions and allows for more functions to be delegated to local councils by the central government.
Furthermore, by virtue of Article 3(2) of the Local Councils Act, the local councils do not have the power to engage in specific acts which are mentioned therein without the prior authority of the central government, as outlined in detail in Section 5 above.
Functions may be delegated by the central government to local councils through the Minister responsible for Local Government by means of an order published in the Government Gazette and by virtue of Article 33(1)(a)-(x) of the Local Councils Act, the local councils have the ability to provide for all such other works, things, matters and services which are not excluded from a Council’s competence by law or assigned to any other authority.
In light of the above, the Republic of Malta complies with Article 4, paragraph 1 of the Charter and there is no violation of the said Article. Nevertheless, as mentioned above, the number and extent of functions assigned to local councils is very limited and more powers, functions and responsibilities could be delegated to local councils in accordance with the Act by means of Ministerial orders published in the Government Gazette.
Furthermore, the Local Councils Act does not impose on the Minister responsible for Local Government the obligation to consult with the local councils before the delegation of any functions to the local councils, allowing in this way the said Minister to delegate powers and responsibilities to local councils unilaterally. The delegation was informed during the monitoring visit that in practice there is lack of formal consultation on behalf of the Minister responsible for Local Government with the Local Councils Association and the local councils. Both, the Local Councils Association and the local councils expressed the view that the central government, through the Minister responsible for Local Government, should increase the frequency and extent of consultation with them both, regarding the delegation of functions to them as well as in order to address problems faced by the local councils.
Moreover, it has to be taken into consideration that the Maltese localities differ in size and population with the smallest localities, having some hundreds of residents whereas the largest may extent to more than twenty thousand residents. The issuance of universal one-size-fits-all Ministerial orders for all councils does not accommodate the needs of all local councils. Large local councils may have greater needs than smaller local councils and consequently the powers granted to all the local councils through universally applicable Ministerial orders may not be fit for them, whereas smaller local councils may not be able to cope with wider responsibilities granted to larger local councils. However, there seems to be no evidence or previous experience of arbitrary issuance of orders and the imposition of responsibilities or obligations with which the local councils could not cope, or the granting of powers which are wider than necessary.
At this point it should be noted that the combined reading of the initial paragraph of Article 33(1) and of Article 33(1)(x) of the Local Councils Act leads to the conclusion that the functions of “each” local council shall be, amongst others, to perform any other function which shall be delegated to “it” by the central government through the aforesaid Ministerial Orders. Hence, it may be argued that the Minister responsible for Local Government may issue orders for specific local councils only, on top of general Orders providing for the delegation of powers and responsibilities to all local councils,
page 135 / 796 accommodating the increased needs of large localities and refraining from imposing heavy responsibilities to smaller local councils. Such an arrangement may be made for the capital city of Valetta, for which the Congress has repeatedly called Malta to make special arrangements.
Monaco [Article ratified - Report adopted on 28 March 2018 ]
The state’s small size and the existence of only one municipality whose area is the same as the state leads to a distribution of powers between the state and the municipality that is difficult to compare to the distribution in most other European countries.
Consequently, the rapporteurs consider it logical that Monaco has not ratified paragraph 3 of Article 4 on the principle of subsidiarity.
No provision is made for the Municipality’s powers in the Constitution, which merely states that “the Municipal Council shall deliberate in public on the Municipality’s affairs” (Article 86).
Provision is made for them in law, particularly in Article 25 of Law No. 959/1974 as powers of the Municipal Council. Law No. 1316/2006 extended and clarified these powers, as the persons we met pointed out. They cover many areas, including social welfare and recreational activities, particularly for pre-school children or to help elderly people remain in their own homes and activities for senior citizens, municipal events and activities, cultural and artistic activities in municipal buildings, etc. These powers can be regarded as full and comprehensive.
In addition, the Municipal Council may express opinions concerning all matters of municipal interest. It is not entitled to publish statements or addresses or express political views (Article 25 of Law No. 959/1974).
However, there are still powers such as public transport that remain under the Monegasque Government’s control, although in most countries they are exercised by local authorities. Monaco’s unusual situation should clearly be taken into consideration in this case, as it is transport into France that is at issue, so it is easy to understand that the state would have a say in this regard. The state is responsible for other areas traditionally handled by local authorities, such as town planning, although the Municipality must be consulted. Social assistance is divided between the state and the Municipality (crèches, home help for the elderly, etc.). Our discussion partners emphasised that the organisation of these services is very complex and confusing, but it generally works because the state and the Municipality maintain a good relationship.
With regard to the consultation of local authorities, Law No. 959/1974 requires the Minister of State to consult the Municipal Council in the areas of town and spatial planning (Article 26), on changes to their remit and on employment regulations for municipal officials (Articles 26.1 and 53).
The same articles contain the rules on the consultation procedure, including the consequences of an adverse opinion by the Municipality. Everyone we met agreed that informal consultations take place regularly between the Mayor and the Minister of State and, when there is a real risk of a stalemate, also with the Prince.
Taking into account Monaco’s unusual situation and its legislative framework and practices, the rapporteurs conclude that Monaco complies with Article 4 of the Charter.
Montenegro [Article ratified - Report adopted on 21 October 2015 ]
page 136 / 796 As regards paragraph 1, the Montenegrin Constitution conveys only a preliminary idea of the basic powers and responsibilities of municipalities. It does, however, set out the principle of local self- government in a way that leaves no doubt that the legislative framework has to follow a path that is compatible with the Charter.
The principal competences of municipalities in Montenegro are stipulated in Articles 32 and 33 of the Law on Local Self-Government. According to Article 8 of the same law: “The Municipality shall be autonomous in performing affairs of local self-government and its rights may not be denied or limited by any act of state authorities, except in cases and under the conditions provided for by the law and in accordance with the Constitution”. Certain affairs that fall under competences of the state administration may be delegated by law to the municipality, if that ensures their more efficient and economic performance. The exercise of certain affairs that fall within the jurisdiction of the state administration may also be entrusted to the municipality by means of a government regulation. The law defines the conditions and terms under which such affairs may be transferred, or entrusted, to the Municipality.
Netherlands [Article ratified - Report adopted on 26 March 2014 ]
Although Dutch municipalities discharge many powers and responsibilities in several domains of local life, it should be pointed out that there is no comprehensive or codified set of competences for municipalities in the legal system of the Netherlands. The Municipalities Act does not contain such enumeration. The actual competences of municipalities in the different sectors of governmental action are identified by the applicable laws and regulations in each of those sectors. Therefore, there is no “hard core” of essential or “inherent” competences for municipalities whatsoever. Accordingly, the competences granted to local authorities in the different sectors of governmental activity may be widened or reduced by the State legislature.
As a general public law principle, governmental responsibilities should be exercised by the authority that can do so most appropriately. In accordance with this idea, the Minister of the Interior is compelled by law, as it were, to encourage decentralisation, and any measure proposed to make certain matters part of central government or provincial policy are to be taken only if the matters in question cannot be efficiently and effectively attended to by the municipal authorities (Article 117, Municipalities Act). As a matter of fact, the 2004/05 Inter-governmental Relations Code encompassed the principle “if possible local, if necessary centrally”.
Therefore, responsibilities may be allocated to higher-tier bodies only if this is required for reasons of efficiency and economy. In principle, if the State wishes to allocate a responsibility to a higher-tier body, the legislature must justify why that responsibility cannot be exercised by a lower body.
With respect to the fullness, comprehensiveness and exclusiveness of responsibilities, autonomous responsibilities and competences of municipalities in the Netherlands can be considered full, comprehensive and exclusive, while it should also be noted that public authorities of the higher tier supervise the decisions of authorities of the lower tier. This form of control can have a substantial impact on local and regional authorities, as it includes the supervision of autonomous activities, in terms of both their legality and their expediency.
In addition to what can be called “proper” or “autonomous” competences, the Dutch constitution (Article 124 para.2) also foresees that local authorities may be required “to provide regulation and administration” by an Act of Parliament or by public authorities of a higher public body (this crucial concept in Dutch public law is, as already mentioned, called “medebewind”. When a local authority acts under a scheme of Medebewind, its autonomy and capacity to take decision is much more reduced as compared to “autonomous” competences. Not to forget that, under “medebewind”,
page 137 / 796 municipalities are “required” (that is, obliged) to provide a given service, to discharge a certain competence that is deeply regulated by the central authority. Therefore, municipalities lack the very essential choice of deciding whether to act or not in a given area, and how to do so. Moreover, the Constitution even provides for specific rules “in the event of non-compliance in matters of regulation and administration required under art. 124, paragraph 2”.
A good example of this “medebewind”-type of municipal tasks is the issuance of passports to local residents, a duty that municipalities certainly discharge, but in doing so they must restrict themselves to apply literally the laws, regulations and instructions approved by the central government. As scholars have put it, in most of these cases, “there is no margin for policy-making, but simply the obligation for the mechanical application of the legislation passed by the higher body”. Using a French administrative-law concept, one could say that, in the medebewind regime, municipalities behave as “indirect administration” of the State agencies.
Certain local leaders met by the Congress delegation expressed their concerns that in recent times the number and importance of tasks to be accomplished under “medebewind” have increased sharply. It is clear that (from the perspective of local self-government) there is a certain tension between “autonomous” powers and “medebewind” activities: the more tasks municipalities are required to perform under “medebewind”, the smaller local autonomy will be.
Finally, Article 4 para 6 of the Charter provides that “local authorities shall be consulted, insofar as possible, in due time and in an appropriate way in the planning and decision-making processes for all matters which concern them directly”. On this matter, see, infra.
In conclusion, three basic remarks may be formulated in respect of the requirements of art. 4, of the Charter:
On the one hand, the number and importance of powers and competences enjoyed at present by Dutch municipalities are generally regarded as “fair” or “reasonable” by local leaders and representatives in the Netherlands. Nothing would support the idea that municipalities are not really a “key” and vigorous actor of public life.
On the other hand, the same stakeholders complain that in recent times the number of tasks that municipalities are required to perform under “medebewind” schemes has increased sharply, reducing the autonomy enjoyed previously.
Finally, the Dutch public law system incorporates an implicit principle in favour of decentralisation and subsidiarity, whose actual implementation corresponds to the central administration (through the Minister of the Interior). This general clause is not an empty word, but has produced in the past (and is producing at present) precise and concrete decentralisation processes.
North Macedonia [Article ratified - Report adopted on 26 February 2013 ]
In practice, local authorities have full discretion to take initiatives within the scope of their competence regarding some competencies among which communal activities, the issuance of construction permits, or questions related to urbanism, local economic development, own finances and finance planning, legal acts.
Shared competences between the local and central government primarily concern the mandates of the inspection bodies. For example, there is a State Construction Inspectorate as well as a local one. The same is true for the Education Inspectorate, the Communal Inspectorate, and the Traffic Inspectorate. In some cases, mandates have been clearly defined by means of bye-laws, but there
page 138 / 796 are also cases of overlapping mandates whereby local authorities must address central government inspectorates for advice. For example, should one municipality plan to open a new school or close an existing one, the municipality needs to obtain advice and opinion from the central government in addition to the decision of the Municipal Council. In order to clearly distinguish the mandates of both instances, a joint working group between ZELS and the Ministry of Education and Science was set up, tasked with the drafting a bye-law.
For the performance of the so-called obligatory (social) competences, the State must provide minimal standards and equal access to the services for all citizens and to withdraw transferred powers in single cases, if these minimum standards are not guaranteed (Article 21 para. 3 of the LSG Law and specific laws, e.g. education and health services).
According to ZELS and other interlocutors and based on the assessment of the EU Commission’s 2011 Progress Report, decentralisation should be encouraged to a greater extent by the central government and vis-à-vis the line ministries which are often still attached to the ideas of central spending and control, and more competences should be transferred to local authorities in social services (housing, and primary health care as delegated competence), public security (e.g. local order and traffic regulation), agricultural land and cultural matters.
The delegation was informed during the visit of coordination problems between the Ministry of the Interior and municipalities, an example of which is the appointment of the (local) Chief of Uniformed Police. Normally, the decision of choice between the candidates proposed by the Ministry remains with the municipal council, but there are cases where due to the politicisation of the decision, the position has remained vacant for years. It seems to the rapporteurs that problems of this nature could be resolved by a different procedure.
The “own” competences of municipalities are listed and specified in Article 22 of the law; they comprise urban and rural planning, protection of the environment, nature and space regulation, local economic development, communal activities, culture, sport and recreation, social welfare and child- protection, education, healthcare, civil protection, fire-fighting, supervision of municipal activities as well as “other activities determined by law”.
Article 23 of the law provides for the delegation of “the execution of certain tasks” by and from “public administration bodies”, linking these delegated competences with the obligation of transferring funds from the central budget. However, so far no delegation according to this article has yet been made.
The allocation of competences is symmetrical for all municipalities: there is no difference in competences and functions among them. The only differentiation concerns the City of Skopje and the ten municipalities within it and is regulated by a special law. For example, the City of Skopje has authority over secondary schools, whereas its ten municipalities have authority over primary education (elementary schools).
The Law provides for a division of local authority competences in line with the principles of the Charter. The Mayor is responsible for the organisation and operation of the administration and also proposes acts for adoption, while the Council adopts decisions to be implemented by the Mayor.
Norway [Article ratified - Report adopted on 26 March 2015 ]
Norwegian local authorities have extensive basic powers but they are not prescribed by the Constitution or any general statute. Instead, the extent of the powers enjoyed by local authorities in a given subject area is determined by specific laws. The division of powers and responsibilities
page 139 / 796 between central government and local authorities may vary, according to the level of social development and what is required for the proper functioning of the welfare state.
There is no general competence clause in Norwegian legislation. Unless the responsibility is explicitly by law designated to others, local authorities can go beyond the powers expressly assigned to them by law if local interests warrant it (economic development, culture, tourism, industrial activities, etc.). A number of municipalities even own power stations.
Norwegian legislation contains no specific reference to the principle of subsidiarity but in practice, local councils have authority in matters which concern citizens directly (health, primary and lower secondary education, waste removal, etc.). Parliament allocates competences and responsibilities between the various tiers of government, while endeavouring to take account of the size and nature of the tasks and the need for efficiency and economy.
Although the government continuously reaffirmed the de jure autonomy of local and regional authorities the actual scope of local self-government seems however to be limited, insofar as central government guides the exercise of local powers and responsibilities. Central government departments can also object to decisions taken by municipal authorities, e.g. with regard to the content of urban plans. The county governor, who represents the central government in the counties, acts as supervisor and adviser to local authorities. Besides reviewing local authority decisions to ensure they comply with the law, he or she can also make judgments about the expediency of local policy (approval of major capital investments, etc. on certain conditions according to the Local Government Act). The number of laws, bylaws, guidelines and recommendations and as a result the influence of central government on local government has increased. It appears, however, that the new government, through the minister for local government and modernisation, has instructed governors to show more respect for local self-government. Furthermore the government emphasized, that any interventions from the part of the central government or county governors are strictly limited to the competences referred to them by law.. Municipal decisions regarding the inhabitants’ rights and duties can be appealed against, by the individual concerned to a central government institution. This institution may then, in addition to overruling the municipalities’ interpretation of the law, also overrule the purely discretionary elements of the decisions.
Norwegian local authorities are regularly consulted by the government through their association (KS, the Norwegian Association of Local and Regional Authorities). An agreement was concluded in February 2000 between local authorities and central government on the meetings and regular consultations that must be held, whether plenary meetings or bilateral meetings between KS and the ministries. Such meetings provide an opportunity to discuss the general framework for the distribution of resources in connection with the tasks assigned to local government, the financial position of local authorities, the cost of reforms, etc. Of special interest is the agreement between KS and the government about calculation of costs related to new reforms. Accordingly, KS is also invited to take part in the preparations of new laws, to establish balance between local and national interests. The current reform of municipal structures and powers has accordingly given rise to numerous meetings between KS and the government.
With regard to paragraphs 1, 2 and 4, and in view of the above, the delegation considers that the situation is partly compliant with the Charter.
Poland [Article ratified - Report adopted on 2 April 2019 ]
Article 4, paragraph 1 of the Charter requires that the basic powers and responsibilities of local authorities are prescribed by the constitution or by statute.
page 140 / 796 Although the Constitution contains only some basic principles (in Articles 163 and 164.3), the general laws on municipalities and powiaty contain a detailed and substantive list of autonomous competences of local authorities (as previously indicated).
Therefore, Article 4, paragraph 1, is fully respected in Poland.
Portugal [Article ratified - Report adopted on 28 September 2020 ]
In the eyes of the rapporteurs, following their talks on the spot, Portugal’s politico-administrative system is undeniably devolved and fully respects local authority autonomy. It is chiefly Law 159/99 of 14 September 1999 which offers the most detailed definition of the current system of flexible devolution, allowing the gradual adaptation of local authorities. Law 169/99 of 18 September 1999 then specified the allocation of powers between the different levels of authorities.
The principles set out in these laws are more or less clear references to the regional policies and values of the European Union: territorial cohesion, subsidiarity (Article 2 of the law). The law also emphasises the necessary co-ordination between the local authorities and state departments, stating in its Article 3 that central and local authorities shall exercise their powers in such a way as to preserve unity in the implementation of public policies and avoid dispersal or overlapping of action.
Consequently, the rapporteurs consider that Article 4 paragraph 1 of the Charter is complied with.
Republic of Moldova [Article ratified - Report adopted on 4 April 2019 ]
The competences and responsibilities of Moldovan local authorities are not prescribed by the constitution, but they are identified in statutes, namely by the Law No. 436-XVI on Local Public Administration, the Law No. 435-XVI on Administrative Decentralisation and the Law on Public Finance. In addition, the sectoral legislation also stipulates responsibilities for local authorities. According to those laws, the main responsibilities for first-level local authorities are: socio-economic development; territorial and urban development; construction and maintenance of roads, streets, local bridges and traffic management; maintenance and operation of water supply systems, sewerage, water treatment, sanitation and domestic waste; social housing; social assistance to the population, protection of children; local public transportation; bus and train stations; pre-school education; public cultural institutions; maintenance of libraries and museums; sports facilities and sports schools; markets and other public places; protection of consumer rights;
page 141 / 796 registration and maintenance of households; management of local property assets; fire departments; maintenance of parks and green spaces; environmental protection; management of land; maintenance of cemeteries; green areas; waste management.
The competences of the second-level local authorities (Raioane) include: management of public property; construction of roads of raional interest; regional public transport; spatial planning; economic development support; local gas and heat distribution; maintenance of education buildings; cultural, tourism and sport management; social assistance; co-ordination of the activities of the local councils in order to provide public services at district level; management and maintenance of systems and infrastructure providing services to different towns and villages.
In addition to these clearly defined competences, local authorities may receive “delegated” tasks from central authorities and legislation. Moldovan local authorities also have regulatory powers, since they can approve local binding regulations imposing duties, conditions and obligations on the local residents.
Despite this classification of competences, the delegation heard several complaints from local leaders that local competences are not clearly delimited, and that there are many cases of overlapping between the responsibilities of the different levels of local authorities, or with those of the state. It seems that there is also an overlapping between the competences of the Raioane and that of the cities. This seems to be a structural problem in the Moldovan system of local competences, as it was underlined by Recommendation 322 (2012), point (5.f). Apparently, little or no progress has been achieved in this field.
page 142 / 796 In the light of the above, Article 4.1 of the Charter is complied with in the Republic of Moldova.
Romania [Article ratified - Report adopted on 3 March 2011 ]
The basic powers and responsibilities referred to in Article 4(1) of the Charter are provided for by Article 36 of Law no. 215/2001 in the case of the local councils and Article 91 in the case of the county councils.
Russian Federation [Article ratified - Report adopted on 30 October 2019 ]
According to Article 12 of the constitution, “local government ... shall be independent within the limits of its authority”. Article 130, paragraph 1, of the constitution provides that local self- government shall ensure the independent solution by the population of issues of local importance. Article 132, paragraph 1, provides that local self-government bodies “shall independently ... solve matters of local importance”.
Federal Law 131-FZ sets out the legal framework for the activities of local self-government bodies, as well as issues of local significance (Chapter 3, Articles 14-18) that are dealt with by local self-government bodies independently and at the expense of local budgets. Such issues include, for example, power, heat, gas and water supply, construction of municipal roads, provision of transport services to the population, creation of conditions for provision of communication services, public catering, trade, conditions for mass recreation of citizens, culture, sports, landscaping and many other issues.
Some criticisms the delegation heard during its visit concerned municipalities being short of competence. In particular, general education operations (except the maintenance of school buildings and some minor aspects), provision of public services, the organisation of the provision of emergency medical care, primary health care in outpatient and hospital institutions, medical care for women during pregnancy and during and after childbirth, the organisation and implementation of environmental control of industrial and social facilities, guardianship for minors and guardianship for seniors are excluded from the jurisdiction of local self-government.
As a result, the availability of primary (non-specialist) health-care facilities for the population has deteriorated (many institutions have been eliminated, such as paramedic services, obstetric stations, outpatient health-care facilities and hospitals in rural settlements). The availability of educational institutions and preschool education institutions has also been reduced, especially in rural areas. The removal of environmental control has led in some cities and regions to large- scale environmental crises because of a lack of services for processing household and industrial waste. In general, many of the powers of local self-government do not have adequate legal regulation. The issues that are by nature local have been delegated to State authorities, while local authorities are attributed powers which do not cover local issues.
During their visits, the rapporteurs were told that the practice of delegation of powers does not comply with the standards of the Charter, according to which the competences must be fully delegated, together with commensurate financial resources and responsibility for their execution. Instead, there is a practice of partial delegation of authority with partial funding from a higher level. Thus there was a vicious circle involving the withdrawal of powers from local government and their transfer to the level of subjects of the federation, which in turn returned them to the level of local authorities in the form of delegated powers with partial financing.
page 143 / 796 According to some interlocutors met during both visits, there has been: an extension of local government’s responsibilities that are alien to this level of public authority (such as an involvement in combating terrorism and corruption and a role in territorial defence); a growing number of powers and responsibilities attributed simultaneously to several levels of public authorities (local governments have been entitled to exercise State powers together while local issues are shared between local settlements and districts (raions, etc.)); and a delegation of State powers to town districts and municipal districts (raions), which has long exceeded all reasonable proportions. It is not an exception that the volume of delegated powers conferred on local governments outweighs the share of their own powers and responsibilities. Local authorities in those cases have to deal mostly with the delegated powers rather than with their own affairs.
In 2011, local governments were stripped off of their powers with regard to public health, which traditionally has been provided in Russia, in a similar way to many other countries in Europe, by local authorities. Moreover, Law No. 136-FZ of 27 May 2014 provides for the right of federal subjects to strip any local authority of its powers and responsibilities. Rural authorities in particular have lost many of their own powers and responsibilities compared to city authorities. In addition, the practice of delegating rural local governments’ responsibilities to the raion level has been increasingly used in recent years. (Part 4, Article 15, of Law No. 131-FZ).
Part 3 of Article 13 of Federal Law No. 131 removed 27 powers from rural settlements, which were transferred to the level of municipal districts, adding the possibility of selective return of these powers by the law of the subject of federation. The most important competences are presented in the following table. Subsequently, amendments to the tax code also reduced permanent contributions to the budgets of rural settlements from the tax on personal income from 10% to 2%.
Organisation of electricity, heat, gas and water supply, sanitation, fuel supply
Road works and traffic safety, creation of parking lots
Provision of low-income housing, organisation of municipal housing stock, municipal housing control
Creation of conditions for the provision of transport services and organisation of transport services
Organisation of library services, acquisition of library funds
Protection of cultural heritage (historical and cultural monuments) of local importance
Development of local traditional folk arts and crafts
Creation of conditions for mass recreation of residents of the settlement and organisation of arrangement of places of recreation for the population
Organisation of collection and removal of household waste and garbage
Use, protection and replanting of the forestry areas located within borders of settlements
Approval of general plans for settlements, rules of land use and development, permit granting for construction projects, approval of local standards for town planning and the
page 144 / 796 design of settlements, the implementation of municipal land control
Organisation of funeral services and maintenance of burial places
Provision of emergency services in the settlement’s territory
Implementation of measures to ensure the safety of people on water bodies, protection of their life and health
Development of therapeutic areas and resorts of local importance, municipal control and protection of specially protected natural areas of local importance
Management informing the population about restrictions on their use
The rapporteurs were told that number of powers and responsibilities are shared by several levels of government. There is no clear division between them, although dozens of federal laws deal with the division of responsibilities, and that makes the whole situation in this field even more confused. Moreover, the law retains the institution of “specific rights” (Articles 14.1 to 16.1 of Federal Law No. 131-FZ) – overlapping responsibilities that local governments must fulfil themselves.
Law 136-FZ brought about three serious changes in the regulation of competence. On the one hand, federal subjects (regions), as already mentioned, were allowed to regulate the competence of the municipalities within the framework provided by the federation. On the other hand, this concerns the redistribution of competences between rural communities and rural districts. The “federal” list of municipal responsibilities comprises roughly 40 tasks. However, since the entry into force of Act 136-FZ, only the municipal districts have been entitled to these. According to this law, rural communities have only 15 tasks. The remaining municipal tasks are now to become tasks of the districts, unless the regional legislator decides otherwise. An analysis of the regional legislation at the end of 2015 showed[20] that by October 2015 a total of 50 regions transferred at least some of the responsibilities back to the rural communities. Most affected were areas such as waste disposal (48 regions), cemeteries and burials (48), social housing (40), water, sanitation and heating (35), and the prevention and elimination of corruption (35). In most cases the transfer of tasks takes place on a flat-rate basis without differentiation between the rural communities concerned. Among the consequences of this regulation is not only a multiple asymmetry between municipalities of the same type (urban and rural municipalities in one region as “two classes” of municipalities, same municipalities in different regions, etc.) but also the erosion of the core competence of rural municipalities and their degradation to largely meaningless institutions.
An even bigger problem (at least from a constitutional point of view), however, is the further amendment of Law 136-FZ, which allows for an upscaling of municipal tasks in favour of the State level on the basis of regional laws. Regions can withdraw tasks from the municipalities (regardless of the type – municipality, county or independent city) at will and then carry them out themselves. The status of such tasks (for example, whether they become State tasks by law or are to be understood as municipal tasks “transferred” to the State) remains unclear. Much more important, however, is the fact that this regulation seems to contradict the constitutional regulation (Article 130 speaks of the fact that municipal tasks are to be carried out exclusively by the municipalities) and several decisions (and legal positions contained therein) of the Russian Constitutional Court. This court has repeatedly emphasised that the constitutional principle of
page 145 / 796 autonomy of local self-government is based on the independent competence separated from the State tasks, and that the municipal tasks may[21] only be fulfilled by the municipalities themselves. For example, in the decision of 29 March 2011, No. 2-P, the Constitutional Court pointed out that a mixture of State and municipal tasks would lead the legislator to impose an unclear and constantly changing range of tasks on the municipalities, which would not be in conformity with the constitution. Apart from the fact that this affects local self-government at its core (because the autonomy of the sphere of responsibility is no longer guaranteed), it can also represent a substantial restriction of citizens’ rights to certain (municipal) services.
However, many federal subjects (regions) have already made use of this provision in Law 136-FZ. By October 2015 a total of 21 regions had passed corresponding laws on the “redistribution” of competences. In all these laws there is an upscaling of municipal tasks. For example, the Nenetski Autonomous Region has taken 18 tasks away from all its municipalities, and Moscow and Orel Oblasti (areas) have taken seven each. In most cases, competences in the field of urban planning (local planning, land-use plans, urban development plans, etc.) are taken away (14 out of 21), but also in heat and water supply (9), waste disposal (7). This brief list alone shows that the core competence of local self-government is affected. It is also interesting to note that among the regions that have deprived the municipalities of core responsibilities are some relatively wealthy regions (with correspondingly relatively wealthy municipalities), including Nenetski and Tyumen (oil regions), and Moscow oblast.
Critical voices claim that relationships between the executive bodies of public power at all levels are based on the principle of tight and arbitrary subordination. Local legislative initiatives tend to assume the form of petitions. As for the relationship between legislative bodies of public power in the regions, those are characterised by a lack of legislative initiatives from local governments. Similarly, very few initiatives have been addressed by regional legislative assemblies to the State Duma of the Russian Federation. In recent years, it has been only on very rare occasions that the State Duma has discussed such legislative initiatives.
An important consultative and advisory mechanism enabling members of the Federation Council and representatives of the municipal community to discuss draft laws and ways of addressing topical issues in the field of local self-government is the Council on Local Self-Government under the Federation Council. The Council on Local Self-Government is a permanent expert advisory body to the Federation Council and it consists of members of the Federation Council, representatives of federal government bodies, government bodies of the constituent entities of the Russian Federation and municipal entities. This council meets at least twice a year. The meetings are attended by representatives of the authorities from all regions of the country, as well as representatives of the public, non-profit organisations and the scientific community. The main objectives of the council are to develop recommendations for the formation and implementation of public policies in the field of local self-government, to discuss the most significant draft federal laws affecting the relevant legal relations, to analyse the practice of local self-government, to promote the dissemination of good practices and to interact with expert advisory bodies of public authorities.
Following the results of the meeting of the Council on Local Self-Government, a decision with recommendations to the Government of the Russian Federation, to other federal authorities, to State authorities of the constituent entities of the Russian Federation and to local authorities is adopted. According to representatives of the Federation Council, in most cases, the recommendations on local self-government are taken into account in the work of public authorities at all levels. In 2018, meetings of the council were devoted to the issues of
page 146 / 796 improvement of human settlements, as well as the formation of a comfortable urban environment. In November 2018, the council held its regular meeting on “Tools to improve the quality of municipal governance”, which addressed issues related to the development of mechanisms to improve the quality of municipal governance.
With regard to the consideration of the opinion of local self-government bodies, it should be noted, however, that there is currently no direct legislative prescription to take their opinion into account in the legislative work of the parliament. An explanation provided by representatives of the Federation Council was the fact that local self-governance is not considered to be part of the system of State power. However, this would not mean that the position of local self-government bodies is not taken into account. On the contrary, most of the public and political activity, for example, of the relevant committees of the Federation Council and the State Duma would be related to the inclusion of heads of municipal entities in the legislative process. In particular, there is scope to ensure the participation of representatives of municipalities in public events of the Federation Council (parliamentary hearings, round tables, meetings, including field meetings in the regions, conferences, etc.): “they are given the opportunity to speak on the most important issues for them, their position is heard, understood and analysed, and in cases where their initiatives, proposals or comments are recognised as justified, balanced and legally acceptable (including, in terms of constitutional rights and freedoms of citizens), they are supported in the chambers of the federal parliament” (Federation Council).
However, there have been cases where even some of the strongest constituent entities have complained about not being heard. In 2004, Moscow City Duma applied to the Constitutional Court of the Russian Federation regarding the constitutionality of Order No. 176 of the President of the Russian Federation of 20 February 1995 “On approval of the list of historical and cultural heritage sites of federal/pan-Russian importance”. This Order of the President classified all historical and cultural monuments which were subject to protection as monuments of State/republic importance and had been subject to State registration and protection in accordance with the established procedure between 1960 and 1994 as historical and cultural heritage sites of federal/pan-Russian importance and included them in the approved list of historical and cultural heritage sites of federal/pan-Russian importance. The following were included in this list without the opinions of the constituent entities of the Russian Federation being taken into account.
- Sites which were previously classed under the established procedure as immovable historical and cultural monuments of local importance or newly discovered sites of historical, scientific, artistic or other cultural value (hereinafter, “newly discovered sites”);
- Sites which were not classed by regulations as historical and cultural monuments or newly discovered sites and which were not subject to State registration and protection in the records of historical and cultural monument protection authorities at the time when Order No. 176 of the President of the Russian Federation entered into force.
Concerning compliance with the different paragraphs of Article 4 of the Charter, it is clear that the Russian Federation complies with paragraph 1, since basic powers and responsibilities are prescribed by the constitution and by law.
As regards Article 4, paragraph 2, and in the light of the situation described above (see in particular paragraphs 113-116), the rapporteurs are of the opinion that local authorities do not have full discretion to exercise their initiative. There are many detailed legal provisions barely
page 147 / 796 leaving any space for local initiative and therefore it can be stated that the Russian Federation does not comply with Article 4, paragraph 2.
The subsidiarity principle is not properly implemented and there are obvious tendencies to upscale several responsibilities without considering the alternative of intermunicipal co- operation. In the case of Moscow, it is obvious that responsibilities are not exercised by those authorities who are closest to the citizen, since nearly all significant responsibilities are concentrated at the city level, while the lower level (the Moscow municipalities) has very few responsibilities and resources. Therefore, the rapporteurs conclude that Article 4, paragraph 3, is violated by the Russian Federation.
Similarly, as regards Article 4, paragraph 4, the rapporteurs would like to refer to their conclusions under paragraphs 117-118, which lead them to conclude that the situation in the Russian Federation does not comply with this provision. In fact, powers of local authorities are not exclusive and overlapping of responsibilities is quite frequent (also, Recommendation 297 (2010) suggested an improvement in the division of competence). Overlapping of responsibilities is a problem emerging in many countries and Russia is no exception.
As for Article 4, paragraph 5, the discretion of local authorities when they exercise delegated powers seems to be more than limited.
Concerning Article 4, paragraph 6, the rapporteurs note that there are several mechanisms and procedures of consultation, but according to some interlocutors met by the delegation, these mechanisms have been eliminated in some constituent entities. It seems that the consultation process differs in law and in practice, which should be improved. Consequently, the rapporteurs consider that the situation partly complies with Article 4, paragraph 6.
San Marino [Article ratified - Report adopted on 28 March 2018 ]
In San Marino, the basic responsibilities and tasks of local government are prescribed by law (Art. 4 paragraph 1 of the Charter). The legislation of the country does not however include a general competence (Art. 4 paragraph 2 of the Charter) for townships (Art. 1 paragraph 2 of Law 127/2013 cannot be interpreted in that sense, since it refers only to the “territory”, not to “affairs” thereof and to a corresponding competence of townships).
Serbia [Article ratified - Report adopted on 18 October 2017 ]
Article 4, on the scope of local self-government, establishes the general principles for allocating responsibilities to local authorities. 45. The delegation recalls that Serbia has not ratified paragraphs 3 and 5 of Article 4 (see supra, paragraph 3 of the present report), in particular paragraph 3 on the principle of subsidiarity, as it is deemed to be incompatible with Article 177 of the Constitution.
The first paragraph of Article 4 underlines the need for the functions and tasks of local government to be rooted in relevant legislation. The main legislative texts are the Constitution and a number of special laws on local government, as mentioned above. Certain functions are also established through sectoral legislation. Local government in Serbia has no general competence, i.e. scope for taking own initiatives, additional to those competences listed in the laws, a situation which is common in many other European countries.
The second paragraph states that local authorities should, within the limits of the law, have full discretion to carry out their functions. Provinces and local self-government units in Serbia have two
page 148 / 796 types of tasks: original tasks listed in the Constitution, in the Law on Local Government, and in the Statute of the Autonomous Province of Vojvodina; and delegated tasks that local government carries out on behalf of a ministry or – within the Autonomous Province – upon delegation by the National Assembly. The original tasks offer wider discretion as they are only scrutinised with regard to constitutionality and legality. Local authorities also have room for manoeuvre regarding the implementation of delegated tasks, although expediency is additionally subject to scrutiny.
During the visit, the issue of the temporary ban on recruitment which has been imposed across the whole public sector was brought to the attention of the rapporteurs. The delegation was informed that recruiting new employees or replacing those who have left, even due to retirement, requires approval from a commission established by the government. This measure is one of several which aim to reduce the size of the public sector and which have been imposed as part of an agreement with the International Monetary Fund. During the meetings held between the rapporteurs and the representatives of local authorities, this measure was flagged as an impediment for local authorities wishing to exercise initiatives relating to any matters not excluded from their competence. As such, it further contributes to the staff shortages already experienced by local authorities. Concerns were expressed over the transparency of decisions to approve or reject requests and their political motivation. The rapporteurs are of the opinion that the criteria for approving the recruitment of staff during the temporary ban are not transparent enough to permit local authorities properly to manage their affairs.
The fourth paragraph of Article 4 addresses the problem of overlapping responsibilities and the need to prevent responsibilities from being undermined. On the whole, the delegation’s impression is that functions and responsibilities are clear and coherent. Moreover, the on-going process of revision of the legislation that pertains to the autonomous provinces and local self-government units is partly aimed at removing inconsistencies that had not been anticipated when the new legislation was adopted in 2006-2007. During the visit, however, several municipalities explained that their responsibilities in the field of healthcare and education were about to be centralised and thus undermined. The rapporteurs are particularly concerned about a proposal to transfer decision- making powers to the ministries for the appointment of boards and directors, with local government retaining the responsibility for financing these functions but without any control over who is appointed. The delegation is of the opinion that such a transfer, if implemented, will constitute an infringement of Article 4 of the Charter.
Paragraph 6 emphasizes that local authorities should be consulted on all matters which concern them. In the previous report, it was noted that although means of consultation were well developed, in particular via the Standing Conference of Towns and Municipalities (SCTM), they nevertheless needed to be consolidated through formal legal standards. It was recommended that Serbia develop relevant legislation to this end. In several meetings, both with ministries and the representatives of provincial and local government, the rapporteurs were informed that the system of consultations had developed in a positive way. The SCTM and relevant government bodies have signed a Memorandum and a Protocol on Cooperation which establish concrete mechanisms for cooperation with the government and the national parliament. Formal cooperation has also been established through the Council for Professional Development of Employees in Local Self-Government. Consultations on economic matters regularly take place through the Intergovernmental Finance Commission, as provided for in the Law on Local Government Finance.
The rapporteurs are of the opinion that, while there is still room for improving legislation governing consultations with local government, the existing consultation mechanisms seem to ensure that the views of local government are heard before decisions affecting them are taken.
As regards Serbia’s compliance with Article 4 of the Charter, the delegation concludes that Serbia
page 149 / 796 complies with the first and sixth paragraphs. However, with regard to discretion and full and exclusive powers enjoyed by local government, the delegation is concerned about the lack of transparency in connection with the temporary ban on recruitment and about the dilution of responsibilities for healthcare and education. In the delegation's opinion, Serbia only partly complies with paragraphs 2 and 4 of Article 4.
Slovak Republic [Article ratified - Report adopted on 24 March 2016 ]
Under current Slovak Law, local authorities manage autonomously (“independently”) several matters. Competences may be divided into “original” competences and “transferred competences”, with the caveat that, under Slovak legislation, if the law does not determine that a given municipal competence is “transferred”, then it must be considered to be an original competence.
Municipalities have original competences in the following fields: management of movable property and real estate owned by the municipality, or transferred temporarily by the State; drafting and approval of their own budgets; administration of local taxes and fees; supervision of economic activities; protection of the environment; kindergarten and nurseries; housing and town planning, building permits; water supply, sewage, and heating; refuse collection and disposal; cemeteries and consumer protection; parks and open spaces; public lightning; housing; social services; culture; certain offences; municipal police; participation in regional planning.
Municipalities also enjoy transferred or delegated State competences in the following areas: registry offices, construction, public order; schools, environmental protection. This is performed by sectoral legislation and is allowed by Art. 71 of the Slovak Constitution. This is usual practice, although local authorities claim that, in general, these delegated tasks are not appropriately funded (see, para 69).
The current situation in the field of competencies for municipalities has been the result of subsequent processes of decentralisation, run by the central government since the nineties. In total, it is estimated that, along a multi-annual program of decentralisation, the State has ended up transferring more than 400 tasks and responsibilities to the municipal and regional level. In many cases, the allocation of public responsibilities has been decided on a rather up-down approach and following a technocratic criterion, based on reasons of scale. For instance, in the domain of education the local authorities are responsible for pre-school and primary schools, while Regions are responsible for secondary schools and the State is responsible for Universities. In the domain of health services, local authorities are responsible for first aid stations and primary medical centres, while Regions are responsible for first-level hospitals and the State is responsible for national hospitals. In the field of social services, local authorities have split competences with the regions, etc.
The overall feeling expressed to the rapporteurs by their interlocutors was that the depth and breadth of local autonomy is fair and reasonable, in the context of the historical evolution of the nation and the most usual practices in neighbouring countries. The situation has certainly improved since the last local monitoring visit in 2001.
This being said, the Slovak system lacks a residual powers clause or a clause générale de competence (as French Law depicts it) in favour of local authorities, which is common in other European countries. The rule is precisely the reverse, since it is provided that if a certain competence or responsibility is not expressly allocated to the municipal level of government, the power is understood to be allocated to the State administration. Furthermore, municipalities and regions can only take action or adopt measures when the Law clearly stipulates that they have the authority to do so. Summing up, it can be said that the local decentralisation in the Slovak republic, at least from the viewpoint of the scope of self-government, makes that municipalities do enjoy an
page 150 / 796 administrative, limited autonomy on explicitly legally designated areas of intervention.
Therefore, the requirements of Art. 4 of the Charter are respected in the Slovak Republic.
Slovenia [Article ratified - Report adopted on 6 November 2018 ]
By virtue of the Constitution: “The competencies of a municipality comprise local affairs which may be regulated by the municipality autonomously and which affect only the residents of the municipality”.
In general, the Local Self-Government Act classifies municipal tasks into six groups: a. normative regulation (like the municipality adopts its statute, decrees and other municipal legal acts); b. administration (e.g. the municipality manages municipal assets and local public services); c. use of own resources (e.g. the municipality builds and maintains local public roads and other paths); d. promoting economic development in its territory; e. assuring aid and rescue in cases of elementary disasters and control of local public events; f. concluding contracts on acquisition and alienation of mobile and immobile assets on public concessions.
In details, competences of municipalities are established by the Local Self-Government Act and other legal acts. Along with above-mentioned six groups of competences, substantially competences of local municipalities cover such policy areas as: a. assets of the municipality; b. economic development of the municipality; c. spatial development and planning as well as building land management; d. creating the conditions for the construction of housing; e. management of local public services and services of social welfare; f. environmental protection; g. management of water supply and power supply facilities; h. educational activities, culture, sports and recreational activities; i. public roads and other public areas; j. and other local matters of public interest.
Municipal operations and activities are also regulated by sectoral legislation. Thus, other laws also define municipal competences, e.g., Roads Act, Environment Protection Act. Disputes between municipalities and the government concerning the distribution of competences are quite frequent and often settled in the Constitutional Court (see for instance, the Decision No. U-I-164/14, dated 16 November 2017 (Official Gazette RS, No. 75/17) on the role of municipalities in the spatial planning at the level of the state).
Therefore, in practice, municipalities perform mainly service delivery functions (e.g., delivery of public services), while a central government keeps regulatory and policy design functions (e.g., legal regulation). Public services are rarely provided by state or municipal bodies themselves. The common approach is to establish specialised legal persons (e.g. public company, public fund, public agency) or to grant concessions.
Apart from the competencies of a local municipality already defined in the legislation, the central government may transfer new functions or tasks to local authorities. In this case, the central government has to provide the municipalities with additional resources. In respect to this, the Constitution clearly states that “By law, the state may transfer to municipalities the performance of specific duties within the state competence if it also provides the financial resources to enable such.”
Article 24 of the Local Self-Government Act regulates the transfer of functions and explicitly states that “The state may by law vest in a municipality the performance of individual duties and functions from state jurisdiction that can be more rationally and more efficiently performed in the municipality, if it also provides the necessary means for such. The law may determine that the performance of individual duties and functions from state jurisdiction referred to in the preceding paragraph shall be transferred to all municipalities, urban municipalities, municipalities in a specific territory, or an
page 151 / 796 individual municipality” In fact, the Local Self-Government Act clearly sets the adequate concomitant resources as the key condition for the transfer of tasks.
The Local Self-Government Act also limits the state, effectively preventing it from intervening into the sphere of municipalities’ self-government.
Article 140 of the Constitution distinguishes between so-called “own” and “transferred” tasks. However, most of academics consider that in practice there are almost no such tasks that could be considered as delegated (transferred). Thus, there is a situation where general legislation and theoretical approaches foresee task delegation, whilst there is no practical application of this.
However, a problem regarding the assignment of new tasks (or duties, or activities) to local authorities by the different legal act has been reported to the rapporteurs by more than one interlocutor. The rapporteurs have been warned about a growing number of legal standard-setting regulations in certain areas of local self-government tasks and that such over-regulation in certain areas has resulted in increasing bureaucracy and pressure on local municipalities in the exercise of their competences. Allegedly, this also unnecessarily increased the cost of services that local authorities had had to cover from their own-resources.
The most frequently mentioned example of over-regulation by interlocutors was the amendments in the legislation regarding construction control and municipal police since local municipalities reportedly are facing lack of funding for attracting and training qualified staff. This also reflects de facto condition when the municipalities are obliged to implement some additional activities while other stakeholders, mainly the Government, would not perceive this activity as delegated.
Pre-schooling has also been mentioned as an over-regulated sphere. The rapporteurs have been informed that local authorities have had to increase local expenditure in order to fulfil their tasks in the field of pre-school education, while no additional resources have been provided to that end. Local municipalities suggested reviewing the spheres subject to detailed regulation and either minimising the required conditions set or providing more operational flexibility for municipalities which they could better adapt to local conditions within certain limits (e.g. students per teacher ratio).
The rapporteurs noted some lack of clarity in practice in distribution of competences of local authorities (own and delegated competences) in practice. Therefore, in their opinion, a review of the list of competences of municipalities could be carried out in consultations with the representatives of local authorities to avoid any overlapping or duplication of functions. During the consultation procedure, the Ministry of Public Administration argued that Slovenia had a good overview of the tasks of the municipalities, which are regulated on frequent basis and monitored in the Catalogue of Competences of Slovene Municipalities (Katalog pristojnosti slovenskih obÄin). It underlined that the Catalogue is financed by the Ministry of Public Administration through association of municipalities, published every year and available online. In the opinion of the rapporteurs such practice of reviews should be continued and possibly deepened in consultations with local associations.
In the opinion of the rapporteurs, although in general, Slovenian local authorities seem to have an adequate degree of autonomy and discretion in their competences, there is a risk that excessive regulation by the government of the provision of certain local services may hinder local government ability to perform tasks under their own responsibility.
In the light of the precedent, it may be concluded that articles 4.1. - 4.5. of the Charter are generally complied with in Slovenia. However, it would be advisable that the central government in consultation with local authorities undertake a review of the degree of prescription in existing legal
page 152 / 796 regulations of certain tasks and responsibilities at local level with a view of removing as many as cannot be of overriding necessity. Such functional review could be carried out, as suggested by local representatives, in the light of the implementation of the Development Strategy for Local Self- Government up to 2020.
Spain [Article ratified - Report adopted on 20 March 2013 ]
Local self-government has been guaranteed by the Spanish Constitution. This guarantee protects both municipalities and provinces (Art.137), which are defined as local government formed by grouping municipalities and operating the territorial divisions required for the performance of state functions. The autonomous communities may set up other groupings of municipalities, and municipalities are entitled to form associations.
Municipalities have statutory powers to make regulations, levy taxes, adopt their budgets, draw up plans and programmes, and make use of expropriation. They have their own staff.
During the visit, the delegation was informed that neither the legislator nor the government have provided a mechanism to overcome the imbalance caused by the exercise of certain competences by local governments, which have traditionally intervened in a number of areas due to their proximity to the citizens and in response to their direct demands. These “competencias improprias” are not regulated by legislation and the provision of services that results from these competences is not fairly compensated; no economic resources are made available for their implementation. They concern personal services and physical environment services.
The present government has applied the slogan “one competence, one administration” to the first policy to reduce public expenditure, meaning that Spanish legislation must be modified not only according to the subsidiarity principle but also the “uniqueness” principle. Avoidance of a series of overlaps of remits with corresponding ones comprising different activities and distributed among different levels of government, is considered to be a crucial means to save public resources.
Under this policy, attention is now focused on the so-called “competencias improprias”. For many years, many municipios took on new powers not explicitly provided for by law (but nonetheless hitherto assumed to comply with Ley de base del regimen local: Article 2, the principle of the “right of intervention in every field concerning the circle of their own interests”), in order to meet the new needs of their citizens, or to fulfil de facto competencies delegated to the municipios on an ad hoc basis by the autonomous community (i.e. with an initial transfer of financial resources not confirmed in the following years).
The new proposed legislation aims at eliminating or at least greatly reducing this phenomenon. It will provide for a strict list of responsibilities classified either as “held in own right” competencias proprias or “delegated” (atribuidas por delegaciòn). The financial system will be assessed in order to guarantee these two kinds of responsibilities. That does not prevent the municipios from assuming responsibilities outside the list, but subject to two specific conditions: 1) when responsibilities held “in their own right” are sufficiently guaranteed; 2) when the assumption of a “non-standard” responsibility is in line with the constraints of the legislation on budgetary stability and financial sustainability of the municipio concerned.
In the current debate regarding structural reorganisation in Spain, political entities have expressed concern regarding on the one hand the issue of “competencias improprias” and on the other hand the overlap of competences. According to the 2012 report of the “Foundation on Progress and Democracy”, the overlap of competences in the public sector lead to an aggravated loss of 32 300 million euros per year, of which 26 108 million euros are to be covered by the autonomous
page 153 / 796 communities and 6 211 million euros by local authorities. As concerns the problem of overlapping competences, considerable initiatives have been launched, at national, regional and local level.
Central government initiatives: Proposed by the Third Deputy Prime Minister and Minister of Territorial Policy and Public Administration, and adopted by the Council of Ministers on 4 March 2011, the "Resolution approving the programs and public policies” will be evaluated by the Agency for the Evaluation of Public Policies and Quality of Services in 2011. The Agency was to make a report on the possible elimination of duplication, overlap and inefficiencies of the autonomous communities. From information received, that report has not been yet published. Another central government initiative concerns the creation in October 2012 of a commission to reform public administration. Some of the aims of this Commission are to develop rationalisation measures, to eliminate administrative burden by simplifying rules and procedures and to avoid duplication. The Commission is attached to the Ministry of Finance and Public Administration, through the State Secretary of Public Administration (Secretaría de Estado de Administraciones Públicas).
Regional initiatives: The current economic crisis has spurred a number of initiatives in regional parliaments to improve local funding and to eliminate the overlap of competences, namely by reforming the statutes of the autonomous communities. Other examples include :
Catalonia: Motion on the liquidity and the financing of local authorities, dated 10 May 2011. The Plenary Assembly of the Parliament of Catalonia, at its meeting on 5 May 2011, approved Motion 19/IX "on liquidity and funding of local authorities" presented by the Parliamentary Group of Left Republicans of Catalonia, with modifications from other groups;
Andalusia: Local laws. As local elected official informed the Rapporteurs during the visit, the regional government of Andalusia was a pioneer in establishing the "Local Laws" (LAULA and PATRICA) for their municipalities. These laws defined municipal powers and gave the Andalusian municipalities the possibility to receive a greater amount of unconditioned national funds;
Basque Country: Report on duplication and inefficiencies in Basque public administrations, from September 2011;
Madrid: Study Commission on duplicate powers. The Assembly of the Autonomous community of Madrid, in its special session on 12 July 2011, approved the agreement creating the "Study on duplicate powers between municipalities and Madrid to improve efficiency in the delivery of public services". This is an “ad-hoc” Commission, which held its inaugural meeting on 19 July 2011. In May 2012, the Opinion published by this Commission was approved, which should help to improve the efficiency of Madrid government. The rapporteurs were informed after the monitoring visit that the Assembly of the Autonomous community of Madrid passed a new law on 28 December making provision to remove these duplicate powers. A bilateral commission was established to start work thereon in January 2013.
Local initiatives: Local governments, either through their representative organisations or individually, have launched initiatives to study the issue of overlapping competences. The resolution adopted by the Spanish Federation of Municipalities and Provinces by the 10th General Assembly of FEMP on 24 September 2011 can be cited as an example.
While the measures related to the economic situation are only temporary, it is very difficult to establish whether the restrictions will affect standards of exercise of public responsibilities or public services. Conversely, if the objective is structural and permanent to reduction, action is foreseeable regarding the standard costs of public functions and services.
page 154 / 796 These initiatives are not in opposition to the provision of the Charter, and have the merit of establishing more clarity in the distribution of responsibilities. Nevertheless this policy could result in a reduction of local authorities’ capacity to adapt local government to the changing needs of their populations and in a reduction of autonomy: the decision to assume a new responsibility as regards “competencias improprias” could be subject to financial oversight (at national or regional level) possibly resulting in a ban on fulfilling these responsibilities. That outcome could somehow conflict with Article 4, paragraph 2 of the Charter: “Local authorities shall, within the limits of the law, have full discretion to exercise their initiative with regard to any matter which is not excluded from their competence nor assigned to any other authority”.
One further element of concern is raised by the financial requirements for municipios to continue exercising the responsibility concerning “competencias improprias”. These requirements, according to a political rather than technical evaluation, could create a distinction between “rich” and “poor” municipios, with the former more abled to assume new responsibilities and the latter confined to strict observance of the list of responsibilities in their own right, established by (national or regional) law.
The Rapporteurs well understand the difficult situation created by the financial crisis. They nevertheless suggest, for example, that the Spanish government and the legislator create a financial system that can fully guarantee (at national and regional level) every municipio’s complete financing for the fulfilment of its “own right” and “delegated” responsibilities (this is the target already set for the proposed reform) and, at the same time, create a system of equalisation in order to transfer resources from richer to poorer municipios, so that all are rendered equally capable (as far as possible) of assuming responsibilities other than the listed ones.
As regards subsidiarity (Article 4, paragraph 3 of the Charter), this principle is clearly upheld in national law as a guiding principle for state and regional legislation assigning powers to local authorities, but it is not reflected in the same way in the statutes of the comunidades autónomas. Here again, some innovations have been introduced by the general provisions of the new Statutes, most of which explicitly adopted the principle (see in particular Article 84, paragraph 3 of the Statute of Catalonia, which directly links the principle to the Charter), but we must wait for the effective implementation of the principle in ordinary autonomous communities legislation.
The subsidiarity principle, however, implies a clear preference for the attribution rather than the delegation of competences to the municipios. In this respect, the texts provided to the Rapporteurs contain a long list of possible competences that can be given over to the municipios by either national or autonomous communities legislation. These concern matters normally attributed, in other European countries, to the communal level as “own” competences. The Rapporteurs understand the present difficulties in finding new structural forms of financing a larger number of own competences, but could not forego underlining that a too large number of delegated competences should be in contrast with the Charter.
In terms of consultation with local and regional authorities (Article 4.6 of the Charter), while some sources have stated that the central government consults the local authorities, namely FEMP, in due time and in appropriate way in the planning and decision-making process for all matters which concern them directly, others have declared the opposite and stressed the need to improve such consultation. The problem is considered here in general terms; the more specific aspect concerning participation in financial matters will be considered later on (Article 9 of the Charter).
Consultation rights are very important at regional level. In this field, several autonomous communities have changed their Statutes and laid down new principles regarding the rights of local authorities to participate to the decision-making process at regional level, creating new areas of co-
page 155 / 796 operation between autonomous communities and local authorities.
For example, Catalonia created (Article 85 of the Statute) a Consejo de Gobiernos Locales, as an organ representing municipios and veguerias (the only second tier of local government recognised by the Statute) in the legislative process and in taking decisions on regulations and acts of general planning. The Consejo has to be regulated by an ordinary law of the autonomous communities.
Andalusia has created two different bodies: one is the Consejo Andaluz de Concertación Local (Andalusian Council of Local Consultation), a joint body in which the Junta de Andalucia Government is represented on one side and local corporations, municipalities and diputaciones on the other. It is therefore a classic organ of consultation, agreement and participation of the Andalusian Government. The second body is the Consejo Andaluz de Gobiernos Locales (Andalusian Council of Local Governments), which, in the words of the President of the Parliament of Andalusia, is a very recent creation under Law 5/2010 of 11 June on “Autonomía Local de Andalucía”, Article 57, not yet in operation and due to start work in the quarter that has just begun; it will participate in the parliamentary proceedings on all laws and all plans affecting local governments in the Parliament.
Article 4 is not fully respected, particularly with regard to the frequent delegation of competences to the municipios.
Sweden [Article ratified - Report adopted on 2 April 2014 ]
According to Article 2 of the new Chapter 14 of the Local Government Act, local authorities are responsible for local and regional matters of public interest based on the principle of local self- government. The basic powers and responsibilities of local authorities are laid down in the Local Government Act or in special laws issued by the Parliament. 75 % of the public services have been devolved to the local level by law.
The question of whether the principle of subsidiarity is applied to the division of powers and competences in law and in practice in conformity with the Charter has been addressed already in the general part of this report. There is no specific provision in the Swedish law which stipulates that local tasks should be performed at local level. Article 3 of Chapter 14 of the Swedish constitution introduces the principle of proportionality. It stipulates that all new legislation that may affect local self-government should be examined, to ensure that the reasons for the intended regulation justify the possible intrusion into local self-government that the regulation would entail.
A proportionality control mechanism was established by extending the mandate of the Council of Legislation (Lagradet) to scrutinise any act of law involving the obligations of local authorities. (Chapter 8, Article 21). Whether this newly established principle of proportionality will provide a legal safeguard to protect the principle of local self-government will mainly depend on its application in practice and its interpretation by the Council of Legislation. However, to counter trends to centralise local tasks, a constitutionally guaranteed principle of subsidiarity seems to be the best solution.
The powers of local authorities should be “full and exclusive” and local authorities should be allowed discretion in adapting their exercise to local conditions. Detailed state regulations in Sweden limit the autonomy of local authorities increasingly.
In the Swedish practice, consultation between central and local authorities in the planning and the decision-making process is carried out through participation in the preparation of legislation in government committees and through the consultation procedure following the publication of reports by such committees. This type of consultation is well established and based on informal procedures. There is the so-called “referral system” before a bill of legislation is presented to the Parliament. This
page 156 / 796 procedure is based on a government act which stipulates referrals to a group of interlocutors including municipalities and county councils. This need not always be SALAR. It can be a specific county council or municipal council depending on the subject matter. The time frame for submitting an opinion was described as “problematic” by some interlocutors because they are sometimes very short. A new regulation has been added in the Instrument of Government (RF 7:2) stipulating that, in preparing government business, the necessary information and opinions from the public authorities concerned should be requested. It is true that this provision now puts on the Government the obligation to ask for information from local authorities. However, although it codifies the previous practice, it does not regulate a time frame for contributions from the local level, which has often been too short in the past. The Government contends that the time frame is normally three months and can be prolonged. The rapporteurs take note that in practice deadlines can vary and consider that a revision of the legislation to provide for an adequate period of time for the consultation process would be appropriate.
Another aspect of possible infringements on local self-government through EU legislation needs to be considered in Sweden. With the entry into force of the Lisbon Treaty, national parliaments have been given the task of carrying out subsidiarity checks. Currently, there is no legislation in force which provides for a formalised procedure to give communes and county councils the possibility to participate in the assessment of whether EU legislation is in breach of the principle of subsidiarity or whether it infringes on local self-government. The Government has considered the existing form of consultations between central government and local authorities to be sufficient (Govt. bill 2009/10:175). The Riksdag carried out an inquiry into how subsidiarity checks were to be carried out under the Treaty and came to the same conclusion as the Government, i.e. that no formal procedure was necessary.
In the rapporteurs’ opinion Swedish law and practice in general complies with the provisions of Article 4. As regards the issue of detailed state regulations limiting the autonomy of local authorities, the rapporteurs consider that there is a risk of infringement which can however be overcome through close consultation between local and national authorities.
Switzerland [Article ratified - Report adopted on 20 October 2017 ]
In principle, the scope of municipal competence is not guaranteed by the cantonal constitutions. These constitutions establish municipal self-government in general terms, but it is very rare that they indicate the areas in which municipalities enjoy autonomy. Municipal competences are set by cantonal laws, with the result that cantonal law-makers are able to modify the distribution of powers between the canton and the municipalities in a way that is unfavourable to the latter, without being considered to have breached the principle of municipal self-government, as long as they do not impinge upon municipal autonomy. Municipalities’ competences can be divided into two groups: firstly, the compulsory responsibilities imposed on them by federal or cantonal law, for example, local development planning or municipal regulation of construction projects; and secondly, the responsibilities that the municipalities have decided to assume as neither the Confederation nor the cantons are responsible for them, for example the construction of sports or cultural facilities.
The general principle, expressly established by some cantonal constitutions, is that of a general residual competence of municipalities (for example: Article 26 of the Constitution of Aargau, Article 122, paragraph 1, of the Constitution of Glarus). Therefore, in addition to the responsibilities entrusted to them by their respective cantons, or more rarely by the Confederation, the municipalities determine their own competences in several fields coming under the local level of government in accordance with a general residual competence.
The municipalities’ competences include certain areas of policing, such as the traffic police,
page 157 / 796 combating noise pollution and the regulation of trade and commerce. They also enjoy a certain degree of autonomy in managing public spaces and administrative assets. For instance, in the Canton of Zurich, the municipalities have significant powers regarding the use of public spaces. They can issue regulations and enjoy considerable discretion in such matters. Regulating construction projects (building features) is also mainly a municipal competence. The municipalities also ensure the supply of utilities to construction sites (water, electricity). They are also competent for certain public works (sports facilities, roads, theatres, museums, etc.) and for many industrial and commercial public services (water and electricity supplies, roads maintenance, etc.). The municipalities are also empowered to grant municipal citizenship. Any citizen of a municipality is a citizen of the canton in which that municipality is located and any citizen of a canton is also a citizen of a municipality in that canton (Article 37, paragraph 1, of the Constitution).
Municipal self-government also exists in legislative and administrative matters. With regard to legislation, the municipality’s law-making powers may be exercised in a field that the cantonal or federal law-makers have not exhaustively regulated. This competence may exist either for the field as a whole, or for a specific sector thereof in accordance with federal or cantonal legislation.
A recent comparative study, which takes into consideration seven dimensions of municipal self- government (particularly legal, political, financial and administrative autonomy) and how they are applied in the 26 Swiss cantons, showed that culture is the key variable explaining the difference in local autonomy between the cantons. German-speaking Switzerland is clearly characterised by a higher degree of autonomy than French-speaking Switzerland.
Another classification of cantonal decentralisation shows that there are five groups of cantons: firstly, large decentralised cantons (Grisons, Thurgau and Zurich) in which municipal sovereignty is preserved; secondly, small decentralised cantons (Appenzell Innerrhoden, Appenzell Ausserrhoden, Glarus, Schwyz, Obwalden and Nidwalden) that have a political culture which is traditionally conservative and strong local self-government; thirdly, large balanced cantons (Bern, Lucerne, Saint Gallen, Aargau, Uri, Solothurn and Valais) characterised by the prevalence of a Germanic political culture; fourthly, small balanced cantons (Basel-Stadt, Jura, Schaffhausen and Basel- Landschaft); and lastly, the centralised cantons of Geneva, Neuchâtel, Fribourg, Vaud and Ticino, where an egalitarian political culture leads to greater centralisation.
It is also apparent from a recent study carried out at the request of the European Commission (Local Autonomy Index for European Countries, 1990-2014, Brussels, European Commission), which takes 11 variables, particularly financial variables, into account, that Switzerland, along with the Nordic countries and Germany, is among the countries with the highest local autonomy.
Although the principle of subsidiarity is expressly provided for under the Federal Constitution with regard to the relationship between the Confederation and the cantons (Article 5a of the Constitution), the rapporteurs are of the opinion that the distribution of responsibilities between the cantons and the municipalities is a result of historical developments and political power dynamics which vary depending on the canton concerned. Therefore, it is not possible to affirm that the principle of subsidiarity is enforced in a general and systematic way in relations between the cantons and the municipalities.
In any event, the rapporteurs consider that the distribution of responsibilities between the cantonal and municipal levels may change over time. For example, after the entry into force of the reform on financial equalisation and the distribution of responsibilities between the Confederation and the cantons (RPT) in 2008, the distribution of competences between the cantons and the municipalities was reconsidered so as to clarify the situation. In addition, the delegation noted that in recent years, an ever-growing number of responsibilities have been transferred from the municipal to the cantonal
page 158 / 796 level. This can be explained not only by the fact that the smallest municipalities are no longer able to execute certain responsibilities, but also because new legal provisions adopted at the federal level have led to developments in cantonal law that are not very conducive to municipal self-government, such as the reorganisation of civil protection in the 1990s, or the protection of minors and adults in the current decade.
In principle, municipal competences are full and exclusive, but some have been transferred in a context of intermunicipal co-operation. Several scenarios must be distinguished here. Firstly, it is possible that one municipality assumes a responsibility, not just for itself but also for other municipalities (the commune-siège (“headquarters municipality” model) based on an affiliation agreement. In addition, some municipalities may jointly assume a specific responsibility; this too is based on an agreement and the municipalities appoint common bodies competent for this purpose. Lastly, several municipalities may jointly decide to transfer the execution of a responsibility to a legal person separate from the municipalities themselves (for example, a union of municipalities).
Intermunicipal co-operation concerns in particular sectors such as firefighting, medical care and schools. In some sectors more than 65% of municipalities have an agreement with one or more other municipalities. There is a strongly growing trend to transfer municipal responsibilities to intermunicipal co-operation structures; the small size of most Swiss municipalities’ accounts for their incapacity to fulfil a number of responsibilities independently, due to a lack of sufficient human and financial resources. Some responsibilities are shared between the municipalities and the cantons (education for example).
The rapporteurs note, however, that the establishment of a fourth administrative tier, an intermediate level between the municipalities and the cantons to which essential municipal responsibilities are transferred, raises the issue of the democratic legitimacy of the administrative bodies belonging to these intermunicipal structures. While it is true that the municipalities are represented within these bodies, there is no guarantee that the representatives will have been elected. For this reason, the rapporteurs consider that, in this context, it would be preferable to provide that these institutions must include a minimum percentage of elected representatives (for example, 50%) so as to safeguard their democratic nature given the fewer opportunities for direct democratic participation by citizens.
The municipalities themselves implement several measures decided at Confederation or cantonal level. With regard to the execution of federal law, municipalities deal with civil status matters, political rights, housing, statistics, civil protection, taxation and environmental protection. As regards cantonal law, they take execution measures particularly in the field of education. They are also responsible for collecting municipal, cantonal and federal taxes. When they are vested by the canton or the Confederation with the mere execution of certain responsibilities, the municipalities have only a small degree of autonomy in practice, their role being limited to that of executing bodies. However, in certain cases municipalities enjoy a margin of autonomy in the enforcement of cantonal or federal law, if higher-ranking law does not lay down detailed rules on the matter concerned and thus leaves the municipalities a greater or lesser degree of discretion.
Under Article 50 of the Federal Constitution, the Confederation authorities (Parliament, Federal Council and Federal Administration) are required, in their different activities (legislation, programming, public works, financial decisions, etc.), to evaluate the effects of this activity on the municipalities and to avoid negative effects as far as possible. This requirement is not an obligation to achieve a specific result, but rather a best efforts obligation, a rule of conduct that the federal authorities must endeavour to respect, both in the implementation of the law and in its execution, which leaves Confederation bodies a certain margin of appreciation.
page 159 / 796 The federal authorities must therefore have sufficient information to evaluate the consequences of their actions for municipalities. To encourage the exchange of information and in-depth discussion, there are tripartite working groups made up of representatives from the federal administration, the intercantonal conferences concerned and the associations of municipalities concerned. Such co operation exists in the social, cultural, health, asylum, immigration, housing, e-government, public transport and regional planning fields. In some more specialised fields, there are also bilateral contacts between directorates of federal offices and the intercantonal conferences, or more rarely, with associations of municipalities.
In addition, a Tripartite Conference on Agglomerations (TCA) was established on 20 February 2001. It is a political forum making it possible for the Confederation, cantons, towns and municipalities to work closely together on the implementation of a policy shared by the Swiss agglomerations. The tripartite commission meets twice a year and brings together representatives of the Confederation (Chancellery, Justice, Secretariat for Migration and the Federal Office for Regional Development), members of the Conseil d’Etat, cantonal representatives and representatives of associations of municipalities. Apart from fostering the exchange of information, this conference aims to increase co- operation within the agglomerations and to resolve certain problems encountered by the latter. Between 2001 and 2014 the TCA focused in particular on strategic planning and the development of the agglomerations policy. It also developed institutional collaboration models and recommendations in specific fields, particularly concerning foreigners and integration. It produced a report on the integration of rural areas in the tripartite collaboration. The TCA does not have any decision-making power. Above all it aims to help the various stakeholders to exchange information, to consult each other and to develop common solutions. It is the only collaboration forum between the Confederation, the cantons and the municipalities which focuses on different political issues. In 2017 the TCA became the “Tripartite Conference” and its scope was extended to rural areas.
The rapporteurs note that several consultation bodies also provide a way for municipalities to express their opinions. At Confederation level, the Law on Consultation of 18 March 2005 (Article 4, paragraph 2c) provides that umbrella organisations of municipalities, towns and mountain regions operating at national level shall be invited to give their opinion as part of the legislative process. Therefore, the participation of these organisations in the legislative process is guaranteed by law, and it usually takes place in the form of hearings held as part of the Confederation Parliament’s work on proposals affecting municipalities.
The rapporteurs note, however, that the municipalities are never directly consulted on an individual basis by the Confederation authorities, although they are able to submit their observations and opinions through the intermediary of the cantons (municipal representatives sit in the cantonal parliament) or through their associations. During the visit, the delegation was informed that large cities such as Zurich would like to be consulted directly, without going through intermediary bodies, in matters such as essential reforms, especially those concerning taxation.
In addition, there are consultation procedures for municipalities at the cantonal level. The cantonal authorities carry out the necessary consultations every time it is a question of modifying a law that affects municipalities. Municipal authorities can also file petitions at cantonal level. The municipalities may also come together at cantonal level within associations destined to serve as interlocutor with the cantonal authorities. The delegation was informed about the example of the Canton of Jura, where the Jura association of municipalities has existed since 2009.
It emerged from the interviews between the Congress delegation and the representatives of the city of Zurich that the consultations are sometimes considered insufficient. For example, in relation to the business tax reform (which was finally rejected by referendum on 12 February 2017), the city of Zurich considers that the Confederation and the canton did not sufficiently consult the large cities
page 160 / 796 affected by the reform, despite the fact that this reform would have led to a loss of income of approximately 300 million Swiss Francs for the city of Zurich alone (in other words, 10% of its overall resources).
The rapporteurs consider that, even though the consultation procedures take into consideration the interests of the municipalities expressed through the Association of Swiss Municipalities or the Union of Swiss Towns, large cities, especially those with more than 100 000 inhabitants (Zurich, Geneva, Basel, Lausanne, Bern and Winterthur) may also have specific interests to put forward in certain areas (taxation, town planning, transport, etc.). It would be desirable that the consultation bodies and procedures grant these large cities a specific status, in other words they should represent themselves rather than being represented by associations which, inevitably, act on behalf of a more general collective interest.
In this connection, the rapporteurs consider that, so as to allow the Confederation to pay greater heed to the potential consequences of its actions on the municipalities and to the unique situation of the cities, urban agglomerations and mountain regions (as provided for in paragraphs 2 and 3 of Article 50 of the Constitution), municipal representatives should be more involved, in the same way as cantonal representatives, in the expert committees and working groups tasked with drafting acts at federal level. This integration of municipalities in the decision-making process from the stage of the preparatory work would make it possible to better take into account municipal interests.
By way of example, the rapporteurs refer to the close dialogue existing between the three administrative levels regarding regional planning. The Swiss Territory Project approved in 2012 by the federal government, the cantons and the municipalities constitutes a point of reference for cantons and municipalities in regional planning matters. The cantons are competent for drafting a master plan (with a 15-year outlook) that is approved by the Confederation and which, as a result, is binding at all levels, especially with regard to plans which may be adopted at municipal level.
The rapporteurs consider that the situation in Switzerland is in compliance with Article 4, paragraphs 1, 2, 3, 5 and 6 of the Charter.
Turkey [Article ratified - Report adopted on 1 March 2011 ]
The analysis article by article is currently unavailable
Ukraine [Article ratified - Report adopted on 31 October 2013 ]
Under Ukrainian legislation, the fundamental powers and responsibilities of the local tier of government are set out in Part II of the 1997 Law on local self-government in Ukraine (Organisation and legal basis). The system for allocating powers is fairly complex. It makes a distinction between the different organs of an authority (council, executive body, mayor) and between its own and delegated powers. Article 26 lists 50 different “powers of councils”. Article 27 thereof (chapter 2) gives cities’ executive bodies eight powers relating to economic and cultural development and to planning and accounts. Article 42 lists at least 20 different powers of mayors.
Although the law assigns an impressive list of powers to local authorities, the rapporteurs were told that a number of national laws assign to State entities (central government departments at local and regional levels or new national agencies) powers which were hitherto wholly or partly the responsibility of local authorities. Some powers have thus been transferred relating to real estate issues, planning and construction, economic development and highways, as well as welfare, health and education. Where buildings in rural areas are concerned (planning permission), central
page 161 / 796 government seems to have a negative influence on local self-government, through technical requirements which do not always allow for the local situation. Central government imposes on local entities in rural areas (for the benefit of private-sector investments) an “accelerated” administrative procedure which allows for neither these entities’ administrative or financial capacity (very often weak and not very effective) nor the demands of urban planning adapted to rural needs. Thus small communities are politically responsible for the “slowing down” of local economic development, without having effective instruments to remedy this. In other sectors concerning, for instance, underground resources and the division of powers relating to water resources, the associations have called for a greater concentration of powers at local/regional level.
These reforms are increasingly restricting the scope of local self-government, curbing local authorities’ territorial responsibility (restriction of local powers over residential areas), budgetary capacity (fines imposed for parking offences on the local authority’s roads go to central government), revenue (concentration of customs revenue at a new national agency) and powers (registration of enterprises, which is currently a matter for local services, is to be transferred to the Ministry of Justice with effect from 1 July 2013). Similarly, there is a decline in local authority offices’ capacity to conduct a comprehensive policy including monitoring the application of spatial planning, urban planning and building policies. On this last point, the responsible committee of the Verhovna Rada seems to want to respect the current division of powers. These different developments might well result in a failure to comply with the provisions of Article 4 (3) of the Charter, which states that public responsibilities shall preferably be exercised by those authorities closest to the citizen. The associations are calling for greater co-operation between central government and local entities in the spheres of education and public health, so as better to meet public needs. The rapporteurs feel sure that a better division of powers to the benefit of local authorities may contribute to greater conformity with the provisions of Article 4 (3) of the Charter.
Following their discussions with various parties during the visit, the rapporteurs note a discrepancy between the legal situation of local self-government in Ukraine and the reality. A number of factors restrict the substance and scope of self-government: a tendency by national institutions to centralise powers; the absence of a stable economic basis at local level; the weakness of local and regional authorities’ financial architecture (see section 4.7: Financial resources of local authorities); the absence of a clear division of powers and administrative activities between central government departments and local and regional authorities, which may give rise to overlapping or duplication in the exercise of powers.
The rapporteurs consider that, in addition to the aforementioned aspects, there are several other factors restricting the full and complete exercise of local self-government by local authorities. 22 years after achieving independence, Ukraine has still not managed to carry out a thorough and consistent reform of local and regional self-government.
For want of sufficient powers and economic and financial resources, most local authorities no longer have the “ability” to which Article 3 of the Charter refers. Furthermore, the stepping up of activity by the responsible ministries has, as the years have gone by, encouraged specialisation and an increase in the administrative role of central government departments at local and regional levels. This has brought about a high level of interference by central government in local authorities’ sphere of action.
In addition, there is an inherent tendency for this effect to increase: as central government’s administrative role and staff numbers increase, so does the number of obstacles impeding reform of local and regional government structures (a reform which could culminate in a transfer of powers to local entities, accompanied by transfers of the corresponding staff and funding). These tendencies are contrary to Articles 20 and 71 (2) of the Law on local self-government in Ukraine, according to
page 162 / 796 which “control by the State should not interfere with the exercise of the exclusive powers of local authorities”. The idea underlying this restriction, although it relates to the question of specific supervision, may be applied more generally in order to curb central government’s attempts to influence the division and exercise of powers to the detriment of local authorities and of their right to self-government.
Where the funding of delegated powers is concerned, the associations have condemned several violations of the principle of concomitant financing, asserting that central government does not cover the full costs of delegated powers. The Association of Ukrainian Cities cited the example of the electrified urban public transport system. It said that there is no requirement in the contract for central government to transfer to local budgets in due time the funds needed to meet the expenditure associated with the provision of transport services at a reduced rate and adequate compensation to cover the difference between the fares (approved by the Ministry of Infrastructure and Ministry of Economic Affairs) and the actual cost of transport services. So if compensation is not paid by the national budget, financial support for electrified urban transport companies will have to be paid solely by municipal councils.
As a result, local self-government is undermined and its scope for action restricted. The trust of the local population is, according to Article 2 (1) of the Law on local self-government in Ukraine, fundamental to any local or regional authority, and therefore to the right to self-government. The population’s trust in the ability of local and regional institutions effectively to manage a significant portion of public affairs has been weakened in Ukraine. The rapporteurs therefore feel certain that local self-government in Ukraine needs, both in the legislative sphere and in terms of political practice, a comprehensive reform in order to achieve a sufficient level of compliance with the provisions of the Charter.
The rapporteurs did not hear any general criticism of the adaptation of the exercise of delegated powers to local conditions, within the meaning of Article 4 (5) of the Charter. Communities with a population of under 5,000, because of their low level of budgetary capacity, apparently find it difficult to fund delegated powers.
With reference to the consultation for which Article 4 (6) of the Charter provides, Article 146 of the Constitution states that “Other issues of the organisation of local self-government, the formation, operation and responsibility of the bodies of local self-government, are determined by law”. Ukraine therefore adopted, on 16 April 2009, Law No. 1275-VI on the associations of local self-government entities, which came into force on 2 June 2009. According to the law, interaction mainly takes the form of “participation in consultations” (Section IV: Principles of the interaction of the associations with public authorities, Article 17, paragraph 2.a and b). The national associations are entitled to be consulted by the President, Supreme Court, Parliament and Cabinet.
The representatives of the national associations note that, in formal terms, consultation functions properly. They also noted an improvement in the procedures for consultation with the new Asarov government. In Resolution No. 1065 of 21 November 2012, the Cabinet amended the government’s rules of procedure. The associations’ representatives are now admitted to Cabinet meetings on an advisory basis, “if the Cabinet is dealing with subjects affecting local authorities’ powers and interests and regional development issues”. The responsible ministries have to involve the associations in the preparation of draft legislation (relevant to their interests). The ministries are required to indicate the extent to which the association’s opinion was taken into account in the draft.
The associations are regularly invited to the meetings of parliamentary committees, but it is very often the case that MPs (including those from opposition parties) do not take their proposals into account. Where the associations’ participation in national coordination structures is concerned, the
page 163 / 796 three associations (Association of District and Regional Authorities, Association of Ukrainian Cities and Association of Village and Settlement Councils) are represented in the “constitutional assembly” set up in 2012 to prepare the constitutional amendments needed with a view to territorial reform. Furthermore, the central executive bodies are required, before setting up advisory or consultation bodies or working groups, to ensure that representatives of the associations will be able to participate.
Where the procedures for preparing fiscal estimates for the purposes of budgetary planning are concerned, the associations are consulted but not included in the administrative process. There are nevertheless some examples, over and above consultation in the strict sense of the term, of co- operation and consultation between the associations and the government. For instance, the Association of Village and Settlement Councils has signed a memorandum with the Ministry of Agriculture concerning the “Village birthplace” project, which is intended to enhance the image of small villages and settlements.
Although Ukrainian legislation places at the disposal of local authorities a set of impressive local powers, the complexity of the legislation, the absence of a clear and traceable vision of the division of powers between the different tiers and the interference that occurs between activities at different levels of governance (particularly through the local and regional activities of central government departments) limit both the scope of Article 4 (2) of the Charter and the full discretion of local authorities to “exercise their initiative”. In the rapporteurs’ view, Ukraine is only partly complying with this provision of the Charter.
Where the right of consultation for which Article 4 (6) of the Charter provides is concerned, the rapporteurs feel that the law does provide for formal procedures in conformity with the Charter, and that, in practice, the mechanisms in place seem to function effectively. The rapporteurs nevertheless noted complaints from local authorities that their viewpoint was frequently not taken into account.
United Kingdom [Article ratified - Report adopted on 26 March 2014 ]
The previous Congress Recommendation (1998) admitted that it would be “difficult to develop a general competence of local government in all fields” although the distinction between local government's own tasks and tasks delegated [were to] be better clarified”. In UK tradition, detailed sectorial legislation is used to identify the authorities on which powers are directly conferred upon. As there is no foundation in a written Constitution, there is also no pre-established “list” of subject matters. As seen above, successive reforms have produced a complex set of bodies which are responsible for delivering public services at the local level. Furthermore, they have general powers, such as recruiting staff and acquiring and managing property. They also have powers to adopt bye- laws, in general terms as well as regarding specific services.
England
Since 1998, Parliament has continued to confer specific and separate powers and duties to local authorities in important areas of public affairs. In England local authorities have the following competences:
County councils are responsible for providing schools, social services, and public transport services, highways, libraries and youth services (in some counties also fire and rescue services).
District councils are responsible for providing local services, including council housing, gyms and leisure facilities, local planning, recycling and refuse collection, licensing, building control and street cleaning.
page 164 / 796 Unitary authorities in England are responsible for all local services.
The Greater London Authority (GLA) shares responsibilities with the London Boroughs in the areas of economic development transport, health, police, fire and emergency planning, environment, including waste and climate change, culture, housing and planning.
Councils provide over 700 services altogether. Most services are mandatory (their performance is a duty by law), such as operating an alcohol licensing regime under the Licensing Act 2003. Some mandatory functions are tightly controlled by central government, resulting in a similar level of service across the country (e.g. the administration of housing benefit). Other requirements such as the library function leave councils with some discretion over the level and type of service they provide. Some council services and functions are discretionary. They range from large economic regeneration projects to the removal of wasp nests. Councils have a general power to charge for discretionary services; they can also charge for arts and entertainment activities, sport and recreational facilities.
In parallel, further authorities operate and provide services at the local level, each with different relationships with local authorities, e.g. the National Health Service, Fire and Rescue Authorities, National Park authorities etc. With regard to the components (precepts) of council tax levied and redistributed to other agencies or authorities, it should be noted, that Police and Fire and Rescue services are precepting authorities whilst the National Health Service is not.
For England, the latest Localism Act (2011) introduced novelties in three main policy areas:
Local government and communities- the general power of competence for local authorities and the community rights (Community Right to Build, Right to Bid and Right to Challenge);
Planning reforms including changes to planning enforcement rules
Housing reforms including reforms to social housing tenure and council housing finance.
Through the Localism Act 2011, Councils were given a “General Power of Competence” allowing them to do “anything that individuals generally may do”. This does not overrule specific legislative curbs on local authority powers contained in other Acts of Parliament, but is intended to clarify potential grey areas where it is unclear if local authorities have the power to undertake certain functions and activities. Thus, the “general power” can only be used to do something which is not already covered by any other statute. By consequence, functions already regulated by statute, such as education, housing and homelessness and highways, can be carried out with only limited discretion.
Guidelines and directives from Ministers are frequent. Very often enabling legislation, i.e. secondary legislation and guidance is used. Many interlocutors provided the Rapporteurs with practical examples for detailed regulations and instructions, such as how often local news is to be published and how often rubbish has to be collected. They criticised these regulations as the manifestation of an attitude of paternalism and mistrust vis-à-vis local authorities.
Consultation
The time-frame is not established in a general way and for all cases, but depends on the concrete subject, in particular on the nature and the possible impact of a proposal. Thus, the period for consultation varies and might range from 2 to 12 weeks (compared to a general period of 12 weeks under the previous government). This uncertainty and time-constraints due to the – possible – short
page 165 / 796 duration of the consultation period might make forms of participatory democracy within the local authority concerned difficult.
Scotland
The powers of the 32 unitary local authorities in Scotland are conferred by statute and include mandatory powers (providing schooling for 5-16 year olds and social work services), permissive powers (economic development, recreation services), and regulatory powers (trading standards, environmental health and issue licences for taxis and public houses). However, in reality, the distinction between mandatory, permissive and regulatory powers is far from clear cut because specific pieces of Scottish legislation sometimes also require local authorities to have a supporting, complementary or supplementary role to that of the Scottish Government.
Scottish Councils deliver a wide range of services to their area; these include housing, local public transport and roads, social work, education for 5-16 year olds, certain social services, power to advance well-being, leisure, parks and recreation, culture, libraries, museums, waste management, environmental protection, health and public safety, licensing, consumer protection, community planning and control, economic development and regeneration, registration (electoral registration) and elections.
Regional bodies covering more than one council area continue to deliver some services, such as health, which remains a national government competency managed through regional structures. However, in practice, statutory functions for local government remain defined through a vast and scattered array of legislation which has never been codified. The Scheme of Delegation and Administration used by many councils cover over 100 separate pieces of legislation that either confer powers or impose duties upon them and some of which are over 200 years old. These lists are also constantly evolving to reflect the new provisions passed by the Scottish Parliament.
While devolution has led to greater influence and access for local government and allowed for partnerships of interest with the Scottish government, it has not led to further decentralisation of power to local government, and has been argued by some to have reduced the importance and powers of local government. Since devolution, there has been an increase in the concentration of public services. The Labour and Liberal Democrat governments of 1999 and 2003 removed criminal justice from local government and some transport functions (while delivery of services remained local). The 2011 SNP government removed police and fire services. COSLA criticises a strong centralisation agenda of the Scottish government pointing to the creation of single Police and Fire Services (April 2013) as an illustrative example, as these services were previously accountable to, and funded through, local government. This has been strongly criticised by many interlocutors as unnecessary centralisation. The Scottish Government underlined that its policy has been to strengthen the connection between services and local communities through a new, formal relationship with each local authority and, additionally, through the Community Planning Partnership approach (for the connection with the new Fire and Police services).
Public service reform in Scotland
The Local Government in Scotland Act (2003) provides a framework for the delivery of public services introducing three elements which are particularly important for their improvement:
Best Value: The Act places a statutory duty upon local authorities to secure Best Value (by examining how services are delivered and ensuring the most effective and efficient means of delivery);
page 166 / 796 Power to Advance Well-Being: Local authorities have the discretion to do anything they consider likely to promote or improve the well-being of the area and/or people within that area, provided it is not prohibited by legislation. The Guidance on the Act suggests a number of ways in which this power may be used;
Community Planning: The Act places duties on local authorities to initiate and facilitate Community Planning, involving other public, private and voluntary sector partners in the process. It places a duty on Scottish Ministers to encourage community planning.
The focus on fostering innovative practices for the delivery of public service continued with the signature of the Concordat 2007 between the Scottish Government and COSLA. This Concordat created at the time a new culture of mutual accountability across public services for the outcomes that are delivered locally.
On the local level, Community Planning Partnerships (CPPs) are statutory bodies under the Scottish local government law bringing together public bodies, voluntary organisations and businesses to agree on strategic priorities for their area, showing how those outcomes will contribute to the Scottish Government's overarching National Outcomes. CPP arrangements are unique in a European context because they are not just consultative processes, but provide community representatives with a direct role in deciding how key local policies are implemented in the area. CPPs were recently reviewed in a “Statement of Ambition” agreed between COSLA and the Scottish Government in April 2012. According to the agreement, new statutory provisions will ensure that all public services and not just local government are required to actively take part in the process (overcoming a weakness in the original design).
Single Outcome Agreements (SOAs) are an important part of community planning and focus on the outcomes of public service delivery at local level. Each Community Partnership agrees a Single Outcome Agreement based on 15 key national outcomes using a range of national and local indicators while establishing priorities and use of resources that reflect local circumstances and needs. The Scottish Government and local authorities are equal parties to the SOA and to some extent can hold each other to account for the delivery of specific commitments. The Government considers SOAs as an alternative to ring-fenced conditions.
The Scottish Government intends to give legal foundation to some forms of civic or community engagement in the forthcoming Community Empowerment (Scotland) Bill. The Scottish Government and COSLA agree that people should become increasingly engaged in co-producing services or supporting them to take control of local services and assets.
Consultation
The Scottish Government regularly consults local government, both in terms of drafting policies (Green and White Papers) as well as legislation. Consultation takes different forms, such as public consultation, bilateral meetings, task forces and conferences (either bilateral or with a range of stakeholders). For example, these might be used to formulate a Scottish position on UK or EU legislation, oversee intergovernmental discussions, or monitor legislation and programmes. In spite of existing good practice, local government does not enjoy consultation as a legally defined right. Arrangements emanate instead from non-binding guidance and best practice guidelines at ministerial and civil service level (although some issues like renewable energy and planning do require statutory consultation before change, including with some local authority associations). Consultation is highly variable in terms of the level, the range of issues, and the degree to which it is binding. As a result, consultation with local government can be ad hoc or fail to have an influence on the Scottish government. For major policy changes, the general 12 week consultation period (which
page 167 / 796 mirrors the UK Government’s standard public consultation period) can also be too short (or include holidays, meaning that local government has to anticipate changes well ahead of formal consultation.
Wales
The general power of competence for local authorities in England, provided for in the Localism Act 2011, does not extend to Welsh local authorities for whom the powers granted under the Local Government Act 2000 remain in place.
Local authorities in Wales are responsible for developing, planning and providing a wide range of statutory and discretionary services. They lead local partnerships through Community Strategies, Local Service Boards and other formal arrangements. Certain services, such as education, must be made available according to duties set out in Welsh and UK legislation. Some elements of other services, such as housing standards, transport and highways, environmental health, leisure and tourism, housing and social services, are provided at the discretion of individual authorities.
However, the WLGA is critical of the regulatory impact assessment and the process for assessing the impact of new responsibilities under the new primary law-making powers. The impression is that the Welsh Government exercises these powers without much strategic oversight, placing duties on councils that have financial consequences. However, planning policy is largely devolved. Overall, this results in a fragmented, case-by-case approach to decision-making.
In terms of efficiency, the efforts of local authorities in Wales to improve performance and management structures has been driven in recent years by the Wales Programme for Improvement (WPI), introduced in Wales in 2002 as statutory guidance to local authorities on how they should discharge their Best Value duties. Greater flexibility for local authorities was introduced in 2005 with the statutory guidance that was issued in that year. The WPI evolved further with the introduction of the Local Government (Wales) Measure 2009.
Northern Ireland
Northern Ireland councils’ powers and duties include direct, representative and consultative functions. Direct functions enable councils to provide public services in areas such as: recreation, environmental health, waste management, street cleansing, tourism, economic development, consumer protection, the enforcement of building regulations, provision of cemeteries, the issuing of miscellaneous licences, dog control.
Representative functions permit councils to nominate representatives in various statutory bodies established to administer regional services such as education, library, health, drainage and social services, and fire protection. Consultative functions allow councils to represent the views of their population on the way in which regional services are operated throughout each district. The consultative role covers centrally administered functions such as planning, roads, water and conservation. District councils are to be consulted - either by statutory obligation or by voluntary agreement - regarding proposals which affect their area.
The current 26 councils can only take action within the framework provided for in the statute. This framework sets out the duties, functions and responsibilities of councils which may be either mandatory or discretionary. Legislation recently introduced in the Northern Ireland Assembly will provide the new councils, to be established from 1 April 2015, with a general power of competence. This power will enable a council to take any action unless there is a law which expressly prohibits the proposed action.
page 168 / 796 Since the re-organisation of local government in Northern Ireland in 1972, planning has been carried out at central government level with local councils being consulted. After the announcement of a major reform programme for the planning system in Northern Ireland, the Northern Ireland Executive had agreed upon reform proposals in February 2010 and planning powers should have been transferred to local authorities on 1 April 2015. Applications for development in the council area were to be decided by local planning officers working in the 11 new councils; councils were also be responsible for developing an area plan for their area allowing residents of the same area to play a key role. Only key strategic planning applications should have remained with planners in the core Department. However, on 23 October 2013, Northern Ireland Environment Minister Durkan announced that he will not proceed with the Planning Bill currently before the Assembly because of legal concerns regarding amendments to the Bill in June; the Bill is thus blocked. Provisions in the Planning Act (Northern Ireland) 2011 (which has already been passed by the Assembly) will allow for the transfer of the majority of planning functions to local councils.
A new statutory duty of community planning is to be introduced in April 2015 in order to promote the development and implementation of a shared vision of councils, statutory bodies and the community sectors and voluntary sectors through a process of cooperation. Northern Ireland Executive agencies and departments will participate in these community planning partnerships. The aim is to create a shared understanding of local issues for better coordination of service delivery and sustainable development.
In Northern Ireland, most administration is undertaken by boards, notably Housing Councils, Health Boards and Trusts, Youth and Labour Services, education and library boards. These are currently appointed by the Northern Ireland Executive with representatives from local government; however, usually the elected representatives are left in a minority-position in the boards. Some interlocutors have pointed to the fact that these agencies (“Quangos”) with nominated joint boards are not included in the Local Government Bill, which could be useful in order to strengthen the elected components in the boards.
Conclusions as regards compliance with Article 4
Although local government certainly has discretion to exercise its functions, the ability of local authorities to discharge their responsibilities sometimes appears to be highly restricted by central government. Guidelines and directives from Ministers are frequent. According to many interlocutors, this is due to the centralist culture of governance across the UK as well as to a certain level of mistrust vis-à-vis local authorities. This is reflected in citizen disinterest and belief that most (important) decisions are anyway taken in London by central government. England is often called one of the most centralised states in Europe with comparatively little autonomy at local government level. Perhaps surprisingly, COSLA comments on the situation in Scotland in almost identical terms: “Scotland is one of the most centralised countries in Europe.” The situation in Wales also shows that local government risks remaining subject to detailed intervention by the devolved government. In Northern Ireland, the effects of the reform will show whether the influence of “Quangos” can be reduced. In the Rapporteurs’ opinion, their relations with local government ought to be included in the Local Government (reform) Bill.
The rapporteurs consider that the system is overall in compliance with Article 4; however, they recommend a reduction of governmental powers in all four entities to remove unnecessary burdens from local authorities and to strengthen their autonomy.
Regarding consultation of local government, again there is general compliance with the requirements of Article 4. That being said, the rapporteurs would suggest that the relations between the respective governments and local authorities would generally benefit from more
page 169 / 796 institutionalised, uniformly (time-)framed and legally guaranteed consultation arrangements for local government. In particular, any time-frame given should take into account the necessity or opportunity for local authorities to consult their local population, at least regarding important issues.
Article 4.2 Scope of local self government
Local authorities shall, within the limits of the law, have full discretion to exercise their initiative with regard to any matter which is not excluded from their competence nor assigned to any other authority.
Albania [Article ratified - Report adopted on 31 October 2013 ]
Albanian legislation (Law No. 8652) provides that LGUs have full discretion to exercise their own competences and take decisions on matters that are not prohibited for them by legislation. Albania has two tiers of LGUs. The system of village boards and town boroughs allow true proximity with the citizens. Therefore, it can be said that the Albanian system of local government formally corresponds to the requirements paragraphs 2 and 3 of Article 4 of the Charter.
Andorra [Article ratified - Report adopted on 28 March 2018 ]
As for Article 4, paragraph 2 of the Charter, according to which “Local authorities shall, within the limits of the law, have full discretion to exercise their initiative with regard to any matter which is not excluded from their competence nor assigned to any other authority”, the Qualified law on local competences states that the competences neither assigned nor delegated to the municipalities belong to the State (Art. 3.3). Nevertheless, in practice Comuns seem to be free to address other needs of their population. Rapporteurs were told that municipalities assumed new competences outside the listed matters, for example for elderly people or preschools. No complaints have been raised by local authorities on their scope of competences during the meetings.
Armenia [Article ratified - Report adopted on 15 June 2021 ]
Article 4.2
2 Local authorities shall, within the limits of the law, have full discretion to exercise their initiative with regard to any matter which is not excluded from their competence nor assigned to any other authority.
156. This paragraph refers to the local governments’ right to undertake voluntary tasks, if they have sufficient capacity for doing so.
157. As explained in point 3.1.5.2. of this report, in Armenia, there is the legal right for municipalities to undertake voluntary tasks, if they do not fall within the scope of responsibility of other public authorities, and the fulfilment of voluntary tasks cannot endanger the performance of compulsory and delegated functions. In fact, communities are generally empowered by the LGA to undertake tasks of local interest.
page 170 / 796 158. So, this principle of the Charter is implemented, even if mostly only on paper, since the vast majority of communities, considering the lack of adequate resources and capacity, are not in a position to undertake non-mandatory tasks and functions. The formal implementation of this point is therefore justified by the rapporteurs, despite the lack of progress in this area compared to the experiences of the previous monitoring procedures.
Austria [Non ratified - Report adopted on 28 September 2020 ]
In accordance with Article 12.2. of the Charter, Austria has not declared itself bound by this provision.
The explanatory report of the Charter indicates that “in addition to the responsibilities assigned by legislation to specific levels of authority, other needs or possibilities for action by public bodies may present themselves. Where these fields of action have local implications and are not excluded from the general competence obtaining in most member states, it is important to the conception of local authorities as political entities acting in their own right to promote the general welfare of their inhabitants that they have the right to exercise their initiative in these matters”.
Pursuant to Articles 10 to 15 and 118, B-VG, in Austria, the allocation of legislative powers is exclusive: either the Federation or the Länder may regulate, implement and/or execute in the public interest, in different areas, as decided by the constitutional law (and its subsequent legal texts).
Pursuant to Article 116.2, B-VG, municipalities are independent economic entities, and have, as indicated by Article 118.1, B-VG, their own sphere of competence and one assigned to them either by the Federation or the Land. As such, municipalities enjoy some (residuary)55 powers, as indicated, inter alia, by Article 85 (Constitution of Burgenland), Article 58 (Constitution of Lower Austria), Article 66 (Constitution of Upper Austria), Article 51 (Constitution of Salzburg), Article 74 (Constitution of Tyrol), and Article 74 (Constitution of Vorarlberg).
Azerbaijan [Article ratified - Report adopted on 17 June 2021 ]
As the explanatory report to the Charter suggests, Article 4.2 entails an understanding of local government according to which “local authorities”25 are “political entities acting in their own right to promote the general welfare of their inhabitants” and therefore “they have the right to exercise their initiative in these matters”. This means that in principle municipalities should have “the right to exercise their initiative on matters not explicitly excluded from their competence by law”, as further explained by the Contemporary Commentary (Paragraph 57).
This is not the situation in Azerbaijan, where there is nothing like a clause of general competence for municipalities. Their competences are listed in legislation and, as described above, severely limited in practice, to an extent that de facto no single function of municipalities is exclusive. Furthermore, from a legal point of view, it must be noted that since the local executive authorities are responsible for the implementation of decisions and policies of the central government and the President of the country has the power to define the competences of local executive authorities, the limits of municipal powers laid down in legislation might be influenced in practice by executive power.
This makes the current legal and factual situation not compatible with the obligation set by Article 4.2 of the Charter.
Belgium [Article ratified - Report adopted on 15 October 2014 ]
page 171 / 796 Flemish Region (Vlaanderen)
With regard to Article 4.2, the Rapporteurs point out that, before 2012, certain principles of local self- government seemed to require a revision of the law, especially with regard to the clarification of powers in the case of the provinces, the strengthening of local democracy and the management of the local and provincial administrations, as well as the modernisation of the administrative system. The Government, through its 29 June 2012 amendment of the Municipal Decree, the Provincial Decree and the Decree on the social services centres, has taken account of all these changes and improvements.
The municipalities play a key role in the internal reform of the state in Flanders and are being allocated more powers. The Flemish government believes it is necessary to simplify the levels of administration in order to make the authorities operate more efficiently and more effectively. Moreover, quality agreements concerning the tasks to be performed should be reached with the local and provincial administrations to ensure that the number of levels of administration involved for each policy sector is reduced to a maximum of two.
The internal reform of the state in Flanders also comprises a new view of the position of the provinces in the Flemish administrative organisation and places the emphasis both on the municipalities and on the Flemish Authority. As the basic unit of government, the municipalities should be considerably strengthened and benefit from a maximum of room for political manoeuvre. As the intermediate tier of government, the provinces are positioned between the municipalities and the Flemish Authority. In matters relating to land use, provinces retain an open remit; in matters not connected with land use, since 1 January 2014, they may only carry out functions if they have been devolved to them under an explicit statutory provision or decree. In a management agreement concluded between the Flemish government and each of the provinces, agreement was reached on how the provinces can, in the interests of efficient and effective public administration, translate into action the responsibilities allocated to them by means of a decree.
Walloon Region and German-speaking Community
The provinces of Wallonia have complete discretion within the framework of the law to carry out their initiatives in matters of provincial interest. At the same time, the municipal council deals with all matters of municipal interest. It deliberates on any other issue submitted to it by the higher authority (Article L1122-30 of the Code of Local Democracy and Decentralisation). This right is, however limited by the supervisory authority, as provided for in the legislation.
The Walloon Region is therefore responsible for the organisation of the local authorities, including the municipalities, the agglomerations and federations of municipalities, the intermunicipal partnerships and the intramunicipal territorial bodies. At the same time, the regions are responsible for the political organisation of the provinces, especially the composition, powers, operation and funding of the local authorities, as well as for organising supervision, establishing the electoral rules and, finally, determining the conditions of service of local authority staff. The regions can also, in accordance with the law, increase the number of or merge municipalities.
Brussels-Capital Region
With respect to paragraph 2 of Article 4, taken in conjunction with paragraph 6, the AVCB indicated its concern regarding the government’s proposed new housing code, brought before parliament without any prior consultation with local authorities, which constitutes a further blow to local self- government. This code provides, amongst other things, that public housing managed by Social Services Centres (Centres publics d’action sociale, CPASs) or by municipalities can be allocated by
page 172 / 796 CPAS councils or municipal executives only with the consent of an independent commission. A draft regional government order provides that no politicians can sit on this commission. In other words, it is civil servants who will make up such bodies. It is a worrying trend in terms of democracy that decisions are now being taken not by elected political authorities but by unelected individuals.
Bosnia and Herzegovina [Article ratified - Report adopted on 31 October 2019 ]
Consult reply indicated at article 4.1
Bulgaria [Article ratified - Report adopted on 21 January 2021 ]
Article 4.2
1. It is important to the conception of local authorities as political entities acting to promote the general welfare of their inhabitants that they have the right to take initiatives on matters not explicitly excluded from their competence by the law29.
1. In Article 21(2) of the LSGLA, it is provided that the municipal council can “resolve other issues of local importance that do not fall within the exclusive competence of other bodies”. According to interlocutors representing local authorities, however, the case-law shows that there are many cases of repeal of municipal ordinances or part of their texts due to the lack of an explicit legal delegation for regulation through local ordinances of the respective issue. Moreover, these interlocutors complained about the extensive State regulation of different fields of action that would barely leave any margins for local statutes and initiatives. In fact, this kind of critique emerges in many European countries, due to the tendency of domestic legislators to regulate even the details in many policy fields and, in addition, to introduce several controls and requirements for previous State approvals that suffocate local initiatives. But this is a common problem that does not seem to have extraordinary dimensions in Bulgaria; moreover, the rapporteurs had the impression that it would rather be the lack of resources that would frustrate local initiatives. Their conclusion is, therefore, that Article 4.2 is respected in Bulgaria.
Croatia [Article ratified - Report adopted on 20 October 2016 ]
As regards Article 4 paragraph 2 Croatian legislation is fairly silent on the right of local authorities to exercise initiatives on the matters which are not excluded from their competences nor assigned to any other authority. However Article 19 of the Law on Local and Regional Self-Government stipulates “The special laws regulating particular activities as per Paragraph 1 of this Article shall determine the tasks, the performance of which by a local self-government unit shall be obliged to organize, as well as the tasks a local self-government unit may perform, if it has ensured the conditions for their performance” (Paragraph 1 provides a list of tasks which the local self-governing unit has responsibility for). This means that local authorities have the right to implement own initiatives only when a specific legislation adopted by the central government bodies allows it. Such strict regulation partially coincides with the requirements of Article 4 paragraph 2 of the Charter as it gives hypothetical right but not discretion to local authorities for implementation of own initiatives with regard to any matter which is not assigned to any other authority.
The rapporteurs therefore conclude that Croatia partially conforms to Article 4 paragraph 2.
Cyprus [Article ratified - Report adopted on 20 October 2016 ]
page 173 / 796 See answer at article 4.1
Czech Republic [Article ratified - Report adopted on 8 March 2012 ]
The same goes for the requirement about full discretion within the limits of the law according to Article 4 (2) of the Charter. As to the proper powers of local and regional authorities, there is not much to be added. When it comes to the powers delegated by law to a limited number of bigger municipalities and to the regions, on the other hand, the scope of discretion is generally much more limited. But the fact that Article 4 para. 1 explicitly opens up the way for the attribution of powers and responsibilities for specific purposes in accordance with the law, is but one of the elements that indicate that limited discretion in the execution of such functions is not in itself contrary to the obligations undertaken by the Charter (see further under Article 4 (5) of the Charter).
Denmark [Article ratified - Report adopted on 31 October 2013 ]
Consult reply indicated at article 4.1
Estonia [Article ratified - Report adopted on 29 March 2017 ]
For the representatives of the associations and local authorities a key focus was the conformity of Estonian practice with Article 4, paragraph 2, of the Charter. In this respect, the rapporteurs believe that there could be room for improvement in Estonian legislation and practice. Different factors combine to limit “the full discretion of local authorities to exercise their initiative”. As mentioned above, a clear distinction between state and local affairs is missing. Secondly, bearing in mind that the state is currently streamlining the organisation of services of public interest at central level, local authorities expressed their concern that this would put an extra financial burden on local citizens and worsen the local business and living environment. Some examples have been presented to the rapporteurs: with respect to the reorganisation of driving education centres, the number of units throughout the territory was reduced from 15 to 4. Such a measure is cost effective for the state but more expensive and time consuming for citizens. This would reduce the financial capacity of families and the discretion of local authorities to increase local taxes. Thirdly, Estonian local authorities are largely dependent on state budget allocations; their own resource potential is far too small to execute their tasks under Article 4, paragraph 2, of the Charter. The rapporteurs consider that Estonia is not in conformity with this provision.
Finland [Article ratified - Report adopted on 28 March 2017 ]
Consult reply indicated at article 4.1.
France [Article ratified - Report adopted on 22 March 2016 ]
Consult reply indicated at article 4.1
Georgia [Article ratified - Report adopted on 7 November 2018 ]
According to Article 75, paragraphs 2 and 3, of the constitution, a self-governing unit shall: 2. … have the right to make decisions on its own initiative on any issue which does not fall within the exclusive authority of state authorities or the Autonomous Republics and the decision of which is not excluded by law from the authority of a self-governing unit. 3. … exercise its powers independently and on its own responsibility, within the scope of the legislation of Georgia. The powers defined by
page 174 / 796 the organic law shall be full and exclusive.
Besides these constitutional provisions, a general clause on municipal competence has been introduced, and thus the principles of own responsibility and discretion to exercise initiative in local affairs are enshrined in the Code.
Georgia therefore complies with Article 4, paragraph 2, of the Charter.
Germany [Article ratified - Report adopted on 14 March 2012 ]
Consult reply indicated at article 4.1
Greece [Article ratified - Report adopted on 26 March 2015 ]
Consult reply indicated at article 4.1
Hungary [Article ratified - Report adopted on 12 February 2021 ]
As for Article 4, paragraph 2 of the Charter, according to which “Local authorities shall, within the limits of the law, have full discretion to exercise their initiative with regard to any matter which is not excluded from their competence nor assigned to any other authority”, in Hungary local authorities can provide optional tasks, i.e. tasks which are not required by acts.
The main aim of local government is the fulfilment of the mandatory tasks; municipalities can provide the optional tasks only if strict legal conditions are met. Firstly, only local public affairs may be performed as an optional task. Municipalities can perform such a task, which does not belong to the responsibility of the central government69.
Municipalities may freely undertake optional tasks determined on the basis of the population’s requirements and the availability of financial resources, but voluntarily undertaken local public affairs cannot endanger the fulfilment of obligatory local government tasks and powers prescribed by the law, and they can be financed by the municipality’s income or by separate resources set aside for this purpose.
During the monitoring visit the delegation was informed that, in practice, it is almost impossible for local government, especially for small municipalities, to undertake optional tasks, considering the limited financial resources. In this respect, as on many other issues, an enormous difference exists between the bigger towns and the small villages.
The competences of the counties are even more limited. They are not empowered by a “general competence”. Their tasks are limited to territorial development, as stated in Article 27.1 pf the Cardinal Act on Local Self-Government. Moreover, rapporteurs were informed that the county self- governments are totally ignored in practice even with regard to their only field of competence, the development policy. The counties have no formal decision-making power, only preparatory and advisory tasks in the distribution of EU subsidies. The role of intermediary and management bodies lies with the central government.
Therefore, the rapporteurs consider that Article 4, paragraph 2, is not respected in Hungary.
Iceland [Article ratified - Report adopted on 29 March 2017 ]
page 175 / 796 As for Article 4, para. 2 of the Charter, according to which “Local authorities shall, within the limits of the law, have full discretion to exercise their initiative with regard to any matter which is not excluded from their competence nor assigned to any other authority”, this principle seems to be fully accepted in Iceland. Article 7, paras. 2 and 3 of the Local Government Act provides that “2. Municipalities shall work for the common welfare of their residents to the extent they consider practicable at any given time. 3. Municipalities may undertake any task relating to the residents of the municipality, providing it is not assigned to others by law”.
Ireland [Article ratified - Report adopted on 31 October 2013 ]
Consult reply indicated at article 4.1
Italy [Article ratified - Report adopted on 18 October 2017 ]
Consult reply indicated at article 4.1
Latvia [Article ratified - Report adopted on 27 March 2018 ]
Consult reply indicated at article 4.1
Liechtenstein [Article ratified - Report adopted on 28 March 2018 ]
Paragraph 2 of this Article refers to the freedom of local authorities to deal voluntarily with any matter of local interest which does not belong to the exclusive competence of any other public authority. As mentioned above (see paragraph 31), the Liechtenstein municipalities can avail themselves of this freedom, which is largely facilitated by the positive financial situation of most local authorities.
Lithuania [Article ratified - Report adopted on 6 November 2018 ]
Consult reply indicated at article 4.1
Luxembourg [Article ratified - Report adopted on 21 October 2015 ]
Consult reply indicated at article 4.1.
Malta [Article ratified - Report adopted on 29 March 2017 ]
According to Article 4, paragraph 2 of the Charter, local authorities must have full discretion, within the limits of the law, to exercise their initiative with regard to any matter which is not excluded from their competence nor assigned to any other authority.
Apart from the inability of local councils to impose and collect taxes, as well as secure their own financial resources, which essentially affects the local councils’ ability to exercise their initiative effectively with regard to matters which are included in their competence, the wording of the Local Councils Act does not restrict local councils from undertaking initiatives when performing their functions or for the purpose of executing their functions. Nevertheless, during the monitoring visit the delegation was informed that partially due to the local councils’ financial dependence on the government and partially due to the fact that prior to undertaking any initiative local councils seek government approval, it seems that in practice local councils do not exercise full discretion in
page 176 / 796 undertaking initiatives nearly of any nature, even for small tasks within their sphere of competence. Instead, the prior approval or notification of the central government or the competent national authorities is sought.
Hence, despite the wording of the Local Councils Act and the inexistence of legislative impediments limiting local councils’ discretion to exercise their initiatives, the practice followed by the local councils suggests that the local councils do not actually have full discretion to exercise their initiative with regard to matters which are not excluded from their competence nor assigned to any other authority. Consequently, the Republic of Malta is not in conformity with Article 4, paragraph 2 of the Charter.
Monaco [Article ratified - Report adopted on 28 March 2018 ]
Consult reply indicated at article 4.1
Montenegro [Article ratified - Report adopted on 21 October 2015 ]
Regarding Article 4, paragraph 2, the Law on Local Self-Government ensures the status of a legal entity to municipalities that shall accordingly have their own statutes and other general acts. The Municipality shall also perform affairs that are transferred to it by law or entrusted by means of a Government’s regulation. The Municipality may also perform other affairs of interest for the local population that do not fall within jurisdiction of State authorities or other bodies and organisations. The interpretation seems to be that the interest of the local population serves as the triggering point for tasks falling within the competence of local self-government. In the absence of laws transferring the competence to other authorities, the municipalities have the right to decide that it should be for them to provide the service or otherwise to make decisions on the respective matter. This rule is reiterated by Article 33(10) that gives municipalities the right to “perform other affairs in accordance with the needs and interests of the local population”. Despite a normative compliance with this provision it appears that in practice there is a problem as regards the process of fiscal decentralisation in Montenegro which is closely related to the precise definition of municipal tasks or competences, namely concerning the competences in education and healthcare and the financial situation of municipalities. This is a question that will be developed in the analysis of Article 9 of this report.
Netherlands [Article ratified - Report adopted on 26 March 2014 ]
Consult reply indicated at article 4.1
North Macedonia [Article ratified - Report adopted on 26 February 2013 ]
Consult reply indicated at article 4.1
Norway [Article ratified - Report adopted on 26 March 2015 ]
Consult reply indicated at article 4.1.
Poland [Article ratified - Report adopted on 2 April 2019 ]
As for Article 4, paragraph 2 of the Charter, according to which “Local authorities shall, within the limits of the law, have full discretion to exercise their initiative with regard to any matter which is not
page 177 / 796 excluded from their competence nor assigned to any other authority”, the Polish Constitution establishes a general residual clause of competence.
According to Article 163 of the Constitution, “Local government shall perform public tasks not reserved by the Constitution or statutes to the organs of other public authorities”; according to Article 164.3, “The commune shall perform all tasks of local government not reserved to other units of local government”. In the legislation, a general residual competence clause does exist for municipalities (Article 6.1 of the Law on Municipal Self-Government), whereas powiaty only have enumerated competences.
It should also be mentioned that Article 87.2 of the Constitution states that «Enactments of local law issued by the operation of organs shall be a source of universally binding law of the Republic of Poland in the territory of the organ issuing such enactments».
Despite this ambitious constitutional and legislative framework, the actual practice is significantly different. The delegation was informed that, absent an express assignment of competence by the law, it is possible for acts of municipalities to be challenged by the voivodes.
An example was presented by the Capital City of Warsaw, concerning the issue of the sterilisation of cats and dogs. The City started a free program of sterilisation not limited to stray cats and dogs, but also open to owners of house pets. The voivode stopped this program, with the argument that according to the law, free sterilization and castration should be limited to homeless animals. Warsaw authorities challenged the decision of the voivode in court but lost in the first instance. They then appealed to the Supreme Administrative Court, which overruled the judgment of the court of first instance and the supervisory decision of the voivode, stating that “It can be [...] considered that the commune should undertake any measures preventing the homelessness of animals as part of the implementation of the obligatory task of maintaining cleanliness and order in communes”. However, in the meantime, the Law on the Protection of the Animals was amended. A new provision was introduced in Article 11.1, according to which “Preventing the homelessness of animals and providing care to homeless animals and catching them falls within the municipality's own tasks”. It was also specified that this task may include a plan for the sterilisation or castration of animals in the municipality, in full respect of the rights of the owners of the animals or other persons entrusted with the care of the animals.
In fact, the example from the Capital City of Warsaw exemplifies a wider issue: notwithstanding the general residual clause, municipalities cannot exercise competences that are not expressly assigned by law. Therefore, the rapporteurs consider that Article 4, paragraph 2 of the Charter is not satisfied in practice in Poland.
Portugal [Article ratified - Report adopted on 28 September 2020 ]
The principle of state unity and the principle of respecting the system of sharing responsibilities between the State and local authorities in the area of public investments constitute a restriction on the autonomy legally granted to local authorities. The municipalities have assumed their responsibilities for mandatory spheres of competence but remain very reluctant over the idea of taking charge of other public policies, owing to the lack of a financial guarantee. The lack of an intermediate level, owing to the fact that the regions provided for in the Constitution have remained hollow constructs in practice, leaves the following powers (which should have been regionalised) without a home:
economic and social development, planning,
page 178 / 796 environment, social facilities, communications networks, education and vocational training, culture and heritage, youth and sports, tourism.
The rapporteurs noted that the municipalities could delegate some of their powers to parishes and join forces in associations. In the absence of a regional level, there is still territorial cohesion between districts and the State, to ensure that local action plans are in line with national plans. The autonomy of Portuguese municipalities is therefore relative: without autonomous territorial co- ordination via regions, they cannot perform their public action efficiently and, accordingly, remain dependent on the State, notably to obtain the funding needed for their functioning.
The rapporteurs consider that Article 4 paragraph 2 of the Charter is therefore generally complied with in spirit but could be applied more rigorously in practice.
Republic of Moldova [Article ratified - Report adopted on 4 April 2019 ]
According to the information collected by the delegation, Moldovan local authorities do not enjoy full discretion to exercise their initiative “with regard to any matter which is not excluded from their competence nor assigned to any other authority”. Local authorities are supposed to act strictly within the domains and spheres where the law has attributed competences to them. Furthermore, the lack of operational capacity of most Moldovan local authorities prevents them from exercising new or innovative actions outside the circle of competences identified in the law.
In the light of the above, the rapporteurs consider that the Republic of Moldova does not comply with Article 4.2 of the Charter.
Romania [Article ratified - Report adopted on 3 March 2011 ]
Article 4(2) of the Charter has been adopted in Article 5(2) of Law no. 215/2001.
Russian Federation [Article ratified - Report adopted on 30 October 2019 ]
Consult reply indicated at article 4.1
San Marino [Article ratified - Report adopted on 28 March 2018 ]
In San Marino, the basic responsibilities and tasks of local government are prescribed by law (Art. 4 paragraph 1 of the Charter). The legislation of the country does not however include a general competence (Art. 4 paragraph 2 of the Charter) for townships (Art. 1 paragraph 2 of Law 127/2013 cannot be interpreted in that sense, since it refers only to the “territory”, not to “affairs” thereof and to a corresponding competence of townships).
The current situation in San Marino is also incompatible with Article 4 paragraphs 3 and 4: Public responsibilities are not exercised, in preference, by those authorities which are closest to the citizen (Art. 4. Paragraph 3). On the contrary, nearly all public responsibilities are exercised by the central state authorities. In San Marino there are certainly well-founded considerations for exercising many public responsibilities at the level of the state, since this country is very small and there are
page 179 / 796 overriding considerations of efficiency and economy. After all, efficiency of public administration is also a constitutionally enshrined principle (Art. 14 paragraph 1 of the Declaration). However, this does not offer sufficient grounds for concentrating nearly all public responsibilities at the level of the state and excluding municipalities from decision-making powers (apart from a very small number of exceptions). Finally, even the extremely restricted powers of local government are not full and exclusive (Art. 4 paragraph 4 of the Charter).
As regards the right to be consulted (Art. 4, paragraph 6, Art. 5 and Art. 9, paragraph 6 of the Charter), domestic legislation includes a series of consultation procedures which have already been analysed in other parts of this report (see above). For instance, the Captains Regent, at the beginning of their term of office, meet the Mayors of the townships (Art. 29: “Conferenza dei Capitani di Castello”). There is a procedure of consultation for the state budget (Art. 24 of law 127/2013), a procedure of consultation for public works (Arts. 31 and 32 of the law), there are several consultative tasks and obligations (e.g. submitting an opinion within 30 days whenever requested to do so by the relevant public service (Art. 23 paragraph 5 of the law) and there is also the obligation of public administration services to respond to requests from the townships within 90 days (Art. 25 of the Law).
During the monitoring visit, however, several interlocutors from the townships complained that these rules and procedures were not respected. In fact, public offices do not answer within 90 days (actually, they usually do not answer at all) and the procedure of the public works’ list is not implemented according to the law. A Mayor complained that she had been asking the state authorities to do something to repair a ramp for disabled persons in front of her town hall for more than a year but nothing had happened and she hadn’t even received an answer to her written query. In the township of Borgo Maggiore, the interlocutors said that this year, the mayors decided not to prepare a list of public works in June in accordance with the law and instead held a press conference to against the persistent practice of central government of ignoring the list and the proposals of the townships. Many mayors are allegedly tired of reiterating exactly the same problems and claims every six months to every new pair of Captains Regent who receive them when they take up office.
Some ministers challenge these claims by the townships. For instance, the Minister of Territory, Environment, Agriculture, Tourism and Civil Protection stressed the fact that the Mayors of townships meet every month for consultation (Art. 30: “Consulta delle Giunte di Castello”) and they invite representatives from the responsible Ministries and other public offices who participate in these meetings. Furthermore he emphasized that the local Capitano (Mayor) is a member of the Environment Committee in his own Ministry, with the right to vote. The Committee Chair is the Minister himself and he allegedly always consults the Mayor first when a local project is coming up for discussion. If the Mayor rejects the project, the Ministry’s plan is suspended.
To sum up, the rapporteurs conclude that San Marino does not comply with Article 4 paragraph 2 (general competence), 3 (subsidiarity principle and exercise of public responsibilities closer to the citizen) and 4 (full and exclusive powers of local authorities). In addition, the rapporteurs are concerned about the implementation of consultation procedures, which are quite developed in the legal framework but do not seem to be implemented accordingly, in many cases. The rapporteurs therefore conclude that there is partial compliance with Article 4 paragraph 6.
Serbia [Article ratified - Report adopted on 18 October 2017 ]
Consult reply indicated at article 4.1
Slovak Republic [Article ratified - Report adopted on 24 March 2016 ]
page 180 / 796 Consult answer indicated at article 4.1
Slovenia [Article ratified - Report adopted on 6 November 2018 ]
Consult reply indicated at article 4.1
Spain [Article ratified - Report adopted on 20 March 2013 ]
Consult reply indicated at article 4.1
Sweden [Article ratified - Report adopted on 2 April 2014 ]
Consult reply indicated at article 4.1.
Switzerland [Article ratified - Report adopted on 20 October 2017 ]
Consult reply indicated at article 4.1
Turkey [Article ratified - Report adopted on 1 March 2011 ]
The analysis article by article is currently unavailable
Ukraine [Article ratified - Report adopted on 31 October 2013 ]
Consult reply indicated at article 4.1
United Kingdom [Article ratified - Report adopted on 26 March 2014 ]
Consult reply indicated at article 4.1
Article 4.3 Scope of local self government
Public responsibilities shall generally be exercised, in preference, by those authorities which are closest to the citizen. Allocation of responsibility to another authority should weigh up the extent and nature of the task and requirements of efficiency and economy.
Albania [Article ratified - Report adopted on 31 October 2013 ]
Consult reply indicated at article 4.2
Andorra [Article ratified - Report adopted on 28 March 2018 ]
Article 4, paragraph 3 of the Charter articulates the general principle of subsidiarity. It establishes
page 181 / 796 that “Public responsibilities shall generally be exercised, in preference, by those authorities that are closest to the citizen. Allocation of responsibility to another authority should weigh up the extent and nature of the task and requirements of efficiency and economy”. In the opinion of the rapporteurs, the size of the country has to be taken into account when assessing the application of this provision, during the visit no issues were raised with regard to the principle subsidiarity.
Armenia [Article ratified - Report adopted on 15 June 2021 ]
Article 4.3
3 Public responsibilities shall generally be exercised, in preference, by those authorities which are closest to the citizen. Allocation of responsibility to another authority should weigh up the extent and nature of the task and requirements of efficiency and economy.
159. This requirement of the Charter lays down the principle of subsidiarity, without which no democratic local government system may exist. The principle allows the assignment of public tasks and functions to administrative agencies not established on the basis of elected local authorities, for the sake of efficiency and social expediency.
160. In practice, the realisation of this principle can only be examined together with the scope of the responsibility of local authorities. As we have seen, most public affairs of local interest are managed by state administration bodies in Armenia, or, even if some of them are conferred on municipalities, they are administered as delegated powers and duties under strict central professional control. It is hardly defensible that public affairs, such as education, health and social care, which have a profound impact on the lives of local communities, can be more effectively managed from a central level or more democratically operated by non-elected public bodies.
161. The rapporteurs do not question that the small and financially weak communities are not able to provide public services requiring special expertise, personnel and institutions. However, it should also be noted that the amalgamation processes have aimed at creating bigger and more powerful consolidated communities exactly to enable them to carry out such functions. In any way, it is circular reasoning to argue that municipalities should not get more revenues as they are not able to deliver costly public services, as well as supposing that more tasks and functions should not be transferred to municipalities because they do not have sufficient financial, personnel and technical resources to provide such local services. During the consultation procedure, the MTAI argued that several improvements in enlarged municipalities are already visible, such as expanded public services, new or renovated public infrastructure, the introduction of new services, a decrease in administrative costs and an increase in service delivery units, and increased organisational capacity in managing human resources, financial resources, tax administration and provision of administrative services.
162. However, experience shows that effective reforms are still needed to make municipalities more capable of performing more public tasks and functions, in particular the rolling out and completion of territorial reforms, continuing human and institutional capacity development measures and designing and implementing a coherent decentralisation strategy aimed at strengthening local capacities and local democracy.
Austria [Non ratified - Report adopted on 28 September 2020 ]
In accordance with Article 12.2. of the Charter, Austria has not declared itself bound by this provision.
page 182 / 796 Pursuant to the explanatory report of the Charter, this paragraph articulates the general principle that the exercise of public responsibilities should be decentralised and in fact, names the subsidiarity principle.
For Austria, as argued in the Report on Definition and Limits of the Principles of Subsidiarity,56 the principle of subsidiarity has been particularly important, and it has to be seen as a means of strengthening local democracy, and not at all (except in case of real need) as a means of diminishing the local level in favour of the regional, or the regional in favour of the central.
The principle of subsidiarity is embedded, at the Land level, in several constitutional laws (e.g. Article 1.3, Constitution of Carinthia; Article 4, Constitution of Lower Austria; Article 9.2, Constitution of Upper Austria; and Article 7, Constitution of Vorarlberg).
Finally, Article 23g, B-VG, introduces the principles of subsidiarity in connection with the European Union: “The National Council and the Federal Council present their view in a founded comment to a drafted legal act in the framework of the European Union, for which reason the draft is incompatible with the subsidiarity principle”. In a similar vein, some Land constitutions speak of subsidiarity when introducing their views on projects within the framework of the European Union (e.g. Article 50b, Constitution of Salzburg; Article 55, Constitution of Vorarlberg).
Taking into consideration the existing legal provisions as indicated above (in Sections 3.3.2 and 3.3.3, as well as the daily reality of Austrian co-operative federalism, where Länder and (to some extent) municipalities are granted the right to fully exercise their own public responsibilities, the rapporteurs invite the Austrian authorities to ratify paragraphs 2 and 3 of Article 4 of the Charter since they appear to be applied in practice.
Azerbaijan [Non ratified - Report adopted on 17 June 2021 ]
Azerbaijan has not ratified Article 4(3) of the Charter.26
Belgium [Article ratified - Report adopted on 15 October 2014 ]
Flemish Region (Vlaanderen)
Article 4.3 emphasises subsidiarity as the basic principle for the distribution of powers and responsibilities between the different tiers of government that together make up the political community. The consequence of this principle is that functions should normally be assigned to the level of territorial government closest to the citizen, unless the magnitude or nature of the function is such that it has to be carried out in a larger territorial entity and there are overriding considerations of efficiency and economy. The rapporteurs point out that one of the guiding principles of the Flemish government’s 2009-2014 internal reform is that of subsidiarity.
Walloon Region and German-speaking Community
The subsidiarity principle is regularly invoked before the Council of State and the Constitutional Court of the Kingdom of Belgium. Nonetheless, it was called into question on 4 July 2013, when the Walloon Government adopted on first reading the preliminary draft decree transferring the provincial responsibilities for housing and energy to the Walloon Region in 2015, which would also involve the transfer of financial and human resources to the region. By invoking the subsidiarity principle, the Association of Walloon Provinces (APW) has come out against this preliminary draft, which according to the APW is an attack on the principle of provincial self-government enshrined in the Charter
page 183 / 796 (Articles 3 and 4) and in the case law of the Constitutional Court, which considers that such a transfer of responsibilities can only have the effect of depriving the provinces of a significant portion of their functions (cf. judgment 95/2005 of 25 May 2005). Moreover, the Memorandum of 25 May 2014 issued by the associations of municipalities of Wallonia, Flanders and the Brussels-Capital Region, points out that governments must take account of the subsidiarity principle in their policies affecting the local level.
Brussels-Capital Region
The rapporteurs believe that some aspects arising out of Article 4, paragraph 3, of the Charter (read in the light of other Charter provisions) deserve closer consideration by regional government authorities. It should here be mentioned that, looking ahead to the regional elections of 25 May 2014, the Board of the Association of the City and Municipalities of the Brussels-Capital Region adopted a memorandum containing Brussels municipalities’ demands of the political parties and future regional government. This memorandum states the concerns of local authorities in the region and lists the main improvements that the association would like to see in running of municipalities through application of the principles of subsidiarity, decentralisation, balance and consultation, which are fundamental to local democracy and good governance.
Bosnia and Herzegovina [Article ratified - Report adopted on 31 October 2019 ]
The principle of subsidiarity is not expressly enshrined in neither of the three Constitutions (of the State, Federation of Bosnia and Herzegovina and Republika Srpska). It is expressly mentioned only in Article 10 of the Federation of Bosnia and Herzegovina Law on Principles of local self-government regarding the transfer of competencies. However, in practice, in the Federation of Bosnia and Herzegovina, Cantons often absorb the competencies of municipalities, in particular with regard to utility services (water supply, sewage and heating; in the case of Canton Sarajevo also education and public transport), but central organisation at cantonal level is rarely more efficient. The new Cantonal Government of Sarajevo has announced to change the centralization policy of the past and to transfer competencies to municipalities. Interlocutors not rarely stressed that municipalities often do not even want additional powers, as these come with considerable costs (e.g. regarding elementary schools, the transfer of which already foreseen in Articles II.A.4 (b), of the Federation of Bosnia and Herzegovina Constitution and in Articles 8 and 10 of the Federation of Bosnia and Herzegovina Law on Local Self-Government Principles).
In a number of meetings in the Federation of Bosnia and Herzegovina, the rapporteurs heard about the importance of mjesne zajednice, i.e. local communities as sub-structures within municipalities. These are regulated at the Federation of Bosnia and Herzegovina level, in Articles 24 to 32 of the Federation of Bosnia and Herzegovina Law on Local Self-Government Principles, but also part of cantonal competencies on local self-government. Their Councils are established through direct election (in addition to local elections) and comprise a certain percentage of elected councillors. Mjesne zajednice are financed through the local budgets and apply for projects through the municipal level. Since 2013/14, there have been several attempts to amend the Federation of Bosnia and Herzegovina Law on Principles of Local Self-Government, not least for strengthening the mjesne zajednice and better involving citizens in a process of bottom-up development. However, local authorities resisted in order to keep their competencies.
In Republika Srpska, the principle of subsidiarity is not expressly anchored in constitution or legislation, but the nature of tasks as well as requirements of efficiency and economy have been considered in the reform of 2017. During the visit, the rapporteurs heard no complaints about the non-respect of the principle of subsidiarity in practice in Republika Srpska. The rapporteurs had the impression that although not expressly mentioned in the legislation, the rationale of subsidiarity in
page 184 / 796 Republika Srpska seems to be mostly implemented in practice.
In the Federation of Bosnia and Herzegovina, a systemic approach guaranteeing the principle of subsidiarity seems hampered by the autonomous role of Cantons which tend to interfere with municipal competencies. The role of mjesne zajednice should also be included in a comprehensive system based on the logic of subsidiarity.
Thus, overall the rapporteurs consider the requirements of Article 4.3 only partially respected in Bosnia and Herzegovina.
Bulgaria [Article ratified - Report adopted on 21 January 2021 ]
Article 4.3
1. This paragraph of the Charter introduces the “subsidiarity principle”, whereby public responsibilities should be exercised “in preference” by those authorities or bodies that are closest to the citizen. This principle crosscuts all levels of territorial organisation and introduces closeness to the citizens as a primary criterion for the allocation of responsibilities unless there are overriding considerations of efficiency and economy because of the extent and the nature of the task. It is of central importance for the protection of local authorities against up-scaling and re-centralisation tendencies that threaten to empty the substance of local self-government. Moreover, subsidiarity can reduce the possible rigidity that unity of application can involve. In this sense, subsidiarity better achieves efficiency, responsiveness, [30] and accountability of governmental action.
1. In Bulgaria, this principle has been involved when additional tasks were transferred to municipalities in the fields of environmental protection, spatial development, the primary sector, social services, education and health, and so forth. Despite these efforts, the principle of subsidiarity in the sense of strengthening local self‑government is not yet sufficiently implemented at present. It seems that the principle of subsidiarity is still essentially understood as a principle of de-concentration. With the legal amendments in the field of education and social assistance, for instance, municipalities were assigned many new responsibilities. They were defined as State-delegated activities.A relevant general tendency becomes clear also from the predominantly task-related financing of municipal tasks (see below).
Croatia [Article ratified - Report adopted on 20 October 2016 ]
Article 4 paragraph 3 articulates the general principle of decentralisation where tasks should generally be entrusted to the most local level of government although this requirement may be negated by other factors, such as limits due to nature and size of certain local authorities.
Local self-government units in Croatia are comprised of municipalities and towns. The average size of a town is slightly below 24,000 inhabitants but the majority have a population below 15,000. There are approximately 17 big towns with a population of over 30,000 inhabitants. There is therefore a high share of very small towns in Croatia. Municipalities, usually rural, are more consistent with an average of around 2,000 - 3,000 inhabitants per municipality although approximately 270 municipalities still have less than 3,000 inhabitants. Legislation does not provide a clear distinction between towns and municipalities in relation to competencies and function. In its 2016 country report on Croatia the European Commission confirms this view stating that a central register that lists competencies and functions for each local administrative unit is not available so it
page 185 / 796 is unclear which local government unit is responsible for which function.1
In addition, local self-government units of cardinally different sizes and territorial borders provide a challenge for an effective allocation of powers. The existence of many tiny municipalities seriously impairs the implementation of public functions on their part. Indeed, the delegation heard that residents of rural areas have complained to the office of the Ombudsman about villages without electricity, without access to potable water, public transport and with unrepaired roads.2 The Congress called on the Croatian central authorities in Recommendation 226(2007): “to undertake a general and more systematic review of the territorial organisation of local and regional government as a possible solution to the problem of the ineffective tiny municipalities”. A response to this issue in outlying urban areas was taken under the previous government in 2014 through the Act on Regional Development which, interalia, created four urban agglomerations in Zagreb, Split, Rijeka and Osijek. The present government continues to promote the agglomeration project, which entails co-operation between towns and adjacent municipalities on the joint implementation of competences. The delegation had the opportunity to visit the town of Rijeka with its agglomeration project in progress. The city mayor was satisfied with the way co-operation among the municipalities was progressing although he considered that there had not been enough consultation prior to the legislation being put in place. It should be noted here too that the Government is attempting to encourage municipal mergers by voluntary means, and a law on the legal framework for voluntary mergers of local government units was adopted by parliament in 2015. However with a lack of incentives to accompany the measure there has been little improvement.
The asymmetric allocation of powers according to the size of a self-government unit deserves a separate mention. As a rule, counties and large towns exercise more powers than municipalities and small towns, which may be appendages of the regional government with many functions of the municipality being exercised by the county. This phenomenon is especially noticeable on islands where municipalities may establish a common organization that renders services throughout the island (e.g. the provision of kindergartens on the Island of Krk). As the main source of revenue for self-governing units is personal income tax (see further under Article 9 infra) this leads to a wide regional disparity in the provision of public services which cannot be categorised as universal.
It can be concluded that Croatia remains highly centralised and this was freely admitted by interlocutors (at all levels) that the monitoring delegation met during their visit. At present the local government units have been allocated a number of functions and responsibilities but, as can be seen under the examination of Article 9 of the Charter infra, these remain largely funded by central government. Therefore decentralisation in Croatia can be characterised as incomplete.
The rapporteurs therefore conclude that Croatia partially complies with Article 4 paragraph 3 of the Charter.
Cyprus [Article ratified - Report adopted on 20 October 2016 ]
See answer at article 4.1
Czech Republic [Article ratified - Report adopted on 8 March 2012 ]
Whether the principle of subsidiarity, as explicitly recognised in Article 4 (3) of the Charter, is respected by the Czech Republic in an optimal manner depends, among other factors, on the share of public responsibilities devoted to the proper powers of local and regional authorities, and not only to delegated powers that are much more strictly regulated (see above).
page 186 / 796 Denmark [Article ratified - Report adopted on 31 October 2013 ]
Consult reply indicated at article 4.1
Estonia [Article ratified - Report adopted on 29 March 2017 ]
Concerning Article 4, paragraph 3, of the Charter, the subsidiarity principle is largely accepted in the country's political practice as well as in the national jurisdiction. In its judgment of 16 January 2007, No. 3-4-1-9-06, the Supreme Court held that “the restriction of the local governments’ guarantee, imposed by section 13 of the Building Act (which provides that local governments shall undertake to organize the building of public roads, public green zones, external lighting and rainwater pipes on the basis of a detailed spatial plan up to the boundary of a land unit specified in a building permit, unless the local government in question and the person requesting the preparation of the detailed spatial plan or the applicant for the building permit agree otherwise), is suitable for the achievement of the referred aim.” As it is most expedient to ensure that this aim is achieved at local government level, the restriction is both necessary and in compliance with the principle of subsidiarity arising from Article 4, paragraph 3, of the Charter. Another judgment also referred to the applicability in Estonia of the principle of subsidiarity (Supreme Court judgment of 3 December 2007, No. 3-3-1-41-06).
Finland [Article ratified - Report adopted on 28 March 2017 ]
Consult reply indicated at article 4.1.
France [Article ratified - Report adopted on 22 March 2016 ]
Consult reply indicated at article 4.1
Georgia [Article ratified - Report adopted on 7 November 2018 ]
The principle of subsidiarity is enshrined in the Constitution of Georgia, Article 7, paragraph 4: “delineation of competence between the state authorities and self-governing units is based on the principle of subsidiarity”, while the Code adopted in 2014 already clearly stipulated that public competences are to be executed by the authorities that are the closest to citizens. Based on this provision, a number of competences (such as the supply of water and the collection of solid waste) were transferred to municipalities; the Government of Georgia has since also delegated competences in secondary education to municipalities.
Georgia therefore complies with Article 4, paragraph 3, of the Charter.
Germany [Article ratified - Report adopted on 14 March 2012 ]
Consult reply indicated at article 4.1
Greece [Article ratified - Report adopted on 26 March 2015 ]
Consult reply indicated at article 4.1
Hungary [Article ratified - Report adopted on 12 February 2021 ]
page 187 / 796 Article 4, paragraph 3 of the Charter articulates the general principle of subsidiarity. It establishes that “Public responsibilities shall generally be exercised, in preference, by those authorities which are closest to the citizen. Allocation of responsibility to another authority should weigh up the extent and nature of the task and requirements of efficiency and economy”.
This principle is neither enshrined in legislation in Hungary, nor applied in practice. As it was pointed out in 2013 report, the allocation of public responsibilities previously managed by local authorities to State 26/45 deconcentrated administration or to the central government happened without taking into account the principle of subsidiarity. The Recommendation 341 (2013) asked the Hungarian government to “revise the legislation concerning local authorities’ mandatory tasks and functions so as to extend the range of powers normally assigned to them on the basis of the principles of decentralisation and subsidiarity”.
Since then, the situation has not changed, and the competences of local governments remain limited. During the consultation process, the Hungarian government pointed out that “the aim in transforming the major health and social care systems was not to centralise powers, but to improve the efficiency of public services operated in a fragmented and uneconomical manner”. It added that “none of the Charter’s articles prohibits the re-designation of specific State (public administration) functions and public services falling within local government competence to be taken over by public authorities, e.g. with a view to improving the efficiency and quality of services for the citizens”.
The rapporteurs do not agree with this view. They remind that Article 4.3 requires that public responsibilities should be exercised “in preference” closest to the citizen. In this respect, it is essentially a political principle since its aim is to bring decision-making as close as possible to the citizen. Allocation of responsibility to another authority which is less close to the citizen is possible, but it should weigh up “the extent” (size or scale) and “nature” of the task itself as well as the requirements of “efficiency” (not effectiveness) and “economy” (of scale, of scope and of minimising costs). A generic reference to the will of “improving the efficiency and quality of services for the citizens” cannot be considered a sufficient justification, especially considering the extent of this allocation, which had an impact on the “substantial share of public affairs” under Article 3.1 of the Charter.
Therefore, it has to be reiterated that the requirements of Article 4.3 of the Charter are not complied with in Hungary.
Iceland [Article ratified - Report adopted on 29 March 2017 ]
Article 4, para. 3 of the Charter articulates the general principle of subsidiarity. It establishes that “Public responsibilities shall generally be exercised, in preference, by those authorities which are closest to the citizen. Allocation of responsibility to another authority should weigh up the extent and nature of the task and requirements of efficiency and economy”. Article 4, para. 4, touches on the problem of overlapping responsibilities. In the interest of clarity, it provides that “Powers given to local authorities shall normally be full and exclusive. They may not be undermined or limited by another, central or regional, authority except as provided for by the law”.
Recommendation 283 (2010), paragraph 5, lett. a), invited Icelandic authorities to “ clarify their fundamental legislation on the basis of the subsidiarity principle, making provision for a clear division
page 188 / 796 of responsibilities between central government and local authorities”.
Since then, this issue has not been addressed by Icelandic legislation. No provisions have been introduced in Law 138/2011. During the meetings which took place with the delegation, local government representatives underlined that this is still an issue of concern and that too many grey zones still exist, as a recent report made by the Icelandic Association of municipalities has revealed. Unclear burdens affect employment services, children’s’ affairs, social security and social assistance, health services, elderly people’s affairs, disabled people, and other groups, such as immigrants and prisoners applying for municipal financial support. According to this document, the consequences of these grey zones adversely affect a relevant number of individuals.
Ireland [Article ratified - Report adopted on 31 October 2013 ]
Consult reply indicated at article 4.1
Italy [Article ratified - Report adopted on 18 October 2017 ]
Consult reply indicated at article 4.1
Latvia [Article ratified - Report adopted on 27 March 2018 ]
Consult reply indicated at article 4.1
Liechtenstein [Article ratified - Report adopted on 28 March 2018 ]
Having regard to the size of the Principality of Liechtenstein, the principle of subsidiarity almost naturally prevails, since all public authorities are located, and deliver public services, close to the citizens.
Lithuania [Article ratified - Report adopted on 6 November 2018 ]
Consult reply indicated at article 4.1
Luxembourg [Article ratified - Report adopted on 21 October 2015 ]
Consult reply indicated at article 4.1.
Malta [Article ratified - Report adopted on 29 March 2017 ]
Article 4, paragraph 3 of the Charter enshrines the principle of subsidiarity, according to which public responsibilities have to be exercised, in preference, by those authorities which are closest to the citizen and allocation of responsibility to another authority should weigh up the extent and nature of the task and requirements of efficiency and economy.
As mentioned above, this Article of the Charter is closely related to Article 3, paragraph 1 and hence, the aforesaid remarks stated under Article 3, paragraph 1 above apply to Article 4, paragraph 3 too.
The existing functions and responsibilities of local councils are narrow and limited. The most significant functions, powers and public responsibilities regarding the public affairs, the construction of roads and infrastructure projects, the issuance of permits, the operation and management of
page 189 / 796 public benefit establishments, installations and infrastructure projects are all exercised by the central government, when in fact they should be exercised preferably by the local councils, which constitute the authorities closest to the citizens.
The text of the Local Councils Act implies a degree of reluctance on behalf of the Legislature to grant extensive responsibilities to local councils, which is evident by the fact that the central government is granted the discretion to delegate or devolve such powers or responsibilities to local councils when they deem this necessary or even when the central government considers that the local councils are ready to exercise such powers or responsibilities. During the monitoring visit, the delegation was made aware of the willingness and eagerness of the local councils to be granted more powers, functions and competences in order to be enabled to regulate and manage a larger share of the public affairs, engage in infrastructure projects, resolve local problems, undertake initiatives for the benefit of the localities’ residents and execute meaningful tasks in their localities. The amendment of the Local Councils Act and the extension of the list of functions permitted to local councils under the law requires significant political decisions, which the political actors are not willing or ready to take at the time being.
Furthermore, the execution of the already narrow list of functions permitted to local councils under the Local Councils Act is even more restricted given the fact that the grants provided to the local councils every year are earmarked for the execution of specific functions and the practice of notifying the central government or obtaining its approval prior to undertaking any kind of initiative. Hence, the performance of the limited scope of public responsibilities allowed to local councils is not exclusively or fully performed by the latter, but instead, the central government maintains a determinative role as to the selection of the functions which will be executed and the resources which will be used by the local councils in the performance of their functions.
In light of the above, it seems very likely to the delegation that Malta does not conform with the obligations arising from the ratification of Article 4, paragraph 3 of the Charter. Local councils should be endowed with greater trust, capital-raising capacity and extended list of functions to enable them to exercise more public responsibilities, regulate a greater share of the public affairs and embark in infrastructure projects and services, where necessary, for the benefit of the residents. Additionally, more discretion should be allowed to local councils to perform their functions in practice and the involvement of the central government should be reduced, while at the same time abandon the current practice of obtaining prior approval or notifying the central government before embarking in new initiatives or executing their functions. Moreover, more freedom should be allowed to local councils to decide how to use their monetary resources and consequently which public responsibilities to perform and to what extent.
Monaco [Non ratified - Report adopted on 28 March 2018 ]
Consult reply indicated at article 4.1
Montenegro [Non ratified - Report adopted on 21 October 2015 ]
As far as Article 4, paragraph 3 is concerned; Montenegro refrained from ratifying the respective provision. The Constitution does however indirectly provide for the principle of subsidiarity. According to Article 16(4) of the Constitution, the system of local self-government shall be regulated by law. In this way and according to the interpretation provided by the Constitutional Court in its written reply to a request made by the Congress, Montenegro has accepted the basic principle of the Charter, which specifies that local authorities are the fundamental basis of any democratic system and that public responsibilities shall generally be exercised by those authorities which are closest to
page 190 / 796 the citizen. In other words, the Constitutional Court affirms that the legislator has the obligation, when deciding which public duties will be performed on the local or state level, to give priority to the level of government that is closer to the citizens. The principle of subsidiarity is also guaranteed by paragraph 2 of Article 4 of the Law on Local Self-Government: “Local self-government shall also be exercised at the level of local community in order to create conditions for the most direct and efficient performance of affairs and of addressing the needs of citizens”.
Netherlands [Article ratified - Report adopted on 26 March 2014 ]
Consult reply indicated at article 4.1
North Macedonia [Article ratified - Report adopted on 26 February 2013 ]
Consult reply indicated at article 4.1
Norway [Article ratified - Report adopted on 26 March 2015 ]
Consult reply indicated at article 4.1.
Poland [Article ratified - Report adopted on 2 April 2019 ]
Article 4, paragraph 3 of the Charter articulates the general principle of subsidiarity. It establishes that “Public responsibilities shall generally be exercised, in preference, by those authorities which are closest to the citizen. Allocation of responsibility to another authority should weigh up the extent and nature of the task and requirements of efficiency and economy”.
In Poland, the principle of subsidiarity is entrenched at constitutional level in the Preamble to the Constitution, according to which the Constitution shall be based on “on the principle of subsidiarity in the strengthening the powers of citizens and their communities”.
However, in practice, this principle is not fully implemented. Local authorities’ representatives at all levels of territorial government complained that more and more competences have been re- centralised, without the centralisation being justified for reasons of efficiency and economy (see supra, sub Article 3.1).
This is especially the case of the reform of education, which affected the competences of municipalities and districts. The reform strengthened the role of the school superintendent, who is now in charge of approving the school network plan, giving opinions on work plans, issuing binding opinions on the possible liquidation of schools by the local government, and participating in the process of selecting the school head.
During the consultation process, the government opposed the expressed views, in particular as regards the focus on recentralisation of certain competences related to the reform of education. It reiterated, once more, its position that the reported re-centralisation should be considered as building uniform standards of access to services and benefits of the welfare state or as introducing minor corrections taking into account the scale of self-government activities in Poland.
The rapporteurs do not share this attitude in general and the reference to minor corrections specifically, taking into account the significance of the educational part in the local self-government share of responsibilities.
page 191 / 796 Therefore, the rapporteurs consider that Article 4, paragraph 3 of the Charter is not fully respected in Poland.
Portugal [Article ratified - Report adopted on 28 September 2020 ]
The main local level concerned, as regions have not been created, is formed of municipalities. These all benefit from a transfer of universal powers on a mandatory basis but they may also become involved on a voluntary basis in partnership policies via contracts (cf. Article 8). This form of devolution, where municipalities are alone (or nearly) in their dealings with the State, has the initial advantage of avoiding conflicts and overlapping in public policies but also the major drawback of excessively extending the list of local powers well beyond their means.
The rapporteurs note that a great many powers are transferred to the municipal level:
rural and urban facilities (green spaces, roads, cemeteries, markets); energy (public lighting, mains power distribution); transport and communications (municipal road network, urban transport, municipal aerodromes and heliports); heritage, culture and science (municipal cultural centres, scientific centres, libraries, theatres and museums); consumer protection (information and protection, mediation, arbitrage); health care (municipal medical facilities, health care centres); welfare (nurseries, kindergartens, programmes to combat exclusion); urban development (municipal planning strategies); municipal police (creation of municipal police forces); external co-operation (devolved co-operation).
Where the allocation of powers between municipalities and parishes is concerned, there is a significant concentration of powers in the municipalities.
Consequently, the rapporteurs consider that Article 4 paragraph 3 of the Charter is complied with, in that prominence is given to the municipal level.
Republic of Moldova [Article ratified - Report adopted on 4 April 2019 ]
This provision embodies the so-called principle of subsidiarity, according to which, “public responsibilities shall generally be exercised, in preference, by those authorities which are closest to the citizen. Allocation of responsibility to another authority should weigh up the extent and nature of the task and requirements of efficiency and economy.” This also embodies a call for decentralisation, something which is especially needed in a country coming from the soviet system where over- centralisation was the rule. In this sense, decentralisation is established in the constitution as a founding principle of local government (Article 109) and, in regular legislation, for there is a specific law on decentralisation: Law 435-XVI of 28 December 2006 on Administrative Decentralisation.
However, the rapporteurs are not convinced that the principle of subsidiarity is respected in Moldova and that it has inspired a real devolution strategy. In fact, the delegation heard and read many complaints from local leaders and representatives that the National Decentralisation Strategy has not been implemented, or only to a minor extent; that most elements of the roadmap have not been implemented; and that the government has extended the deadlines of the public administration reform. In recent years, it appears that there have not been any further transfers of competences and powers to the local authorities, and devolution at local level has been halted. What is more, the
page 192 / 796 delegation heard complaints that the political party in power is favouring a clear move towards re- centralisation. The central government, for its part, provided a different view on the matter. Governmental officials claimed that the government is about to make reforms and changes towards further decentralisation, but they did not provide details or a realistic work plan.
In the light of the above, the rapporteurs conclude that the Republic of Moldova does not fully comply with Article 4.3 of the Charter.
Romania [Article ratified - Report adopted on 3 March 2011 ]
For Article 4(3) of the Charter, it is necessary to point out that the local council possesses local self- government powers by virtue of the principle of subsidiarity, provided for by section 3(a) of the framework Law on decentralisation (Law no. 195/2006). The local council can freely decide on what task to carry out to meet the needs of the local community.
Russian Federation [Article ratified - Report adopted on 30 October 2019 ]
Consult reply indicated at article 4.1
San Marino [Article ratified - Report adopted on 28 March 2018 ]
Consult reply indicated at article 4.2
Serbia [Non ratified - Report adopted on 18 October 2017 ]
Consult reply indicated at article 4.1
Slovak Republic [Article ratified - Report adopted on 24 March 2016 ]
Consult answer indicated at article 4.1
Slovenia [Article ratified - Report adopted on 6 November 2018 ]
Consult reply indicated at article 4.1
Spain [Article ratified - Report adopted on 20 March 2013 ]
Consult reply indicated at article 4.1
Sweden [Article ratified - Report adopted on 2 April 2014 ]
Consult reply indicated at article 4.1.
Switzerland [Article ratified - Report adopted on 20 October 2017 ]
Consult reply indicated at article 4.1
Turkey [Article ratified - Report adopted on 1 March 2011 ]
page 193 / 796 The analysis article by article is currently unavailable
Ukraine [Article ratified - Report adopted on 31 October 2013 ]
Consult reply indicated at article 4.1
United Kingdom [Article ratified - Report adopted on 26 March 2014 ]
Consult reply indicated at article 4.1
Article 4.4 Scope of local self government
Powers given to local authorities shall normally be full and exclusive. They may not be undermined or limited by another, central or regional, authority except as provided for by the law.
Albania [Article ratified - Report adopted on 31 October 2013 ]
1. On the other hand, Law No. 8652 distinguishes between "authority" and "functions". “Authority” is synonymous with "competence" (i.e. authority given by law to a certain entity for carrying out a function/task). “Authority” is further divided into four categories (administrative, service, investment and regulatory). Accordingly, LGUs in Albania may have only an “administrative authority” in one sector of municipal economy and “investment and service authorities” in another, while “regulatory authority” may belong to the central government agencies. Such partitioning of competences contradicts with a basic principle of the Charter according to which, competences of local governments should be full and exclusive. In general, the terminology used in the Albanian legislation is confusing because the terms "own" and "delegated" are used not only for “authority” but also for the “functions”.
In practice, the Albanian model of territorial regulation and spatial planning is a vivid example of inconsistency with paragraph 4 of Article 4 of the Charter. This competence, defined as an own “function” of local authorities is, in fact, implemented by a parallel structure that is chaired by the Prime Minister where all decisions are taken within the strict administrative hierarchy. Such a fragmentation of LGU powers does not perfectly fit the requirements of paragraph 4 of Article 4 which stipulates that the powers of local authorities be full and exclusive.
Andorra [Article ratified - Report adopted on 28 March 2018 ]
Article 4, paragraph 4 raises the problem of overlapping responsibilities. In the interest of clarity, it provides that “Powers given to local authorities shall normally be full and exclusive. They may not be undermined or limited by another, central or regional, authority except as provided for by the law”. This principle seems fully respected in Andorra: in the exercise of their competences, the Comuns enjoy full normative, executive and enforcing power, as well as financial and tax authority.
Armenia [Article ratified - Report adopted on 15 June 2021 ]
page 194 / 796 Article 4.4
4 Powers given to local authorities shall normally be full and exclusive. They may not be undermined or limited by another, central or regional, authority except as provided for by the law.
164. Full and exclusive powers are a precondition of local self-government, which means that municipalities should be able to decide autonomously how they fulfil their mandatory tasks, and to have sufficient resources to carry out those tasks. The full and exclusive nature of these powers allows only a legal supervision exercised by central agencies over local authorities.
165. There is no doubt that there are some less important public services that municipalities deliver themselves, but there are only a few such functions (like the maintenance of kindergartens or cultural facilities). However, the rapporteurs’ experience has been that many tasks performed by municipalities, such as the maintenance of public utilities or the operation of local transport, are often carried out jointly by municipalities and administrative agencies of central government. In these cases, municipalities have only complementary or secondary functions (like maintaining waterworks or waste disposal), sometimes without real decision-making competence.
Austria [Article ratified - Report adopted on 28 September 2020 ]
The explanatory report to the Charter underlines that in the interest of clarity and for the sake of avoiding any tendency towards a progressive dilution of responsibility, powers allocated to local authorities should normally be full and exclusive.
As already indicated (e.g. by Article 15.1, B-VG), Austria is a highly centralized federation: what is of no exclusive responsibility of the Federation, is legislated by it and executed by the Länder, framed by it (in general principles) and implemented and executed by the Länder or legislated and executed by the Länder. The municipalities do have their share of responsibilities and they are actively engaged in federal and Land policy-making (Article 118.1, B-VG, regulates that municipalities have their own set of powers and one assigned by the Federation or the Land).
Austrian municipalities perform their duties under their own responsibilities, free from instructions and under exclusion of legal redress by administrative authorities outside the municipality. As indicated by Article 118.7, on application by a municipality, the performance of certain matters in its own sphere of competence can, in accordance with Article 119a.3, B-VG, be assigned by ordinance of the Land Government or by ordinance of the Governor to a Land authority. In so far as such an ordinance is meant to assign competence to a federal authority, it requires the consent of the Federal Government. In so far as such an ordinance by the Governor is meant to assign competence to a Land authority, it requires the consent of the Land Government. Such an ordinance shall be rescinded as soon as the reason for its issue has ceased.
Pursuant to Article 119a, B-VG, municipalities are under constant supervision so that they do not infringe laws and ordinances in dealing with their own responsibilities, in particular do not overstep their powers, and fulfil the duties legally devolving upon them.
During the monitoring visit, the rapporteurs observed that there is an unbalanced distribution of exclusive regulatory powers to the benefit of central and/or Länder authorities. This presents a threat to exercise of local self-government. However, considering the complexity of Austrian cooperative federalism, the rapporteurs conclude that Austria complies with this paragraph. Still, they invite the Austrian authorities to avoid unnecessary limitation of the municipalities’ powers.
Azerbaijan [Article ratified - Report adopted on 17 June 2021 ]
page 195 / 796 As described above, the powers of municipalities are limited and by no means exclusive, as they are both legally and de facto undermined by especially the local executive bodies and overall by the current structure of powers as far as the local issues are concerned. The laws and the Regulation on Local Executive Bodies concentrate all important powers with regard to the implementation of state power at local level and locally relevant public services in the hands of local representatives of central governments and heads of executive bodies, which is contradictory to the text and spirit of Article 4 of the Charter overall and of Article 4.4 in particular. As the Contemporary Commentary puts it, limitations on the powers of municipalities must be provided by law, “be exceptional, based on objective reasons and interpreted narrowly” (Paragraph 67).
The Law on the Status of Municipalities makes clear that the powers of municipalities are by nature not “full and exclusive”: Article 4.2 states that the services provided by the municipalities are only supplementary and local social, economic and environment programmes may be aimed only at resolving issues not covered by the relevant state programmes. Therefore, the majority of local public services fall under the competence of both state and municipal structures,27 whereby the strongest level inevitably prevails. As recalled above (Article 3) the law also prevents municipalities from interfering with programmes carried out by the local executive authorities in key areas such as local social protection and local social and economic programmes. This way, municipalities are discouraged from introducing policies in many of the areas where they could have a role, because the central government already carries out a wide range of programmes in those categories through the local executive authorities and line ministries. For example, it is practically impossible for municipalities to participate in the maintenance or management of public schools, because the Ministry of Education is responsible for both tasks.
Article 4.4 of the Charter also discourages overlapping responsibilities, as in turn they can become a threat to the weakest level of government, which in the case of Azerbaijan is no doubt the municipality. “Higher-level authorities usually have more and better financial, organisational and human resources than local authorities” (Contemporary Commentary, Paragraph 67) and while in the context of Azerbaijan it is not legally appropriate to consider local executive authorities as “higher level authorities” as compared to municipalities due to the formal separation between the two, they do have “more and better financial, organizational and human resources” and “take control take control of the most attractive governmental responsibilities” (Paragraph 67), and “greater or even exclusive regulatory powers in various areas” (Paragraph 67), creating a de facto incompatibility with Article 4.4 of the Charter.
The current legal framework in Azerbaijan does not establish full and exclusive powers for municipalities nor does it provide for a clear definition of the responsibilities of the various actors and favours local executive authorities over municipalities in taking care of the local services.
In light of the above, the rapporteurs consider that Article 4.4 of the Charter is not respected in Azerbaijan.
Belgium [Article ratified - Report adopted on 15 October 2014 ]
Flemish Region (Vlaanderen)
With regard to the powers and responsibilities mentioned in Article 4.4, the Flemish government stated in its explanatory memorandum to the draft of the decree on the approval of the European
page 196 / 796 Charter of Local Self-Government, which was signed in Strasbourg on 15 October 1985, that powers and responsibilities are normally granted without any reservation but that additional intervention proves necessary at different levels in certain areas of administration and that it is necessary in these cases for the action of the central or regional authorities to be based on clearly formulated statutory provisions.
Walloon Region and German-speaking Community
In the Walloon Region, Article L2212-32 of the Code of Local Democracy and Decentralisation, adopted in application of Article 162 of the Constitution, describes the provincial powers and responsibilities as follows: “The Provincial Council shall, in compliance with the subsidiarity principle, deal with all matters of provincial interest. The Council shall carry out its functions in a manner complementary to, and not competing with, the activities of the regions and municipalities. It shall also deliberate on any other issue submitted to it by the federal, community or regional authorities”. The provinces are therefore free to take action on all matters apart from those excluded from their area of responsibility (for example, direct assistance for farmers and horticulturalists, investment aid, etc). These are discretionary responsibilities and differ for each province. As subordinate authorities, the provinces must perform a number of compulsory functions, which are the same for each province, such as compulsory spending on cathedrals, religious facilities, heritage sites, etc.
The municipalities’ powers and responsibilities are described as follows: “The (municipal) council shall deal with all matters of municipal interest and it shall deliberate on any other issue submitted to it by the higher authority”. Accordingly, the municipalities, as self-governing subordinate authorities, deal with any matter they consider it necessary to assign to themselves provided that the function has not been assigned to another authority. As subordinate authorities, they perform compulsory functions, such as local primary education, managing the public records, dealing with the church maintenance deficit and co-funding the social services centre.
Apart from their compulsory functions, the provinces and municipalities can take action in the same fields as the sharing of powers and responsibilities between them has not been regulated by the federal or regional legislature.
The aim of the Sixth State Reform now underway is to transfer to the federated entities, regions and communities some functions currently exercised by the federal state. With regard to the impact of this reform at the provincial level, there should be no direct effect (the only provision governing the province as an institution is the amendment to the Constitution which transfers the competence of organising the provinces to the Regions as a whole. The provinces have therefore taken action in connection with some transferred functions, especially in the healthcare and welfare sectors, but also housing, farming and the economy.
As far as responsibilities still shared between the federal and regional levels are concerned, the Union of Walloon Towns and Municipalities also stated in the Memorandum of 24 May 2014 that it is absolutely essential for structured consultation to be established between the federal and the regional/community levels so that the local authorities can benefit from an integrated approach.
Brussels-Capital Region
The special law of 8 August 1980 established the powers and responsibilities of the three regions in Belgium, pursuant to Article 107 quater, which was added to the Constitution in 1970. With due regard for the specific features of the Brussels-Capital Region, various powers and responsibilities can be distinguished: at regional level, for Brussels as capital city, and for the 19 municipalities.
page 197 / 796 For regional matters the Brussels Region (like the Walloon and Flemish Regions) exercises specific powers in the following fields: urban development, housing, environment, water policy and nature conservation, the economy and employment policy, transport, public works, energy policy, local authorities and subordinate authorities (municipalities, intermunicipal partnerships, faiths), external relations, scientific research, etc.
As for its powers as a capital city, given that Brussels is both the capital of Belgium and the seat of European institutions, the Region co-operates with the federal state on initiatives in the fields of urban development, planning, public works and transport.
The municipalities’ mandatory missions include the following: managing and co-funding the CPASs, managing municipal primary education, keeping registers of births, deaths and marriages, maintaining law and order, maintaining municipal roads, etc. Other municipal missions are discretionary, such as education beyond primary level, housing, and promotion of cultural activities.
The Region also exercises powers formerly granted to the Brussels Conurbation, namely firefighting and urgent medical assistance, refuse collection and disposal, and taxis. The Region has also inherited provincial powers from the former province of Brabant.
According to some sources it is necessary to clarify the division of responsibilities and missions between the Region and the 19 municipalities, since in some fields their powers overlap. The many regeneration programmes for public areas offer multiple examples. The policy of subsidised works is another example of lengthy administrative procedures of this kind. Street cleaning and refuse collection is a further instance of failure due to a labyrinth of powers when it should be based on the subsidiarity principle whilst ensuring that only one public authority is responsible for managing a particular public area.
These overlaps lead to reduced resources and ability for the municipalities in Brussels to pursue their own policies for social and cultural matters and development of public areas, having been reduced so to speak to a purely administrative role. This situation is detrimental to the public perception of how democratic institutions are run, since municipal policymakers should still have the ability to determine priorities in line with the specific features of their municipality and the needs of their community. Furthermore, a multi-level management is necessary, namely through cooperation between different levels of government with the aim of guiding the management of certain matters that should be kept separate.
It is vital to end these parallel powers and as well as sometimes to increase the Region’s independence from the municipalities for exercise of certain powers but in other cases to strengthen municipal independence, since the municipalities must be able to meet their communities’ expectations more effectively.
Bosnia and Herzegovina [Article ratified - Report adopted on 31 October 2019 ]
Consult reply indicated at article 4.1
Bulgaria [Article ratified - Report adopted on 21 January 2021 ]
Article 4.4
1. According to Recommendation CM/Rec(2007)4 of the Committee of Ministers to member States on local and regional public services31, law makers should establish a clear definition
page 198 / 796 of the responsibilities of the various tiers of government and a balanced distribution of roles between these tiers in the field of local services. This would make it possible to avoid both a power vacuum and the duplication of powers. Moreover, this allocation of responsibilities should promote predictability and guarantee continuity in the provision of certain local public services that are essential for the people.
1. In several monitoring reports it has been pointed out that confusion and lack of clear demarcation of powers would blur responsibility and lead to a power shift for the benefit of higher level and especially of central authorities. Due to the lack of resources at lower governmental levels, complementary action by higher-level authorities is often required, but quite often this is not made on the basis of parity and partnership; local authorities would then be reduced to mere agents of regional or national authorities32.
1. A characteristic example mentioned by the NAMRB is the Water and Sewerage Services. Since the municipalities became owners of a significant part of the water supply and sewerage networks and facilities in 2010, they acquired new responsibilities for the maintenance and development of the networks and for the quality of the service to the citizens. These responsibilities are accompanied by severely limited management rights. Municipalities are obliged to join the so-called water supply and sewerage associations in designated territories, concluding contracts with commercial companies – water supply and sewerage operators. The State has a blocking quota in these associations, which mainly perform advisory functions in the adoption of the regional master plans for water and sewerage and the business plans of the water and sewerage operators. Thus, municipalities cannot really influence the process of investments to improve the networks, nor the quality and price of the service.
1. Another example that has been mentioned is the field of education: Municipalities do not have instruments to influence good governance, although they are the owners of the material base and are in charge of its maintenance. The municipalities are not employers of the school management, they do not participate in their attestation.
1. Local interlocutors have also mentioned the field of healthcare: municipalities are the owners of 122 municipal hospitals (36% of all hospitals in the country), which compete on a market basis in their activities with other public, private, and mixed hospitals. Municipalities have no legal basis to finance their activities but can only participate in the improvement of the material and technical base.
1. One of the main challenges of the decentralisation reform process is to allocate clearly the management and relevant responsibilities to the different levels and to eliminate overlapping of competences. As long as this is not yet achieved at a satisfactory level, there is only partial compliance of Bulgaria with Article 4, paragraph 4, of the Charter.
Croatia [Article ratified - Report adopted on 20 October 2016 ]
Article 4 paragraph 4 of the Charter is concerned to avoid any tendency towards a progressive dilution of responsibility exercised by local authorities and therefore powers should not overlap or be duplicated but should normally be full and exclusive. The Charter also recognises that complementary action is required by different levels of authority in certain fields but that this requires clear legislative provisions.1
It is inevitable that for a responsibility such as education involving primary and secondary schools and higher education, as well as a national curriculum, several levels of authorities both at central
page 199 / 796 and sub-state level will be involved and this situation is similar to that in other European countries. The Ministry of Public Administration notes in terms of education that primary education tasks (under the Primary and Secondary Education Act of 2008, amended in 2014) are not completely decentralised: the state level is responsible for payroll and compensation of employees’ travel expenses, funding of special programmes and capital construction projects, while counties and cities founders of primary schools are responsible for planning the schools network and funding material costs, maintenance costs, capital investments for school equipment and transport of pupils.2 Nevertheless the delegation heard from other interlocutors of another difficulty concerning education – in that collective agreements for teachers (employees) are negotiated at central level whereas the county (in this particular case) is liable through the courts for compensation resulting from any breach of the agreement.
The Congress already identified overlapping responsibilities as a challenge for Croatia in Recommendation 226(2007) which resulted from its last monitoring visit. The Croatian government was recommended “to ensure that the clarification of allocation of powers to different levels of government leaves room for the autonomous exercise of power by the municipalities». Following the meetings during the current monitoring visit the rapporteurs feel that this is still an issue that has not been resolved. In Croatia there are inconsistencies that go beyond the division of competences and, where the same competence is concurrently exercised by several administration units, it can be difficult to identify which share of public affairs is being administered by which specific administration body. As mentioned above under Article 4 paragraph 3 the European Commission has also made this observation.3 This can lead to an impression that functions may be assigned to the self-government body only nominally, with no real, inherent power. These inconsistencies are compounded in that the exercise of authority of both local and regional self-government is further restricted by the regulatory and control function of the central ministries. Such spheres as urban planning and urban development are limited by a mandate to build (construction permit) to be issued by the central authorities. This is further explored in the examination of Article 8 and Article 9 of the Charter infra.
For the reasons stated above the rapporteurs find that clarification is still required in the allocation of powers to different levels of government and for this reason conclude that Croatia is not in conformity with Article 4 paragraph 4 of the Charter.
Cyprus [Article ratified - Report adopted on 20 October 2016 ]
See anwser at article 4.1
Czech Republic [Article ratified - Report adopted on 8 March 2012 ]
According to Czech law, only the judiciary may decide with binding effect upon contested questions regarding the limits to the powers of local and regional authorities under the law, the Constitutional Court playing a prominent role. It thus seems that the obligations of the Czech Republic under Article 4 para. 4 of the Charter do not give rise to serious doubts.
Denmark [Article ratified - Report adopted on 31 October 2013 ]
Consult reply indicated at article 4.1
Estonia [Article ratified - Report adopted on 29 March 2017 ]
With regard to Article 4, paragraph 4, of the Charter, the rapporteurs would like to advance the same
page 200 / 796 considerations as in respect of paragraph 2. Accordingly, the implementation of this provision is, in practice, not fully guaranteed at local authority level. The principles of consultation are laid down in the rules of the Government of the Republic of Estonia in Estonian. These rules, particularly section 4 on co-operation and engagement and section 6 on co-ordination (concording), stipulate that the national associations of local government must be consulted when draft legislation is presented in parliament. In practical terms, the associations submit their comments on the draft laws via the e- law information system. The associations consider that, by and large, they have been duly informed and consulted about the new initiatives. At parliamentary level, we would mention the “Rule on Legal Technique of Drafts proceeded in Riigikogu”. During the consultation process, the rapporteurs were informed by the Constitutional Committee of the Parliament that Riigikogu Rules of Procedure and Internal Rules Act had been amended on 13th of May 2016 (§ 36 section 2) so as to oblige the committee to invite those interest groups that were invited to participate in the preparation of the bill, to participate in the discussion of this bill.
Finland [Article ratified - Report adopted on 28 March 2017 ]
Consult reply indicated at article 4.1.
France [Article ratified - Report adopted on 22 March 2016 ]
Consult reply indicated at article 4.1
Georgia [Article ratified - Report adopted on 7 November 2018 ]
According to Article 75, paragraph 3, of the constitution, “[o]wn powers defined by the organic law shall be full and exclusive”. This provision is nearly identical to the first sentence of Article 4, paragraph 4, of the Charter.
In practice, however, some competences that have been transferred to municipalities (for example, water supply) are not full and exclusive, and current public services are provided by enterprises that are under the ownership of the central government. The main cause of such a lack of clarity regarding devolved competences is a lack of coherence between the local government code and the sectoral legislation, but also inconsistency.
Water supply is a topical example. In 2017, centralised water supply systems were available to 72% of the population (compared with 68% in 2013). Municipalities were allocated the competence to supply water in 2014. However, the provision of the water supply is realised through outsourcing and public–private partnerships. In the case of the capital city, Tbilisi, the city of Rustavi and the municipality of Mtskheta, the water supply is provided by a commercial entity, Georgian Water and Power Ltd., while for the vast majority of Georgian municipalities, the water supply is provided by the United Water Supply Company of Georgia, a commercial entity that belongs to the central government and serves up to 57 local self-governing units. The municipalities are not permitted to intervene in monitoring the quality of State company-provided services. A different model is applied in the Autonomous Republic of Adjara; here the supply of water to the population is provided by companies that are under the ownership of municipalities. Recently, six municipalities in the Autonomous Republic of Adjara initiated a process of consolidation of these small companies into one regional company.
In 2016, the ministry of regional development and infrastructure prepared a package of legislative changes for harmonisation of sectoral legislation with the Code. This package was adopted at first reading in the Parliament of Georgia and is awaiting adoption following its second and third readings.
page 201 / 796 In view of this situation, it is clear that further steps should be implemented in order to fully comply with Article 4, paragraph 4, of the Charter. The rapporteurs are therefore of the opinion that at this stage Georgia partially complies with the above mentioned provision.
Germany [Article ratified - Report adopted on 14 March 2012 ]
Consult reply indicated at article 4.1
Greece [Article ratified - Report adopted on 26 March 2015 ]
Consult reply indicated at article 4.1
Hungary [Article ratified - Report adopted on 12 February 2021 ]
Article 4, paragraph 4, provides that “Powers given to local authorities shall normally be full and exclusive. They may not be undermined or limited by another, central or regional, authority except as provided for by the law”.
As it was already underlined by the 2013 report, the competences of local government in Hungary experienced a severe reduction after 2011 constitutional and legislative reforms, as many tasks have been recentralised by the State, or devolved to State deconcentrated administration. However, this does not mean that the remaining powers of local authorities are full and exclusive. It happens quite often that local authorities are bound by many legal and factual constraints, further reducing their powers.
During the monitoring visit, the delegation was informed that this happened in the waste management.70 Under the terms of the Cardinal Act on Local Self-Government, waste management is a mandatory duty of the local government. For many decades, municipalities resorted to their own companies, which also collected the waste collection fee. The new regulation removed the right to levy the waste collection fee from the waste handling public service providers (including local self- government companies) and this right was entitled to a State company set up for this purpose, so that this company could issue bills to residents. In theory, the legal regulation stipulated that this State company then shares with the public service providers the fees collected from the residents, irrespective of the actual costs, but in practice this become very complicated as the State company was unable, or only partially able to issue bills to residents, and as a consequence it did not have the funds, or only the partial funds to re-allocate to the public service providers. In addition, the local governments were forced to establish associations, and these associations then carried out waste handling with the involvement of the former public service providers as sub-contractors. Since the associations did not receive money, or only received money in part and delayed, from the central company, because it could not collect the fees properly from residents, was consequently unable to pay the sub-contractor, determining constant problems with waste collection.
Therefore, the rapporteurs consider that Article 4, paragraph 4 of the Charter is not respected in Hungary.
Iceland [Article ratified - Report adopted on 29 March 2017 ]
See answer at article 4.3
Ireland [Article ratified - Report adopted on 31 October 2013 ]
page 202 / 796 Consult reply indicated at article 4.1
Italy [Article ratified - Report adopted on 18 October 2017 ]
Consult reply indicated at article 4.1
Latvia [Article ratified - Report adopted on 27 March 2018 ]
Consult reply indicated at article 4.1
Liechtenstein [Article ratified - Report adopted on 28 March 2018 ]
As to the requirement of the full and exclusive exercise of local government powers, in general the Municipalities Act explicitly distinguishes between “own” and “delegated powers” (eigene” and übertragener Wirkungskreis). However, the rapporteurs observed that in some areas, the responsibilities of the central government and the municipalities seem overlapping that does not allow for the powers given to local authorities to be full and exclusive.
During the visit the rapporteurs observed that some tasks of local authorities, like the issuing of building permits or community planning and development, require joint action with state administrative bodies. During the consultation procedure the government informed the rapporteurs that according to the existing legal regulations in the area of building permits or community planning and development the central administration monitors compliance with the Building Law and grants building permits while the municipalities monitor compliance of projects with building regulation at municipal level and since structure plans exist both at national and municipal level, the government monitors municipal structure plans with regard to their compliance with the national structure plan and with the legal requirements.
However, during the meetings the rapporteurs heard criticisms in relation to unjustified central government intervention in clearly local matters, such as the designation of local residential areas.
Moreover, the municipalities’ power to prepare and adopt their own annual budget is not full and exclusive, since all municipal budgets must be approved by the central government.
The municipalities and the central government also have some shared functions and tasks in the field of public education. However, here, even if public education can be regarded at a very abstract level as a shared responsibility, in practice various tasks are carefully separated and clarified. While municipalities are responsible for paying teachers and maintaining primary school buildings, the central state carries out a number of professional tasks (e.g., it is responsible for curricula).
Therefore, in the opinion of the rapporteurs, Article 4 paragraph 4 is partially complied with by Liechtenstein.
Lithuania [Article ratified - Report adopted on 6 November 2018 ]
Consult reply indicated at article 4.1
Luxembourg [Article ratified - Report adopted on 21 October 2015 ]
Consult reply indicated at article 4.1.
page 203 / 796 Malta [Article ratified - Report adopted on 29 March 2017 ]
Under Article 4, paragraph 4 of the Charter, powers given to local authorities must normally be full and exclusive, and they may not be undermined or limited by another, central or regional, authority except as provided for by the law.
Despite the fact that there are no provisions in the Maltese Constitution or the Local Councils Act expressly restricting the exercise of the functions permitted to local councils by the central government, the exercise of the local councils’ functions necessarily depends on the annual grant, which is calculated and allocated on the basis of the formula laid down under the Local Councils Act. Since the extent of the financial and monetary resources available to the local councils to perform their functions is pre-determined and the local councils have no tax-collecting capacity, this necessarily means that the discretion and ability of the local councils to exercise their permitted functions is by no means full or exclusive. Instead, whether or not a local council will perform its functions permitted under the Local Councils Act and indeed to what extent, this will essentially depend on the size of the annual grant and the part of the grant earmarked to the performance of each function. Consequently, the power of the Local Councils to exercise their functions is not full or exclusive, contrary to the requirements of Article 4, paragraph 4 of the Charter.
Moreover, the submission of annual budgets to the central government and the practice of informing the national authorities or obtaining their approval prior to performing tasks or undertaking initiatives is not in line with Article 4, paragraph 4 of the Charter, which calls essentially for the lack of any restrictions or limitations on the local councils’ power and discretion to perform their permitted functions under the Local Councils Act.
In light of the above, the Republic of Malta is not in conformity with Article 4, paragraph 4 of the Charter.
Monaco [Article ratified - Report adopted on 28 March 2018 ]
Consult reply indicated at article 4.1
Montenegro [Article ratified - Report adopted on 21 October 2015 ]
Concerning Article 4, paragraph 4, the rapporteurs are of the opinion that the law is based on the assumption that competences are full and exclusive. This provision of the Charter is better reflected by Article 36 of the Law on Local Self-Government, stating that the municipality “shall exercise methods and conditions for performing its own affairs in accordance with possibilities, interests, and needs of the local population”. According to Article 37 of the same law, “When the Government estimates that performance of affairs of municipal own jurisdiction is of common interest for two or more municipalities, it may demand that the municipalities perform jointly such affairs or it may determine that such performance is of public interest and provide conditions for its implementation”. Generally, the rules provide for a clear understanding under which circumstances the authorities at the national level have a right to interfere with the actions of local governments. Consequently, the rapporteurs consider that the situation complies with this paragraph.
Netherlands [Article ratified - Report adopted on 26 March 2014 ]
Consult reply indicated at article 4.1
page 204 / 796 North Macedonia [Article ratified - Report adopted on 26 February 2013 ]
Consult reply indicated at article 4.1
Norway [Article ratified - Report adopted on 26 March 2015 ]
Voir réponse indiquée à l’article 4.1.
Poland [Article ratified - Report adopted on 2 April 2019 ]
Article 4, paragraph 4, provides that “Powers given to local authorities shall normally be full and exclusive. They may not be undermined or limited by another, central or regional, authority except as provided for by the law”.
During the monitoring visit, all the local representatives met by the delegation complained about the violation of the principle of Article 4.4, as in several matters the powers given to local authorities are not full and exclusive. Legislation, government and ministerial regulations contain very detailed provisions that do not leave to the local authorities the possibility to adapt them to local conditions. The Association of Polish Cities underlined that the issue is not new, as it was also mentioned in the 2015 Report, but over the last few years the problem has worsened. Education, social assistance, spatial planning are the fields in which the national regulation is so detailed that local authorities are left without any discretion.
During the consultation procedure, the government agreed that the issue of reducing freedom of task implementation system is not new in the Polish local self-government system, but the State must ensure some minimum access to public services and benefits. It further contested the reported limitation of the freedom of local self-government in adaptation of standards resulting from laws and government regulations to local conditions.
However, two very special cases were mentioned to the rapporteurs by local interlocutors which hold significant symbolic value: they are concerned with the competences of the municipal councils on monuments and streets’ names.
The representatives of the Capital City of Warsaw informed the delegation of the decision taken by the government allegedly in name of national security to localize the monument to commemorate the 2010 Smolensk air crash (in which the then President of the Republic, his wife and several other Polish high level officials died) in the main central square of Warsaw, in spite of a different previous decision of the municipality. The municipality considered this decision as intruding upon its competences on land use and planning and management of public places. The complaints that have been filed by the municipality have not been examined yet by the prosecutor and by the administrative courts.
The delegation was also informed of the dispute opposing several municipalities to the government as a consequence of the application of Law of 1 April 2016 on “de-communistisation” of names. Applicable from 2 September 2016, the Law requires the competent authorities of local government units to change such names within 12 months from the date of its entry into force. In the event of failure to fulfill this obligation by the appropriate bodies of the territorial self-government units, in accordance with Article 6.2 of the Law, the voivode issues a replacement order, in which (s)he assigns the name pursuant to Article 1 of the Law.
page 205 / 796 Since there are currently political disputes about which of the names of historical figures amount to propagation of communism in practice, the delegation was told that voivodes abused the right to issue replacement orders. The orders were then challenged by the municipalities before the administrative courts, which, in some cases ruled the acts of the voivodes to be invalid.
To conclude, the rapporteurs would like to underline that notwithstanding the governments’ legitimate interest in ensuring the basic service standards in the areas which have a major impact on the lives on citizens, the overall matter of improvement and development should be a responsibility for local self-government and for partnership between the local and central level, and not one-way top-down relations.
Therefore, the rapporteurs consider that Article 4, paragraph 4 of the Charter is not fully respected in Poland.
Portugal [Article ratified - Report adopted on 28 September 2020 ]
The rapporteurs note that some powers and responsibilities are transferred to local authorities via legal instruments specifying the type and method of transfer, as follows:
the transfer of powers linked to exclusively municipal matters which are of a general nature and universally applicable; the transfer of powers linked to matters relating to regional action programmes, with these powers being exercised by municipalities in line with the priorities laid down by regional development co-ordination councils, which are mere decentralised administrative units and therefore dependent on central government pending true regionalisation; the transfer of powers linked to matters relating to national action programmes, with these powers being exercised by municipalities in line with the priorities laid down by the Assembly of the Republic at the request of the government.
The rapporteurs consider, therefore, that Article 4 paragraph 4 of the Charter is complied with.
Republic of Moldova [Article ratified - Report adopted on 4 April 2019 ]
Under the law, the powers granted to local authorities are full and exclusive in the sense of Article 4.4 of the Charter, and the delegation did not hear specific complaints on this issue.
Consequently, the delegation believes that the Republic of Moldova complies with Article 4.4 of the Charter.
Romania [Non ratified - Report adopted on 3 March 2011 ]
As stated above, Romania has made an interpretative declaration concerning Articles 4(4) and (5) of the Charter.
Russian Federation [Article ratified - Report adopted on 30 October 2019 ]
Consult reply indicated at article 4.1
San Marino [Article ratified - Report adopted on 28 March 2018 ]
Consult reply indicated at article 4.2
page 206 / 796 Serbia [Article ratified - Report adopted on 18 October 2017 ]
Consult reply indicated at article 4.1
Slovak Republic [Article ratified - Report adopted on 24 March 2016 ]
Consult answer indicated at article 4.1
Slovenia [Article ratified - Report adopted on 6 November 2018 ]
Consult reply indicated at article 4.1
Spain [Article ratified - Report adopted on 20 March 2013 ]
Consult reply indicated at article 4.1
Sweden [Article ratified - Report adopted on 2 April 2014 ]
Consult reply indicated at article 4.1.
Switzerland [Non ratified - Report adopted on 20 October 2017 ]
The delegation reiterates that Article 4.4 has not been ratified by Switzerland.
Turkey [Article ratified - Report adopted on 1 March 2011 ]
The analysis article by article is currently unavailable
Ukraine [Article ratified - Report adopted on 31 October 2013 ]
Consult reply indicated at article 4.1
United Kingdom [Article ratified - Report adopted on 26 March 2014 ]
Consult reply indicated at article 4.1
Article 4.5 Scope of local self government
Where powers are delegated to them by a central or regional authority, local authorities shall, insofar as possible, be allowed discretion in adapting their exercise to local conditions.
page 207 / 796 Albania [Article ratified - Report adopted on 31 October 2013 ]
The Organic Law also states that Albanian municipalities and communes have delegated functions. These are functions of the central government which are, by law or by a contractual agreement, assigned to LGUs. The law provides that the central government guarantee the necessary financial support for the execution of these functions. However, the law does not specify which functions may be delegated to local authorities; the delegation of power is essentially left to line ministries. Therefore, in the rapporteurs’ opinion, it can be said that, in general, Albanian legislation on local government complies with paragraph 5 of Article 4; however delegated competences need to be clearly defined in Law No. 8652.
Andorra [Article ratified - Report adopted on 28 March 2018 ]
Article 4, paragraph 5 deals with delegated powers, asking for local authorities to be allowed discretion in the exercise of those powers. This provision does not raise any special issues in Andorra either.
Armenia [Article ratified - Report adopted on 15 June 2021 ]
Article 4.5
5 Where powers are delegated to them by a central or regional authority, local authorities shall, insofar as possible, be allowed discretion in adapting their exercise to local conditions.
167. The inherent nature of delegated powers is to allow some discretion for local authorities to decide on the best way to perform such tasks in the local circumstances. Although municipalities have very small executive functions in the range of delegated powers and functions, the rapporteurs were still left with the impression during the visit that local authorities can adapt the implementation of delegated powers to local contexts.
Austria [Non ratified - Report adopted on 28 September 2020 ]
In accordance with Article 12.2. of the Charter, Austria has not declared itself bound by this provision.
Pursuant to the explanatory report of the Charter, this paragraph builds on the familiarity of local authorities with local conditions. When receiving delegated tasks, local authorities “should, when possible, be allowed to take account of local circumstances in exercising delegated powers”.
In Austria, according to Article 119, paragraphs 1 and 2, B-VG, in performing delegated tasks, municipalities need to comply with the federal or Land laws, and the mayor – the person responsible for performing the said tasks, is bound by the instructions provided by the Federation or the Länder. Therefore, as suggested by the doctrine with regard to delegated functions, “municipalities have no right to self-government and serve as mere administrative units.”57
In light of the foregoing, the rapporteurs conclude that this provision is not fully respected in Austria.
Azerbaijan [Article ratified - Report adopted on 17 June 2021 ]
Delegation of functions to municipalities has traditionally not been used in Azerbaijan. The possibility
page 208 / 796 is provided for in the very Constitution (Article 144(II)), and in such case also the financing necessary to perform the task has to be transferred.
As mentioned above, the first and so far only case in which such delegation took place was in 2020, when the Cabinet of Ministers transferred from the Ministry of Ecology and Natural Resources to five municipalities a module type equipment for cleaning dirty water constructed in the shore of the Caspian. The delegation of functions was accompanied by the transfer of the financial resources necessary to manage them.
The rapporteurs were not able to collect first-hand information on how this delegation is working and is being implemented, and in particular it is not clear the extent of discretion that municipalities are given “in adapting their exercise to local conditions” as required by Article 4.5 of the Charter. In any case, no interlocutor pointed to any particular problem arising in this regard and all confirmed that the respective financial resources have been allocated in the State budget 2020.
The rapporteurs consider such first precedent an encouraging example of trust towards the municipalities and a demonstration of the fact that they can indeed be entrusted with tasks, including complex ones. They express the hope that this reportedly positive experience can be replicated more often and can open up new avenues for the balanced development of local self- government in the country.
As the possibility to delegate functions to municipalities is not only contained in legislation but is eventually also being implemented in practice, the conditions set out in Article 4.5 of the Charter can be considered to be met in Azerbaijan.
Belgium [Article ratified - Report adopted on 15 October 2014 ]
Flemish Region (Vlaanderen)
In the event of the delegation of powers by a central or regional authority, the local authorities should, as far as possible, be allowed discretion in adapting their exercise to local conditions (Article 4.5).
Some departments of the federal, community or regional administrations can implement deconcentration mechanisms or, quite the contrary, decentralisation mechanisms through the local authorities. The law has delegated some functions to local authorities with due respect for their autonomy. The municipalities are responsible in the following areas: public records, population, electoral matters and religious facilities, social services centres, education, police services, monitoring unemployment, issuing driving licences, and pension applications, while the provinces can propose candidates for certain judicial offices, validate municipal elections via the Council of Electoral Disputes, and give an opinion on some boundary changes. These delegations of powers and responsibilities to the local authorities entail various forms of oversight exercised by the higher authority.
As far as the communities and regions are concerned, no functions have been delegated to them as they are not political authorities subordinated to the federal state. They are federated entities with their own autonomy towards the federal state and have, in this respect, their own organs and functions.
Walloon Region and German-speaking Community
With regard to Article 4.5 and the delegation of powers, the rapporteurs note that the local
page 209 / 796 authorities can have allocated functions, either because the delegating authority considers they concern matters of municipal or local interest or because the delegating authority believes these functions will be better performed at the local level. According to the functions assigned and the legal instrument employed, the local authority will therefore be considered a devolved or decentralised authority.
As far as the German-speaking Community is concerned, the decree of 1 June 2004 entitled “Decree on the exercise of certain functions of the Walloon Region by the subordinate authorities in the German-speaking Community” (Dekret über die Ausübung gewisser Zuständigkeiten der Wallonischen Region im Bereich der untergeordneten Behörden durch die Deutschsprachige Gemeinschaft) enabled the supervision and funding of these municipalities to be carried out by the German-speaking Community. This transfer comprises:
- the general funding of the municipalities (municipal funds),
- the funding of road infrastructure and other grant-aided works,
- the supervision of municipalities’ administrative acts,
- the organisation of the bodies responsible for managing places of worship,
- regulations on funerals and graves.
The exercise of these new responsibilities first of all led to significant administrative simplification and to a reduction in the time taken to approve decisions for all the local authorities concerned as it rendered superfluous the systematic translation of administrative decisions and reduced the number of cases of special supervision. All the new provisions in the decree were taken after considering the specific local conditions and after consulting the local authorities.
Brussels-Capital Region
The legal basis for delegation of powers is enshrined in sections 108 to 111 and section 133 of the new Municipalities Act. Burgomasters may delegate all their statutory powers if they are absent or unable to discharge their duties. Regarding the police, a burgomaster may delegate part of his or her powers to an échevin. He or she may also delegate his or her power of signature.
The delegation was informed that the latest draft ordinance (adopted on 27/2/2014) amending the new Municipalities Act was brought before the Brussels Parliament without any prior consultation with the Conference of Burgomasters or the Association of the City and Municipalities. The Association would have liked to have been consulted, to have read the draft ordinance and to have given its opinion. Another example of failure to consult the Brussels municipalities, in which the latter were not even informed of its publication in the Belgian Gazette, was the ordinance of 26 July 2013 establishing a framework for transport planning (published in the Belgian Gazette on 3 September 2013) and amending the Brussels Urban Development Code.
Bosnia and Herzegovina [Article ratified - Report adopted on 31 October 2019 ]
Cantonal Constitutions provide for the possible delegation of competencies to lower levels as well as for the transfer to higher levels. Following consultations with the municipality concerned, this delegation shall take into account the subsidiarity principle and the capability of the municipality, according to the Law on Principles of Local Self-Government (Article 10); it shall be accompanied by the allocation of the necessary funds for fulfilling new tasks (Article 9). While various interlocutors
page 210 / 796 stressed that in practice obligations and responsibilities transferred to local authorities are often not accompanied by the transfer of financial assets for the fulfilment of those obligations, in contrast with Article 9 of the Charter, no complaints have been expressed with regard to undue interferences with the exercise of delegated powers.
Therefore, it appears that Article 4.5. on delegated powers is respected with regard to the discretion of local authorities in the adaptation of those powers to local needs. The rapporteurs however identified more problems in the conditions of the delegation of powers such as their insufficient funding which will be further developed under the analysis of Article 9.
Bulgaria [Article ratified - Report adopted on 21 January 2021 ]
Article 4.5
1. Delegation of competences and governmental tasks may adopt different mechanisms. Usually, the State or regional authorities keep the ownership of the competence and transfer to local entities the exercise or application of that competence. At the same time, the delegating bodies (in their capacity as “master of the competence”) keep the power to instruct the local ones on how to implement the delegated tasks and to supervise the execution of those delegated tasks.
1. According to Recommendation CM/Rec(2007)4 of the Committee of Ministers to member States on local and regional public services, the proximity to the population of local public services is a fundamental necessity. In order to ensure that services are adapted to the citizens’ needs and expectations, local entities should benefit from a high degree of decentralisation and a capacity for independent action. Delegating authorities should adopt minimum standards for the protection of the users of the delegated services and create the necessary machinery for monitoring compliance with them33.
1. According to the NAMRB, the scope of the State-delegated activities includes new services, mainly in the field of education, social care, as well as healthcare, defence and security. The scope of the most important delegated activities is the following:
• education: 86% of schools and 95% of kindergartens are municipal;
• healthcare: 36% of all hospitals or 122 municipal health facilities; nearly 100% of all nurseries, health offices in kindergartens;
• social assistance and care: 90% of social services are provided by municipalities.
1. The vague formulation of the own sphere of local self-government makes it possible to assign atypical responsibilities to the municipalities through changes in normative acts in the sectoral legislation. Such cases are: service (delivery) of administrative and judicial proceedings; control over the observance of copyright and related rights; control over the use of medicinal plants; deratisation and disinfection outside urban areas owned by others; control over the deposit and distribution of printed works; registration of apiaries, and so forth. This leads to additional aggravation of the administration and spending of own financial resources, while relevant discretion is barely granted to municipalities, as local interlocutors have stressed.
1. Annually, by a decision of the Council of Ministers, the activities delegated by the State, financed from the State budget in the organisation and provision of public services are
page 211 / 796 determined and standards are adopted for the activities delegated by the State with natural and value indicators in the respective year. Most of the new responsibilities transferred to the municipalities, primarily in the field of social assistance, education, and so on, are defined as State-delegated activities. The system for financing most of the State-delegated responsibilities through uniform expenditure standards currently applied, limits the powers of municipal councils to redistribute these resources according to local needs and priorities. The NAMRB upholds the position that the expansion of municipal powers should happen only if it goes hand in hand with relevant funding and discretion.
Croatia [Non ratified - Report adopted on 20 October 2016 ]
The issue of what in Croatia is called decentralised powers should also be raised. These are the competences that the ministries delegate to self-government bodies and correspondingly a more accurate name for these powers is “delegated” rather than “decentralised” powers. In this report they are called delegated powers and they are treated inter alia under Article 4 paragraph 5 of the Charter. They are neither elaborated in the Constitution of Croatia nor in the organic Law on Local and Regional Self-Administration, which is not uncommon in Europe.
The following are delegated powers: the granting of building permits, social protection, education and fire safety. According to the Ministry of Finance of the Republic of Croatia, in 2011 these delegated powers were enforced by 153 units,1 only regional self-government exercised all the above-listed powers. Only 66 towns (generally large towns) were engaged in the granting of building permits, education and fire safety and 67 municipalities exercised fire safety tasks only. This picture shows that the active units of government in Croatia are large towns and regions, although their autonomy in exercising these powers is limited to a certain extent by control and direct administrative intervention on the part of ministries.
The Charter states that the delegation of powers should be carried out according to the law. Delegated powers in Croatia are defined under ministerial decisions rather than by parliamentary acts. Article 4 paragraph 5 of the Charter intends that recourse to delegation to local authorities does not excessively impinge on the sphere of independent authority at the local level and that, where possible, the latter should be allowed to take account of local circumstances in exercising delegated powers. According to the existing practice in Croatia, local self-government bodies may only adapt the delegated powers to local interests by obtaining a preliminary consent from the ministries.
For the reasons stated above the rapporteurs consider that local authorities are very restricted in their exercise of delegated powers locally and conclude that Croatia does not comply with Article 4 paragraph 5 of the Charter on the powers delegated to local authorities by central government.
Cyprus [Article ratified - Report adopted on 20 October 2016 ]
See answer at article 4.1
Czech Republic [Non ratified - Report adopted on 8 March 2012 ]
As already noted, Article 4 para. 5 of the Charter is not binding for the Czech Republic. On the other hand, the Congress delegation’s clear impression is that Czech law is well in conformity with that provision. Not only does the Charter limit itself to talk about what is “possible”, a criterion the substance of which is by necessity much left to the determination of the relevant state. Even more does it seem clear that the systematic need for a decision by the judiciary in cases where a local or
page 212 / 796 regional authority is in disagreement with central government on the extent and/or substance of its responsibilities under the law makes Czech law comply with the obligation under the Charter, had Article 4 para. 5 been applicable.
It follows from what has just been said that the Czech Republic should consider withdrawing its declaration concerning Article 4 para. 5 of the Charter.
Denmark [Article ratified - Report adopted on 31 October 2013 ]
Consult reply indicated at article 4.1
Estonia [Article ratified - Report adopted on 29 March 2017 ]
Consult replies indicated at articles 4.2, 4.3, 4.4 and 4.6.
Finland [Article ratified - Report adopted on 28 March 2017 ]
Consult reply indicated at article 4.1.
France [Article ratified - Report adopted on 22 March 2016 ]
Consult reply indicated at article 4.1
Georgia [Article ratified - Report adopted on 7 November 2018 ]
According to Article 134.1 of the Code, a sectoral supervision authority can also provide “recommendatory instructions”, but these should not restrict the right of a municipality to ensure the exercise of its delegated powers, taking into consideration local conditions.
In view of this legislation, it can be confirmed that Georgia complies with Article 4, paragraph 5, of the Charter.
Germany [Article ratified - Report adopted on 14 March 2012 ]
Consult reply indicated at article 4.1
Greece [Article ratified - Report adopted on 26 March 2015 ]
Consult reply indicated at article 4.1
Hungary [Article ratified - Report adopted on 12 February 2021 ]
Article 4, paragraph 5, refers to delegated responsibilities, establishing that local authorities shall, insofar as possible, be allowed discretion in adapting their exercise to local conditions.
In Hungary, most of the delegated administrative powers were taken back by the central government from local officials (mainly from the town hall clerks). Since 1 January 2013, almost all the local and regional state administrative tasks and functions have been carried out by the newly established 198 district offices, which are the subordinate units of the county governmental offices.71 Although the delegated tasks have always been State administrative functions (earlier delegated to
page 213 / 796 municipal officials), as a consequence of their recentralisation, the mayor’s offices have lost a large part of personnel and a large amount of financial resources.
Therefore, the rapporteurs are of the opinion that Article 4, paragraph 5, can be considered only partially respected in Hungary.
Iceland [Article ratified - Report adopted on 29 March 2017 ]
Ireland [Article ratified - Report adopted on 31 October 2013 ]
Consult reply indicated at article 4.1
Italy [Article ratified - Report adopted on 18 October 2017 ]
Consult reply indicated at article 4.1
Latvia [Article ratified - Report adopted on 27 March 2018 ]
Consult reply indicated at article 4.1
Liechtenstein [Article ratified - Report adopted on 28 March 2018 ]
As regards social services, the costs of social care and assistance and the maintenance of social institutions (such as retirement homes) are co-financed by the state and the municipalities concerned. However, in the opinion of the rapporteurs, the shared financing of a mandatory function does not necessarily mean shared responsibilities, and, that being the case, this practice cannot be regarded as a breach of the Charter. Municipalities may also contribute to financing the costs of public transport on a voluntary basis, even though this falls under the responsibility of the state. “Partial compliance” can be established only if the decision-making power is divided.
As far as delegated powers are concerned, local autonomy is obviously more limited, since the central government bodies exert stronger supervision over their implementation, as compared with purely legal oversight. However, the rapporteurs noted that local authorities in Liechtenstein have sufficient discretionary powers in performing delegated tasks and therefore consider that the situation complies with paragraph 5 of Article 4.
Lithuania [Article ratified - Report adopted on 6 November 2018 ]
Consult reply indicated at article 4.1
Luxembourg [Article ratified - Report adopted on 21 October 2015 ]
Consult reply indicated at article 4.1.
Malta [Article ratified - Report adopted on 29 March 2017 ]
As to Article 4, paragraph 5 of the Charter, which calls for local councils, insofar as possible, to be allowed discretion in adapting the exercise of powers delegated to them by a central or regional
page 214 / 796 authority to local conditions, it is evident from all the above that the Republic of Malta is not in conformity with this paragraph of the Charter. As can be deduced from the list of permitted functions stated in Section 5 of this report, the range of the local councils’ functions is limited. Their execution essentially depends on the formula laid down under the Local Councils Act for the calculation of the grant allocated to each local council, since the latter neither have tax-collecting capacity nor do they have any other economic resources which may be considered adequate to finance the execution of their functions. The expenditure of the local council for each permitted function is pre-determined and it is factored into the grant allocated to the local councils as a lump sum, having as a result for the local councils to have no room for discretion for the application of such funds. Taking into consideration the strict administrative supervision undertaken by the central government, the practice of obtaining prior approval or notifying the central government before undertaking any initiative and the lack of income-raising capacity, the local councils do not have the discretion to adapt the exercise of the functions to local conditions. The impression of the delegation is that local councils lack the ability or discretion to set or follow priorities in the execution of their functions depending on the needs of their locality. Consequently, there is non-conformity with Article 4, paragraph 5 of the Charter.
Monaco [Article ratified - Report adopted on 28 March 2018 ]
Consult reply indicated at article 4.1
Montenegro [Non ratified - Report adopted on 21 October 2015 ]
Montenegro has not ratified the provision of Article 4, paragraph 5 of the Charter, but the rapporteurs would like to mention that during its visit, they were not approached with any substantiated demands for increased competences or delegated competences from central to local level. On the contrary, the interlocutors generally seemed to be content with the present scope of competences and of the associated self-governing rights on the side of municipalities. At the same time, the political actors at the national level seem to be prepared to think about more decentralisation. At least, there does not appear to be any fundamental opposition against further transfers of competences to municipalities as long as the effective and efficient performance by the respective local governments is regarded as guaranteed.
Netherlands [Article ratified - Report adopted on 26 March 2014 ]
Consult reply indicated at article 4.1
North Macedonia [Article ratified - Report adopted on 26 February 2013 ]
Consult reply indicated at article 4.1
Norway [Article ratified - Report adopted on 26 March 2015 ]
Consult reply indicated at article 4.1.
Poland [Article ratified - Report adopted on 2 April 2019 ]
Article 4, paragraph 5, refers to delegated responsibilities, establishing that local authorities shall, insofar as possible, be allowed discretion in adapting their exercise to local conditions.
page 215 / 796 During the monitoring visit, the delegation heard many complaints of local authorities, which claimed to have been left without any discretion in the exercise of those competences. They pointed out that they are becoming only paying agencies for the central government. This situation also has negative consequences at the financial level, since, as we shall see further infra (sub Article 9), the financial resources transferred for the exercise of those competences are not adequate. Furthermore, the Supreme Audit Office (NIK) criticized this system, pointing out that local authorities in the exercise of delegated competences only act as spending agencies for the central government. The NIK proposal was to change them into own competences of local authorities.
Therefore, and notwithstanding the government’s view to the contrary, the rapporteurs consider that Article 4, paragraph 5 of the Charter is not fully respected in Poland.
Portugal [Article ratified - Report adopted on 28 September 2020 ]
Article 237 paragraph 1 of the Constitution stipulates that the powers and the organisation of local authorities must be established by law. The regulatory power of local authorities is governed by Article 241 of the Constitution, which allows local authorities to adopt their own regulations within the limits of the Constitution and the laws and regulations issued by a higher category of local authority, or by an authority with oversight over the local authority in question.
The rapporteurs conclude, therefore, that Article 4 paragraph 5 of the Charter is complied with.
Republic of Moldova [Article ratified - Report adopted on 4 April 2019 ]
Under Article 4.5 of the Charter, “where powers are delegated to them by a central or regional authority, local authorities shall, insofar as possible, be allowed discretion in adapting their exercise to local conditions”. As noted above, Moldovan local authorities may receive delegated powers by the central authorities on the basis of the law (Law no.436-XVI of 28.12.2006 and Law no.435-XVI of 28.12.2006). However, the delegation heard many complaints from local elected representatives that when this happens, they are not allowed discretion in adapting their exercise to local conditions. The discharge of these competences must be implemented strictly within the guidelines and directives issued by the central government.
In the light of the above, the rapporteurs are of the opinion that the Republic of Moldova does not comply with Article 4.5 of the Charter.
Romania [Non ratified - Report adopted on 3 March 2011 ]
As stated above, Romania has made an interpretative declaration concerning Articles 4(4) and (5) of the Charter.
Russian Federation [Article ratified - Report adopted on 30 October 2019 ]
Consult reply indicated at article 4.1
San Marino [Article ratified - Report adopted on 28 March 2018 ]
Consult reply indicated at article 4.2
Serbia [Article ratified - Report adopted on 18 October 2017 ]
page 216 / 796 Consult reply indicated at article 4.1
Slovak Republic [Article ratified - Report adopted on 24 March 2016 ]
Consult answer indicated at article 4.1
Slovenia [Article ratified - Report adopted on 6 November 2018 ]
Consult reply indicated at article 4.1
Spain [Article ratified - Report adopted on 20 March 2013 ]
Consult reply indicated at article 4.1
Sweden [Article ratified - Report adopted on 2 April 2014 ]
Consult reply indicated at article 4.1.
Switzerland [Article ratified - Report adopted on 20 October 2017 ]
Consult reply indicated at article 4.1
Turkey [Article ratified - Report adopted on 1 March 2011 ]
The analysis article by article is currently unavailable
Ukraine [Article ratified - Report adopted on 31 October 2013 ]
Consult reply indicated at article 4.1
United Kingdom [Article ratified - Report adopted on 26 March 2014 ]
Consult reply indicated at article 4.1
Article 4.6 Scope of local self government
Local authorities shall be consulted, insofar as possible, in due time and in an appropriate way in the planning and decision-making processes for all matters which concern them directly.
page 217 / 796 Albania [Article ratified - Report adopted on 31 October 2013 ]
There are no clear regulations and rights for the involvement of the associations in the process of consultation with the central government agencies. No legal act of Albania stipulates what the specific obligations for the central government in process of consultation are. Although the right of LGUs to associate is guaranteed by the Constitution, the Rapporteurs would invite the Government to consider introducing a specific article in Law No. 8652 that will set up clear requirements for the central authorities to consult with LGUs on matters which concerns them directly, as required by paragraph 6 of Article 4 of the Charter and as reiterated in the Recommendation 171 (2005) on consultation of local authorities and Recommendation 328 (2012) on the right of local authorities to be consulted by other levels of government.
Andorra [Article ratified - Report adopted on 28 March 2018 ]
Finally, Article 4 paragraph 6 of the Charter provides that “local authori ties shall be consulted, insofar as possible, in due time and in an appropriate way in the planning and decision making processes for all matters which concern them directly”. During the meetings all the interlocutors evaluated the relationship between the State and the municipalities as very smooth and fair. Although a formal mechanism of consultation does not exist, the municipalities are always consulted by the government and all important decisions (including the ongoing reform of the competences and the financial transfers) have been duly negotiated with the municipalities. The size of the country also has to be taken into account since the proximity of the central authorities certainly facilitates informal ways of consultations. The delegation observed that the prime minister is very accessible to local representatives although no specific Ministry has the competence for local government. In addition, most of the national politicians have a record as mayors or local councillors and are very much familiar with local issues and needs.
Therefore, the rapporteurs consider that in practice local authorities of Andorra are consulted in due time and in an appropriate way on all matters that concern them directly. At the same time they would suggest entrenching the consultation requirements in the law in order to give a stronger guarantee to local authorities and secure the maintenance of consultations on the same systematic level in future.
In conclusion, rapporteurs believe that, taking into account the specificities of Andorra, Article 4 of the Charter can be considered as generally respected.
Armenia [Article ratified - Report adopted on 15 June 2021 ]
Article 4.6
6 Local authorities shall be consulted, insofar as possible, in due time and in an appropriate way in the planning and decision‑making processes for all matters which concern them directly.
168. The Charter requirement concerning the right of local authorities to be consulted “in due time and in an appropriate way” in matters which concern them directly is not reflected in the LGA, either in general or specific cases.
169. As explained above (see section 3.1.10), there are still no institutionalised mechanisms of consultation between the central government and municipalities in Armenia. The government regularly circulates draft legislative proposals to public organisations, including the associations of
page 218 / 796 local authorities, for opinion. The public council, operating under the authority of the MTAI, does not provide exclusivity in consulting local authorities, as it represents the platform for all public organisations. Although there is direct contact between the government and the national association of communities, it cannot replace a well-regulated, effective system of consultation that would provide not only relevant information to the municipalities about the issues relating to them but would also ensure their real involvement in the decision-making process prior to the relevant decisions being taken.
170. During the consultation procedure, the MTAI opposed this view and underlined that legal issues are addressed through parliamentary channels (the Standing Committee of the National Assembly, meetings with the electorate, awareness campaigns, pooling of feedback from municipalities, exchange with the central and local authorities, analyses and reporting at panel sessions, etc.) and, in addition, administrative procedural and application issues are tackled through methodological support, circulation of elucidatory materials by line ministries co-ordinated by the MTAI, and topical meetings (on site and centrally). It also pointed to the website www.e-draft.am, established by the government as an online platform for gathering feedback from municipalities, and to the Official Gazette (Bulletin) of the government periodical Procurement Bulleting. It further argued that there are various specific consultation practices established by law that regulate a number of important aspects of interaction between the government and municipalities, for example in the area of legislation development, budgeting and local socio-economic development. The MTAI stressed that several initiatives were proposed by municipalities themselves through those channels (for example, the LED project proposals for joint funding of specific projects and the subventions).
171. The MTAI pointed out that although no association can play an exclusive role in these consultations, the quality of consultations should be improved to establish a better dialogue between the parties concerning public policy making.
172. However, although there are specialist national community organisations, financial officers and community council members, the Association of Communities of Armenia is the only nationwide association representing the interests of the municipalities. The rapporteurs heard that contact between the government, its line ministries and the national association is occasional and depends on the governmental will, which makes local authorities vulnerable. As the rapporteurs were made aware, in some cases the municipalities concerned learned about the ongoing amalgamation process from the press.
Austria [Article ratified - Report adopted on 28 September 2020 ]
The right of local authorities to be consulted by higher levels of government is a fundamental principle of European legal and democratic practice and pillar of good governance building. In fact, the Congress formulated several principles that should guide the consultation process, namely: mutual respect between all actors; openness and transparency; responsiveness, with all actors providing appropriate feedback.58
Pursuant to Article 10.3, B-VG, before the Federation concludes state treaties which make necessary implementing measures in the sense of Article 16, B-VG or affect the autonomous sphere of competence of the Länder in another way it must give the Länder the opportunity to give their opinion. If the Federation is in possession of a uniform opinion of the Länder, the Federation is bound thereby when concluding the state treaty. The Federation may depart therefrom only for compelling foreign policy reasons; it shall without delay advise the Länder of these reasons.
According to Article 14b.3, B-VG, when legislating on public tendering, the Federation has to grant
page 219 / 796 the Länder opportunity to participate in the preparation of draft bills; in addition, if the execution of such legislation falls under the business of the Länder, the latter need to give their consent.
Article 23d, B-VG states that the Federation must inform the Länder and municipalities, should they be concerned, without delay regarding all projects within the framework of the European Union which affect their autonomous sphere of competence or could otherwise be of interest to them and it must allow them opportunity to present their views within a reasonable interval to be fixed by the Federation. Such comments shall be addressed to the Federal Chancellery. In these matters, representation of the municipalities is incumbent on the Austrian Association of Cities and Towns (Austrian Municipal Federation) and the Austrian Association of Municipalities (Austrian Communal Federation) (Article 115.3, B-VG).
Austria is known, also, for its informal horizontal cooperation of the Länder, taking the form of a Conference between Land Governors (Landeshauptleutekonferenz). These Conferences act as true political fora where unanimity is required to reach a decision.59 In addition, as already presented (above 3.2.2) all Land constitutions have specific regulations pertaining to public consultation (referenda, public initiatives, etc.).
Pursuant to Article 34.1, B-VG, the Länder are represented in the Federal Council in proportion to the number of nationals in each Land. The members of the Federal Council are elected by the Land Parliaments. The Federal Council has the right to submit legislative proposals to the National Council (Article 41.1, B-VG), every enactment of the National Council60 is conveyed by its President to the Federal Council (and save as otherwise provided by the constitutional law) an enactment can be authenticated and published only if the Federal Council has not raised a reasoned objection to the enactment (Article 42.2, V-VG). To the extent an enactment of the National Council requires the consent of the Länder, it is to be notified by the Federal Chancellor pursuant to Article 42, B-VG, immediately after the procedure has been closed to the Land Government Offices of the Länder concerned. The consent is deemed to be granted if the Governor of the Land does not notify the Federal Chancellor within eight weeks after the day on which the enactment has been served to the Land Government Office, that consent is denied. Before expiry of this period the enactment may only be published if the Governors of the Länder concerned have notified the express consent of the Land (Article 42a, B-VG). Finally, the Federal Council needs to give its consent when constitutional laws or constitutional provisions contained in simple laws restrict the competence of the Länder in legislation and execution (Article 44.2).
Considering the above, the rapporteurs assess that there are effective consultation mechanisms of local authorities in place, and that Austria complies with provision 4.6 of the Charter.
However, during the monitoring visit, the rapporteurs took note of the municipalities’ interest in having a stronger (constitutional) voice at the federal level, especially when financial matters are concerned (e.g. in the distribution of shares from the federal taxes; in concluding agreements on the basis of 15a B-VG; etc.).
The rapporteurs reiterate the invitation to the Austrian authorities to consider modifying Federal Constitutional Law in order to allow the associations of municipalities to participate in agreements between the Federation and the Länder on all matters that concern them. Also, fully considering the particularities of the Austrian consensual-driven policy making, the rapporteurs underline the importance of considering the municipalities equal partners of the Federation and the Länder.
Azerbaijan [Article ratified - Report adopted on 17 June 2021 ]
According to the national associations of municipalities and to the representatives of the Parliament
page 220 / 796 met by the Congress’ delegation, municipalities are quite regularly consulted, especially but not exclusively through their associations, on central government plans or decisions that primarily affect the interests of municipalities. Representatives of the Parliament also affirmed that consultation procedures are normally activated on any draft legislation relevant to municipalities or to their association and that municipalities or their associations can also submit proposals for legislation. By way of example of the alleged good practice to consult national associations as well as individual municipalities when bills are discussed that are of municipal concern, representatives of the parliamentary committee on regional relations mentioned that the transfer of responsibility on cemeteries to municipalities took place following intense consultations. Legislation, however, remains silent on conditions and procedures of consultation, except in financial matters that directly concern municipalities (see below, Article 9). Reportedly, also a network of informal consultations is in place which makes it possible to bring municipal issues to the attention of state authorities at both central and regional level.
Very few examples of consultations – especially the formal ones – have been provided to the delegation despite several questions. The government pointed to the Ministry of Justice’s Instruction on “Assistance in organizing the activities of municipalities and methodological assistance to them” as an example of consultation with the national associations. The national associations of municipalities pointed out to the delegation that consultation with municipalities is improving and that (unspecified) draft laws are currently in the pipeline in the work of Parliament. According to the national associations the provision of subsidies and subventions to municipalities in the draft budget of the Republic of Azerbaijan are also discussed with municipalities and their national associations in the Milli Majlis, Ministry of Justice and other central executive bodies and inquiries are made to find out their opinion on specific issues. The Mayor of Saray told the delegation that he knows how to raise issues of concern and therefore he is not missing a formalised procedure for consultation.
This shows that while consultation is possible and takes place informally, it is not an established practice, nor is it perceived as an important element for the functioning of local self-government to the extent that deserves to be enshrined in legislation.
It must be reminded that consultation is a key principle of the Charter and municipalities should be consulted by state bodies in the discussion and approval of laws, regulations, plans and programmes affecting the legal and operational framework of local democracy, as reminded by the Contemporary Commentary (Paragraph 79). In order to raise awareness of the key importance of consultation as a procedural backbone for the functioning of (local) democracy, the Congress has adopted several recommendations and resolutions on the right of municipalities to be consulted. It has reminded that the right of local authorities (municipalities) to be consulted is “a fundamental principle of European legal and democratic practice”, as it contributes to good governance (Recommendation 171 (2005))28 and that local authorities (municipalities) should have an active role in adopting the decisions on all matters that concern them and in a manner and timing such that they have a real opportunity to formulate and articulate their own views and proposals, in order to exercise influence (Recommendation 328 (2012)).29 Therefore, consultation cannot be exercised only in practice and outside transparent procedural frameworks.
Next to the procedures to consult municipalities as such, prior to making decisions that might affect them, the Azerbaijani legislation provides for instruments that allow to consult citizens, including by means of referenda. The Law on Local Referenda defines the issues that may be decided by local referendum and establishes procedures for organizing referenda, publishing the results and enacting them into law.
Municipalities may hold a referendum on any issue within their competence at their own initiative or at the request of at least ten percent of eligible voters in the respective territory. Referenda are
page 221 / 796 financed from local budgets. When a referendum is to be held, the municipality issues a resolution announcing the date of the referendum, the issue at stake and the order of financing. This resolution must be publicized in the local mass media within three days.
The Law on the Status of Municipalities provides for a number of instruments for direct participation of citizens, such as opinion polls, meetings of citizens (in municipalities with less than 500 inhabitants), popular initiatives, petitions by citizens and other forms, including neighbourhood committees, associations, and charitable organizations (Articles 26-30). It is curious that among the instruments for citizens participation also elections are mentioned (Article 27) and that some interlocutors, asked about participation, mentioned that citizens can listen to the meetings of the municipal councils, can call members of municipality on the phone and that mayors make themselves available for the press.
The Congress delegation could not get informed about the practical use of such instruments. The representatives of the national associations of municipalities explicitly stated that, overall, the level of citizen participation in local governance processes, including decision-making on local issues, is not high in the country. The practice to resort to participatory instruments is in any case extremely limited and they do not form part of the ordinary life of municipalities.
Due to the significant difference between the legal framework and the practice as far as consultation is concerned, the requirements of Article 4.2 of the Charter are met only in part in Azerbaijan.
Belgium [Article ratified - Report adopted on 15 October 2014 ]
Flemish Region (Vlaanderen)
With regard to Article 4.6, the local authorities must be consulted, as far as possible, in due time and in an appropriate way, in the planning and decision-making processes for all matters that concern them directly.
Dialogue, consultation, co-ordination and co-operation, both horizontal (between local authorities) and vertical (between local authorities and higher authorities), is an important reality, even if it sometimes takes place informally.
The local and provincial authorities are consulted by the Flemish government through their associations on matters concerning them directly. In Flanders, at management level, the Association of Towns and Municipalities and the Flemish Region’s Strategic Advice Council (Strategisch Adviesraad) play an important role in the consultation of the local authorities. At the legislative level, dialogue and the consultation of the local authorities take place directly both in the context of the Committee for Internal Affairs of the Flemish Parliament and the Vlabest, the Flemish consultative council, in whose work the towns and municipalities are invited to participate. A significant role in ensuring indirect dialogue, consultation and co-ordination is also played by the large number of MPs who also have a local mandate (currently no less than 75% of MPs).
The rapporteurs were informed that the Association of Flemish Towns and Municipalities and the Flemish Association of Provinces are regularly consulted on matters concerning them directly.
The rapporteurs were also told during their visit that the Flemish government systematically consulted the respective associations of the local municipal subdivision and of the provincial authorities in the Committee on negotiations and consultations concerning matters relating to work and employment within the local and provincial authorities. The Flemish government also holds talks on matters of governance with the associations present on the Flemish Advisory Council for
page 222 / 796 Administrative Affairs (VLABEST) platform, which gives advice of every strategic case. Representatives of the Association of Flemish Towns and Municipalities and the Flemish Association of Provinces are members of this advisory council.
Article 4 is generally complied with in Flanders and the Government is urged to continue the reforms proposed in order to clarify the powers and responsibilities of the provinces and strengthen local and provincial democracy. In the framework of the Sixth State Reform, the rapporteurs stress the importance of continuing to improve dialogue with the communities and regions as subjects which directly concern the communes.
Walloon Region and German-speaking Community
With regard to the local authorities’ right to be consulted, the UVCW has a key role in the dialogue between the Walloon Region and the municipalities. It is recognised as the representative federation of the towns, municipalities, social services centres and police areas in Wallonia. At the Walloon level, it plays an important upstream role via structured contacts with administrations and cabinets when governmental measures are being prepared and a downstream role via structured contacts with the Walloon parliament. The UVCW is often consulted when parliamentary committees examine draft decrees concerning the local authorities. Alternatively, municipal parliamentarians draw for their contributions to debates on analytical notes provided to them by the UVCW. The UVCW also sits on many regional, community and federal consultative committees.
At the federal level, the consultation process takes place through the Union of Towns and Municipalities of Belgium, of which the UVCW is a member, like its sister associations the Union of Flemish Towns and Municipalities and the Association of the City and Municipalities of the Brussels- Capital Region.
The UVCW has reiterated the importance of the Federal Government undertaking to carry out a consultation with representatives of the local authorities (municipalities, social services centres, police areas, future emergency rescue zones) each time it plans measures concerning them, especially when these measures have financial implications for them. At the same time, the unions of towns and municipalities must participate in intergovernmental consultations between the Federal Government and the regions when the Consultation Committees deal with issues concerning the local authorities. Similarly, when issues concern the local authorities, experts from the unions of towns and municipalities must be involved in the work of the Higher Finance Council.
The German-speaking Community maintains a close relationship of partnership and complementarity both with the Walloon Region, which has transferred responsibilities to it, and with its local authorities, the nine municipalities, which can be explained by the relatively small size of the territory and by their linguistic identity. Various meetings take place several times a year between the Community’s authorities and the local authorities.
The delegation is of the opinion that, generally speaking, Article 4 is complied with and applied in respect of the local authorities of the Walloon Region and the German-speaking Community. However, the sharing of responsibilities between municipal and provincial authorities has not been regulated by the federal legislature or the Walloon regional legislature. At the same time, the federal and the regional must comply with the principle of subsidiarity and improve consultation with the local authorities and their respective representatives.
Brussels-Capital Region
In the rapporteurs’ opinion, clarification is required regarding the division of powers and missions
page 223 / 796 between the Region and the 19 municipalities. Furthermore, it is important that the municipalities should remain solely responsible for all matters concerning them and that the federal state should take financial responsibility for a number of missions within its remit, the cost of which is borne mainly by the Brussels municipalities. Consultation of local authorities in all matters of direct concern to them must be improved, and the Association of the City and Municipalities of the Brussels-Capital Region (AVCB) must here be one of the main partners in the dialogue that is essential between the Region and its local authorities.
Bosnia and Herzegovina [Article ratified - Report adopted on 31 October 2019 ]
In the Federation of Bosnia and Herzegovina, municipalities appear to be quite vocal in public debate and their consultation on legislative proposals is foreseen as part of mandatory public consultation by the Law on Principles of Local Self-Government (Articles 53 and 56) as well as by the Federation of Bosnia and Herzegovina Parliament’s Rules of Procedures on Legislative Drafting. Among the 25 working bodies and committees within the Federation of Bosnia and Herzegovina Parliament, there is also one dedicated to local self-government issues. However, in practice, the consultation requirement by higher authorities does not seem to be systematically respected, in particular when new legislation imposes fees on local authorities (e.g. fire-brigades and electric energy supply). Currently, there are already 8 decisions by the Constitutional Court of the Federation of Bosnia and Herzegovina stating violations, including the annulment of the Federation of Bosnia and Herzegovina Law on Fire-Protection which imposed fees on local authorities without prior consultation. Another important area covers spatial plans and infrastructure. For example, Jablanica, situated on the current main North-South route to Mostar has not been consulted on the new highway (corridor 5C), which will – according to current plans – allow for an access in 40 km distance only, with probable negative consequences for the whole economic system of the municipality. Also, at Cantonal level consultation is not always respected: a law on transportation of pupils (2002) had been adopted by Canton West-Herzegovina without providing funds for municipalities to cover the new task and without approval by the Association of municipalities. Challenged by the association, in 2012, the Constitutional Court of the Federation of Bosnia and Herzegovina ruled in their favour. The issue of non-implementation of the relative Constitutional Court decisions will be mentioned under the analysis of Article 11.
The new Republika Srpska Law on local self-government (2016) provides for mandatory consultation with the Republika Srpska National Assembly through the Republika Srpska Association of local authorities, as an NGO representing all cities and municipalities. The rapporteurs have been informed that a strategy for the development of local self-government shall be elaborated and a working group for the follow-up on implementation has been established to this end. Already during the preparation of the new Law, for which the Charter has been used as a “guiding line” (according to the information from the Republika Srpska Ministry of Local Self-Government), comprehensive consultation has been organized for more than one year (starting in October 2015). The law has been supported by the Republika Srpska Association of local authorities and consultation has led to some changes in the draft. Some interlocutors stressed however the importance of informal, political channels for representing local interests, which could be an indicator that the official, formal channels are less used in practice.
The Brčko District participates via a representation office in the Council of Ministers BiH as well as in the co-ordination mechanism. The powers of the international supervisor are frozen for some years. The delegation was told by the representative of Brčko District that co-operation and compromise are part of Brčko’s peculiar political culture. The delegation heard no complaints on consultation with higher level authorities.
The rapporteurs consider that Article 4.6. is respected only in legislation, but not in practice.
page 224 / 796 The practice of consultation needs to be developed and improved, in particular in the Federation of Bosnia and Herzegovina. The establishment of a Federation of Bosnia and Herzegovina Ministry for Local Self-Government as a central institution and interlocutor for all issues concerning local government, as recommended by the Association of the municipalities and cities of the Federation of Bosnia and Herzegovina, could be an important step to improve consultation process.
Bulgaria [Article ratified - Report adopted on 21 January 2021 ]
Article 4.6
1. Consultation is a key principle of the Charter and local authorities should be consulted by State (or regional) bodies in the discussion and approval of laws, regulations, plans, and programmes affecting the legal and operational framework of local democracy. This also increases democracy, in the sense that decision makers should listen to the voice of local authorities and of their associations. Moreover, this is demanded by the principles of 34 transparency in the governmental action, and by the principle of subsidiarity .
1. The Congress has adopted several recommendations and resolutions on the right of local 35 authorities to be consulted by other levels of government . In its Recommendation 171 (2005) the Congress emphasised that the right of local authorities to be consulted is a fundamental principle of European legal and democratic practice, the aim of which is to 36 37 contribute to good governance . Recommendation 328 (2012) emphasises that consultation should be organised in a manner and timing such that local authorities have a real opportunity to formulate and articulate their own views and proposals, in order to exercise influence.
1. According to information provided by the NAMRB, on issues that directly concern the municipalities, the following statutory consultation mechanisms apply.
At the initiative of the NAMRB since 2016, through amendments to the Normative Acts Act, each draft normative act that affects the powers of municipalities should be consulted with the NAMRB before being submitted for adoption to the Council of Ministers.
The draft normative acts are subject to obligatory public consultation and published on a special internet portal of the government. Within the deadlines for these consultations, both the NAMRB and individual municipalities can also send their opinions and actively do so.
In the parliament, the NAMRB submits opinions to the competent parliamentary committees on all bills which affect the activities of municipalities. Representatives of the NAMRB are invited to participate in meetings of parliamentary committees and may express positions during the debates on submitted bills.
In total, the NAMRB and the municipalities participate in 260 advisory bodies, councils, commissions and working groups at the various ministries and central departments with 640 representatives from 180 municipalities. This approach of preliminary joint work provides the municipalities with the opportunity already at the stage of initiative to reform particular sectors and be an active participant in the process.
The representation of the NAMRB in the Monitoring Committees of the Partnership Agreement with the EU 2014-20, in the Monitoring Committees of the Operational Programmes and the Rural Development Programme is important for the activity of the municipalities. These powers are defined by a decree of the Council of Ministers.
page 225 / 796 Municipalities are also represented in the new regional development councils, which according to the Regional Development Act co-ordinate the implementation of State policy for regional development in the respective planning region at Nomenclature of Territorial Units for Statistics (NUTS) level 2. Representatives of municipalities (mayors and chairmen of municipal councils) have 70% of the votes in the regional councils. They were elected through a transparent procedure organised by the NAMRB, at the level of planning regions. Thus, the local government will have the opportunity to participate directly in the process of preparation and approval of the new Integrated Territorial Strategies (ITS) for Development at NUTS 2 level planning regions. The law provides for these strategies to be adopted by the Council of Ministers under the proposal of the Minister for Regional Development and Public Works after their approval by the relevant regional development councils.
1. Another important institution for consultation is the Council for Decentralisation of Public Administration (where also the NAMRB is represented) at the Council of Ministers. It has a decisive role for the implementation of the main objectives of the decentralisation strategy. This permanent advisory body was established by a government decree in 2006 to support the implementation of State policy in the field of decentralisation. With various normative changes in governmental acts regarding the functions of this council, its activity was interrupted twice – from 2011 to 2013, as well as from 2016 to 2020. After persistent efforts by the NAMRB in August 2020 after a four-year interruption a meeting of the Council was held. At this meeting it was decided to update the Decentralisation Strategy 2016-25, to elaborate a programme for its implementation for the period 2021-25, as well as to prepare a draft government decree, guaranteeing the sustainable and effective activity of the Council. For this purpose, a working group was established, which started its activities in January 2021.
Croatia [Article ratified - Report adopted on 20 October 2016 ]
Article 4 paragraph 6 of the Charter concerns matters which come within the scope of local authorities, as do the other paragraphs of Article 4, but also matters which are outside their scope but by which they are particularly affected. Consultation with self-government bodies and their associations has traditionally been weak in Croatia where it is generally agreed that, despite decentralisation initiatives through different governments, the country structure remains centralised. Nevertheless, all of the Associations agree that there has been an improvement in information concerning new state laws, reforms and strategies which has arisen out of the public e-consultation code of conduct. Zagreb City further details that “Article 11 of the Act on the Right of Access to Information (Official Gazette 121/11 and 85/15) lays down that state administration bodies, other state bodies, local and regional self-government units and legal persons with public authority are obliged to conduct public consultations prior to the adoption of acts and subordinate legislation, and in the adoption of general acts or other strategic or planning documents where these affect the interests of citizens and legal persons. This Article also stipulates that the state administration bodies shall conduct public consultations via the central state website for public consultations by publishing the draft regulation, general act or other document, with a substantiation of the reasons and objectives to be achieved through adoption of the regulation, act or other document, and inviting the public to submit their proposals and opinions. This establishes the legislative framework for using the system of “e-Consultations”, which provides an overview of the open public consultations concerning the proposals of acts and subordinate acts, as well as active participation in their creation. The City of Zagreb is registered in the application of e-consultations and actively participates in public consultations, by giving comments and proposals for draft acts, other regulations and documents. It also participates in the consultations by supplying comments and proposals to draft acts, other regulations and documents via the Associations of Cities and the Croatian County Association, of which it is also member”.1
page 226 / 796 While the Association of Counties say that they are “regularly consulted” on new state laws, reforms and strategies, the means of providing their opinion is mainly through public e-consultation websites as well as their own initiatives on lobbying or promotional activities and consulting with experts etc.2 In the meeting with the delegation they also said they had been involved in discussions on the Act on Local and Regional Self-Government as well as the Act on Local Elections and themselves were investing more effort into making their voice heard. Nevertheless on other consultations they have been completely side-lined, in particular in relation to finance, which is discussed under Article 9 (cf infra para 139 ff).
As for the Association of Towns of Croatia and the Association of Municipalities of Croatia, they are dissatisfied with the low frequency and character of consultations. The municipality representatives note that they frequently lack information about decisions made by the government and mention that they can familiarize themselves with governmental decisions and draft laws/bills only after their promulgation. A further example on the absence of consultation was mentioned to the delegation pertaining to The Act on Salaries in the Local and County (Regional) Self-Government passed in 2010 (see infra under Article 6 paragraph 2). Nevertheless, pursuant to the Act on the Right of Access to Information, a draft law, before being passed, must be made public - which happens through the e- consultation system. A complaint by the Associations is that they do not receive separate notification of publication of the draft acts that concern them but must trawl indiscriminately through the websites hoping to find relevant information on which they will react and make their opinions heard. There is no system for pre-warning the associations of relevant draft legislation and in any case once the legislative text has been opened for wide public consultation, drafting has already reached an advanced stage. The Ministry of Public Administration for its part, says it, and other state administration bodies, regularly consult local and regional self-government units on matters which directly concern them, as a rule through their national associations. Furthermore, according to the Ministry, local and regional self-government representatives get involved in the work of expert working groups during the development of laws and regulations which concern them.3 Nevertheless these practices are not yet institutionalised and depend on the whim of the authority.
The Congress in its previous Recommendation 226(2007) called on the Croatian authorities to “make a general legal provision for the consultation of local and regional authorities in the planning and decision-making processes for all matters which concern them directly. A legal provision for consulting local and regional authorities is still lacking. A consultation process for the public at large is not an adequate replacement for consultation of local self-government bodies (and their associations). The Charter requires local authorities to be consulted in due time and in an appropriate way. This requirement of the Charter means that self-government bodies (or their associations) should have the right and possibility to consult a draft governmental decision so as to prepare their respective recommendations and have a real possibility to exercise influence.4 The right provided for by Article 4 paragraph 6 of the Charter entails the organization of consultations between two parties – local or regional and central governments – and is in no case limited only to e- consultation or a Code of Practice on consultation which are designed for informing and consulting the general public on draft laws.
The rapporteurs also note that a new government arrived in power at the end of January 2016, just a few weeks before the visit of the monitoring delegation. The new Minister of Public Affairs, in discussions with the delegation, has pledged a desire for greater consultation with self-government and its associations, in particular in relation to a “Decision on the implementation of reform measures for the improvement of the public administration system” adopted by the new government in February 2016 and which forms a component part of the National Reform Programme of Croatia. Before any final decisions are made on these reform measures she has said that discussions will be held with all the relevant parties – municipalities, cities and counties so as to find the best solution.31 The rapporteurs welcome this development and would like to be informed on this.
page 227 / 796 In conclusion the rapporteurs find that Croatia is partially in compliance with the Charter concerning Article 4 paragraph 6 on consultation and would recommend institutionalising a consultation procedure with local and regional authorities, through their associations, so as to provide a guarantee of their inclusion in the decision-making process on all matters concerning them directly.
To sum up, the rapporteurs conclude that Croatia partially complies with Article 4 of the Charter: Croatia does not comply with Article 4 paragraph 4 and paragraph 5 Croatia partially complies with Article 4 paragraph 2, paragraph 3 and paragraph 6 Croatia complies with Article 4 paragraph 1.
Cyprus [Article ratified - Report adopted on 20 October 2016 ]
See answer at article 4.1
Czech Republic [Article ratified - Report adopted on 8 March 2012 ]
As regards Article 4 para. 6 of the Charter, during the Congress delegation’s visit, some complaints were received regarding the presumed lack of due consultation in the planning and decision-making processes for all matters which concern local authorities directly. The Czech Republic is one of the member States where no particular law exists that makes it a general requirement to consult local authorities at the different legislative stages. After the visit, the Ministry of the Interior drew the delegation’s attention to the fact that such a duty is stipulated by general laws (Act on Municipalities, Act on Regions, Act on the Capitals City of Prague) and also by the Legislative Rules of the Government that define regions and associations of municipalities as “obligatory consultative subjects” as regards legislative proposals with reference to self-government matters or competences. Moreover, all legislative proposals are included into the Electronic Library of the Office of the Government and thus made public. In addition, regional councils have the right of legislative initiative, which entitles them to submit legislative proposals.
To some extent, the complaints may probably be explained by the fact that the relationship between central and regional government is spelled out in quite detailed statutory (including budgetary) provisions, thus leaving the final say to the political processes carried out within the two chambers of the Parliament (consultation is foreseen for procedures related to changing the boundaries of local authorities but such consultation has the legal value of an opinion and not of a decision binding on national authorities). Also, many elected local officials hold parliamentary mandates which is a form of political influence and information exchange that lies somewhere between "consultation" and "lobbying", and has a major impact on decisions concerning local authorities.
But it may nevertheless be worthwhile considering whether proper mechanisms of consultation should be further developed and formalised, not the least by involving the representative associations concerned (see further below on the right of local and regional authorities to associate under Article 10 of the Charter). Indeed, the Congress has already called on members States (including the Czech Republic), through its Recommendation 171 (2005) on consultation of local authorities, to introduce particular legislative provisions with a general requirement to consult local authorities at the different legislative stages “for all matters which concern them directly” and also to consult local authorities at all stages concerning the financial resources allocated to them (Article 9 para.6 of the Charter).
The question of the deadlines given to local authorities is an important element of proper consultation. In order that the terms stipulated by the Charter under Article 4 para. 6 ( “in due time and in an appropriate way”) can be implemented in a satisfactory manner, clear provisions should be
page 228 / 796 set out in relevant legislation allowing local government authorities sufficient time in which to consider the issues of interest brought to their attention.
Denmark [Article ratified - Report adopted on 31 October 2013 ]
Consult reply indicated at article 4.1
Estonia [Article ratified - Report adopted on 29 March 2017 ]
The Administrative Procedure Act (2001) is of particular relevance, with regard to consulting local government as a party to various proceedings. Not holding hearings, when authorised to by law, is an essential procedural error that invalidates the respective state administrative act. With regard to the consultation procedures for changing local boundaries, Article 158 of the Constitution of the Republic of Estonia states that the boundaries of local authorities shall not be altered without taking into consideration local government entities’ opinions. Section 46 of the State Budget Act establishes specific procedures with regard to consultation on the budget.
However, there seem to be some practical and organisational problems with the consultation procedure. The associations criticise the short deadlines allowed (normally a 15-working day consultation period is to be respected) and stress the important point that draft bills may change in substance during the parliamentary deliberation process. Continuous consultation of the associations may be necessary but it is not always implemented, although the associations have been involved in the work of the reform committee. In general, consultations concentrate on practical aspects of a draft; local authorities are less included in the governmental discussions and decision-making processes on fundamental political issues. Particular criticism came from the associations with respect to the Administrative Reform Act; according to them, the government has not sufficiently communicated the overall aims of the reform.
The rapporteurs consider that Estonia formally respects Article 4, paragraph 6, of the Charter. However, consultation mechanisms could be improved. There should be more detailed information about mid- and long-term projects and their consequences for local authorities. Consultation practices should be adapted local authorities’ need to closely follow deliberation processes. The government should not only organise the consultation process on a formal basis, in compliance with the criteria laid down in the Charter (in due time and in an appropriate way in the planning and decision-making processes for all matters which concern them directly), but the consultations should also take place on a regular basis. The rapporteurs are of the opinion that the consultation process between local authorities and the government should be globally improved in order to reinforce it.
To summarise these findings, the rapporteurs are of the opinion that non-compliance problems arise with the implementation of paragraphs 2 and 4 of Article 4.
Finland [Article ratified - Report adopted on 28 March 2017 ]
Consult reply indicated at article 4.1.
France [Article ratified - Report adopted on 22 March 2016 ]
Consult reply indicated at article 4.1
Georgia [Non ratified - Report adopted on 7 November 2018 ]
page 229 / 796 According to Article 76, paragraph 4, of the constitution, “state authorities shall make decisions on issues related to local self-government in consultation with self-governing units. The rule for consultations shall be defined by the organic law”.
According to Article 7, paragraph 3, of the Code, State authorities are obliged to hold preliminary consultations with non-entrepreneurial (non-commercial) legal entities that comprise more than half of the country's municipalities, before making decisions on issues relating to the powers of a municipality. One such non-profit (non-commercial) legal entity is NALAG, which unites all local self- governing units in Georgia. All draft laws relating to local self-government are submitted to NALAG for comments. In accordance with parliament regulations, all comments must be attached to the draft law and submitted to the parliament.
Georgia fully complies with Article 4, paragraph 6, of the Charter and this article could therefore be ratified by the Georgian authorities, as was confirmed by interlocutors during the monitoring visit to Georgia.
Germany [Article ratified - Report adopted on 14 March 2012 ]
Consult reply indicated at article 4.1
Greece [Article ratified - Report adopted on 26 March 2015 ]
Consult reply indicated at article 4.1
Hungary [Article ratified - Report adopted on 12 February 2021 ]
Article 4 para. 6 of the Charter provides that “local authorities shall be consulted, insofar as possible, in due time and in an appropriate way in the planning and decision-making processes for all matters which concern them directly”. This issue was addressed in Recommendation 341 (2013), according to which the Hungarian authorities had to “consult local authorities and their national associations and define the consultation partners so that appropriate and effective consultation is arranged, in practice, within reasonable deadlines on all issues of interest to local authorities”.
Since then, no new legal mechanisms of consultation have been introduced in the Hungarian legal system.72
As a matter of fact, the delegation received contradictory information about the practice of consultation, as some local authorities’ representatives did not complain about the lack of consultation, whereas other local representatives pointed out that local governments are not consulted by the central government and parliament. It was underlined that, as the law establishes that the government should consult with the parties affected by the legislation, the most important laws are submitted as private member’s motions, or as committee amendment motions, in order to avoid consultation. For example, the provisions on the solidarity contribution were introduced as committee amendment proposal, without any prior impact study or consultation. As for consultation via the National Cooperation Council of Local-Self Government (composed of representatives of the government and the presidents of the associations of local authorities) – which the Hungarian government mentioned in its comments to the draft report during the consultation procedure – according to the interlocutors, it cannot be considered as an effective tool, due to the time shortage or sometimes sabotage of the consultation meetings.
The delegation was informed that local authorities led by the opposition parties are experiencing
page 230 / 796 difficulties in getting answers from the government and, in general, they are not consulted by the State authorities.
Therefore, the rapporteurs believe that the requirements of Article 4.6 of the Charter are not complied with in Hungary.
Iceland [Article ratified - Report adopted on 29 March 2017 ]
Finally, Article 4 para. 6 of the Charter provides that “local authori ties shall be consulted, insofar as possible, in due time and in an appropriate way in the planning and decision making processes for all matters which concern them directly”. Recommendation 283 (2010), paragraph 5, lett. e), provided that Icelandic authorities should “clarify the situations, and also the related procedures, in which local authorities may be involved in national decision making that concerns them, by envisaging, for example, the right for local authorities to be consulted, to which the state would be bound”.
The new Local Government Act fully addressed this issue, since Article 2, para. 4, establishes that “No matters specifically concerned with the interest of a municipality may be resolved without consultation with the municipal council”. Article 98.3 provides that “At all times when issuing government edicts on the basis of this Act, the Minister shall consult the Association of Local Authorities in Iceland regarding their contents”. Actually, the association has been involved in the process of writing the new local government act. 145. Chapter XIII of the Act is dedicated to “communication and consultation between central government and the municipalities”. According to Article 128, “The Government shall ensure formal and regular collaboration with the municipalities regarding important issues of governance relating to the position and responsibilities of the municipalities. Formal collaboration shall take place regarding, amongst other things, the presentation of draft legislation with a bearing on the municipalities and on the control of public finances, the division of responsibility between central government and the municipalities and other important issues with a bearing on the interests or finances of the municipalities”.
Two main collaborative bodies have been established: a State and Municipal Collaborative Council and a State and Municipal Collaborative Committee. The first, that shall meet at least once each year, is integrated by the Minister responsible for local government and the chairman of the Association of Local Authorities in Iceland. Other Ministers shall attend meetings of the collaborative council as the occasion arises at any given time. The latter is composed by the permanent under- secretaries of the Ministry responsible for local government and by three representatives nominated by the committee of the Association of Local Authorities in Iceland. If necessary, the collaborative committee may decide to summon representatives from more ministries. The collaborative committee shall function under the auspices of the collaborative council, and be the forum for regular discussion and communication between the state and the municipalities. The collaboration agreement between the Association of Local Authorities and the Government establishes structures for the consultation and collaboration procedures between the association and the ministries. There is at least one annual consultation meeting with the Minister of Finance and the Minister of the Interior, and other ministers if relevant. Two standing subcommittees have been set up by the new collaboration agreement, with representatives from the association and the mentioned ministries. One deals with financial affairs and the other with labour market affairs. These committees collect data on development in their respective spheres and present them at the annual ministerial meetings. Parallel to these structures, informal contacts between the association and the State institutions play an important role in the collaboration procedure.1
In addition, Article 78 establishes that one out of three members of the Municipal Finances Monitoring Committee appointed by the Minister of Finance shall be appointed in accordance with a
page 231 / 796 nomination by the Association of Local Authorities.
In conclusion, although the number and importance of the powers and competences currently enjoyed by Icelandic municipalities could be considered in compliance with Article 4 of the Charter, the rapporteurs believe that the recommendation included in lett. a) of the Recommendation 283 (2010) should be reiterated and that Icelandic authorities should be invited again to clarify the division of responsibilities between central government and local authorities, in the light of the principle of subsidiarity.
Ireland [Article ratified - Report adopted on 31 October 2013 ]
Consult reply indicated at article 4.1
Italy [Article ratified - Report adopted on 18 October 2017 ]
Consult reply indicated at article 4.1
Latvia [Article ratified - Report adopted on 27 March 2018 ]
Local governments are regularly consulted in the adoption of matters that affect their interests, and they regularly participate in the decision-making of State institutions on those matters. Most of this consultation and participation is channeled through the national Latvian Association of Local and Regional authorities (LPS), under the authority of art. 96 of the Law on Local Governments, although local governments are free to conduct lobby and participation on an individual basis.
Moreover, this institutional consultation and participation is regulated in the Law by two key provisions. On the one hand, art. 86 of the Law on Local Governments provides that the Cabinet shall agree with the municipalities on issues concerning the interests of all municipalities, such as: draft legislation and draft regulations of the Cabinet concerning the municipalities; the amount of subsidies and earmarked grants to be allocated to municipalities each economic year and other financial matters that will be discussed infra.
It is important to underline that the Law does not provide for the local authorities just to be consulted (in the sense of “being heard”) but the duty of the State to negotiate and even “co- ordinate” with them. This means that the Law is pervaded by the principle of true, deep and “binding” participation of local authorities in the decision-making of State authorities.
The second relevant legal rule in this domain is the Cabinet regulation No. 585, of 6 July 2004. This regulation describes in a more detailed manner the matters on which the consultation and negotiation must take place, as well as the procedures to conduct such negotiation process. Thus, it is provided that: each year by 1 March, the LPS shall submit the competent ministries the list of officials who are authorised to participate in the negotiations; each year by 1 April, the ministries shall agree with the LPS on the issues that need to be co- ordinated, and the terms for their considerations; each year by 1 August, negotiations shall take place between the competent ministries and the LPS;
page 232 / 796 the results of the negotiations between the ministries and the LPS shall be drawn up as minutes.
During the consultation procedure, national authorities stressed the fact the minutes of negotiations between the Ministry of Finance and the Latvian Association of Local and Regional Governments shall be drafted, taking into account the agreement of the other ministries on financial issues, and in conformity with the requirements specified in the State Administrative Structure Law. After signing the minutes thereof shall be submitted to the Cabinet concurrently with the draft Law on the State Budget. Its further reviewing and sending to the Saeima shall take place in accordance with the requirements of Section 13 of the Law on Local Government Budgets, and the copies of the minutes shall be sent to other ministries for information.
Moreover, such minutes shall be published on the internet webpage of the Ministry of Regional Development and Local Government within one month after every negotiation. This undoubtedly increases the “binding” nature of the negotiation since they are made public.
The minutes shall be sent to the Cabinet. In the domain of financing, the minutes shall be sent concurrently with the draft Law on the State budget and later on to the Saeima.
In this domain, the local representatives met by the Delegation made two substantive claims. On the one hand, and even if they are satisfied with the current scheme and pattern of participation, they find that on too many occasions the Government circulates its proposals and drafts with a too narrow time span for making comments and allegations (in some cases, it was reported, in a deadline of just some hours!). This was a recurrent claim made by several local representatives. This means that, in practice, the local governments have no time to react to the government proposals. This is a bad practice that could certainly be improved. On the other hand, they also claimed that during the territorial reforms, which entailed among other measures the suppression of many local governments, the voice of the local entities was not properly taken into consideration.
In the light of the precedent, the Delegation considers that Latvia complies with article 4 of the Charter.
Liechtenstein [Article ratified - Report adopted on 28 March 2018 ]
The Charter requirement concerning the right of local authorities to be consulted “in due time and in an appropriate way” in matters which concern them directly is not reflected in the Act either in general, or in specific cases. However, in Liechtenstein municipalities are effectively involved in the decision-making processes regarding matters that affect them, despite a lack of institutionalised consultation mechanisms. In light of the above considerations, the rapporteurs’ consider that Liechtenstein complies with the requirements of paragraph 6 of Article 4 of the Charter.
Consequently, the rapporteurs conclude that Liechtenstein complies with paragraphs 1 to 3 and 5 and 6 of Article 4, and partially complies with paragraph 4.
Lithuania [Article ratified - Report adopted on 6 November 2018 ]
Consult answer indicated at article 4.1
Luxembourg [Article ratified - Report adopted on 21 October 2015 ]
Consult reply indicated at article 4.1.
page 233 / 796 Malta [Article ratified - Report adopted on 29 March 2017 ]
According to Article 4, paragraph 6 of the Charter, local authorities have to be consulted, insofar as possible, in due time and in an appropriate way in the planning and decision-making processes for all matters which concern them directly.
The Local Councils Act contains a number of provisions under which the central government has to consult with the local councils or the Local Councils Association prior to taking any decisions or actions for any matters concerning the local councils.
Under Article 3(2A) of the Local Councils Act, prior to drawing a written policy regarding Local Government, the Minister must agree with the Local Councils Association.
Article 3(3) of the said Act provides that the local councils have to be consulted before any changes are effected to the boundaries of localities.
According to Article 37A(4) of the Local Councils Act, any change/transfer of a locality from one region to another may be made by the Minister responsible for Local Government after consultation with the Local Councils Association, whereas under Article 37A(5) of the Act, the functions of Regional Committees shall be those established by the Minister responsible for Local Government by regulations made following consultation with the Local Councils Association.
According to Article 47A(3) of the Local Councils Act, after consultation with the local council of a locality, the Minister responsible for Local Government may from time to time declare an area within the locality as a Community for the purposes of the law.
Lastly, during the consultation process the Ministry of Justice, Culture and Local Government informed the rapporteurs about recent setting up under the Chairmanship of the Director General (Local Government) of a Local Government Good Governance Working Group (LGGG) with a view to serving as a consultative forum and making recommendations to strengthen good governance practices at local level. The LGGG comprises representatives from the Local Councils Association, the Association of Maltese Local Council executive secretaries, the Office of the Auditor General and the Department of Local Government Monitoring and Support.
Nevertheless, during the monitoring visit the delegation was made aware of the fact that there is lack of formal consultation on behalf of the central government with the Local Councils Association and the local councils. Complaints were voiced to the delegation as to the inexistence of established formal consultation mechanisms and the delegation is left with the impression that consultation mechanisms should be laid down under the law and followed in practice, ensuring that local authorities’ opinion, views and needs are both, heard and taken seriously into consideration, prior to taking or implementing any decision which affects either them or the residents of their localities.
In light of the above, the rapporteurs conclude that the Republic of Malta is not in conformity with Article 4, paragraph 6 of the Charter.
Monaco [Article ratified - Report adopted on 28 March 2018 ]
Consult reply indicated at article 4.1
Montenegro [Article ratified - Report adopted on 21 October 2015 ]
page 234 / 796 With regard to Article 4, paragraph 6 of the Law on Local Self-Government provides an obligation of the State authorities to consult and include local self-government units in the process of adopting legal, strategic and other documents that define the status, rights and duties of local self- government units. Namely, Article 13 of the Law on Local Self-Government provides that when laws and regulations that define the status, rights and duties of the local self-government are being drafted, in particular in relation to activities that are regulated by the present law, the municipality shall be entitled to express its views. Furthermore Article 122a lays down the obligation of the State bodies, in the process of preparation of laws and other regulations and general documents that regulate the status, rights and duties of the local self-government, to provide drafts or Bills and other documents to the municipality for consideration within a period which may not be less than 15 days from the day of submission.
The rapporteurs were also informed that the Agreement on cooperation between the Union of Municipalities and the Government of Montenegro provides an obligation of the central government and its authorities to ensure involvement of representatives of the Union of Municipalities in working groups or organs who are preparing legal documents, regulations, strategic and other documents regulating the local self-government system (establishing rights or duties). Despite the fact that from a legal point of view, the obligation to consult and include representatives of the Union of Municipalities by central authorities is mostly respected, this principle is not fully applied in practice, and the government does not always consult local authorities. The rapporteurs have been told that the Union of Municipalities informed the Government of Montenegro in writing thereof and requested that the Government ensures implementation of the law with regard to compliance with the obligation of state authorities to present to municipalities all acts that define the status, rights and duties of local self-government units for consultation.
Representatives of the Union of Municipalities informed the rapporteurs that they are present in the most important Government bodies (Council for Improvement of Business Environment, Structural and Regulatory Reforms, Coordination Team for Local Self-Government Reform, National Council for Sustainable Development, Privatisation Council, Commission for Equalisation System, Commission for Concessions, etc.). However this presence does by itself not ensure a consultation or cooperation on all matters that concern them directly. Moreover, in order to improve the situation and accelerate the process of reform in the field of the local self-government, the Union of Municipalities has proposed to establish a separate state authority, other than the Ministry of Interior, which is actually responsible for local government. These new proposed institution would work predominantly on the matters of local self-government in Montenegro. The necessity of such institution results also from a too wide range of tasks that are under the actual portfolio of the Minister of Interior who is often not able to deal in detail with all problems relating to the functioning of local government. In that respect, the Union of Municipalities presented, at the beginning of 2014, the initiative to the Government and the Ministry of Interior for the establishment of a separate Ministry of State Administration and Local Self-Government. There has been no feedback regarding this initiative so far.
In conclusion, Article 4, paragraph 2 requires special attention by the national authorities. Also in regard to Article 4, paragraph 6, the local authorities must be consulted, as far as possible, in due time and in an appropriate way, in the planning and decision-making processes for all matters that concern them directly. This primarily refers to the application of this principle in practice, since legal framework and mechanisms are established. The rapporteurs believe that the non-ratified paragraphs 3 and 5 of Article 4 should be ratified, as they are already de facto applied.
page 235 / 796 Netherlands [Article ratified - Report adopted on 26 March 2014 ]
Consult reply indicated at article 4.1
North Macedonia [Article ratified - Report adopted on 26 February 2013 ]
Consult reply indicated at article 4.1
Norway [Article ratified - Report adopted on 26 March 2015 ]
Consult reply indicated at article 4.1.
Poland [Article ratified - Report adopted on 2 April 2019 ]
Finally, Article 4 paragraph 6 of the Charter provides that “local authorities shall be consulted, insofar as possible, in due time and in an appropriate way in the planning and decision-making processes for all matters which concern them directly”.
On this matter, as pointed out by the 2015 Report, the Polish Joint Committee represented a positive example of inter-governmental consultation, also in comparative perspective.
The legal framework has remained unchanged in the last few years, but in practice, the mechanism does not seem to provide any more for an appropriate consultation process. During the monitoring visit, the delegation heard recurrent complaints on the fact that an increasing number of decisions concerning local interests are taken at the central level without appropriate consultation of local authorities.
Especially emphasized was the practice to submit governmental proposals in the form of private bills lodged by members of the parliamentary majority, in order to avoid the obligation to consult with the Joint Committee. The delegation was informed that this procedure has become the “normal procedure”. Several examples of this practice were presented, including the Law on the protection of the environment, liberalising the logging of forests, and the Law that affected agricultural advisory centres.
Furthermore, several pieces of secondary legislation have been adopted by the government without any prior consultation of the Committee. One example that was mentioned by the Association of Polish Cities is the Regulation of the Council of Ministers of 15 May 2018, establishing the minimum and maximum remuneration for elected local representatives. In other cases, the delegation was informed that governmental projects have been submitted to the Committee, but the remarks of local authorities have not been taken into consideration by the government and the reasons for rejecting some comments were not communicated to local authorities.
During the consultation process, the government presented a different assessment of the situation, pointing out that during the current term of the government the Joint Committee has met 34 times, around 1209 legislative proposals were submitted for opinion to the Joint Committee, and only 3% of them have not been discussed with self-governments. The government maintains that the Joint Committee and its particular Task Forces have considered a wide range of issues. The government also pointed out that Joint Committee’s self-government representatives can participate in consultations held within the Sejm parliamentary committees when proposals are submitted by MPs.
page 236 / 796 Given that consultation and participation of local self-government authorities has become a matter of contention between the central and subnational authorities, the rapporteurs are especially concerned with this negative change in central-local relationships in Poland, which represents a significant regression compared to the previous acquis (achievements). Consequently, they encourage Polish authorities to restore those good practices based on collaboration and dialogue that used to characterise Poland’s experience in the past.
Therefore, the rapporteurs consider the requirements of Article 4, paragraph 6, are not respected in Poland.
Portugal [Article ratified - Report adopted on 28 September 2020 ]
The issue of consultation of local authorities in planning and decision-making processes was discussed during the monitoring visits and proved to be a sensitive one, even though there is now a national monitoring commission: the associations of local authorities are still calling for changes in this area, but both the government and the Assembly of the Republic do not appear to envisage reforms at this stage. These associations feel that there is a need for close monitoring if devolution is to be made a reality. The president of the ANAFRE expressed his regrets to the rapporteurs that the municipalities have no say on territorial reorganisations and have no access to the Constitutional Court and that the independent commission looking at the reorganisation of the State does not involve the regions in its discussions. For its part, the ANMP considered that it is given a proper hearing when the government prepares new legislation, although the discussion time is sometimes very short, and its comments are not always all taken into consideration.
The rapporteurs consider, therefore, that, despite noteworthy progress made since the last monitoring visit, Article 4.6 of the Charter is not yet fully heeded and accordingly conclude that it is only partially complied with.
Republic of Moldova [Article ratified - Report adopted on 4 April 2019 ]
This provision of the Charter deals with consultation and participation of local authorities in decision making. On the one hand, Moldovan legislation provides for the obligation to consult the local authorities and their associations: inter alia, Article 3 of Law No. 435 on Administrative Decentralisation; and Article 6 of Law No. 436 on Local Public Administration.
However, the overall impression of the delegation is that Moldovan local authorities are not regularly consulted in the adoption of legislation that affect their interests, and that they do not regularly participate in the decision making of state institutions on matters concerning them. This situation was one of the aspects analysed during the second fact-finding mission conducted by the Congress in the country in December 2017. On that occasion, the local politicians told the rapporteurs that the CALM is systematically excluded from governmental talks and negotiations in the field of local reforms. For instance, they claimed that the strategy on the reform of public administration was approved by a commission where there was not even one representative of the CALM.
During this monitoring visit, the local elected representatives met by the delegation insisted on the same points, although they conceded that there had recently been some minor changes. For instance, the government decided to organise some meetings, and the “parity commission” was not dismantled, as had been announced by the government. A “working group” to discuss further strategies and decentralisation initiatives was also anticipated. However, these slight changes are qualified as merely “political signs” by the CALM, and they do not constitute a true systematic change. In this respect, the local representatives (CALM and local elected representatives) that
page 237 / 796 spoke with the delegation made two substantive claims: the CALM does not influence legislation on matters affecting local interests in any way; consultation is not systematic, but rather selective and limited. Important issues are not discussed with local authorities. They are only consulted on minor issues and on a selective basis.
For its part, the central government denied the claims formulated by the CALM and by other local elected representatives in this field. Government officials contended that a platform for the efficient communication between the government and local authorities had been created, to which the CALM was invited; that government officials hold regular meetings with mayors around the country; that the “parity commission” for decentralisation is working well; that the government holds one meeting every three weeks in different cities, in order to be closer to local authorities; that the government regularly hears and receives communications and complaints from local authorities; and that the government has offered the CALM the possibility to attend the regular, weekly meetings of the government (which are broadcast in streaming) and that the CALM has refused to attend those meetings. In conclusion, the government claims that there has been a great opening of the government for dialogue with the CALM, which has refused this invitation.
The impression of the delegation is that, beyond the existence of legal provisions requiring the effective consultation of local authorities, the extent and effectiveness of this consultation depends on many variables, such as the political orientation of the ruling government, the personal affinities between local and central rulers, or the will of certain politicians. The tone of interterritorial dialogue, in any case, seems to be at its lowest level in years. This situation falls short of what is required by Article 4.6 of the Charter.
In the light of the above, the rapporteurs conclude that the Republic of Moldova does not comply with Article 4.6 of the Charter.
Romania [Article ratified - Report adopted on 3 March 2011 ]
Article 4(6) of the Charter is reflected in Article 8 (1) of Law no. 215/2001 and in Government Decision no. 521/2005 on the procedure for consulting the associations of local authorities on the drafting of legislative instruments. Furthermore, the delegation welcomes the fact that Government Decision no. 521/2005 expressly refers to the Charter and to Article 4 (6) in its preamble.
Russian Federation [Article ratified - Report adopted on 30 October 2019 ]
Consult reply indicated at article 4.1
San Marino [Article ratified - Report adopted on 28 March 2018 ]
Consult reply indicated at article 4.2
Serbia [Article ratified - Report adopted on 18 October 2017 ]
Consult reply indicated at article 4.1
Slovak Republic [Article ratified - Report adopted on 24 March 2016 ]
Consult answer indicated at article 4.1
page 238 / 796 Slovenia [Article ratified - Report adopted on 6 November 2018 ]
The “Resolution of normative activities” (adopted 19 November 2009) introduced a new approach for preparation of laws and regulations in Slovenia, which has had to serve a platform for extended consultations between the government and local municipalities. Precisely, the resolution was intended to introduce the standards of quality in preparation of legal acts as a result of analyses that had highlighted some weaknesses in the process of drafting regulations, such as the lack of consultations with society and experts.
The three associations (i.e. Association of Municipalities and Towns of Slovenia (SOS), The Association of Municipalities of Slovenia (ZOS) and Association of Urban Municipalities of Slovenia (ZMOS)) are active and participate regularly in the consultations with the central government.
During the consultation procedure, the Ministry of Public Administration underlined that in 2016 the Secretary General of the Government of the Republic of Slovenia, at the initiative of the Ministry, amended the Rules of Procedure of the Government of the Republic of Slovenia making it mandatory for ministries and other bodies to involve all three associations to discuss the draft documents.
However, the representatives of the associations pointed out that municipalities or their associations often are not called to participate in the design process of the new bills and regulations or the deadline for receiving their feedback is too short to react properly. According to the associations, their views are not sufficiently taken into account at the final stage of decision-making. Associations underlined that a regular communication and coordination between the government and local municipalities may ensure both the quality of legal acts and a better assessment of the financial implication of their implementation at local level.
In the opinion of the rapporteurs, the effective consultation process with local authorities could also help to identify the potential spheres of overregulation (such as pre-school education and spatial planning, as mentioned before) at the very early stages of legal drafting.
On these grounds, the rapporteurs cannot conclude that the government acts in a systematic way in breach of Article 4.6. However, having regard to the concerns expressed by the local authorities and their associations, the rapporteurs would recommend increasing the degree of involvement of local representatives at every stage of preparing new laws and regulations on all matters of their concern, and extending the timescale for consultations to make them more efficient.
Spain [Article ratified - Report adopted on 20 March 2013 ]
Consult reply indicated at article 4.1
Sweden [Article ratified - Report adopted on 2 April 2014 ]
Consult reply indicated at article 4.1.
Switzerland [Article ratified - Report adopted on 20 October 2017 ]
Consult reply indicated at article 4.1
Turkey [Non ratified - Report adopted on 1 March 2011 ]
page 239 / 796 The analysis article by article is currently unavailable
Ukraine [Article ratified - Report adopted on 31 October 2013 ]
Consult reply indicated at article 4.1
United Kingdom [Article ratified - Report adopted on 26 March 2014 ]
Consult reply indicated at article 4.1
Article 5 Protection of local authority boundaries
Changes in local authority boundaries shall not be made without prior consultation of the local communities concerned, possibly by means of a referendum where this is permitted by statute.
Albania [Article ratified - Report adopted on 31 October 2013 ]
Albanian Law No. 8652 (Chapter X) defines the procedures for boundary changes to LGUs. It stipulates clearly that a local council should express its opinion on any change to the boundary of its respective LGUs, but the law does not regulate the case when a local council is against such a change. It does not provide any possibility to the local council to oppose the decision of the government and apply to the court against the central government decision. Albanian legislation is not specific enough on the right of a local authority to oppose any changes to its borders, nor does it provide for the use the institution of referendum to validate public support for such changes, Albanian legislation only refers to a general affiliation to the “opinion of community expressed directly or indirectly by various interested subjects”.
Such a wide interpretation of the requirement of Article 5 cannot be construed as an example of good practice in honouring the spirit and principles of the Charter. Therefore, in the rapporteurs’ opinion, although Albanian legislation generally recognises the need for consultation with local communities as stipulated in Article 5 of the Charter, there is still need for a clear mechanism of consultation (local referendums or equivalent means) with local communes on LGU boundary changes.
Andorra [Article ratified - Report adopted on 28 March 2018 ]
This article requires that the local communities are consulted in case of changes in local authorities’ boundaries.
page 240 / 796 In Andorra, changes to local authorities’ boundaries may be made on the basis of agreements between Comuns, final court rulings or international treaties signed by the Principality of Andorra which apply by extension to the Comuns.
In the case involving the Parish of Escaldes-Engordany, this Parish was established by division from the Parish of Andorra la Vella by a decree of the Co-princes on 14 June 1978, after the local population had been asking for 30 years the institution of a Comù.
Finally, the fact that the Parishes are provided for directly by the Constitution implies that their amalgamation requires a constitutional amendment, according to the procedure set out in Article 106, which introduces the requirement of a national referendum: “The revision of the Constitution shall require the approval of the General Council by a majority of two-thirds of the members of the Chamber. Immediately after its approval the proposal shall be submitted to ratification in a referendum”.
Taking into account the specificity of Andorra, the rapporteurs consider that Article 5 is respected.
Armenia [Non ratified - Report adopted on 15 June 2021 ]
Article 5: Protection of local authority boundaries
Changes in local authority boundaries shall not be made without prior consultation of the local communities concerned, possibly by means of a referendum where this is permitted by statute.
174. The Charter requires that a change to local authority boundaries should give rise to prior consultation with the local communities concerned, possibly by means of a referendum where this is permitted by statute.
175. As has been mentioned above, the amalgamation process has slowed down since the recent political changes but is expected to continue. In this light, despite the related constitutional provision (Article 190), the absence of legal guarantees to hear the opinions of the affected communities and local inhabitants is worrying. Occasionally held hearings and the practice of sporadic communication or informal consultation may not be enough to substitute the real and legally guaranteed prior consultation and involvement of local inhabitants.
176. During the consultation procedure, the MTAI expressed their view that the consultation on the territorial reform through an institutionalised consultation mechanism between the government and the national association is questionable and has certain limitations because of vested interests of community leaders and members of the national association. However, it also informed the delegation that the two draft legal instruments are currently being discussed in the National Assembly to address the official hearings held in the National Assembly when it discusses amalgamation legislation, as is the possibility of holding local referendums concerning the amalgamation.
177. The rapporteurs welcome such initiatives aimed at improving consultation process and trust they will be adopted soon. However, they would like to reaffirm that monitoring is an instant snapshot of the moment of a visit and, accordingly, the assessment of a country’s compatibility with the Charter is made in regard to the actual situation that they encounter and cannot be based on laws that are in the process of being created or that are earmarked for enactment at a future stage.
Austria [Article ratified - Report adopted on 28 September 2020 ]
page 241 / 796 In Austria, the Municipal codes of the Länder include specific provisions for boundary changes. For Burgenland Article 7 indicates that a Land law is required to change the boundaries of municipalities against the will of a participating municipality; otherwise, municipalities have the option of voluntarily deciding on their new borders (including merger or separation).
In Carinthia, Article 7 to 8a of the Municipal code regulate changes in the boundaries: the Land government can, by law, change municipal boundaries to the extent required by the social, economic and cultural structure of the municipalities involved, if these municipalities request it by means of corresponding municipal council resolutions and have reached an agreement on any property dispute. A municipality can be divided into two or more municipalities, if there is a favourable majority (of at least two thirds) in the municipal council, each community arising or affected by the separation is likely to provide the means for its continuation and the separation corresponds better to the social, economic and cultural structure of the community members and community interests. For Lower Austria, the Municipal code regulates in Section 2: border changes, mergers and separations. For each resolutions of the municipalities involved, and the approval of the Land government are required. Separations may occur if either: a decision is taken by the municipal council (with a majority of three quarters of the votes cast) or, a referendum on the separation of the municipality, which also includes a provision for property law, has the approval of at least three quarters of the voters in the new communities to be formed, and with the participation of at least two thirds of those entitled to vote in each of the communities to be newly formed. For Upper Austria, Section 10 deals with border changes: they can all be accepted at the will of the municipal councils, and if the municipalities are in opposition, when a Land law is issued. Similar provisions pertaining to divisions and border changes are contained by the Municipal Code of Salzburg (Article 7 to 11) and Tyrol (Articles 5-6). In Vorarlberg, border changes must be made at the will of the municipalities and with the approval of the state government (Article 6) and if there is opposition, a Land law is required.
The Styrian Municipal Code – Section II provides that in order to change the boundaries of municipalities, the municipal councils of the participating municipalities must agree, and the Land government must approve them. The approval is to be granted if the changes are made for reasons of public interest and considering the geographic location of the municipality, and capacity to fulfil its legal tasks. Public interests are to be understood in particular as economic, infrastructural, regional planning and transport policy, demographic or financial reasons. A law is required to change borders against the will of a participating municipality.
Pertaining to the issue of changing borders in the Styrian amalgamation reform,61 during the monitoring visit, the rapporteurs met with Styrian Land representatives, as well as with the mayor of Raaba-Grambach, one of the merged municipalities, opposing the process. As indicated by the interviewees, local community, as well as elected officials from different municipalities affected by the reform were both formally and informally consulted. Albeit the result of the consultation was favourable to merger in just 85% of the cases (and not all), the consultation did occur and the legal conditions for achieving the merger were met.
Considering the above, the rapporteurs conclude that Austria complies with this paragraph.
Azerbaijan [Article ratified - Report adopted on 17 June 2021 ]
Municipal boundaries are determined by the Law on Municipal Territories and Lands, together with the list of all municipalities in Azerbaijan and their territories. According to this law, the State Land Committee and the local executive authorities draw up documents for urban planning and construction which clearly indicate municipal territories and land to be transferred to municipalities. Other laws also regulate issues of municipal property, such as the Law on Land Reform, whose
page 242 / 796 article 7 is wholly devoted to the issue of municipal lands, the Law on the Management of Municipal Lands; the Law on Municipal Taxes; and the Law on the Merging of Municipalities. Also, the Model Municipal Charter specifies that territorial boundaries must be incorporated into all municipal charters.
According to the Law on the Status of Municipalities, the determination of or changes to municipal boundaries and the determination of and changes to municipal boundaries after municipalities have been established, consolidated, separated, re-established or abolished, are laid down by law, taking into consideration their socio-economic situation, historical and other local conditions and the opinions of the relevant territory’s population. All municipalities in the Republic of Azerbaijan have to be included in the State register of municipalities controlled by the Parliament and are entitled to the relevant certification.
Municipal boundaries are protected by law, since the territory of municipalities is fixed by statute and any change to them needs an in-depth analysis of social, economic and other conditions and the local community has to be consulted on such changes.
The delegation has been informed of the recent partial changes in the administrative areas of the Sharur and Sadarak provinces of the Nakhchivan Autonomous Republic. The Milli Majlis passed the respective law, which transfers the Demirchi village of the rural administrative district by the same name from its current Sharur Administrative Province to the Province of Sadarak.
Since the establishment of municipalities, their number (initially 2757) has been progressively reduced by means of successive amalgamation processes. The last wave of mergers took place in 2014 and reduced the number from 1718 to the current 1606. Mergers took place among the village municipalities and did not affect larger cities. According to information provided to the delegation, it is likely that further amalgamations might happen in the near future, as smaller municipalities often face problems in carrying out their functions due to especially financial and capacity reasons.
Merger of municipalities is an entirely voluntary procedure, which cannot be imposed onto municipalities. The government has however twice introduced changes to the legislation on “Joint activities and the merger, separation and abolition of municipalities” and has simplified the procedure in order to encourage voluntary mergers. Furthermore, the national associations of municipalities often provide information on the potential benefits of amalgamation.
As a consequence of the military intervention, in late 2020, in parts of the territory that were previously outside of governmental control, a transitional regime was adopted for those areas, which established a direct control by the government. Municipalities will be (re)formed in those territories too, which will lead to the increase of the total number of municipalities in the country by 915, according to first information received by the delegation. No information has been provided as to the procedures and the exact timing of this transition. The rapporteurs wish to recall that this process should be guided by the Charter and its principles and should therefore allow for a sufficient degree of involvement of the citizens and the municipalities concerned.
While the legislative framework is overall in line with the requirements of Article 5 of the Charter, consultation is not sufficiently guaranteed in practice nor a sufficient degree of involvement of the population by means of referenda and other participatory instruments is taking place. Awareness should be raised not only about the benefits of mergers of municipalities, but also about the requirements to achieve them in a democratic, inclusive and participatory environment.
For these reasons, the rapporteurs consider that the situation in Azerbaijan is compatible only in part with the requirements of Article 5 of the Charter.
page 243 / 796 Belgium [Article ratified - Report adopted on 15 October 2014 ]
Flemish Region (Vlaanderen)
Article 7 of the Belgian Constitution states: “The boundaries of the state, the provinces and the municipalities can only be changed or corrected by virtue of a law.”
The regions have the powers to change or rectify boundaries of provinces and municipalities, with the exception of the boundaries of municipalities mentioned in section 7 of the Use of Languages in Administrative Matters Act, co-ordinated on 18 July 1966, namely Drogenbos, Kraainem, Linkebeek, Sint-Genesius-Rode, Wemmel and Wezembeek-Oppem, and the municipalities of Comines-Warneton and Voeren. The merger of municipalities must be carried out pursuant to a decree.
The voluntary merger of municipalities is regulated by Article 297 of the Municipal Decree. Article 297.1 states: “Two or more municipalities may address a merger proposal to the Flemish government, which shall present it to the Flemish parliament in the form of a draft decree”.
Accordingly, any change to municipal boundaries will only be made with the agreement of all the municipalities concerned. The proposed boundary change will not take place if a municipality objects. Pursuant to Article 260 of the Provincial Decree of 9 December 2005, the provincial council issues an opinion on the proposed changes to the boundaries of the province, districts, electoral constituencies, cantons and municipalities and with regard to the designation of administrative centres.
The Flemish government’s 2009-2014 policy programme contains the following provisions concerning the voluntary merger of municipalities and the voluntary merger of a municipality and a social services centre:
- Voluntary merger of municipalities: the Flemish Authority will encourage the voluntary mergers of municipalities and gives its support in particular through a one-off subsidy bonus;
- Voluntary merger of a municipality and a social services centre: the voluntary merger of a municipality and a social services centre is made possible by decree. The Flemish Authority gives its support in particular through a one-off subsidy bonus.
Furthermore, Article 205 of the Municipal Decree states that the municipal council may, at the request of the municipality’s inhabitants, organise a consultative referendum at the municipal level. This initiative must be supported by at least:
- 20% of the citizens in municipalities with less than 15,000 inhabitants;
- 3,000 citizens in municipalities with a minimum of 15,000 inhabitants and less than 30,000 inhabitants;
- 10% of the citizens in municipalities with a minimum of 30,000 inhabitants.
The first stage of the procedure is to submit a merger proposal to the Flemish government. This is done via a decision of the municipal councils concerned. The second stage is the possibility available to the Flemish government to submit the merger proposal to the Flemish parliament in the form of a draft decree. However, this is only a possibility (the government “may”) and not an obligation. The conclusion of the procedure is the approval of the draft decree by the Flemish parliament.
page 244 / 796 Similarly, a municipality may also submit a proposal to split the municipality.
Article 5 of the Charter is complied with by Flanders.
Walloon Region and German-speaking Community
In Belgium, Article 7 of the Constitution states that the boundaries of the state provinces and municipalities can only be changed or corrected pursuant to a law (exception: changes to the language boundaries). Similarly, the boundaries of agglomerations and federations of municipalities can only be changed or corrected pursuant to a law. However, the Constitution also states that the law cannot eliminate the provinces or municipalities without a prior amendment to the Constitution. The protection of the provinces is guaranteed all the more as their legal names are mentioned in the Constitution. However, section 4 of the Special Act of 13 July 2001 on the transfer of various powers and responsibilities to the regions and communities amended section 6, VIII, of the Special Institutional Reform Act of 8 August 1980, making the regions responsible for “in respect of the subordinate authorities: […], changes or corrections of the boundaries of provinces and municipalities”. Local authority boundaries can therefore be changed by decree.
The local authorities can organise consultative referendums (consultations populaires) on matters of local interest. The Sixth State Reform provides for the possibility to organise regional popular consultation processes based on regional decrees.
In the Walloon Region and the German-speaking Community, an initiative to change boundaries between two municipalities will come from the municipalities concerned, which will send their requests to the government. It is therefore the government that submits to the parliament a draft decree on boundary change. Each municipality then carries out a public inquiry, after the completion of which the municipal council of each municipality concerned meets again to issue an opinion on the changes planned, taking account of the outcome of the inquiry. According to Articles L1112-1 and L1112-2 of the CDLD, if the territorial changes involve population changes that mean the composition of the municipal bodies also has to be changed, then a Government order gives instructions for the election writ to be issued and will deal with all matters relating to the first election.
Article 5 is complied with in Wallonia and the German-speaking Community.
Brussels-Capital Region
In Belgium, Article 7 of the Constitution provides that the boundaries of the state, provinces and municipalities can be changed or corrected only by virtue of a law (except for changes to language boundaries). The regions are responsible for changing or correcting the boundaries of provinces and municipalities, apart from the boundaries of those municipalities cited in section 7 of the Use of Languages in Administration Act, consolidated on 18 July 1966, namely Drogenbos, Kraainem, Linkebeek, Sint-Genesius-Rode, Wemmel and Wezembeek-Oppem, and the municipalities of Comines- Warneton and Voeren. Municipalities are merged by decree. It should be noted that a number of political parties have criticised the multiple layers of Brussels institutions and suggested that some municipalities might be merged. Those who support this political view believe that it is hard to govern Brussels properly because of its overcomplicated institutional framework: federal government, French Community, Flemish Community, VGC, COCOF, COCOM, regional government, Parliament, 19 municipalities, 19 CPASs, 130 échevins and 650 municipal councillors. In practice, reducing the number of Brussels municipalities from 19 to 11, for example, was an idea put forward by a regional candidate in a campaign called ‘A Simpler Brussels’. He based his argument on the differences in area and population between the capital’s municipalities. Nevertheless, such
page 245 / 796 electioneering ideas have usually remained at the discussion stage, since in actual fact the existing burgomasters mostly prefer to remain the head of a small municipality rather than becoming échevins in a larger area.
Local authority boundaries are protected in the Brussels-Capital Region.
Bosnia and Herzegovina [Article ratified - Report adopted on 31 October 2019 ]
This article requires that local communities should be consulted in case of changes of local authorities’ boundaries. Due to the territorial compromise at the end of the war, with 51% of the territory assigned to the Federation of Bosnia and Herzegovina and 49% to Republika Srpska, many municipal boundaries had changed, and most new municipal boundaries reflect changes in ethnic composition. Before the war, there were 109 municipalities; after the war, their number increased, as municipalities were divided between the Federation of Bosnia and Herzegovina and Republika Srpska, and mjesne zajednice with ethnic minorities became new municipalities.[14] Some municipalities that maintained pre-war boundaries changed ethnic composition.[15] Due to the fragmentation of the country into two Entities and 10 Cantons with constitutional status, no change of municipal boundaries has occurred across the formers` boundaries.
Apart from the debate over the status of Sarajevo (see above), there is a debate about the (economic) sustainability of some smaller Cantons which receive transfers from the Federation of Bosnia and Herzegovina budget. However, as the Cantons are politically determined structures and established by the international Washington Agreement of 1994 and, subsequently, in the Federation of Bosnia and Herzegovina Constitution, it is difficult to imagine that any merger will have success.
The previous monitoring reports of the Congress did not identify a definite problem with regard to change of municipal boundaries and prior consultation of the communities concerned. During this visit, the delegation did not hear any complaints from political leaders or associations on the possible non-recognition of Article 5 in the current situation. In the absence of the recent practice and complaints on changes of local authority boundaries, the rapporteurs cannot but follow the letter of law and proceed from the principle that the provisions of the legislation on consultation in both Entities shall apply to the situation of potential changes of local authority boundaries in line with Article 5 of the Charter.
Thus, the rapporteurs consider the present situation in Bosnia and Herzegovina compliant with Article 5.
Bulgaria [Article ratified - Report adopted on 21 January 2021 ]
Article 5 – Protection of local authority boundaries
Changes in local authority boundaries shall not be made without prior consultation of the local communities concerned, possibly by means of a referendum where this is permitted by statute.
1. Territorial reforms have been implemented in several European countries, where the existence of very small and weak municipalities goes along with a shortage of capacities leading to inefficiency and non-compliance with Charter requirements. In this context, the Charter does not prohibit amalgamations, nor impose a closed pattern of territorial or institutional design. It introduces procedural rules for changes in local authority boundaries.
1. In this vein, it is a mandatory procedural requirement that no change of local boundaries
page 246 / 796 may be adopted without consultation. This must take place at a timely stage before a final decision on this matter is made. This is required in order to promote the efficiency of consultation, in other words the real possibility of local communities to be heard and to express their views at a time where influence over amalgamation decisions and their different aspects can really be exercised and consultation is not only of formal or symbolic nature. If the amalgamations include a considerable part of the country or the whole country, then the national associations of local or/and regional authorities should also take part in the consultation procedures38.
1. In its Recommendation (2004)12, the Committee of Ministers of the Council of Europe established some principles that should be followed by the parties when they engage in reforms of the boundaries or the structure of local authorities39. Moreover, the objectives, methods and results of a process of reform should be fully compatible with the provisions of the Charter. Furthermore, where appropriate, the parties should further ensure that the objectives, methods and results of the process of reform comply with their obligations under Article 7.1.b of the European Charter for Regional or Minority Languages, and Article 16 of the Framework Convention for the Protection of National Minorities.
1. According to Article 136(2) of the constitution,“the borders of a municipality shall be established following a referendum of the populace”. In the past 10 years, since the previous monitoring, there have been no mergers of municipalities in Bulgaria. The NAMRB informed the delegation that there were two cases of establishing new municipalities by separating the respective territory from an existing municipality. Thus, from 1 January 2015, the municipality of Sarnitsa became an independent municipality after a referendum, separating itself from Velingrad municipality. With this act the municipalities in Bulgaria reached 265. At the end of February 2021, a referendum was held to separate the town of Obzor and several nearby settlements into an independent municipality, from Nessebar municipality. With its decision from 23.03.2021the Council of Ministers confirmed the results of the referendum and announced the new municipality. The last stage of the procedure is forthcoming – issuing a presidential decree. The Administrative and Territorial Structure of the Republic of Bulgaria Act exhaustively determines the terms and conditions for the establishment, division or merger of municipalities. In the general case, the main requirement for all three hypotheses is to conduct and have a positive result from a referendum among the population from the affected settlements.
Croatia [Article ratified - Report adopted on 20 October 2016 ]
The Croatian Constitution and the Law on Local and Regional Self-Government do not define how borders of a local or regional self-government unit should be established and/or changed. A procedure for changing the border of local and regional self-governing regions/counties is regulated by a special law (The Act regulating the Territory of Counties, Towns and Municipalities in the Republic of Croatia) that provides for the holding of consultations with the public.
The Referendum Act of Croatia is rather complex and strictly regulates the referendum procedures. This act defines three forms of direct democracy at a local level: the referendum, public consideration and petition. As for the central government, it can call a so-called “facultative1 referendum”. Article 57 of the Referendum Act says: “The Government can call a facultative referendum in the territory of one or more units of local self-government or local government in order to obtain the opinion of inhabitants of the respective area concerning its territorial organization. All residents of the territorial unit are eligible to vote, and the decision is reached by a majority of votes cast.” The institute of facultative referendum itself means that its outcomes will have only consultative force and they may not be taken into account, although such a precedent has
page 247 / 796 never occurred in Croatia.
The use of the referendum for a public consultation prior to changes to local authority boundaries as specified by law is thus in full compliance with the provisions of Article 5 of the Charter.
Cyprus [Article ratified - Report adopted on 20 October 2016 ]
The Charter requires that local authority boundaries should not be changed without prior consultation with the local communities concerned, possibly by means of a referendum where this is permitted by statute.
The relevant legislation contains sufficient guarantees for local authorities to be consulted prior to any initiative for merging them, as it stipulates that before submitting such a legislative proposal, the Government must call local referenda in the respective communities, and the results of these popular votes must be attached to the legislative initiative. As a consequence, Article 5 is fully implemented.
Czech Republic [Article ratified - Report adopted on 8 March 2012 ]
Under Czech law, decisions to amalgamate two or more municipalities are based upon an agreement between the relevant municipalities (Act No. 128/2000, Chapter I, Part 3). Break-outs may be decided following a referendum held in that part of the municipality that wishes to break away. There is no reason to believe that the Czech obligation to consult before changes in the boundaries are made, as stipulated under Article 5 of the Charter, is not respected.
Denmark [Article ratified - Report adopted on 31 October 2013 ]
Protection of boundaries is guaranteed both by statute and in practice. Law No. 382 of 3 May 2006 on changes in local and regional boundaries and the dissolution and establishment of binding partnerships lays down the rules applicable to changes in local and regional boundaries. It stipulates that such changes must be approved by the councils of the municipalities concerned.
Where municipal mergers are concerned, the rapporteurs learned that municipalities which opposed mergers had the option to conclude co-operation contracts with other municipalities. Mergers are therefore basically voluntary, although there are a number of constraints. During the debate on the reform, it was decided to derogate from the general criterion of a minimum population of 20 000 for specified islands. This exception concerns five municipalities (Læsø, Fanø, Ærø, Samsø and Langeland), which have populations ranging from 1 841 in the case of Ærø (the smallest Danish municipality) to 12 861 in the case of Langeland, the most densely populated island municipality.
After the political negotiations leading up to the reform, two municipalities near the capital (Vallensbæk and Dragør, which have some 14 500 and 11 900 inhabitants respectively and were not included in the compulsory co-operation scheme because they are not islands) were allowed to retain their municipality status provided that they co-operated with a neighbouring municipality under the same arrangements as for the islands. Recently, the Law on co-operation among smaller municipalities was amended to facilitate co-operation with one or more non-neighbouring municipalities. This amendment was made at the request of municipalities engaged in such co- operation and in close consultation with them and with the LGDK association.
The protection of local authority boundaries as laid down in Article 5 of the Charter is guaranteed in Denmark.
page 248 / 796 Estonia [Article ratified - Report adopted on 29 March 2017 ]
Article 158 of the Constitution of the Republic of Estonia requires that boundaries of local authorities shall not be altered “without considering the opinion of the local governments concerned”. In view of the ongoing reform project to amalgamate, on a large scale, the existing territorial units in Estonia, the aim of seeking the opinion of local authorities should be borne in mind. One of the interlocutors pointed out to the delegation “that local governments should protect the local government unit and provide coincidence of the state decision and public interest. The opinion of the local government unit should be profound and substantial and enable to clarify whether through border changes the wishful aim can be achieved. Such conclusion is confirmed by the fact that the Constitution does not exclude the border changes to be made against the will of the community”.
In this regard it is worth mentioning that the Supreme Court in its judgement of 20 December 2016, stated (point 136): "Obligation to ascertain the opinion of residents does not proceed from § 158 of the Constitution. The Chamber is of an opinion that an obligation proceeds from § 158 of the Constitution for the executive power of the state to hear out the opinion of the local government unit. The Chamber notes that also the European Charter of Local Self-Government does not require the hearing out of the opinion of local residents. Article 5 of the Charter enacts: “Changes in local authority boundaries shall not be made without prior consultation of the local communities concerned, possibly by means of a referendum where this is permitted by statute.” Thereby the Charter leaves it up to the accessed state to decide whether to organise a referendum which, pursuant to Estonian legal order, is of a binding nature, or a consultative referendum which, pursuant to Estonian legal order, does not have a binding legal force, or to delegate the expressing of residents opinion into the competence of the local government body”.
Finland [Article ratified - Report adopted on 28 March 2017 ]
The former Katainen’s government launched a major local government reform in 2011, the aim being to reduce the number of municipalities from 413 to 70. According to an Orimattila town councillor, this reform process failed to take account of the constitutional limitations on local government legislation. The Parliament’s Constitutional Law Committee stated (20/2013) that it was impossible to merge municipalities against their will (unless they were unable to perform statutory tasks like providing fundamental welfare services). The Supreme Administrative Court, however, ruled that compulsory merger is possible in the context of a specifically regulated nation-wide structural reform of local governments. In this case, compulsory co-operation between municipalities – and mergers – are possible outcomes (Supreme Administrative Court 2014:195 and 2014:144). Another acceptable reason for involuntary merger is if a municipality is in a hopeless economic situation. In exceptional, economically critical circumstances the State may impose strict economic and administrative restrictions on a particular municipality under specific legislation. Such extreme situations may also result in compulsory mergers of municipalities (Supreme Administrative Court 2014:197). Since 1 July 2013, the Finnish legislation provides for the possibility of mandatory mergers in the event that municipalities encountered major economic problems (Section 18 of the Municipal Structure Act).
It is also worth mentioning a particular situation of the obligatory change in municipal boundaries in the Helsinki region when south-west part of Sipoo – Oestersundom was transferred in a compulsory manner from the municipality of Sipoo to the municipality of Helsinki by a Cabinet order in 2006 in spite of the reported large opposition of the local population of Sipoo expressed during the local referendum. The aforementioned decision of the Cabinet was contested before the Supreme Administrative Court. In its decision (2008:1), the Supreme Administrative Court referred explicitly to
page 249 / 796 the Charter and specifically to Article 5 of the Charter (as well as Articles 3 and 4). The decision of the Cabinet was upheld.
There is still some discussion of the possibility of a reform to the system of obligatory mergers and compulsory changes of local authority boundaries. In the light of the visit that they carried on in May 2016, the rapporteurs conclude that Finland complies in general with Article 5 of the Charter and encourage the Finnish authorities to step forward on this reform.
France [Article ratified - Report adopted on 22 March 2016 ]
The Charter contains several articles on consultation between central and sub-national governments. As already mentioned (see paragraph 166), Article 4.6 introduces the right of local authorities to be consulted in general terms, as a basic principle of local self-government. Two more articles, Article 5 on local authority boundaries and Article 9.6. about financial matters, refer to special fields of consultation.
The Congress has also adopted recommendations on consultation of local authorities. Recommendation 171 (2005), the Congress emphasises that the right of local authorities to be consulted is a fundamental principle of European legal and democratic practice, the aim of which is to contribute to good governance. In the interests of promoting good governance, consultation of local authorities should be a required part of policy-making, enabling the wishes of local authorities to be known in good time and properly taken into account in the decisions of central authorities. Mechanisms for consultation should be well-established in the democratic and political relationship between the state and the territorial authorities. Consultation processes appear in general to be moving towards a system of negotiation between the government and territorial authorities. Although the concept of “appropriate consultation” (Article 4, paragraph 6 of the Charter) has not yet given rise to specific case-law, there is already “extensive case-law” in several countries on the legal effects of failure to consult territorial authorities. Regarding territorial organisation, the Congress has emphasised that the general rule should be the prior consultation of the territorial authorities concerned.
In Resolution 347 (2012), the Congress initiated the elaboration of a strategy for 2013 to further strengthen the consultation processes between the different levels of government in order to improve the quality of legislation and, thereby, the local and regional policies -as well as the effectiveness of such consultation processes in the member States.
In Recommendation 328 (2012) the Congress stated that the right of territorial authorities to be consulted, as laid down in Articles 4.6, 5 and 9.6. of the Charter, constitutes one of the core principles of local democracy. Local authorities should therefore be consulted and should have an active role in adopting decisions on all matters that concern them and in a manner and timeframe such that local authorities have a real opportunity to formulate and articulate their own views and proposals, in order to exercise influence on the decision-making processes affecting them.
Consultation procedures should be clearly defined and transparent and should constitute a required part of policy making and the legislative process, to enable local authorities to express their interests and opinions in time for these to be taken into account in the formulation of policy and legislation. Central and regional authorities should provide clear and detailed information, in writing, about proposed policies well before the consultations are due to take place, in order for those consulted to be well informed about the motives and objectives of each planned decision or policy. Strategically important decisions should be based on careful analysis of the implications for self-governance as well as of the economic consequences for the local and regional level. Local and regional government expertise should be involved in the process of drafting policies and legislation at an
page 250 / 796 early stage, for example through participation in working groups to prepare new legislation. Local and regional authorities should have a clearly defined right to petition if they believe that necessary consultations have not been properly conducted, and a right to redress if it is established that procedures were not properly followed.
Although the text of the Charter does not define the concept of consultation, having regard to the Charter’s basic function to establish and promote the rights of territorial authorities, consultation between the central and the territorial governments can be defined as a process by which the parties seek information, advice or the opinion of each other about particular topics, and discuss them. From the point of view of territorial governments, the main functions of consultation are:
- to obtain relevant information on the decision-making process of central authorities affecting their interests;
- to provide the opportunity for local authorities to express their views and opinions on the relevant statutory laws and regulations in all stages of the decision-making process;
- to make proposals, and submit claims or complaints to central government, with the latter’s obligation to respond to them.
As already mentioned (paragraph 171), Article 5 of the Charter refers to a particular field of consultation (changes to territorial government borders), while Article 4.6. introduces the general right of consultation, also referring to some guiding principles. By definition, the general provisions of Article 4.6. also apply to the specific field of changing borders. The requirement of Article 4.6. for an “appropriate way” of consultation is to be seen as a “rationality” principle of consultation, which obviously requires that consultation should take place in a way that provides real opportunity for territorial authorities to formulate and articulate their own views and proposals. Certainly, there is no guarantee that the central authorities, entitled to legislate or make policy decisions by law, will accept the opinions of sub-national territorial authorities, but it is an inherent requirement that they have to take them into account, before taking any final decision.
The purpose of the Charter’s “due time” criterion is to ensure that the manner and timing of consultation is such that territorial authorities have a real possibility to exercise influence on the decision-making process affecting them. As the explanatory memorandum of the Charter states, the right of local governments to consultation under certain conditions may be overridden, in particular in cases of urgency, but this is allowed only exceptionally. The Charter does not specify the length of “due time” in a normative and general way, because it depends on many circumstances in the member states. But the more specific the matter concerned, the easier this is to determine, having regard also to the traditions and demands of the territorial authorities. The “due time” criterion could be equated with a “reasonable time” requirement.
More specifically, Article 5 of the Charter contains a procedural safeguard of territorial self- government rights; it requires a consultation with the concerned territorial government(s) on any plan to change its boundaries before any action has been taken. This principle underlines the basic requirement that the affected authorities must be notified about any proposal to change their boundaries. This relates to both cases when an individual authority’s boundaries change, and when the whole territorial government system is transformed. The decision maker, before any final action, is obliged to ask the view of the territorial communities concerned. In other words, any change of territorial government boundary may take place only after seeking the opinion of the affected authorities, municipalities and/or regions. In this way the spirit of the Charter is respected, requiring a partnership between central government and territorial authorities based on mutual trust and co- operation.
page 251 / 796 When the change of the boundaries or the administrative status of a territorial authority takes place against the will of the overwhelming majority of the local population, not only the affected sub- national authorities but also the affected citizens may easily lose their trust in democratic institutions and processes. Therefore, national governments should publicise and explain a coherent concept as justification for the changing of boundaries, based on plausible reasons of public interest. Finally, results of consultation are not binding for the decision makers, but it is important to achieve transparency and procedural (so-called “throughput”) legitimacy of decisions on territorial choices, especially when an important part of the local/regional citizenry does not approve of changing the borders.
In view of the importance attached to appropriate and efficient consultation, which builds trust and legitimacy, and takes place in due time (which means, prior to territorial reform), the practice whereby central government consults only with the national associations of local/regional authorities when the whole local government system is restructured, or when a number of local/regional authorities are merged into greater units, does not meet the requirements of the Charter. The provisions of the Charter require consultation with all local/regional communities concerned, especially when the number of the affected authorities is rather small and consultation with each one of them is easily practicable (as it is in the case of the French regions).
The issue of prior consultation when changes in local authority boundaries are made is fundamental and existential for territorial authorities in all countries. In France, the question of regional boundary changes has been particularly controversial since the draft law on “the delimitation of the regions, regional and departmental elections and modifying the electoral calendar” (hereafter called the Law on the Regions) was introduced into the Senate on 18 June 2014. That the government chose an “accelerated procedure” (also controversial) to steer the law through the upper and lower house is a further indication of the extent of discussion that the subject - in particular the regional boundaries – was expected to, and did, generate. The law aimed principally at reducing the number of metropolitan regions from 22 down to (initially) 14, merging some and leaving others intact. After much debate and amendment, the Senate finally adopted the draft law in first reading but voted to delete the amendment aimed at reducing the number of regions. The national assembly reinstated a new map of 13 regions – which the Senate extended to 15 at its second reading – adopting it by a narrow majority of a single party. The 13 regions were again reinstated by the National Assembly at second reading. With no common accord between the two houses, a joint committee was convened but no agreement was found and on 17 December 2015 the National Assembly adopted its definitive text with 13 regions. Finally on 19 December a group of 60 parliamentarians and 60 senators challenged the law as unconstitutional, taking a case to the Conseil Constitutionnel (Constitutional Council) (further details of this court case appear below). Following the Council’s decision of 15 January 2015, rejecting the challenge of unconstitutionality, the law was finally promulgated on 16 January 2015 with the date of 1 January 2016 set for the new boundaries to enter into force.
The strength of feeling shown in the National Assembly and the Senate on the issue of regional boundary changes was also reflected in concerns at the level of citizens and their associations and guided the rapporteurs’ questions during the monitoring visit. The issue has remained one of heated discussion in the country at large owing to the regional elections scheduled for December 2015, and the entry into force of the new, amalgamated regions from 1 January 2016. In some of the meetings that the rapporteurs had with French regional and local politicians, there were strong criticisms about the lack of previous consultation, while during the visit in the Region of Champagne-Ardenne, it was clear that the planned amalgamation with Alsace caused furious reactions among the regional and the local politicians in Champagne. However, the Law on the Regions, passed by Parliament on 16 January 2015, is going ahead; neither will referenda on this issue be organised, as some complainants have proposed.
page 252 / 796 The Conseil Constitutionnel in its decision of 15 January 2015, marked the first of two significant rulings handed down in France in 2015 concerning the legal aspects of amalgamation and prior consultation according to Article 5 of the Charter. The second case was brought before the Conseil d’Etat (The Council of State) also contesting the above law on the Regions, but this time with a request to annul Decree No. 2015-939 published on 30 July 2015 relating to the election of regional councillors under the new regional map. The two cases are described in further detail below.
As to the decision of the Conseil Constitutionnel, the 120 litigant deputies and senators claimed that the law on amalgamating and delimiting the regions (the Law on the Regions) violated Article 5 of the European Charter of Local Self-Government and that the absence of prior consultation with the affected territorial collectivities also violated the principle of superiority of international treaties over parliamentary laws that is enshrined in Article 55 of the French Constitution. According to this reasoning, if an international treaty is violated, then the Constitution itself is violated. However, rejecting this argument, the Conseil Constitutionel confirmed its traditional interpretation, according to which it is not its role to review the compliance of a law with the provisions of an international treaty or agreement. Since its Decision n° 74-54 DC of 15 January 1975, the Court has constantly stated « si les dispositions de l’article 55 de la Constitution confèrent aux traités, dans les conditions qu’elles définissent, une autorité supérieure à celle des lois, elles ne prescrivent ni n’impliquent que le respect de ce principe doive être assuré dans le cadre du contrôle de la conformité à la Constitution ». « If (should) the provisions of Article 55 of the Constitution confer on treaties, under the conditions so defined, a superior authority to those of laws, they neither prescribe nor imply respect for this principle when ruling on conformity with the Constitution”.
The litigants in this case had claimed that the lack of prior consultation of regions and departments would violate the principle of free administration of the territorial collectivities which is a fundamental principle recognised by the Constitution and the laws of the Republic. In Article 72 the Constitution stipulates that the territorial collectivities are freely administered by elected councils under the conditions provided by law.
Nevertheless, the Conseil Constitutionnel rejected the complaint alleging disregard of the principle of free administration of territorial collectivities stating that the Constitution would not prescribe the consultation of territorial collectivities on changes to their territorialboundaries. At most,it ruled, Article 72-1 provides that changes to the boundaries of territorial collectivities may give rise to the consultation of voters under the conditions provided for by the law.
The litigants had also invoked laws preceding the Constitution of 1946. These laws prescribe the obligation to take into consideration the opinion of territorial collectivities before adopting an administrative decision concerning their boundaries. These arguments were also rejected by the Council which stated: In the case under consideration, the changes to regional boundaries were made by a legislative act of parliament and not by a normative act of the administration. Furthermore, the Council reasoned that Article 72-1 referred to consultation of local voters and this exluded a contrario, the existence of a principle of consultation in favour of the collectivities themselves. Therefore, the Conseil Constitutionnel refused to recognise the existence of a fundamental principle that would impose prior consultation of territorial collectivities.
The question of the requirement for prior consultation of individual regions was the subject of another application based once again on a violation of Article 5, giving rise to a decision by the Conseil d’Etat (the Council of State) in 2015. This case was brought by three associations and five individuals who filed for a judicial remedy requesting to annul the presidential Decree No. 2015-939 of 30 July 2015 concerning the convocation of the electoral colleges for the election of regional councillors, councillors of the Corsican Assembly, councillors of the Assembly of Guyana and councillors of the Assembly of Martinique (hereafter called the decree on the election of regional
page 253 / 796 councillors). In this the litigants relied on the jurisdiction of the court to rule on the compatibility of a law with international treaties, even where the law is posterior to the treaty. Indeed, there are already a number of cases where French administrative courts have taken into account the principles and norms of the Charter in their judgements on provisions of French law.
The facts were that the French Government had convened the voters by a decree of 30 July 2015, to vote in December 2015 for the first regional elections to be based on the new map of the regions. Three associations and five individuals filed for a judicial remedy, requesting the Conseil d’Etat (Council of State) to annul the decree No. 2015-939 of 30 July 2015 concerning convocation of the electoral colleges to proceed with the election of regional councillors. Furthermore they requested the Council to order the Prime Minister to convene the electoral college to elect regional councillors within the areas defined in accordance with Article L. 4111-1 of the general code of local authorities in its version prior to its amendment by Article 1 of Law on the Regions of 16 January 2015. On this occasion, the applicants contested the law of 16 January 2015 concerning the merging and delimitation of the French regions, which was the legal basis for the aforementioned decree. The litigants argued that the law disregarded the European Charter of Local Self-Government, which requires signatory states to implement rules safeguarding the political, administrative and financial autonomy of local authorities.
In its decision of 27 October 2015 the Conseil d’Etat rejected all the requests before it. The Council held that Article 4 of the European Charter of Local Self-Government (which provides in its paragraph 3 on the scope of local self-government, that “public responsibilities shall generally be exercised, in preference, by those authorities which are closest to the citizen”) only governs relations between states signatory to the Charter and therefore may not be relied upon by individuals before a judge. However the judges’ reasoning contains many subtleties as they accepted only to examine the provisions of the law in the light of France’s international commitments but would not examine the procedure for the adoption of the law in the light of its international commitments.
Therefore, as regards the alleged violation of Article 5 of the Charter, the judges found that the applicants could not rely on compliance with an international treaty to challenge the procedure for the adoption of the law of 16 January 2015. They further reasoned that the Conseil d’Etat was therefore only able to rule on the content of the law with regard to France’s international commitments, and not the procedure for adoption of that law.
Finally, the Conseil d’Etat also rejected the argument that the merging of regions had disregarded the provisions of Article L. 4122-1 of the general code of local authorities which provides that regional boundaries should be changed only after consultation with, and favourable vote by, the regional and departmental councils affected. The judges held that the Parliament, being the legislator, was able to remove this requirement for prior consultation on a case-by-case basis before the adoption of the law of 16 January 2015 on territorial reform.
The Congress delegation cannot but regret that the European Charter of Local Self-Government, ratified by France, were not taken into consideration by the Conseil d’Etat.
Considering now the requirements of Article 5, the fact that a special parliamentary law had been adopted and that the law about the mergers of regions was the subject of debate and voting in the Senate, does not appear to satisfy the principles laid down in the Charter. The Senate is an integral part of the legislative power. The Constitution (Article 24) provides a particular mode of election for the members of the Senate, who are elected by representatives of the territorial collectivities although they are not entitled to represent single territorial collectivities (e.g. regions) – they have no legal mandate for representing the interests of single territorial authorities. Senators represent general interests of the territorial collectivities as such and they fulfil this task within the framework
page 254 / 796 of their parliamentary work (to examine and vote on laws, control the government and evaluate public policies, Article 24 of the Constitution). The opinions of the senators cannot be regarded as “consultation” as required by the Charter. Moreover, the participation of senators in parliamentary work cannot be characterised as efficient prior consultation “in due time and in an appropriate way” for the authorities directly concerned as stipulated in Article 4.6 (general rule) in combination with Article 5 (particular rule) that safeguard the right of territorial authorities to be consulted.
Furthermore, the right of “prior consultation” is enshrined in the Charter for “the local communities concerned” and that means for each one of them, especially if the number of the “communities concerned” is small (as it is the case of the French Regions) so that such a consultation is easily practicable. Therefore, the delegation concludes that, according to Article 5 of the Charter, the official representatives of each region have to be consulted prior to changes in regional boundaries and mergers. The genuine representative of the regional community is no other than the regional assembly, the representative and deliberative institution where an open local debate about the reasons, the aims, the means and the possible consequences of such mergers can take place. The provision of the Charter for prior consultation of “communities concerned” (and not of communities in general or even of their representatives at national level etc.) is a substantial procedural guarantee safeguarding the spatial component of local autonomy and the distinct identity of each territorial community. These guarantees cannot be by-passed through distant consultation on a general basis at the national level.
The rapporteurs conclude, therefore, that the procedures for adopting the law of 16 January 2015 “on the delimitation of the regions, regional and departmental elections and modifying the electoral calendar” did not meet the aforementioned requirements of the Charter and that there is therefore an infringement of Article 5.
Georgia [Non ratified - Report adopted on 7 November 2018 ]
The Georgian Code of Local Self-Government includes special provisions for consultation with municipalities and the local population in cases of territorial reform (Articles 10, 11, 12 and 13). In addition, Article 74, paragraph 2, of the constitution provides that “decisions on the establishment and abolition of a self-governing unit, or the changing of its boundaries, shall be made by Parliament in consultation with the respective self-governing unit and on the recommendation of the Government”. It therefore seems to the rapporteurs that Georgia is able to ratify the Article 5 of the Charter and this was confirmed by all interlocutors of the Congress delegation during the monitoring visit, including the chairman of the parliament.
Concerning the implementation of a consultation procedure before the mergers of 2017, when 14 municipalities were merged into seven cities (Gori, Zugdidi, Ozurgeti, Telavi, Mtskheta, Akhal’tsikhe, Ambrolauri), information provided by Georgian experts indicated that the ministry of regional development and infrastructure had organised a policy meeting with NALAG in March 2017 and presented a report on the pilot territorial reform implemented in 2014, pointing out that separation of urban centres from their rural areas was not in the interests of efficiency and that the government had plans to reverse the 2014 territorial reform. The official position of NALAG was that: a) there should be consultation with municipalities before any decisions are taken; b) re-merging of the seven cities with their adjacent rural communities should be approved by locally elected bodies of each respective municipality; and c) in no cases should funding of merged municipalities (State transfers) be less than the cumulative sum of funds of merged municipalities in the previous fiscal year. The ministry agreed with NALAG’s proposals and asked NALAG to provide logistical support for the organisation of consultations with Georgian municipalities.
In April-May 2017, NALAG organised 10 consultation meetings in all regions of Georgia. Those
page 255 / 796 meetings were attended by mayors and heads of local councils, representatives of the central government, and independent experts and they were also open for public participation. The agendas of those meetings included three topics: a) re-amalgamation of seven cities and seven municipalities; b) recommendations for decentralisation of State powers; and c) recommendations for financial decentralisation. In total, 250 local government representatives took part in these consultation meetings. NALAG prepared a verbatim report of the meetings and developed a set of recommendations based on that report. Both documents were submitted to the ministry. The verbatim report showed that the absolute majority of local government representatives supported the re-amalgamation of the affected municipalities.
The ministry of regional development and infrastructure then officially submitted a proposal for amalgamation to the following local government units: the city and the municipality of Gori, the city and the municipality of Telavi, the city and the municipality of Akhaltsikhe, the city and the municipality of Ozurgeti, the city and the municipality of Mtskheta, the city and the municipality of Zugdidi, and the city and the municipality of Ambrolauri. Local councils of all 14 local government units organised open sessions in which to discuss the proposals on amalgamation, which were subsequently approved. Representatives of the NGO coalition that had strongly opposed the proposal for re-amalgamation also attended these meetings.
Following a final session of the executive board in June 2017, NALAG decided to support territorial consolidation of the 14 municipalities. Subsequently, a draft legislative proposal, along with a verbatim report of regional consultation meetings that had taken place, was sent to parliament for approval. Laws on this territorial reform were adopted after three readings. The delegation has been informed that, although the President of Georgia vetoed the bills on the ground that rolling back this process seemed completely unsubstantiated and unacceptable, and that taking away the self- governing status of seven towns would halt the development and strengthening of self-governance in Georgia, the Parliament overrode the President’s veto on 26 July 2017.
Germany [Article ratified - Report adopted on 14 March 2012 ]
The European Charter requires that local authority boundaries not be changed without prior consultation with the local communities concerned, possibly by means of a referendum where this is permitted by statute.
The administrative law of various German Länder makes the change of local government boundaries possible. The whole process is regulated by law and needs the concerning local authorities’ participation in the decision-making procedure. In some Länder, as in Baden-Württemberg, Brandenburg, Saxony, Saxony-Anhalt and Thuringia, any change to the status of a municipality requires a consultative referendum of the local community prior to the final decision. The rights of local authorities are protected also by Land constitutional courts. Municipalities may lodge complaints against the procedure.
The number of local authorities of the old Länder was 8,513 in 1994, while those of the former East Germany comprised 6,295 municipalities. The unified Germany altogether consisted of almost 15,000 individual local governments in the early 1990s. While in the Western Länder some progress has been achieved towards further integration of the local government system, only tentative reforms were accomplished in the Eastern Länder in the 90s. Since the first monitoring visit in 1999, municipal mergers have occurred in different degrees in the various Länder (see para. 38). The Congress delegation has not heard any contestation of the merger processes or any other change to local government boundaries.
Greece [Non ratified - Report adopted on 26 March 2015 ]
page 256 / 796 Greece is not bound by article 5, according to which local authority boundaries should not be changed without prior consultation with the local communities concerned, possibly by means of a referendum where this is permitted by statute. This being said, the rapporteurs would like to stress that the process of mergers of municipalities has been a prominent feature in the Greek territorial landscape in the last decades, especially in the “Kapodistrias” and “Kallikratis” reform. Changes to administrative boundaries of a municipality may take place under certain conditions provided for in articles 2-5 and 10-13 of the Law 3463/2006 (“Code of Municipalities and Communities”) and article 5 (“Redefinition of boundaries of municipal communities within municipalities of over 100 000 inhabitants, transfer of a local community to a neighbouring municipality”), as well as article 6 of the Law 3852/2010 (“the Kallikratis reform”) (“Establishment of a local community from a settlement which is defined in the census as independent”). The opinion of the local authorities involved is requested. The holding of local referendums is enshrined in article 216 of the Law 3463/2006; however the presidential decree necessary to implement this provision is still lacking and therefore, referendums have not, in practice, been held. Therefore the rapporteurs are of the opinion that the situation in Greece would be, de jure at least, in compliance with Article 5. Consequently, they consider that very little is required to enable ratification of Article 5 of the Charter and they encourage the Greek authorities to consider revisiting the declaration made as regards this article.
Hungary [Article ratified - Report adopted on 12 February 2021 ]
This Article requires that local communities should be consulted in case of changes of local authorities’ boundaries.
The Cardinal Law on Local Self-Government establishes, in Article 125.4, that the territorial structure of Hungary is decided by Parliament, and therefore – after obtaining the opinion of the given municipalities – the consolidation and division of counties, borders, the name and seat of counties, and the formation of the capital districts and the borders of the capital are defined by a Resolution from Parliament.
During the monitoring visit the issue was not raised. Although local government is highly fragmented in Hungary and there are many small villages experiencing serious problems in managing their tasks, consolidation is not an option in Hungary and the principle “one village, one local authority” is applied.
The rapporteurs consider that the requirements of Article 5 are satisfied in Hungary.
Iceland [Article ratified - Report adopted on 29 March 2017 ]
As Iceland is one of the most sparsely populated countries in the world, it is easy to understand why the process of mergers of municipalities has been a prominent feature of the Icelandic territorial landscape in the last twenty years: the number of municipalities has been reduced from 196 to 74. In spite of all the attempts to reform, the main feature characterizing the Icelandic system is still very much present: more than half of the municipalities in the country have less than 1000 inhabitants and 1/3 of them have less than 500 individuals, a circumstance that has been considered as the main problem over the decades; too many, too little municipalities with limited capacity to provide modern services.
Mergers have always been voluntary (with the exception, in the past, of those municipalities whose
page 257 / 796 population fell under 50 inhabitants; this threshold, however, has now been abandoned by Law 138/2011), since it is against the law to merge municipalities without the prior consent of the majority of citizens, which must be consulted by means of a referendum.
Law 138/2011 dedicates the Chapter XII to “Amalgamation of municipalities”, setting detailed rules on the amalgamation procedure. Article 120 establishes that “No municipality may be amalgamated with other municipalities unless more voters in a referendum […] are in favour of the amalgamation than are opposed to it”.
Recommendation 283 (2010), paragraph5, lett. f), invited Icelandic authorities to “raise the minimum threshold below which the merger of local authorities is compulsory and make provision for a combination of criteria based, in particular, on economic and geographical rationality and on the preservation, as far as possible, of inhabitants’ “municipal identity” before con sideration”. Although in the last few years local leaders and state politicians seem to have begun to believe that the most realistic way to strengthen the municipal level so that it can continue taking over significant tasks from the state is by developing more cooperation projects, and a form of surrender to voluntary amalgamations appears to have taken place, during the meeting with rapporteurs the Icelandic Association of Local Authorities expressed its opposition to compulsory mergers provisions.
Therefore, the rapporteurs consider that Article 5 of the Charter is now fully respected in Iceland.
Ireland [Article ratified - Report adopted on 31 October 2013 ]
Alteration of boundaries can be initiated by local governments, but also centrally. According to Article 61.—(1) of the LGA, "Following consideration of a report by the Local Government Commission with respect to the boundary of a local authority, the Minister may, by order, alter the boundary of the relevant county, city or town.
Some consultation in advance of boundary changes is formally provided for in law, but can be cosmetic in practice. Referendums are not provided for by law in the case of boundary changes, although local plebiscites are permitted by law for a very limited number of other local issues (such as changing the name of an area, etc.) The legislation that governs the alteration of local authority boundaries [Section 29 of the LGA 1991 and the Local Government (Boundary Alteration) Regulations 1996 (S.I. No 217 of 1996)] contain provisions for consultation. These procedures include the publication of newspaper notices, submissions by interested persons (which must be considered) and the availability for public inspection of the proposal.]
The local authorities claim that there was not sufficient consultation as foreseen in Article 4, para.6 of the Charter (in due time and in an appropriate manner) on the new territorial structure proposed by the “Action Programme”, either with citizens, councillors or associations. The DECLG contends that they did consult. The rapporteurs note that the lack of an institutionalised procedure and the fragmentation of the associations representing local authorities must have contributed to creating this unsatisfactory situation.
The DECLG has informed the rapporteurs that a Local Electoral Area Boundary Committee has been recently established to review and make recommendations on local electoral area boundaries in the context of the results of the 2011 census and the Action Programme. The Committee has been asked to report back no later than May 2013. The Committee has issued a public invitation for submissions as part of the review process.
Italy [Article ratified - Report adopted on 18 October 2017 ]
page 258 / 796 At point 4.1 of this preliminary report, reference was already made to the evolution and current situation of the mergers of municipalities in Italy. In this domain, the most important concern raised by this short article of the Charter is whether the local residents are consulted whenever a fusion or merger or municipalities is approved. The interlocutors met during the visit ensured that this provision is fully respected by the Italian legislation and is common political and administrative practice. In this sense, Article 15 of the Testo Unico provides that “the region may modify the territorial remit of the municipalities having heard the concerned population…”. Moreover, the Constitution includes specific provisions on this: “the region, after consultation with the populations involved, may establish through its laws new municipalities within its own territory and modify their districts and names”. The delegation was informed that the merger of municipalities is always a bottom-up process, and that there is a referendum for the citizens involved. If this popular referendum is positive, then the merger is approved by the region, by means of a specific legislative act.
Therefore, the rapporteurs conclude that Article 5 of the Charter is fully respected in the Italian Republic.
Latvia [Article ratified - Report adopted on 27 March 2018 ]
Checking whether article 5 of the Charter is currently respected in Latvia is a somewhat tricky question, for the simple reason that, since the closing of the territorial reforms in 2009, there have not been substantive experiences of alteration of local authority boundaries and therefore this provision could hardly be applied. It is true that, in the past, there were allegations of lack of respect of this article of the Charter. For instance, the explanatory memorandum of Recommendation 317(2011) on “local and regional democracy in Latvia”, states that “the delegation noted that the reform has met with a certain amount of resistance and opposition. Central government was accused of insufficient consultation and discussion with its interlocutors” (par. 63).
During this visit, the Delegation did not hear any complaints from political leaders and association on the possible non-recognition of this article in the present situation. In any case, there is no constitutional provision on the matter and the Law on Local Governments does not include specific provisions either.
In conclusion, Latvia complies with article 5 of the Charter.
Liechtenstein [Article ratified - Report adopted on 28 March 2018 ]
The Charter requires that a change in local authority boundaries should give rise to prior consultation with the local communities concerned, possibly by means of a referendum where this is permitted by statute.
According to Article 4 paragraph 1 of the Constitution, the borders of state territory may only be changed by means of a law. Changes to boundaries between municipalities, the establishment of new municipalities and the merger of existing municipalities also require a majority decision of the Liechtenstein citizens eligible to vote who reside there.
The Constitution provides that every municipality shall have the right to secede from the Principality within the limits of the law or an international treaty. A local referendum is required for both the initiation of such a procedure and for adoption of the final decision.
In the light of the above considerations, the rapporteurs conclude that Article 5 is complied with in
page 259 / 796 Liechtenstein.
Lithuania [Article ratified - Report adopted on 6 November 2018 ]
This provision aimes at requiring that the local communities be consulted in case of changes in local authorities’ boundaries.
In Lithuania, the Law on the territorial administrative units and their boundaries provides a rigorous procedure for the establishment of new municipalities and for the change of municipal boundaries, including a consultation of the residents and of the local councils involved. It is worth mentioning that, according to Article 7 of the Law, more than half of the residents of the municipality to be established eligible to take part in the poll shall participate and more than half of those who participated shall vote in favour of establishment of a new municipality.
This provision was applied by the Constitutional Court in the judgment of 28 June 2001, mentioned in the previous report, according to which the Government failed to implement those legislative provisions, as the Ministry of Public Administration Reforms and Municipal Affairs, neither requested nor received proposals form municipal councils as regards changing the boundaries of municipalities, nor did it organise any opinion polls of local residents under the procedure established by the Government.
During this visit, the rapporteurs did not hear any complaint from municipal representatives and the ALAL on the protection of local authorities’ boundaries. No changes in municipal boundaries happened after the last monitoring visit.
The rapporteurs consider that the requirements of Article 5 of the Charter are fully satisfied in Lithuania.
Luxembourg [Article ratified - Report adopted on 21 October 2015 ]
The rapporteurs addressed the question of the reorganisation of local government in Luxembourg in the context of the reform for the merger of communes (2011-2017) in the light of Article 5 of the Charter.
The aim of amalgamating communes in Luxembourg is to establish more robust entities so that they can demand more autonomy and act as a true counterweight to central government. This is the very principle of mergers.
In August 2014, the government at the time made a statement undertaking to take the necessary steps to provide the country with a public service and local government structures equipped for the challenges of the 21st century. In spring 2005, the Minister of the Interior and Spatial Planning assessed the critical mass that the communes needed to reach to be in a position in the medium term to offer their inhabitants a proper basic service. The Ministry subsequently presented the Chamber of Deputies with its integrative blueprint for territorial and administrative reform of the Grand Duchy of Luxembourg. On 3 July 2008, a policy debate on the reorganisation of local government in Luxembourg was held in the Chamber of Deputies and confirmed the need for a sustained awareness-raising campaign to promote the move towards strong, self-governing communes.
Under Article 2 of the Constitution, “the boundaries and capitals of judicial or administrative districts may be changed only in accordance with a law.” This provision has the distinct advantage that each
page 260 / 796 merger can be practically tailor-made under a special law taking account of the specific characteristics of the communes merging. Neither the Constitution nor the law expressly requires a referendum to be held prior to a merger of communes. The possibility of holding a referendum at communal level does exist in Luxembourg and derives from Article 35 of the modified Communal Law of 13 December 1988, which provides: “the communal council may call on the voters to give their opinions via a referendum on matters of communal interest and on such terms as it shall determine.” Referendums must be held by law if they are requested by a fifth of voters in communes with over three thousand inhabitants and by a quarter of voters in all other communes. In this event, the council must hold the referendum within three months of the request. The arrangements for referendums are established by Grand Ducal regulation. The provisions of the electoral law on compulsory voting, particularly Articles 259 to 262, apply. At all events, referendums are only consultative.
The arrangements for this type of referendum are governed by the amended Grand Ducal regulation of 18 October 1989, under which everyone on the electoral roll for communal elections may take part in a referendum. This includes foreign nationals who fulfil the conditions of the modified Electoral Law of 18 February 2003 and have asked to be included on the electoral roll. Although, under domestic law, holding a referendum in the event of a merger of communes is merely a possibility, this form of consultation has always been used without exception, with reference among other things to Article 5 of the Charter.
After the first wave of mergers in the 1970s, reducing the number of communes from 130 to 118, the following further mergers were carried out, reducing the number of communes to 105 by 2015:
Merger laws and new merged communes established since 2004:
- 21.12.2004 Tandel Bastendorf and Fouhren
- 14.07.2005 Kiischpelt Kautenbach and Wilwerwiltz
- 28.05.2009 Clervaux Clervaux, Heinerscheid and Munshausen
- 24.05.2011 Esch-sur-Sûre Esch-sur-Sûre, Heiderscheid and Neunhausen
- 24.05.2011 Käerjeng Bascharage and Clemency
- 24.05.2011 Schengen Burmerange, Schengen and Wellenstein
- 24.05.2011 Parc Hosingen Consthum, Hoscheid and Hosingen
- 24.05.2011 Vallée de l’Ernz Ermsdorf and Medernach
- 19.12.2014 Wiltz Eschweiler and Wiltz
All these mergers were preceded by a referendum. Political decision-makers have always considered themselves bound by the outcome of referendums and SYVICOL has expressed its support for mergers.
The mergers of communes in Luxembourg have gone hand in hand with a harmonisation of communal regulations and various administrative and technical services. However, all the merger laws referred to include a transitional measure under which the regulations of the former communes remain in force on the territory for which they were enacted until they are replaced by uniform texts
page 261 / 796 that apply to the entire territory of the commune created by the merger. This measure is essential in order to avoid a legal vacuum when the merger comes into force. In some cases the communal councils of merged communes have even worked together to adopt identical regulations ahead of a merger.
However, the delegation has been told that sometimes the co-existence of different regulations within one and the same commune causes a whole range of practical and administrative problems. It is in the area of communal taxes and charges that any disparities are most obvious and that harmonisation is most urgently required.
In other areas, the continuing existence of old regulations can cause complications that are somewhat difficult to overcome. This applies chiefly to communal spatial planning, as the harmonisation of several master plans and regulations on buildings, public highways and sites must follow the same procedure as when these documents were originally drawn up, which can easily take more than two years. Likewise, preparing the accompanying document file represents a substantial cost.
The question of how communal services are reorganised has to be addressed differently for each merger depending in particular on the existing services and geographical considerations. As a rule, practice has shown that it is essential to combine services and that it is best for the efficient functioning of the new commune to do this as quickly as possible. This often entails major costs (for projects such as the construction of a new town hall or technical facilities or the conversion of existing buildings) and this accounts for a large share of state funding for mergers.
It is worth pointing out that the commune resulting from a merger is automatically a member of the intercommunal groupings to which at least one of the merged communes belonged. As far as SYVICOL knows, the difficulties that this caused in the past were resolved in the course of the merger preparation procedure.
The offices of the Ministry of the Interior help communes which are candidates for a merger with the formalities.
In accordance with a cabinet decision, financial support for mergers of communes from the government is provided by means of a per capita subsidy (EUR 2,500 from 2004 to 2011) based on population size at the date when the merger begins. Payment of this amount is spread over ten years. A sliding scale was applied for the first time to the merger of the communes of Eschweiler and Wiltz under the law of 19 December 2014. The rapporteurs have been informed that the cabinet meeting of 25 April 2014 adopted yet another calculation method for the years 2015 to 2016, which differs from the previous ones in that it no longer applies to the population of the commune created by the merger, but to that of each commune merged. The subsidies are now set at EUR 2,000 per capita per commune for the bracket up to 2,000 inhabitants and EUR 1,000 per capita per commune for the bracket from to 2,001 inhabitants to 3 000 inhabitants.
In the light of the foregoing, the rapporteurs conclude that Luxembourg is in full compliance with Article 5 of the Charter, as changes to local authority boundaries are not only voluntary but are preceded by a referendum of the electorate of the communes concerned In addition, the law on mergers provides for “tailor-made” mergers and, in this respect, Luxembourg’s example is clearly a good practice, which it would be worth bringing to the attention of other member states which are considering potential mergers.
Malta [Article ratified - Report adopted on 29 March 2017 ]
page 262 / 796 According to Article 3(3) of the Local Councils Act, changes in the boundaries of localities may be made only in exceptional circumstances and only by the Electoral Commission, after consultation with the Minister, the local councils concerned, and, wherever possible, with the Local residents. The Electoral Commission shall effect such changes through a legal notice in the Gazette.
The Electoral Commission is established under Article 60 of the Constitution and consists of a Chairman, serving as Chief Electoral Commissioner, who is appointed to that office from the public service, and such number of members not being less than four as may be prescribed by any relevant law. The members of the Electoral Commission are appointed by the President acting in accordance with the advice of the Prime Minister, which is given after consultation with the Leader of the Opposition.
Malta complies and copes well with the requirements of Article 5 of the Charter, since the right of the Maltese Local Authorities affected to be consulted prior to changes to their boundaries is secured and safeguarded under Article 3(3) of the Act.
Monaco [Article ratified - Report adopted on 28 March 2018 ]
Monaco has only one municipality, which covers the entire 2 sq. km surface area of the state, as established by the Constitution (Article 78). Due to its unusual situation, the rapporteurs consider that Article 5 does not apply in Monaco’s case.
Montenegro [Article ratified - Report adopted on 21 October 2015 ]
Article 21 of the Law on Local Self-Government prescribes that the municipality shall have the name and territory as determined by the law.
Montenegro has a single administrative level for local communities, namely the municipal level. As already mentioned Montenegro has 23 municipalities. In November 2011, the Parliament of Montenegro passed the Act on Territorial Organization of Montenegro1. This Act lays down the conditions and the procedure for initiating a territorial change. Accordingly, any change to municipal boundaries will only be made in conformity with this law. In 20132 and in 20143 the act was amended by two Acts on Changes and Amendments to the Act on Territorial Organization of Montenegro. These changes granted municipality status to Petnjica and to the municipality of Gusinje. The rapporteurs were informed that initiatives for the establishment of municipalities in Sutomore and Petrovac are under consideration.
Article 5 of the Charter is therefore complied with by Montenegro.
Netherlands [Article ratified - Report adopted on 26 March 2014 ]
The Dutch constitution provides that the “revision to provincial and municipal boundaries shall be regulated by an Act of Parliament” (Article 123 para.2). The Municipalities Act does not include specific provisions on the matter, but a specific statute deals with the matter: the “Wet algemene regels herindeling” (Wet Arhi). Thus, a modification of municipal boundaries takes place whenever a new municipality is established or suppressed, when two or more municipalities merge, or whenever a territorial modification concerns at least 10% of the local population. As a rule, a re-definition of municipal boundaries can only take place by an Act voted in Parliament, on the initiative of the local bodies concerned. The Minister of the interior is in charge of implementing such act. The Law on the change or local authorities’ territories provides for the necessary rules on the election of the new local representative bodies, and fixes the situation of the local authorities’ staff affected by the
page 263 / 796 changes.
In this sense, it is convenient to stress that the process of mergers of municipalities has been a prominent feature in the Dutch territorial landscape. The process started in the 19th century and has continued for decades at a steady pace. Governmental officials told the Congress Delegation that, the process of mergers of municipalities cannot be considered to be definitively closed and that any further merger or fusion would be welcome by the government. However, the merger process must be decided by the municipalities themselves, even though the government may set the necessary financial incentives for such outcome. Merging municipalities is therefore a voluntary initiative of the local bodies concerned.
In the light of the precedent considerations, the requirements of Article 5 of the Charter can be considered to be complied with by the current legal scheme.
North Macedonia [Article ratified - Report adopted on 26 February 2013 ]
According to the LSG Law, a ”municipality shall be established on the territory of one or more populated places where the citizens are connected by common needs and interests, where there are conditions for material and social development and for participation of the citizens in the decision- making process on their local needs and interests” (Article 16). The territory on which a municipality is established should represent a naturally, geographically and economically linked entity, with communication among populated places and gravitation towards the common centre, and it should have infrastructure facilities as well as facilities of social standard built therein (Article 17).
With the territorial re-organisation as part of the implementation of the OFA (Article 116 of the Constitution providing the constitutional base for an organic Law on Territorial Division, which was adopted in 2004), the number of municipalities has been reduced from 124 to 84. The logic behind the new territorial division was to create larger and thus more functional municipalities, but also to have more bilingual ones by reaching the necessary 20% threshold for communities. Although the reform had met fierce criticism, a series of referendums against the new Law did not pass. As further legislation or amendments are subject to the double-majority requirement, smaller communities are protected against unilateral changes of the new territorial design.
These mergers have created problems in some cases. In particular, the co-existence of urban and rural units within the same municipality is often difficult due to the disparity in their situations. The rural parts of the new and bigger municipalities often need to improve their infrastructure, waste management and water supply, but these are not perceived as priorities by the urban municipalities, which already provide these services and functions to the majority of the population in the urban parts (which also constitutes the majority of the voters).
In the Rapporteurs' opinion, these problems could probably be resolved by a systemic approach which takes the differences between urban and rural units fully into account. One way to do so would be to determine mandatory tasks or essential services each municipality has to fulfil before engaging in other fields of its competences. The Rapporteurs have noted that Article 22 para. 3 of the LSG Law which contains a reference to such a possibility, has not been used so far by the legislator.
In addition, special funds for the development of rural areas might be set up in order to provide financial incentives to municipalities for the development of these areas. Although the LSG Law already provides for such an option (Article 12), again this has not been used. It has now been replaced by the Law on Balanced Regional Development (BRD). According to the BRD Law, 70% of funds available under the law shall be devolved to the new Planning Regions, while 20% are to be reserved for poorer Regions and the rest (10%) is to be used for underdeveloped municipalities. The
page 264 / 796 Rapporteurs think that reserving specific funds for the underdeveloped parts of municipalities should be considered within this new framework, permitting to treat urban and rural areas (merged into one municipality) differently, i.e. according to clear criteria with the objective to create cohesive and sustainable units of local self-government.
According to Article 19 of the LSG Law, a special law (i.e. the 2004 Law on territorial organisation) determines the territory, names, seats and borders of the municipalities, the procedure for their establishment and other issues regarding the territorial division.
The principle of prior consultation of the concerned population in case of a change of boundary is not expressly included in the LSG Law 2002 (as opposed to its predecessor from 1995, Article 15). It could however be considered as a binding principle in the (monistic) legal system of “the former Yugoslav Republic of Macedonia”, due to the binding force of Article. 5 of the Charter. This being said, a procedure for consultation of the populations concerned on the modalities of such modification would benefit from being clearly laid out in the law to ensure the smooth running of consultations. The Rapporteurs have noted that, although the adoption of the Law on territorial organization in 2004 has been criticised for insufficient prior consultation before its adoption, the principle is contained in the provisions of Article 2 of the same law: “A new municipality can be established (amalgamated, divided and the boundaries can be changed) after prior consultation with the citizens in the municipality concerned”.
Norway [Article ratified - Report adopted on 26 March 2015 ]
Local communities are in fact consulted prior to any change in local authority boundaries. The territorial reform currently under way, and which is expected to produce mergers between municipalities, has given rise to extensive consultations with local authorities and their association (KS). According to the legislation, municipalities should consult their inhabitants about changes in the boundaries of local authorities. This can be done by a local referendum, opinion polls, questionnaires, meetings or by other means.
The rapporteurs accordingly conclude that Norway is in compliance with Article 5 of the Charter.
Poland [Article ratified - Report adopted on 2 April 2019 ]
This Article requires that local communities should be consulted in case of changes of local authorities’ boundaries.
Article 15.2 of the Constitution states that «The basic territorial division of the State shall be determined by statute» but does not specifically refer to the right of consultation of local communities when changes in local boundaries are decided. The requirement of the prior consultation of local communities was also absent from the original text of the Law on Municipal Self- Government and of the Law on Powiat Self-Government. It was introduced in the legislation after Recommendation 120 (2002).
According to the existing legislation, the Council of Ministers may create, merge and dissolve gminy/powiaty. It also defines the boundaries of municipalities and districts by way of regulations. Revisions and changes in local government units are made by the Council of Ministers upon its own initiative, or on a motion by the local bodies themselves. In either case, the changes require an opinion of the organs of local self-government units and are subject to the public consultation of the residents of the area affected by the change.
page 265 / 796 Alternatively, the creation, merger, or division of municipalities as well as the re-definition of their boundaries may also be initiated by residents in a referendum, the results of which can form the basis for a motion by the local council.
Determination and change of municipal boundaries is made in a way that ensures that the territory of the resulting local body: (a) is as uniform as possible in terms of the settlement pattern and spatial arrangement; (b) takes into account social, economic and cultural ties; and (c) ensures that the local body is able to carry out its tasks.
Therefore, although the legislation requires consultation of the residents, in Poland the change of the boundaries may also happen against the residents’ will.
Changes in municipal boundaries have generated in the last few years a significant volume of controversies. The delegation was informed that a prospected change in the area of the Capital City of Warsaw, which would have affected several neighbouring municipalities, was abandoned. A change of the borders of the City of Opole, that were enlarged to include parts of the territory of neighbouring municipalities, against the will of the councils of the affected municipalities and against the will the residents as expressed in public consultations, was implemented by the Council of Ministers, and generated a conflict that ended up – although without an answer – before the Constitutional Court.
A very special case is the abolition of the Ostrowice municipality. On 5 July 2018, the Sejm adopted the Law on special solutions for the Ostrowice municipality in the West Pomeranian Voivodeship, establishing that the Council of Ministers, by regulation, would abolish the municipality of Ostrowice. According to the explanatory statement to the bill, the municipality of Ostrowice is one of the most indebted municipalities in Poland, with no financial prospects to carry out investments for many years and no financial means to repay the debt. The abolition of the Ostrowice municipality and the inclusion of its area to the neighboring municipalities will take place through the regulation of the Council of Ministers issued after consultations with residents (as provided by Article 1 of the Law). The consultations will be carried out by the authorities of the concerned municipalities.
According to the explanatory statement of the bill, “the advice of the councils is not required, in accordance with the European Charter of Local Self-government, which only provides for consultation with residents (Article 5)”. Changes in the territorial division related to the abolition of the Ostrowice municipality will take place on 1st January 2019.
The rapporteurs would like to point out that changes in boundaries and mergers of local authorities are very often a source of tensions and political conflicts. Although a more detailed procedure, with a more substantive consideration of the will of the residents could help in smoothing conflicts and tensions, the rapporteurs consider that the requirements of Article 5 are globally met in Poland.
Portugal [Article ratified - Report adopted on 28 September 2020 ]
In Article 164, the Portuguese Constitution states that the “creation, abolition and modification of local authorities” fall within the legislative responsibility of the Assembly of the Republic. Accordingly, it is for Parliament and Parliament alone to legislate on the creation and abolition of local authorities and changes to their boundaries. That said, when examining the draft legislation concerned, the Assembly of the Republic must take account of the reports and assessments produced by local authority bodies.
In the view of the rapporteurs, this means that there is real consultation of the local authorities concerned or national local authority associations, as could be seen in the reorganisation of
page 266 / 796 boundaries undertaken from 2012 onwards in line with commitments entered into under the Programme of economic adjustment and reform devised with the EU and the IMF, particularly at the level of the parishes.
Article 249 of the Constitution therefore guarantees prior consultation of the local authorities concerned (or their national associations) if territorial boundaries are reformed. Nevertheless, this relates to consultation solely of the “local authorities concerned”, and no procedure involving all local authorities in decision-making exists as such in Portugal.
Despite these reservations, the rapporteurs consider that Article 5 of the Charter is complied with.
Republic of Moldova [Article ratified - Report adopted on 4 April 2019 ]
Changes in local authority boundaries shall not be made without prior consultation of the local communities concerned, possibly by means of a referendum where this is permitted by statute.
As noted above, the number and size of local authorities in the Republic of Moldova is unanimously perceived as a negative: there are too many first-level local authorities, and they are too small and weak in terms of finances and administrative and managerial capacity. This situation would be the ideal context for governmental policies or plans for amalgamations and mergers of local authorities. However, whether Article 5 of the Charter is currently respected in the Republic of Moldova is somewhat difficult to determine, because in recent years there have not been substantive alterations to local authority boundaries. Therefore, this provision could hardly be applied. During the meeting with the association of Raioane Councils, the rapporteurs were told that that the government is working on a project of merging the current Raioane to produce larger and more efficient units (7 or 8 districts), that the councils were involved in the discussions and that the Raioane bodies and the mayors were consulted regularly.
The previous monitoring reports of the Congress did not identify a definite problem in this respect. During this visit, the delegation did not hear any complaints from political leaders or associations on the possible non-recognition of this article in the current situation. In any case, there is no constitutional provision on the matter.
In conclusion, the Republic of Moldova complies with Article 5 of the Charter.
Romania [Article ratified - Report adopted on 3 March 2011 ]
The protection of local authority boundaries is guaranteed in Romanian law by Article 22 of Law no. 215/2001.
Russian Federation [Article ratified - Report adopted on 30 October 2019 ]
According to Article 131, paragraph 2, of the constitution, “changes in borders of the areas in which local self-government is administered shall be made with the consideration of the opinion of the population of the corresponding areas”.
Pertinent regulations also exist at the subnational level. In the Chuvash Republic, for instance, the procedure of conducting a local referendum is provided by the Law of April 28, 2004, No. 2 “On local referendum and voting on issues of changing the boundaries of a municipality, transforming a municipality, recalling a deputy, a member of an elected body of local self-government, an elected official of local self-government”.
page 267 / 796 During the consultation procedure the representatives of the Republic of Chuvashia referred to the Federal Law No. 62-FZ of April 3, 2017 “On Amending the Federal Law “On the General Principles of Organizing Local Self-Government in the Russian Federation” establishes the legal status of a city district. Representatives of the Republic of Chuvashia explain that a city district is constituted by one or several settlements united in a common territory that are not municipal entities in which local self- government is exercised by the population directly and (or) through elective and other local self- government bodies. A city district can exercise certain state powers transferred to local self- government bodies by federal laws as well as by laws of the Federation entities. The settlement is granted the status of a city district by law of the Federation entity on a number of legal grounds and with the consent of the representative body of each of the municipalities. The authorities of the subject of the Federation together with the local authorities should assess the development prospects of territories and the feasibility of endowing these territories with the status of a city district. Citizens of the Russian Federation exercise local self-government through various forms of expression of will, but most often through elected and other bodies of local self-government. The representative body of the municipality in fact represents interests of a particular municipality's residents and expresses their opinion on certain issues.
At the same time, it was stressed to the rapporteurs during their visits that Law No. 62-FZ of 3 April 2017 provides for the elimination of rural local governments. According to the relevant provisions, any local territory can be dubbed a “town district”, even though there are no town settlements of adequate size and territory connection. The real aim of this law would be rather to establish a single local authority for a town district as compared to the district (raion) where there existed a two-tier system of local government. Some federal subjects have used this law to do away with local self- government: local settlements have been abolished, direct elections for the head of local government have been scrapped and municipalities have been stripped of their powers and responsibilities. This policy has been pursued in a most aggressive way, notably in the Regions of Moscow, Nizhny Novgorod and Kaliningrad.
As an example, the rapporteurs would like to refer to the complaint that was addressed to the Congress in January 2019 by the representatives of some municipalities of the Odintsovo district (Moscow region) and reportedly supported by 14 000 signatures of residents of this district. They claimed that local rural settlements had been transformed into a single urban municipality in violation of Article 5 of the Charter and despite the opposition of the residents against what they perceive as a “forced urbanisation”.
According to some interlocutors, the rapporteurs understood that it has become common practice for the regions to establish “town districts” in territories, including rural areas. More than a third of the regions in Russia have been applying this right widely, which results in abolishing local settlements. To achieve this, it is enough for a region to simply change the name of a municipal district to a town district (okrug). This entails the abolition of seven to ten settlements in a district. As a result, the same number of local government heads are dismissed, as are between 50 and 100 local elected representatives for each district. Even though the Russian Federation’s constitution and legislation provide for prior consultation of local communities affected, it seems that in practice several communities have been abolished without prior consultation. Prior consultation of local communities should be organised not only in cases of amalgamation but also in cases where a certain level or category of local authorities is abolished and integrated into a higher level or another category of territorial authorities.
Therefore, on the basis of the above-mentioned information, it appears to the rapporteurs that the situation in the Russian Federation does not comply with Article 5 of the Charter.
San Marino [Article ratified - Report adopted on 28 March 2018 ]
page 268 / 796 Changes in boundaries and amalgamations do not come into consideration in the old Republic of San Marino, where these borders and these townships have grown historically.
Serbia [Article ratified - Report adopted on 18 October 2017 ]
The article stipulates that any changes to the territory of local authorities require consultation with the community, via a referendum if possible. The Serbian constitution is clear on such matters, with Articles 188 and 189 providing sufficient guarantees for the legal protection of the boundaries of local authorities. The territory of a local self-government unit is determined by law, and any establishment, revocation or alteration of territory can only be undertaken after a referendum. There have been no cases of territorial changes in recent years. The rapporteurs conclude that Serbia complies with Article 5 of the Charter.
Slovak Republic [Article ratified - Report adopted on 24 March 2016 ]
It seems that this article is respected in Slovakia, and the rapporteurs did not hear anything to the contrary. To begin with, Art. 66 of the Slovak Constitution provide that “the unification, division or cancellation of a municipality shall be regulated by a law”. In relation to mergers, domestic legislation stipulates that the merging of several municipalities (to create another, independent and bigger one) requires the celebration of a previous referendum in all the municipalities concerned, and an agreement between the said municipalities. Officially, the merger is subject to the approval by the deconcentrated State administration and implemented by means of directives of the central Government.
In the light of the precedent, the Slovak Republic complies with Art. 5 of the Charter.
Slovenia [Article ratified - Report adopted on 6 November 2018 ]
As indicated earlier, Slovenia has a single-tier self-government system – only local level of municipalities, since due to various reasons a regional level has not been implemented yet. 88. In 1991, Slovenia had 60 municipalities, in February 2018 the total number of municipalities in Slovenia reached 212, 11 of which have urban status.
Slovenia also has twelve statistical regions with no administrative functions. Statistical regions are subdivided into two macro-regions (East and West Slovenia) for the purpose of the Regional policy of the European Union.
The general conditions for establishing a new municipality are defined by the legal acts. The Constitution (Article 139) explicitly states that “A municipality is established by law following a referendum by which the will of the residents in a given territory is determined. The territory of the municipality is also defined by law”. According to the Constitution, the will of residents plays a crucial role in determining self-government.
Also the Local Self-Government Act (Article 12) provides that “The area of the municipality may be changed or a new municipality may be established by law after a referendum has been held to determine the will of the population”. A referendum is mandatory to establish a new local municipality either splitting from the current local municipality or merging together. According to Article 14a of the Local Self-Government Act “a decree on the calling of a referendum on the
page 269 / 796 establishment of a new municipality or a change in the territory of the municipality shall determine the referendum area or several referendum areas, the text of the question in each area, the date of the referendum and the voting day”.
However, for establishing a new municipality some conditions have to be met. The Local Self- Government Act (Article 13a clearly requires that “A municipality shall have at least 5,000 inhabitants.”
The municipal capacity to fulfil tasks should also be considered. Before 2010 in exceptional cases, a municipality could have fewer than 5,000 inhabitants for geographic, border location, nationality, historical or economic reasons. Those exceptions were deleted by the amending act of 2010 and the only exception from the condition of 5000 inhabitants now (Article 13a) is as follows: “Upon its establishment a municipality may have fewer than 5,000 inhabitants if this involves the establishment of a new municipality by way of a merger of two or more municipalities.”
According to the data of the Ministry of Finance, 111 municipalities do not meet the criteria of 5000 inhabitants, while the smallest municipality has only 362 inhabitants. Therefore, the number and size of municipality shall be regarded in the context of their capacity to provide all necessary public services at the good quality level. Fragmentation of the country continued and the number of municipalities increased to 212 in 2015.
Today, half of the Slovenian municipalities (111) have a population of fewer than 5,000 residents, and six of these have fewer than 1,000; 48 municipalities have a population of between 5,000 and 10,000; 49 municipalities have a population of between 10,000 and 50,000; two municipalities have a population of between 50,000 and 100,000 and two of over 100,000.
There is a rather large diversity among local municipalities in Slovenia. For example, Komenda is a municipality with the highest natural increase per 1000 inhabitants – 9.9 while Kostel, on contrary, is the municipality with the lowest natural increase per 1000 inhabitants – (minus) 20.3. KoÄevje is covering the largest area 555 km2 while Odranci covers only 7 km2. There are 5,977 settlements in total and 59 settlements were unpopulated in Slovenia in January 2017.
Already back in 2001, the Congress had emphasised that Slovenia should apply measures tailored to prevent further fragmentation, resulting in inadequate funding and the lack of capacity of municipalities to ensure their tasks. However, the process of establishing new local authorities continued. The last new municipality was established in 2015 – the municipality of Ankaran which is now one of the smallest municipalities by size since it covers only 8 km2. According to the Ministry of Public Administration the trend in fragmentation of municipalities has stopped since then. It appears to the rapporteurs that small municipalities have problems in performing many tasks and are more dependent on the equalisation under the Financing of Municipalities Act.
If the municipality is too large, it is losing its internal cohesion and power distance increases. The residents might feel the inability to influence decisions or to participate in the direct decision making. If the municipality is too small, the residents are under the risk of being limited in their self governmental rights and enjoying poorer quality services.
Currently, there is no reform tailored to merge municipalities on the agenda.
In the opinion of the rapporteurs Slovenia complies with Article 5 of the Charter.
Spain [Article ratified - Report adopted on 20 March 2013 ]
page 270 / 796 In general, according to the information provided to the rapporteurs, it seems that the situation is in compliance with Article 5 of the Charter. Local authorities appear to be formally consulted on projects of changes of local boundaries.
The issue of merging of municipalities with less than 5 000 inhabitants was widely discussed in 2012. Several national sources concluded that most of Spain’s municipalities are administratively unviable, and considered their merger essential in any process aiming at strengthening local government. In the case of Spain, establishing a minimum population size of 5 000 inhabitants would represent a major step forward, bearing in mind that 6 797 municipalities (83.7%) of the municipalities are currently below this threshold. The draft act on Rationalisation and Sustainability of Local Government (Ley de racionalisacion y sostenibilidad de la Administracion local) stipulates that 3.725 local entities should be merged. The benefits to be gained from such a merger would be: to reduce administration costs, while guaranteeing the improved administrative capacity of the municipalities, approximate 3.500 million euros; to facilitate the reform of the local finance system, reducing the dependence of the municipalities on higher tiers of government and improving the fiscal responsibility of each municipality; to improve the efficiency of municipal investment policies, reducing the dependence of the small municipalities on higher tiers of government and avoiding the duplication of service provision; to facilitate municipal financial control (currently impeded by their size and sheer number) and the design of policies tailored to their needs (e.g. fiscal stimulus, aid in extreme financial situations, etc.).
Nevertheless, some interlocutors the Congress delegation met during the visit noted that it would be more appropriate to combine local self-government with flexible management and promote a rational distribution of competences, taking into account the economic needs of municipalities and of their citizens rather than opting for a simple “artificial fusion” of municipalities.
Should this measure be adopted and implemented in the future, the rapporteurs are confident that a consultation process will be organised prior to the foreseen changes of local boundaries as stated in the Article 5 of the Charter. The reform would need to be accompanied by measures guaranteeing citizen participation (including those in the small, merged municipalities) and that they have the capacity to play a role in the decisions that affect them.
Sweden [Article ratified - Report adopted on 2 April 2014 ]
Principles and procedures for changes in local authority boundaries are laid down in the Act Amending the Division of Sweden into Municipalities and County Councils (1979:11 reprinted as 1988:198). The Government has the power to decide on alterations of municipal boundaries through amalgamation or division of two or more municipalities or by incorporation of a part of a municipality into another.
This being said, the municipalities concerned need to be consulted and special account must be taken of their opinions. The law also requires that the public be consulted before deciding on a change of municipal subdivisions. This is usually done through a referendum, but can also be done through an opinion poll. If the government wants to change a municipality’s boundary, against the wishes of its inhabitants, the legislation requires that the government specify the reasons. However, ultimately the municipalities have no veto rights whereby they could oppose a decision to change their boundaries.
The municipal as well as the county councils may seek support from their electorate to express their adverse opinion against planned changes in boundaries by means of a referendum, an opinion poll or similar procedures as regulated in the Local Government Act and the Municipal Referenda Act (1994:692). It must be noted however that the outcome of a referendum or opinion poll is not
page 271 / 796 binding on the Government. It is only indicative but can have a certain weight in terms of political impact.
Provided the required consultation complies with the “in due time and in an appropriate way” stipulations of the Charter, Sweden is in compliance with Article 5 of the Charter.
Switzerland [Article ratified - Report adopted on 20 October 2017 ]
Over half of the municipalities have under 1 200 inhabitants, whereas 80% of the municipalities have less than 10 000 inhabitants, meaning that approximately half of the Swiss population live in municipalities. These municipalities are on average among the smallest in Europe, with the exception of those in France, Greece and Iceland. It is obvious that the smaller municipalities are, the more limited their ability to carry out their responsibilities in an autonomous manner. As a result, these responsibilities may be transferred to other municipalities in the framework of intermunicipal co-operation (entailing a loss of fiscal autonomy) or sometimes centralised at the level of the canton. Mergers between municipalities are therefore a relevant alternative.
Ideally, the municipalities should be able to implement the majority of their traditional responsibilities (primary education, social aid, water supply and treatment, local roads, fire-fighting services, and so on) autonomously and only rely on co-operation with other municipalities to fulfil a small number of responsibilities. This objective could be reached if Switzerland had between 800 and 1 000 municipalities. The average number of inhabitants per municipality would then be 9 000. The number of Swiss municipalities is expected to decrease by 700 within the next 20 years.
Municipalities seldom merged prior to 1990, but over the last 25 years they have merged with increasing frequency. In the mid-nineteen-nineties, there were still 3 000 municipalities. Today there are fewer than 2 300. Over the past few years the largest numbers of mergers have taken place in the cantons of Grisons, Jura, Vaud, Schaffhausen, Glarus, Ticino and Neuchâtel. In the Canton of Zurich, the move towards mergers began some five years ago and the number of municipalities decreased from 171 to 168.They will soon number 165. In the Canton of Jura there were 83 municipalities in 2008 and there are now only 57 left (four mergers are currently planned).
In the majority of cases, the decision to merge municipalities requires the approval of the inhabitants of the municipalities concerned, with the result that small municipalities can prevent a merger. There are two main reasons for refusing the merger: the inhabitants’ sentimental attachment to the municipality’s identity (in particular its name) and the fear of municipalities where local taxation is relatively low that the transfer of tax-raising powers to the new municipality will mean higher taxes. The laws of most cantons provide for the possibility of merging municipalities, even against their will, if there is a major regional interest, even if that interest is difficult to prove. In the Canton of Jura, Article 69b of the Law on Municipalities of 9 November 1978 stipulates that the parliament may, by means of a decree, decide to merge one municipality with another. This decision may be taken, by way of exception, when a municipality refuses to merge with one of several other municipalities and it cannot operate autonomously for one of the following reasons: a) it depends, on a long-term basis and to a significant degree, on resources that derive from financial equalisation; b) it has in the past regularly failed to fill all the posts on municipal bodies; c) it depends to a large extent on collaboration with one or several neighbouring municipalities. The Parliament must consult the municipal councils of the municipalities concerned before taking its decision.
In the Canton of Bern, Article 4h of the Law on Municipalities of 16 March 1998 stipulates that its Executive Council is responsible for approving decisions to merge, adopted by the municipalities concerned (voluntary mergers). The Executive Council gives its approval if the merger is in keeping with the law and provided there are no major cantonal interests opposing it. If the Executive Council
page 272 / 796 has not accepted a voluntary merger of municipalities, the parliament of the canton (the Grand Council) gives its opinion after consulting the municipalities concerned.
On a proposal from the Executive Council, the Grand Council can also order that municipalities be merged against their will if the municipality is no longer in a position to autonomously carry out its responsibilities over the long term because it: a) repeatedly presents a balance sheet deficit and there is no possibility in the medium term of redressing the situation; b) can no longer guarantee the ability of its bodies to operate as a result of the on-going inability to fill important offices or administrative posts; or c) does not, for a prolonged period of time, comply with the provisions laid down by the Confederation, the canton or the national churches regarding the execution of important municipal responsibilities (Art. 4,i). The Grand Council must take account, in particular, of the geographical, historical, cultural, economic and financial conditions, as well as of co-operation between the municipalities concerned. Finally, on a proposal from the Executive Council, it may order the merger of more than two municipalities against their will if the majority of the municipalities concerned and of voters approved the merger in a referendum.
As the rapporteurs were informed, the cantons generally prefer to use financial incentives to merge, in the form of a reduction in taxes or of grants. For example, in the Canton of Zurich, the 2016 Law on Municipalities provides for a procedure for merging municipalities and the financial incentives to be offered by the canton. Indeed the administrative and financial support of the cantons appears to be decisive where mergers are concerned. All of the cantons which have succeeded in merging municipalities have offered financial incentives, whereas no mergers have taken place in cantons where there is no provision for such incentives. It should also be noted that a revised Constitution of the Canton of Uri was adopted by the population on 22 September 2013, facilitating the merger of municipalities and avoiding the need to revise the constitution each time a merger is to take place: revised Article 67 of this constitution no longer refers to all of the municipalities of the canton by name.
It appears that the European Charter of Local Self-Government, and in particular Article 5 providing for the consultation of local authorities prior to any changes in local authority boundaries, is often referred to by the municipalities in the context of merger procedures. Indeed the delegation was informed of a judgment handed down by the Federal Court on 3 June 2016 (ATF 142 I 216), which explicitly refers to Article 5 of the Charter in a dispute concerning the procedure for merging municipalities in the Canton of Ticino (see below).
In light of the above information, the rapporteurs conclude that Switzerland is in compliance with Article 5 of the Charter.
Turkey [Article ratified - Report adopted on 1 March 2011 ]
The analysis article by article is currently unavailable
Ukraine [Article ratified - Report adopted on 31 October 2013 ]
Article 85 (29) of the Constitution includes among the powers of the Verhovna Rada “establishing and abolishing districts, establishing and altering the boundaries of districts and cities, assigning inhabited settlements to the category of cities, naming and renaming inhabited localities and districts”. According to Article 93 (13), only the laws of the country, a presidential decree or another administrative act can alter the territorial structure of Ukraine.
Article 26 (41) of the Law on local self-government in Ukraine gives city councils power to decide on
page 273 / 796 administrative and territorial division. Article 15 (1) of the Law on local self-government in Ukraine allows amalgamations “or other forms of optional unification”. Whether or not to amalgamate administrative territorial units with a common administrative centre is an issue which may be decided solely through a local referendum (Article 6 of the Law on national and local referendums). In this context, it is important for a clear and comprehensible explanation of the need to alter boundaries to be given to the public. Although the laws provide for prior consultation, the need for a reform of territorial structure is obvious. In this respect, the Association of Village and Settlement Councils is in favour of a flexible policy directed to making decisions on amalgamations of communities on a voluntary and not compulsory basis. Whatever the case may be, Article 5 of the Charter requires consultation of the authorities concerned, irrespective of the instrument of amalgamation adopted.
Ukrainian legislation therefore complies with the Article 5 of the Charter.
United Kingdom [Article ratified - Report adopted on 26 March 2014 ]
Local authorities owe their current territorial shape and size to local government legislation. Voluntary mergers are permissible under the law. The Local Government Boundary Commission for England is now responsible for the overall examination of local government boundaries and structures. Established by the Local Democracy, Economic Development and Construction Act 2009, it is responsible for three types of review: electoral reviews, administrative boundary reviews and structural reviews. The latter type is used to establish whether one or more single, all-purpose councils (unitary authorities) should be established in an area instead of the existing two-tier system. The Commission was established on 1 April 2010, when it took on the functions of the Boundary Committee for England.
Similar bodies with equivalent functions, despite some differences in the width of the mandate, exist in Scotland, Wales and Northern Ireland: Local Government Boundary Commission for Scotland, Local Democracy and Boundary Commission for Wales and the Local Government Boundaries Commissioner for Northern Ireland.
Concerns have been expressed during the meetings with council leaders in Scotland regarding a possible amalgamation of the Shetland Islands with the Highlands which would lead to an increase of already significant travel costs as well as to the perception of a loss of democratic control. According to the Scottish Government there are no plans to amalgamate Shetland and Highland Councils.
In Wales, the Local Government (Wales) Measure 2011, passed by the National Assembly in March 2011, gives Welsh Government Ministers wide powers to amalgamate two or three local authority areas and to issue statutory guidance on collaboration. This has been criticised by the WLGA.
A major review on territorial organisation of local government is underway in Wales. A Commission on Public Service Governance and Delivery has been established in April 2013 (the Williams Commission) in order to assess the way in which public services are organised and delivered in Wales, and how they may be improved. This broad mandate covers all devolved public services and the Commission will report to the Welsh Government by December 2013. It has been welcomed by the WLGA as an opportunity for reflection on Welsh public services in the context of huge pressures as well as for a debate on local democracy. However, recent comments by the First Minister of Wales that 22 local authorities are ‘unsustainable’ in light of a dramatically changing and challenging financial settlement have furthered speculation about a possible reduction in the number of local authorities in Wales. It seems important that all proposals for structural change are supported by hard evidence. In addition, the WLGA asks for a range of key tests to be carried out as well as for clear assurances by the Welsh Government on retaining local government’s functional integrity as
page 274 / 796 well as for considering the increase of democratic control over other public services such as public health and community services. Thus, according to the WLGA any form of significant reorganisation in Wales would need to be aligned with a review of local democracy.
The reform of local government in Northern Ireland will see the reduction from currently 26 councils to 11. Legislation to finalise the boundaries of the new 11 local government districts was approved by the NI Assembly on 12 June 2012.
The criteria for review of boundaries within Northern Ireland are established by Article 50 of and Schedule 4 to the Local Government (NI) Act 1972. Within this framework, Local Government Boundaries Act (Northern Ireland) 2008 provided for the appointment of a Local Government Boundaries Commissioner to make recommendations on the boundaries and names of the 11 new districts; a final recommendations report was submitted to the then Minister of the Environment in June 2009. Throughout the process, the recommendations were subject to extensive public consultation. The Commissioner’s final recommendations with modifications agreed by the Executive were given effect by the Local Government (Boundaries) Order (NI) 2012. The next local government election which will take place on 22 May 2014, together with elections for the European Parliament, will be to the 11 new local government districts; these will become fully operational on 1 April 2015, when the 26 current councils will cease to exist.
The regulations and procedures regarding (the change of) local boundaries require consultation of concerned local authorities and, consequently, are in compliance with this article.
Article 6.1 Appropriate administrative structures and resources for the tasks of local authorities
Without prejudice to more general statutory provisions, local authorities shall be able to determine their own internal administrative structures in order to adapt them to local needs and ensure effective management.
Albania [Article ratified - Report adopted on 31 October 2013 ]
Law No. 8652 clearly stipulates that the elected bodies of communes and municipalities have the right to determine their internal structure. In practice, deliberative bodies of communes and municipalities adopt their statutes, which establish the internal structure for municipal administration. Thus, it can be said that both Albanian legislation and practice in this regard are in full compliance with paragraph 1 of Article 6 of the Charter.
Andorra [Article ratified - Report adopted on 28 March 2018 ]
Article 6, paragraph 1 of the Charter provides that local authorities must be able to determine their own internal administrative structure.
The Qualified Law on the competences of local authorities assigns Comuns the power to establish their own internal organisation and functioning, in accordance with the Constitution, general laws and customs and traditions (Art. 4.13). In 1995 the Comuns had already adopted common rules on
page 275 / 796 their functioning (Reglament de funcionament dels Comuns). In 2011 they brought them up to date by means of an order on organisation and functioning which applies to all the Comuns.
Armenia [Non ratified - Report adopted on 15 June 2021 ]
Article 6.1 (analysis and conclusion)
1 Without prejudice to more general statutory provisions, local authorities shall be able to determine their own internal administrative structures in order to adapt them to local needs and ensure effective management.
179. Local authorities shall have the right to determine their internal administrative structures and they should be able to adapt them to local needs and ensure effective management. Apparently, this organisational autonomy can be restricted only by law, in order to ensure the democratic operation of all local governments. The Charter requires that the right conditions must be provided for the office of local elected representatives in order to ensure free exercise of their functions.
180. In Armenia, according to data from the MTAI, in 2017 the total number of municipal servants was 6 324, while the total number of public employees in the local government sector was 39 324.19 It means that the average number of administrative staff in the communities is 12.6, which seems to be extremely low considering that the data also includes the figures for the larger municipalities.
181. During the visit, the rapporteurs were left with the impression that in Armenia there is a highly centralised system, under the management of the Ministry of Territorial Administration and Infrastructures. During the consultation procedure, however, this ministry argued that the role of the government is only to assist and provide methodological guidance to municipalities with regard to staffing and recruitment of municipality staff. The numbers of local community staff are set by the Community Council.
182. The rapporteurs note positively that in recent years several international development programmes have been launched in the country to provide professional training for local officials, and, according to the existing legislation, each municipal servant is bound to participate in professional training at least once every three years.
Austria [Article ratified - Report adopted on 28 September 2020 ]
Article 116, B-VG states that the municipality is an independent economic entity, entitled to self - administration and, within the limits of the law, to possess assets of all kinds, to acquire and to dispose of such at will, to operate economic enterprises to manage its budget independently within the framework of the financial constitution and to levy taxation.
The business of the municipalities will be conducted by a local administrative office (city administrative office or city administration), managed by a civil servant with legal training (Article 117.7). The mayor, the members of the municipal executive board (city council, city senate) and, if appointed, other executive officials are responsible to the municipal council for the performance of their functions (Article 118.5, B-VG).
Considering the above, the rapporteurs conclude that Austria complies with the provision of this paragraph.
page 276 / 796 Azerbaijan [Article ratified - Report adopted on 17 June 2021 ]
Article 6.1 of the Charter requires that the right conditions be provided for the office of local elected representatives in order to ensure free exercise of their functions. The Law on Municipal Service outlines the structure of the executive apparatus and the organization of municipal service and regulates the activities of municipal employees, their rights, duties, labour conditions and social benefits. Accordingly, municipalities have the right to determine their internal administrative structures and this organisational autonomy can be restricted only by law, in order to ensure the democratic operation of municipalities.
As to the structure, municipalities have a municipal assembly or council, consisting of elected councillors. The size varies from 5 (in municipalities with less than 500 inhabitants) to 19 (in a place with more than 100,000 inhabitants). The term of office of local councillors is 5 years. Although no official data are available on the representation of political parties on local councils, the Congress delegation was told that there is a low level of representation of political parties at local level and the vast majority of councillors are independent and do not belong to any party. In general, political parties have no local agendas and only recently the establishment of an opposition party (Real) has brought the issue to the fore, although predominantly in the bigger centres. There is instead a positive trend as far as representation of women and youth is concerned: in the 2019 municipal elections, 5,847 women have been elected, who make up 38.8% of the councillors, with an increase of 11% compared to the municipal elections in 2014. About 35% of municipalities are led by women. The 2019 municipal elections also witnessed the election of 6.012 young persons (39.9%), which increased their presence in municipalities by 10.3% compared to 2014 municipal elections.
Members of municipalities (councillors) can be dismissed only in specific cases provided for by law. According to article 22 of the Law on the Status of Municipalities these are: violation of the electoral procedures; resignation; failure to fulfil the legal requirements for the position; appointment to a position in a legislative, executive or judicial body; medical declaration of unfitness to fulfil official duties for more than four months; non-attendance of meetings, without due cause, for a period of time stipulated in the municipal charter.30
During the term of office, a member of the municipality (councillor) may not be dismissed on the initiative of the administration or transferred to a low-paid job as a disciplinary sanction at the place where he/she works under an employment contract without prior consent of the municipality and its head (Article 11 of the Law on the Status of a Member of the Municipality). The procedure for dismissal is regulated by Article 22 of the same law. Reference to the possibility to do so with consent of the head of the municipality raises concerns as to the effectiveness of the guarantee the provision is aimed to ensure. Information provided after the visit confirms that this sometimes occurs in practice, such as in the case of Sabail municipality and Binagadi settlement municipality. The information does not specify, however, neither the number of dismissals nor their frequency.
The council is presided over by the chair (sometimes referred to as “mayor”), who is elected by the council from among the municipal councillors. Municipal councillors cannot be removed from office and amendments to the Law on the Status of Municipalities adopted in 2014 specify the cases in which their powers can be suspended, as well as when a municipality can be early dismissed. This requires a decision by the Central Election Commission on an appeal submitted by the Milli Majlis of the Republic of Azerbaijan (Articles 22-1 and 22-2 of the Law on the Status of Municipalities).
Municipalities may establish standing and other committees in order to prepare in advance and review matters within their responsibility, assist the municipal assembly to implement its decisions and supervise the activities of municipal enterprises and organisations. Nevertheless, decisions on
page 277 / 796 some issues are the responsibility of the municipal council, such as important organisational and personnel matters or the imposition of local taxes and levies. As far as the main operational rules are concerned, meetings are convened by the chair. The council takes its decisions by a simple majority of voting councillors, with the exception of decisions on local taxes and levies, for which a two-thirds majority is required.
All municipalities have drafted their charters following the template included in the Model Municipal Charter, as provided by the respective law. This has no doubt helped municipalities to establish their organizational document, considering the low capacity of especially small and rural municipalities. At the same time, the consequence of the support found in the model charter is that all municipal charters look quite the same and municipalities have in practice little opportunities to adapt their internal administrative structure to local needs. The room for discretion that legislation must leave to municipalities in order for them to choose and set up their own organisational structure is therefore very limited in practice. Legally, it hast to be reminded that the municipal charters are registered by the relevant local executive authority (Article 8.3 of the Law on the Status of Municipalities).
No structural public administration reforms have taken place since Azerbaijan has gained its independence. However, over the last years, single measures have been taken by the Ministry of Justice to bring the work of local self-government bodies in line with new requirements, especially by expanding the use of the internet in the administrative life of municipalities and by introducing electronic forms of payment. As of 2015 it is prohibited to accept local taxes and fees by cash at municipal offices and local taxes and fees can be paid in banks or in local post offices only. The municipalities currently equipped with computers and connected to the internet are 2/3 of the total and measures are being taken to include all municipalities in this process, which is a short-term goal of the government. Another important practical step has been the implementation of the Automated Municipality Information System (AMIS) Programme, which, inter alia, connects municipalities to the Government Payments Portal of the Central Bank which facilitates electronic payments and helps a more transparent transfer of money. Measures have also been taken to combat corruption and to increase professionalism in the public service.
Municipalities have the power to establish independent bodies such as local companies or agencies to improve the delivery of local services. The Law on the Status of Municipalities provides that municipalities may establish independent legal entities to engage in economic activities and other activities not prohibited by law and have the power to determine the purposes, conditions and rules of activity of such legal entities, regulate the prices and tariffs of their products (services), approve their charters, appoint and dismiss their heads, and listen to their activity reports (Articles 34 and 35). The delegation has been informed by National Authorities during the consultation procedure that over the last couple of years this possibility is being used increasingly by municipalities, which have established new enterprises in various fields of activity.
In 2015, a Law on Public Legal Entities was adopted (and subsequently specified by a Decree of the President of the Republic of Azerbaijan) providing that such entities are non-state or non-municipal organizations established on behalf of the state and municipality or by a public legal entity with the purpose to engage in activities of national and public significance, such as commercial activities. Unlike government agencies, the public legal entities are granted the right to participate in entrepreneurial activities. They are not funded by the state budget, but rather through the self- funding principle. While the transfer of certain responsibilities of the state to the public legal entities could represent a possible step towards more decentralization, it does not seem that municipalities have made use of this possibility so far.
The rapporteurs consider that in Azerbaijan the conditions set out in Article 6.1 of the Charter are partly met and encourage authorities to redouble their efforts to allow a real degree of
page 278 / 796 organizational and also political differentiation among municipalities and to support them in creating proper working conditions for the benefit of the local communities.
Belgium [Article ratified - Report adopted on 15 October 2014 ]
Flemish Region (Vlaanderen)
The Belgian Constitution has enshrined the self-government of the provinces and municipalities. Apart from the disciplinary regulations, the provinces and municipalities are responsible for dealing with the administrative situation of their staff. In the context of the autonomy they enjoy, the Flemish local authorities have their own staff and handle the recruitment and management of their human resources. The local staff comprises personnel from the provinces, the municipalities, intermunicipal partnerships and the social services centres.
There are two major categories of local authority staff:
- Regular staff, who work on a permanent basis for a legal person governed by public law. These are staff of the public services, which are governed by administrative law, and are subject to conditions of service that are in many ways similar to those of state employees.
- Employees subject to private law (contract workers), who are bound to the local public employer by a contract of employment. The local authorities make use of them to meet exceptional and temporary staffing requirements or, more frequently, to replace absent regular staff.
As far as contract workers are concerned, the regions, which are responsible for supervising the local authorities, want to put a gradual end to these disparities with regard to conditions of service. The minimum requirements for the status of local staff are listed in the decisions of the Flemish Government, which are, for the most part, issued on the basis of sectoral agreements negotiated with the staff representatives. These decisions must be sent to the relevant authorities who will lay down the principles they intend to see respected. Accordingly, the regions’ supervisory authorities have prompted them to recommend and adopt a new classification of grades and of the minimum and maximum points for the determination of the salary scales of the staff concerned.
The municipal and regional governments are entirely free to determine the rules relating to the pay and conditions of their staff. As far as the local authorities are concerned, the municipal and provincial councils lay down, within the limits of the law and regulatory provisions, the administrative and financial rules applicable to their staff.
According to estimates for 2013, the municipalities’ staff costs in Flanders went up by 3.6%, and many municipalities have decided that they will from now on no longer replace members of staff who leave and no longer renew contracts that have expired. There has therefore been a reduction in staff numbers. In spite of the fact that the threshold index was exceeded at the end of 2012 with, at the end of the day, a pay increase of 2% for 2012-2013, the rise in staff costs remained within the limits of the forecasts for 2013. The rapporteurs were informed that the municipalities had had to contend with a higher annual increase during the previous term of office (4.3% on average), including the effect of the annual indexation with a 2% to more than 2% increase in costs for new commitments, salary scale increases, the implementation of the collective bargaining agreement, etc.
On 1 January 2012, the “Act ensuring the long-term funding of pensions of permanent members of staff of provincial and local government administrations” came into force. For the local authorities, this reform meant a substantial rise in the basic contribution rates and in the additional rates in respect of so-called “responsibility contributions”, which are significant amounts for the entities and
page 279 / 796 constitute a considerable differential between their actual pension costs and their basic contribution rate. During the first four years of the municipal legislature, the basic contribution rates will not stop rising and in 2016 will reach a single rate of 41.5% of the payroll for regular staff.
The crucial problem of municipal staff pensions can only be resolved by a consistent approach between the pensions of regular staff and those of contract staff.
Between its entry into force in 2012 and 2016, the reform of the funding of the pensions of regular staff will mean accumulated additional costs of €2.250bn for the country’s municipalities, social services centres, police force areas and intermunicipal partnerships. A reform of the system of financing the pensions of local authority staff was necessary and this law was essential, but it was an inadequate measure in the absence of other structural changes. It seems this situation, especially the aforementioned additional pension refinancing costs of €2.250bn facing the Belgian local authorities, will be a cause for concern up to 2016.
The rapporteurs support the demands of the Flemish Association of Towns and Municipalities VVSG (and its two sister associations, UVCW for the French Community and AVCB for the Brussels-Capital Region) and calls on the Federal Government to take measures and offer solutions likely to have a significant impact on the local authorities’ pension costs and to implement the most appropriate of these solutions. It will not be enough to increase receipts, and it will be essential to reduce funding expenditure.
Walloon Region and German-speaking Community
In the Walloon Region and the German-speaking Community, the municipal council has regulatory power both with regard to the internal organisation of municipal services and the pecuniary interests of the municipality. These regulations and ordinances must not be in breach of the law or of general or provincial administrative regulations.
Brussels-Capital Region
Determination of personnel policy, and implementation of its various aspects, must be a matter for the appropriate bodies at local level, whether the municipalities or the CPASs.
Like the two other regions, the Brussels-Capital Region has its own administration, institutions and staff. It has the same powers as the other regions in this respect.
The latest amendment to the Municipalities Act is seen as positive by the rapporteurs with regard to the option of sacking a regular employee if the latter has received two successive negative appraisals. All the efforts being made to improve training for local-government officers were also considered positive. The requirement for municipal representatives in the intermunicipal partnerships to report annually to the municipal council was also thought necessary. Extending the range of documents that had to be available to the public on the Internet further helped to improve transparency.
Points still of concern are associated with the fact that the municipal council has been given too many powers in personnel matters, a field that should come under the municipal executive.
All positions will in future be available for recruitment and promotion unless the council expressly provides otherwise. This is an entirely new provision.
The expediency of this measure is open to question. It is unlikely to encourage members of staff to
page 280 / 796 remain in their own departments. The AVCB is concerned about an adverse impact on good governance of administrative staff, leading to a substantial loss of experience among local- government officers and competition between municipalities to attract the most highly regarded.
The fact that the Council of Europe’s revised European Social Charter has been incorporated into the new Municipalities Act is to be welcomed. From the very start of the parliamentary term it was the government’s intention to recast this text and incorporate into an ordinance the agreements signed between the unions and the government. These agreements cover the following: staff framework, organisation chart, job descriptions, terms of recruitment and promotion, staff training and appraisal, the role of the municipal clerk and internal mobility.
As regards language matters, it is important for the Region to provide financial incentives for the municipalities to develop language-learning programmes enabling their staff to have a good command of both national languages.
Another aspect that deserves mention is the fact that municipalities are the only authorities to have to fund the entirety of their staff pensions. Pensions are a federal matter, and the Region and federal government must take the structural measures required for long-term rescue of the pension scheme for regular staff in order to ensure that the latter have a reasonable pension that is still financially viable for the employer. In this respect, cities and municipalities are alone in bearing the cost of pensions for their regular staff, and this represents a huge expense for local government.
The rapporteurs consider that, despite the fact that municipal decisions on staff matters are subject to approval by the Region, the legislative arrangements nevertheless guarantee municipalities a measure of self-government. However, the rapporteurs reiterate their support to the demands of the AVCB (and its two sister associations, the Flemish VVSG and the Walloon UVCW), addressed to the federal authority to study a number of options likely to have a significant impact on the local- governments’ pension burden and to act on the most relevant.
Bosnia and Herzegovina [Article ratified - Report adopted on 31 October 2019 ]
As a rule, municipalities have the power to determine their own internal administrative structures, respecting statutory provisions and limitations. This usually requires a proposal by the mayor and decisions by the local council. The mayor, as head of the executive and of the administrative staff, also has moderate powers to introduce changes and adaptations in the administration of the municipality. However, in the large majority of local authorities, the administrative and human resources are so reduced that in reality only very few things can be determined or adapted in order to ensure “effective management”.
More specifically, the Federation of Bosnia and Herzegovina Law on Administrative Bodies provides for limits to the municipal autonomy introducing a proportion between the establishment of new bodies and the population numbers of the area of competences.
A positive example for organisation of services and interaction with citizens is the GIZ-sponsored initiative “Sistem 48” in the municipality of Jablanica. Answers to citizens’ questions on any matter related to local services are given within 48 hours. Service priorities are discussed and decided in monthly meetings with Mayor and all service providers.
In Republika Srpska, the new law on civil servants has introduced a set of new criteria regarding standards of employment of civil servants and employees, in particular providing for a ratio of 3 employees for every 1.000 inhabitants (in Cities 1/1.000), thus determining the size of the administration; this ratio has to be achieved by 30 June 2019. Eastern Sarajevo, for example, will
page 281 / 796 have to adapt its staffing levels to 65 employees within that deadline, through retirements and dismissals. In Banja Luka, staff numbers have to be reduced from currently 750 to 570. Interlocutors expressed concern and estimated that most of the local self-government units will not be able to respect the new ratio; they asked the Association to become active in order to change the quota. Also, for the collection of a new real estate-tax introduced on 1 January 2019 for Cities (only) difficulties are expected. The Republika Srpska local self-government Ministry pointed out that the adoption of the new law has been prepared through comprehensive consultation. It also commented that the cap for staff was necessary for containing the high share of wages and salaries in local budgets, as its continuous increase risks to make the provision of some basic local services impossible. Although in some municipalities people will have to be dismissed, due to overstaffing in the past, the long period for adaptation should make a management of redundancy possible by internal re-organisation and retirement; also, emergency services, such as fire fighters or similar are not concerned. Monitoring of the implementation and the re-examination of the cap in 2020 are foreseen as well as an extension of the deadline in some well-motivated cases.
The privatization of public property and companies, 20 years ago, deprived local self-government units of their own companies for public services, with some exceptions. In Banja Luka, 65% of the water supply is owned by the City, 35% by others; 49% of the district heating system are also owned by the City. However, basically all public services are run by private companies, e.g. road- construction and maintenance, transportation, cleaning and gardeners. This has consequences for procurement considered as complex, slow and prone to corruption. Not rarely, complex procedures have to be repeated after complaints by competitors which causes huge delays in the implementation of important projects. In Banja Luka a new social housing-project has been launched with three buildings owned and managed by the City (59 apartments).
The Brčko District has a peculiar administrative and institutional structure adapted to its specific situation. There are 11 Departments which correspond to small ministries. With 93.000 inhabitants (census figure, estimated 75.000 permanent residents) it has ca. 3.000 staff in the administration. Strong international presence (US) and frequent removals of office-holders have created a particular political culture which is much more open to compromise and agreement compared to the rest of the country. Thus, by contrast with the Entities, the school system in the Brčko District is not divided, but integrated and even history lessons are taught for all pupils together (the compromise being that the period 1992-95 is not treated). Only language classes are taught in different groups.
Municipalities have broad liberties in law, but there are also certain important restrictions, which make the rapporteurs conclude that Article 6.1 is only partially respected. The cap for local staff introduced by Republika Srpska is a matter of concern for the rapporteurs. Although the provisional application of this measure could be justified due to overstaffing in the past and the need to guarantee cost-efficient municipal administrations, it limits the organisation autonomy of local authorities in violation of Article 6 as it precisely prescribes the size of the administration (and not only a maximum threshold) without leaving room for discretion.
Bulgaria [Article ratified - Report adopted on 21 January 2021 ]
Article 6.1
1. This paragraph states that local authorities have discretion to determine their own internal administrative structures or organisation. The power to organise themselves is then a part of the autonomy enjoyed by local entities (self-organisation power). This discretion is not absolute but has to respect the general statutory framework on governmental organisation. The goal of the paragraph is to safeguard local autonomy by allowing local authorities to create such an administrative internal structure and organisation that enable them to meet
page 282 / 796 the various needs of the local residents and provide a full range of public services.
1. The self-organising power of local entities must be broad, and it should include not only the power to decide the internal local organisation, but also the power to establish independent bodies such as local companies or agencies for the better delivery of local services. Local authorities should also have discretion to establish territorial deconcentrated units and structures (such as municipal districts) to ensure the best delivery of their responsibilities40.
1. Bulgarian municipalities do have the freedom to determine the internal organisation as well as their internal administrative structures. The LSGLA regulates in detail the powers of political elected bodies at the local level (municipal council, mayor, mayors of mayoralties and mayor deputies). Local authorities independently determine the organisation of the administrative structures, both internal (structuring of the administration) and external (creation of municipal units, public establishments, and municipal enterprises). The municipal administration is structured in directorates, departments, or sectors. Departments or sectors may also be organised as independent structural units, without being included in the composition of directorates or departments. The municipal council may establish services of the municipal administration in separate districts, mayoralties, settlements or in parts of them and determine their functions.
Croatia [Article ratified - Report adopted on 20 October 2016 ]
Pursuant to Article 28 of the Law of Croatia on Local and Regional Self-Government, the numerical composition of the representative body is determined by the Law on Local and Regional Self- Government and it is associated with the population ranging from 7 members for the smallest units under 500 inhabitants up to 51 members for units over 300 000 inhabitants, for example Zagreb. For units of up to 35 000 inhabitants and for those over 200 000, no distinction is made between counties or cities. So for example a unit with between 2 500 and 5 000 inhabitants will have 13 members, while one with between 20 000 and 35 000 inhabitants will have 21 members. For units between 35 000 and 60 000 inhabitants, a county will have a 31-member assembly while a city will have 25 members in its council and a unit with between 100 000 and 200 000 inhabitants will have 41 members in the county assembly and 35 members in the city council.
The structure of departments and services is determined by a statute approved by the local representative body. Croatian legislation also defines a dualistic statute of local officials. In particular, on fulfilment of delegated tasks, the status of a local official/servant is equated with the status of a public servant/official.
The rapporteurs conclude that local authorities have certain discretion in relation to their own administrative structures and therefore consider that Croatia complies with Article 6 paragraph 1 of the Charter.
Cyprus [Article ratified - Report adopted on 20 October 2016 ]
Local authorities must have the right to determine their internal administrative structures and they should be able to adapt them to local needs and ensure effective management. Apparently, this organisational autonomy can be restricted only by law, in order to ensure the democratic operation of all local governments. The Charter requires that the right conditions must be provided for the office of local elected representatives in order to ensure free exercise of their functions.
According to the opinion of the rapporteurs, the requirement of the appropriate administrative
page 283 / 796 structures and resources of local authorities is not implemented in a satisfactory way in Cyprus, in particular in case of small communities. A number of communities are not able to carry out their mandatory functions, but need the assistance of central authorities. These local authorities often do not have sufficient staff or financial means to employ local civil servants and public employees. As the Congress delegation was told, there are great and unjustified differences between the municipalities and communities in their personnel and other technical resources. For example, Kokkinotrimithia Community is poorly supplied with staff (only five employees), whereas it has a comparable population to the neighbouring municipality which employs about a hundred people.
During the visit of the rapporteurs, the need for the strong central control over the municipalities and the communities was frequently explained with the insufficient resources of local authorities. It was also said that municipalities and communities are legal persons guided by public law. As such entities, by contrast to private companies and organisations, legal persons of public law have the duty under the General Principles of Public Law to manage their affairs applying the principles of good governance. Another recurring argument against the greater engagement of local authorities was the alleged high level of corruption at municipal and communal governments. However, none of these arguments are convincing. If local authorities do not have enough capacity to carry out more tasks or to perform their duties in a more autonomous way, they should get sufficient resources to do so. The fight against corruption is a general effort in all Member States of the Council of Europe, which deserves to be strongly encouraged; nonetheless, it is not a compelling reason for keeping local politicians and officials far from public resources or from public authority.
In this situation, it can be concluded that while paragraph 1 of this Article is respected, paragraph 2 of the said provision is only partly complied with.
Czech Republic [Article ratified - Report adopted on 8 March 2012 ]
The internal structures of local and regional authorities are regulated quite extensively by nationallegal provisions. At the properly administrative level, however, they enjoy a high degree of adaptation to local needs and management. The Congress delegation has no reason to believe that Article 6 para.1 of the Charter is not respected by the Czech Republic.
Denmark [Article ratified - Report adopted on 31 October 2013 ]
Local and regional employees account for 22 % of the whole Danish workforce, totalling 554 906 employees. They are either civil servants (Tjenestemænd) or contract employees (Overenskomstansatte). The latter do not hold any special legal status and their working conditions are governed by general labour law and their particular contracts. On the other hand, civil servants have a special legal status: they enjoy special protection and can only be dismissed under very specific circumstances. Since the 1990s, only the police and the defence forces have recruited staff with civil servant status. There are still a few employees holding this status in the municipalities, but they are increasingly few and far between.
The municipalities and regions have a free hand to define their administrative structures, the status of their staff and the arrangements for their training and remuneration. The Law on Local Self- Government contains no rules on municipal administrative structures or staff training. Nor is there any rule limiting the possibility of a local council delegating its responsibilities to municipal staff. In fact, there are very few cases where the local council or mayor are unable to delegate a decision to the administrative staff, the rare exceptions being, for instance, purchase and sale of municipal property.
page 284 / 796 Wages and working conditions for municipal staff are governed by legislation and under agreements concluded by employees’ organisations and the LGDK. All the Danish municipalities have delegated their responsibilities in terms of negotiating with employee organisations to the LGDK. Wages and working conditions for regional staff are similarly governed by legislation and under agreements concluded by employee organisations and the Danish Regions. The five regions have delegated to Danish Regions their responsibilities in terms of negotiation with the employee organisations. Article 67 of the Law on Local Self-Government establishes an administrative council responsible for pronouncing on matters relating to remuneration and working conditions of municipal and regional staff. This council, whose members are appointed by the Ministry of the Economy and the Interior, includes four members from the LGDK, two members from Danske Regioner, one member from the Ministry of the Economy and the Interior and one member from the Ministry of Finance.
In connection with training for local councillors, Denmark has an inter-municipal institution known as Local Authority Training and Enhancement, which organises courses for the newly elected councillors.
In the rapporteurs’ view, the administrative structures and resources would appear to be appropriate for the tasks performed by Danish local authorities, as required by the Charter.
Estonia [Article ratified - Report adopted on 29 March 2017 ]
Article 154, paragraph 1, of the Estonian Constitution stipulates that “all local issues shall be resolved and managed by local governments, which shall operate independently pursuant to law”. The organisational power of local authorities to decide how to manage local issues is itself a “local issue” and may be not restricted by the government. This right is restricted neither in this constitutional provision nor within the Local Government Organisation Act and other legal acts. In its judgment No. 3-4-1-12-09 the Supreme Court of Estonia gave some explanations concerning the principles ruling the internal organisation of local authorities, in particular: “The right of self- management is not an absolute right, yet the central authority of the state may interfere with the right only with such measures that are proportional and bear in mind a clearly defined lawful objective.”
The rapporteurs have not heard any objections from representatives of local authorities with respect to a potential infringement of Article 6 of the Charter, with the exception of the above-mentioned criticism from the City of Tallinn concerning the number of council members. However, there has been repeated criticism with respect to the weak financial autonomy of local authorities, a fact which hinders them from building effective local administration structures, particularly in rural areas. According to the associations, quite often in smaller municipalities one employee covers different fields. As there is little work for specialists, since generalists are preferred, maintaining the quality of the staff is a challenge. Remuneration (and the volume of the budget) is comparable across municipalities that have a similar size. This topic will be dealt with under Article 9 of the Charter. In addition, the rapporteurs refer to Chapter VIII, point 2, of the “Basic Principles: “We will carry out an administrative reform to increase the decision power and responsibility of local governments in managing and organising public life.” As details are not yet known, the rapporteurs recommend reviewing these developments under Article 6 of the Charter at a later date.
Finland [Article ratified - Report adopted on 28 March 2017 ]
According to information provided by the AFLRA, about 422 000 persons are employed in the municipal sector (October 2015). The number of municipal staff grew rapidly during the seventies and the eighties, which was a period of expansion in welfare services. The number dropped in the
page 285 / 796 recession years of the early 1990s, but started to rise again in the middle of that decade. It reached its height, however, in 2011, and since then the number of staff has decreased every year. 85% of monthly salaried employees in the municipal sector are employed on full-time contracts. Three- quarters of all employees have permanent jobs and women account for about 80% of municipal staff. While the average age of employees is 45.7 years, that of permanent staff is 47.8 years. According to the persons interviewed by the rapporteurs, municipal employees enjoy good career prospects, especially in larger municipalities which can easily attract highly skilled staff. Therefore, Finland fully complies with para. 1 of Article 6 of the Charter.
France [Article ratified - Report adopted on 22 March 2016 ]
French legislation (also CGCT – Code General des collectivites territoriales) offers many different possibilities to sub-national territorial authorities for the organisation of their services. It is worth mentioning however, that financial administration of territorial authorities in France does not fall under the decision-making power of territorial collectivities but is run by state employees and the respective administrative units. During the monitoring visit, the interlocutors from French territorial authorities met by the rapporteurs did not consider this to be a problem and they highlighted to the rapporteurs the advantages of impartiallity and the excellent know-how that these financial services offer, claiming that de facto there are always points of interdependence. Therefore, co-operation with these state financial services operating on behalf of the territorial collectivities appears to work well.
Conditions of service in French local government have improved greatly and high-quality staff are now engaged in several territorial collectivities, while training and life-long learning are ensured through a series of efficient institutions (see supra human resources). Increased mobility of personnel offers better carreer perspectives and makes territorial collectivities more attractive than theywere.
Therefore, there seem to be no major challenges concerning the implementation of Article 6 of the Charter in France. Smaller municipalities are the exception, where mayors are obliged to solve a wide range of problems through their own means and resources, due to the lack of staff, as emphasised by the Representative of Rural Mayors to the rapporteurs. There is also lack of specialised staff in rural areas and municipalities and even in some departments, where stronger incentives and motives would attract better qualified staff.
Georgia [Article ratified - Report adopted on 7 November 2018 ]
According to Article 76, paragraph 2, of the constitution, “a self-governing unit shall independently establish its organisational structure in accordance with the organic law, and shall make decisions with regard to human resources in accordance with the organic law and legislation governing public service”. According to the Code, Georgian municipalities have the right to determine their internal administrative structure in accordance with Georgian legislation. In general, the basic internal structure of a local government unit is defined by the Code, but municipalities are able to form administrative units and structural divisions. Statutes and rules of procedure for internal departments and services are adopted by the municipal councils.
The Code of Local Self-Government (Article 156) indicates the specific formula for calculation of the number of employees per municipality – a formula based mainly on the size of the population. However, initial experiences with the enforcement of this legislation have shown that it is quite difficult to use one formula for all municipalities in view of the very big differences between them and the specific needs of municipalities in mountainous or other areas. Several changes have been
page 286 / 796 made in order to give more discretion to municipalities and to achieve a more flexible formula.
Municipalities have the right to establish non-commercial (non-profit) and commercial (Ltd), enterprises for the provision of municipal and social services. As yet, there is no regulation defining how many such enterprises can be established in each municipality. According to local experts, this possibility is being misused as there is a huge number of non-commercial entities, thus leading to increased costs. In recent years the number of non-commercial entities established by the municipalities has nearly doubled and this has taken place in order to provide employment. Any entity that receives funding from municipal budgets is open for monitoring by the local council; the true reason for this spectacular increase in the number of non-commercial entities is that their employees are not subject to the law on civil service employment. As a result, open recruitment competitions are not required in order to hire staff, which makes these jobs easily accessible to political supporters.
In general, Georgia complies with Article 6, paragraph 1, of the Charter, but there are some concerns about the formula for the calculation of the number of employees in municipalities, which is restricting their organisational autonomy. In principle, such restrictions do not conflict with the Charter, but they should be flexible and take into consideration the big differences between municipalities. According to the Charter, local authorities should be able to determine their structures (including the number of posts of civil servants) “in order to adapt them to local needs” and this is not possible if the formula for the calculation of the number of employees is formalistic and basically oriented on the size of the population.
Germany [Article ratified - Report adopted on 14 March 2012 ]
The right to determine their internal administrative structures belongs to local authorities who should be able to adapt their structures to the local needs and ensure effective management. Apparently, this organisational autonomy can be restricted only by law, in order to ensure the democratic operation of all local governments.
The basic conditions and framework for local authorities’ internal structures are regulated by the local government laws of the respective Länder. These laws set only general requirements as is usual in all democratic societies. It means that the local representative body cannot decide on what kind of organs it establishes or which type of officers it appoints, because the basic organisational and staffing issues are regulated by laws. Nevertheless, within these frameworks, individual local authorities are free to shape their own administrative structures (Organisationshoheit). In this sphere, they may determine the structure of their organs, the division of tasks and the internal communication and cooperation between them. The rapporteurs have not heard any objections or concerns expressed on this issue.
Greece [Article ratified - Report adopted on 26 March 2015 ]
Article 6, para 1 of the Charter provides that local authorities shall be able to determine their own internal administrative structure. Greek municipalities enjoy a certain degree of autonomy in establishing their internal organisation charts, although it should be considered that they lack statutory powers and that the laws regulate in detail the municipal organisation.
Hungary [Article ratified - Report adopted on 12 February 2021 ]
Article 6, paragraph 1 of the Charter provides that local authorities shall be able to determine their own internal administrative structure.
page 287 / 796 The Fundamental Law (Article 32.1 d) entitles local governments to decide on their own administrative structure, as well as the rules of their operation. The legal basis of the local administrative structure of a local government is the Rules of Organisation and Operation that must be adopted in the form of a Decree by the body of representatives, which must respect the legislative provisions. The Cardinal Act on Local Self-Government enumerates the organs of the local authority, including its administration, under the name mayor’s office, among them.
Not all towns and villages have their own administration, due to economic reasons. According to the Cardinal Act on Local Self-Government (Article 85), in small villages with fewer than 2,000 residents, the administration of local governments operates in a form and under the name joint local government office if the concerned villages can be found in the same district and their administrative borders are separated by no more than the administrative territory of another town.73 Villages with more than two 2,000 residents may also be affiliated to a joint local government office. Villages affiliated with such a joint local government office are required to have at least 2,000 residents in total, or the joint local government office must cover at least seven towns in order to create an efficient administration.
While the office is directed by the mayor, it is headed by the chief executive (also called clerk). The chief executive exercises employment rights in respect to the officials and employees of the office and exercises other employment rights in respect to his assistants. Appointment, remuneration, management appointment, dismissal, withdrawal of management appointment, and the rewarding of certain public officials and employees of the local government office require the consent of the mayor as specified by himself. The chief executive is obliged to report annually to the body of representatives on the activities of the office. The chief executive is appointed by the mayor for an undetermined period on the basis of open competition. Qualification – a BA in public administration or MA in law – is required by law, and consequently, the chief executive represents permanence and proficiency in the office. Proficiency includes ensuring the legality of the decisions made by local government organs and preparing the decisions of the mayor on state administration matters.74
During the consultation process, the Hungarian government pointed out that the “joint local government” is a consequence of the highly fragmented structure of local government in Hungary (the smallest settlement has only 9 inhabitants) and that the employees of the local government office are exclusively made up of local government officials engaged by the specific local government, or the local governments to operate a joint office.
Therefore, it appears to the rapporteurs that in this respect, the situation in Hungary partially complies with Article 6.1.
Iceland [Article ratified - Report adopted on 29 March 2017 ]
Article 6, para. 1 of the Charter provides that local authorities shall be able to determine their own internal administrative structure. 155. With regard to internal organization, Icelandic municipalities enjoy a fair degree of autonomy. According to Article 9 of Law 138/2011, within the limits of State legislation, municipal councils are allowed to pass special ordinances on the governance and administration of their municipalities and the procedures applying to the matters handled by the municipality. Provisions must also be made in the ordinance on meeting procedure for the municipal council and its committees. Important aspects of the municipal organisation (such as the committees, councils, boards, including an executive board to be established, the appointment and the qualities of the chief executive officer etc.) are left in the hands of the municipal council: a circumstance that explains the variety of models of administrative organization existing among the Icelandic municipalities.
page 288 / 796 As regards Article 6 para. 2 of the Charter, Icelandic municipalities have the power and the autonomy to recruit high quality staff on the basis of merit and competence. There is no centralised system for recruitment, in the sense of a nationwide, French-type territorial public service. Law 138/2011 lays down specific provisions dealing with the engagement of the employees (Article 56). According to Article 57, “The terms of service, rights and obligations of municipal employees shall be subject to the provisions of collective agreements at any given time and to the provisions of their employment contracts”.
During the meetings, rapporteurs were told that in small municipalities it is difficult to recruit high- quality staff: the level of capacity (in terms of the number of trained and skilled professionals) increases only upon reaching around 2,500 residents. In any case, this difficulty is only part of the broader question on the size of municipalities and on the search of effective solution to guarantee a stronger local government: certainly, it cannot be considered a consequence of “the conditions of service of local government employees”, as indicated by Article 6, para. 2 of the Charter.
Consequently, the current Icelandic system fully meets the requirements enshrined in Article 6 of the Charter.
Ireland [Article ratified - Report adopted on 31 October 2013 ]
The LGA significantly improved the right of local self-governments to determine their own internal structures (Article 158-1), but in reality the financial limits provided by the central government still remain the core determinant of the number of staff employed by local authorities.
The conditions of service (such as qualification requirements) of local government employees are to a large extent determined centrally. Pay scales for most local authority staff are set on a nationwide basis through ay structured negotiating mechanism with the Local Government Management Services Agency (representing the Government and County Managers) negotiating with the trade unions. For the past number of years, there have been decreases in the pay scales so as to respond to the national funding emergency and, partly, as a result of the increased insistence for value for money in relation to public spending in general. In March 2012 local authority staff salaries stood at 28,765 euros per annum as compared to 37,243 euros in mid-2008 which might be acceptable, taking into account the broader economic constraints and the need for savings on all levels of government.
Italy [Article ratified - Report adopted on 18 October 2017 ]
As regards the compliance with Article 6, paragraph 1 of the Charter, as a rule, Italian local authorities are able to determine their own internal administrative structures, with due respect to general legislation. This self-organisation power is recognised by the Constitution, according to which “municipalities, provinces and metropolitan cities have regulatory powers as to the organisation and implementation of the functions attributed to them” (Article 117). In this sense, and as noted supra, all local authorities have the power to approve their own by-laws, by which they decide on the organisational structure of their internal services, as well as the precise competences of the local organs. The comprehensive document of such by-laws is called “statuto” and is regulated extensively at Article 6 of the Testo Unico. The statuto has to be approved in every local authority, they must be discussed and approved in the council by a two-thirds majority.
In the light of this information, it can be concluded that Article 6, paragraph 1 of the Charter is complied with in Italy.
page 289 / 796 Latvia [Article ratified - Report adopted on 27 March 2018 ]
Latvian local authorities are endowed with pretty large self-organisation powers. In this sense, art. 14 of the Law of Local Governments provides that, in carrying out their functions, “local governments have the right…to establish local government institutions, to found societies or foundations and capital companies” (letter a). Furthermore, under art. 24 of the said Law, the council of every local entity may approve the “by-laws of the local government” (English terminology) in which the council determines the “administrative organisation and structure of the local government”, the several council committees (with their competence and organisational arrangements), and the “organisational and technical servicing” of the local authority.
In rural territories (pagasti) in which the local government administrative center is not located, the municipalities are supposed to set up a local administration office that facilitates the contacts between the rural residents and the Town Hall. These deconcentrated offices are run by a manager of the rural territory or “administration manager”, whose functions are enumerated at art. 69 of the Law on Local Governments.
Each municipality or city has its own office, consisting of administrative officials who are responsible for discharging the instructions of the Council Chairman and of the executive director. In most local authorities (at least those having more than 5,000 inhabitants) the municipal administration is run, on a day-to-day, basis, by the executive director, who is appointed by the council on the proposal of its chairman. The executive director is responsible to the council. The head of the administration as well as the speaker of the Council is a mayor. Executive director is subordinated to the mayor and his competence includes all elements determined by the Law on Local Governments, but sometimes there is shared responsibility with other executives. All administration (including executive director) is responsible to the Council.
As it can be seen, the self-organisation powers of Latvian local authorities are very extensive, and is only limited by the Law on Local Governments. This situation complies with the requirements of article 6.1 of the Charter.
Liechtenstein [Article ratified - Report adopted on 28 March 2018 ]
According to Article 6 of the Charter, local authorities shall have the right to determine their internal administrative structures and must be able to adapt them to local needs and ensure effective management. The Charter requires that the right conditions should be established for the holding of office by local elected representatives in order to ensure the free exercise of their functions.
The Municipalities Act of 1996 determines the basic features of municipal organisation. It regulates in detail the composition, powers and duties of municipal bodies. Local officials are elected by the Municipal Assembly or the Council and local authorities are free to establish their own structures (such as committees).
As for local government staff, there are no uniform rules governing the civil service in the country. Administrative staff are employed by each municipality on the basis of a specific municipal regulation. The Municipalities Act obliges local authorities to adopt local regulations on the public service and the wages of local administrators (Dienst- und Besoldungsreglement, sections 61-62 of the Municipalities Act). The central government authorities have instituted no limit on the number of staff employed by municipalities.
page 290 / 796 As a consequence, the rapporteurs consider that paragraphs 1 and 2 of Article 6 of the Charter are complied with in Liechtenstein.
Lithuania [Article ratified - Report adopted on 6 November 2018 ]
Article 6, paragraph 1 of the Charter provides that local authorities shall be able to determine their own internal administrative structure.
Lithuanian local authorities are endowed with pretty large self-organisation powers. In this sense, Article 16 of the Law on Local Self-Government provides that the municipal council has the competence on “6) setting-up of municipal council’s committees, commissions, other units necessary for organization of the work of a municipality, other commissions provided for in laws, as well as approval of their regulations; 10) approval of the structure of the municipal administration taking of decisions concerning establishment of positions of civil servants of political (personal) confidence of the mayor, determining of their number and forming of the secretariat of the municipal council on the recommendation of the mayor; 13) taking of decisions on the establishment, abolishment of wards and determination of their number, conferment of names to the wards and change thereof, assignment of territories to the wards, defining of the boundaries of the territories serviced by the wards as well as the change of the said boundaries, after having evaluated the opinion of the residents; 14) approval of division (grouping) of localities or their parts into elderships on the recommendation of the director of the municipal administration”
Furthermore, under Article 30, “the structure of the municipal administration, its regulations of activities and wage fund, the biggest allowed number of positions of civil servants and employees working under the employment contract and receiving payment from the municipal budget shall, on the proposal of the director of the municipal administration and the recommendation of the mayor, be approved and changed by the municipal council, and the staff positions shall be approved by the director of the municipal administration”.
As regards Article 6 paragraph 2 of the Charter, the conditions of service of local government employees are the same as other civil servants and employees working under the employment contract. They are regulated by the Law on Civil Service and the Labour Code. According to the Law on Local Self-Government, approval of the structure of the municipal administration, regulations and salary fund, setting of the maximum possible of positions of civil servants and employees working under the employment contract in the municipal administration on the proposal from the director of the municipal administration on the recommendation of the mayor, is the exclusive competence of the municipal council. The remuneration of employees somewhat depends on the population of the municipality.
During this visit, the delegation did not hear any complaint from municipal representatives on the possibility to recruit high-quality staff, although they were told that, within the Civil Service, salaries at local level are 20% lower than at national level.
The rapporteurs consider that current Lithuanian system meets the requirements enshrined in Article 6 of the Charter.
Luxembourg [Article ratified - Report adopted on 21 October 2015 ]
The legislation makes certain tools available to communes to enable them to perform both their mandatory and their optional tasks. Firstly, the communes may carry out their tasks as they wish; secondly, the law provides them with various means of working with other legal entities to complete
page 291 / 796 certain tasks.
To perform some of their tasks, the communes employ their own staff (local government officers, employees, workers), who then provide the communal services. Communes are free to establish their own organisation charts and the posts of local government officer they consider necessary for these purposes, albeit always subject to the prior authorisation of the Minister of the Interior. Although the communes establish their own staffing requirements, it is the Minister of the Interior who approves the creation of the post and the appointment of the officer. The representatives of local elected officials claim that this supervision has a tendency to become one of expediency – and sometimes a disproportionate one – rather than one of mere legality. Competitive recruitment procedures are organised by the state but the officers are paid by the commune. It should be pointed out that the Minister of the Interior is entitled to intervene to rectify communal budgets.
Article 87 of the Communal Law requires each commune to have a secretary. The rules on the recruitment and examination of candidates for the post of communal secretary are contained in the Grand Ducal regulation of 1 February 2008.
Article 92 of the Communal Law requires each commune to have a revenue officer (receveur). The rules on the recruitment and examination of candidates for the post of communal revenue officer are contained in the Grand Ducal regulation of 20 December 1990. Like any other member of the communal staff, revenue officers are placed under the supervision of the college of the mayor and aldermen (Article 57 of the Communal Law). With the assistance of the communal secretary, the college verifies the revenue officer’s accounts at least once every three months. The college is also required to take steps to ensure the safety of revenue office staff.
The amended law of 19 July 2004 added a new section to the Communal Law containing rules on communal technical services. As communal spatial planning and urban development are increasingly complex matters, it has become necessary to provide communal authorities with qualified staff who can ensure that the legislation in these areas is correctly applied. This is why communal technical services are now regulated by the communal law.
The communal technical services’ task is to assist communal bodies both with the application of the law on communal spatial planning and urban development and its implementing regulations and with the preparation and implementation of local spatial planning projects and schemes and the buildings regulations.
An obligation was introduced into the legislation for communes with 10,000 inhabitants or more to set up appropriate technical services. They were required to include at least one urban or spatial planner who meets the statutory conditions governing the profession and, where needed, one or more officers with a professional background in technical engineering.
Every commune with 10,000 or more inhabitants may decide to recruit an urban or spatial planner, and a number of communes with fewer than 10,000 inhabitants may decide, on approval by the relevant minister, to group together to recruit a joint urban or spatial planner in accordance with the procedures laid down by the communal law for the appointment of a joint secretary.
Each commune with 3,000 inhabitants or more is required to employ at least one communal officer with a professional background in technical engineering to take charge of technical service duties.
During their visit the rapporteurs were told by several mayors that small communes had a real need for specialised urban planning staff. Similarly, the communes repeatedly stressed the need for legal and technical support. The draft constitutional amendment presented to the rapporteurs included an
page 292 / 796 article on the right of communes to set up public institutions.
While Article 6 is generally respected, the rapporteurs are concerned about the fact that staff recruitment is subject to the prior approval of the Minister of the Interior with regard to the creation of posts and the appointment of local government officers. The restriction of local self-government in this respect prompts the rapporteurs to reach a finding of partial compliance with this article.
Malta [Article ratified - Report adopted on 29 March 2017 ]
The internal administrative structure of the local council consists of the executive secretary and the employees of the local councils.
The provisions of the Local Councils Act regarding the appointment, removal, transfer and functions of the executive secretary are stated in detail herein above. Additionally, it is noted that the obligation under Article 49(1) of the Local Councils Act to have an executive secretary is not in itself in breach of the Charter and comparable provisions are not uncommon in other Member States, aiming to ensure some permanence in the running of the local council and to maintain some distinction between “political” functions, which are carried out by the Council and the Mayor, and “administrative” functions which are meant permanently to be carried out by the executive secretary.
As to the employees of each local council, Article 53(1)(a) of the Local Councils Act provides that each local council may appoint such employees as it thinks necessary for the efficient discharge of its functions, but it may not employ more than one person per 2.500 residents. Where the population of the locality is less than 2.500 residents, the local council may employ one person on a part-time or full-time basis, plus another one if they wish to do so.
The employees of each local council are appointed for a period of three years and their contract may be renewed for successive three year periods under such terms and conditions as may be prescribed by regulations issued by the Minister responsible for Local Government.
Clerical services may not be purchased by the local councils, as per Article 53(1)(c) of the Local Councils Act, but instead, according to Article 53(1)(b) of the said Act, the Department for Local Government may authorize a local council to employ clerical personnel in excess of the limit established by law, upon receiving a relevant justified request by the Local Council and obtaining the approval of the Minister responsible for Local Government.
The Minister responsible for Local Government may prescribe the qualifications to be possessed by, the remuneration payable to and the technical, administrative and office procedures to be followed by the employees of the local council.
The removal from office, suspension or re-instatement or any withholding of remuneration of the executive secretary and of any employees of the local council for whom qualifications are prescribed under Article 53(2) of Act, are subject to the approval of the Minister responsible for Local Government.
As it is evident from the above, the maximum number of employees which may be employed by each local council is based on its population, each local council generally having the ability to employ one employee per 2.500 residents.
The population of a locality is indeed an indication of the needs of each local council. Nevertheless, it may be argued that this is not the only indicator of the extent and nature of the locality’s needs for
page 293 / 796 employed personnel. Despite the above, since the local councils do not have the power to engage in infrastructure projects and other ventures which require both, considerable expenditure and a great number of technical, supervisory and administrative personnel, it may be argued that the existing mechanism for calculating the maximum number of local councils’ employees may not be unsatisfactory.
In order to get an idea of the number of personnel employed by the local councils, one has to look at the population of the Localities. According to the Electoral Commission (Department of Social Security and Department for Citizenship and Expatriate Affairs), the general population estimate in March 2013, as prepared by the Ministry of Finance for the purpose of Article 73 of the Act, was 446,547. It arises from the aforesaid statistics that the average population per locality in 2013 was 6.567 citizens, and 14 out of the total of 68 localities, i.e. 20% of the localities, had less than 2.500 citizens.
According to the Local Councils Act, localities with less than 2.500 residents may employ up to two (2) employees. The Act is not clear as to the factors that should be taken into consideration in order to decide on what grounds such local councils may employ the second employee. Hence, it may be argued that the Legislature left this decision to the discretion of the local councils. The said Act clarifies that the executive secretary is not included in the maximum number of employees who may be employed by the local councils.
Determining the maximum number of employees of a local council on the basis of the population of each locality may be argued not to identify and cater efficiently for the needs of the local councils, the localities and their population, while the local councils could come together (as they indeed do) to create synergies and economies of scale in order to provide higher quality services to the residents at a reduced cost, and the employees of local councils in more populous localities could undertake some of the functions of the less-populous ones and vice versa, as may be necessary on a case-by-case basis.
The Legislature’s choice to determine the maximum number of the local council’s employees on the basis of its population creates paradoxes. For example, according to the aforesaid statistics of 2013, the locality of L-Imdina had 294 residents. Hence, the local council of L-Imdina has the ability to employ up to two (2) employees, plus the executive secretary of the local council. The L Imdina locality shares borders, among others, with the localities of Rabat, with a population of 6,911 residents, and Attard with 10,502 residents, as well as L-Imtarfa which has a population of 2,569 residents.
L-Imdina and L-Imtarfa may employ up to 2 employees each. Nevertheless, the same applies for Rabat whose size is much bigger than the L-Imdina and L-Imtarfa. Rabat covers an area of 26.6 sq. km, which is more than 16 times bigger than the combined area covered by L-Imtarfa, which extends at an area of 0,7 sq. km, and L-Imdina, whose area covers 0.9 sq. km.
Another example would be Sliema locality that has a population of 16,854 residents (2014) within a small area of 130ha and which can benefit from a larger portion of employees, whilst Valetta, being the capital city and therefore with particular needs, has a small population of 5,723 residents (2013) and thus restricted manpower.
Servicing and reaching residents in an area which is greater in size requires more personnel than performing functions in a smaller area, and the population of each locality is not accurately distributed per square kilometer in the Republic of Malta. Hence, it may be argued that the choice of setting the maximum number of each local council’s employees on the basis of the locality’s population requires reconsideration.
page 294 / 796 Nevertheless, apart from the determination of the maximum number of employees by the Act, the local councils do indeed have the ability to employee administrative and other personnel. The choice of the persons to be employed and the tasks to be performed by them is left by the Local Councils Act to the local councils, allowing them to determine their own internal administrative structure, albeit with some limitations, as mentioned above.
The above are not the only limitations provided under the Local Councils Act. Under Article 53(2) of the said Act, the Minister responsible for Local Government may, by regulations, prescribe the qualifications possessed by, the remuneration payable to and the technical, administrative and office procedures followed by any person appointed to the office of the executive secretary or Deputy executive secretary of a council.
In light of all the above, it seems that there is partial conformity of the Republic of Malta with Article 6, paragraph 1 of the Charter. The rapporteurs consider that the Maltese authorities should revise the system of determination of local councils’ internal administrative structures in order to improve it, including the legislative provisions and practice followed as to the approval of the executive secretary by the central government and the method of determining the maximum number of employees of each local council, which are both not in line with the spirit and aims of the Charter.
Monaco [Article ratified - Report adopted on 28 March 2018 ]
Article 6, paragraph 1, of the Charter provides that local authorities should be able to determine themselves what internal administrative structures they wish to be endowed with. The Municipality of Monaco enjoys a certain degree of autonomy in drafting its internal organisation chart, even though it should be remembered that it has no statutory power and that it is the law that gives the detailed rules on the organisation of the municipality.
Under Article 17 of Law No. 959/1974 the Municipal Council may set up its own standing committees and special committees for studying specific issues.
Under Article 25 of Law No. 959/1974, the Municipal Council’s remit includes: “5) the establishment, management or concession and organisation of municipal services and their transfer or withdrawal; 6) the establishment or amendment of the organisation chart of municipal services, which shall determine, by category of staff, how staff will be assigned, having regard where appropriate to the provisions in the second paragraph of Article 53”.
Chapter IV of Law No. 959/1974 contains provisions on municipal officials and staff.
Under Article 52, the status of municipal officials and staff is governed by public law provisions. Unless the laws and regulations state that the appointment for a job must be made through a sovereign order, the Mayor appoints and dismisses municipal officials and staff. If necessary, the Mayor may fill vacancies that have temporarily arisen in these jobs for limited periods, provided that he/she immediately notifies the Minister of State of these appointments. Municipal officials and staff work under the Mayor’s authority and are managed by the Secretary General of the Mayor’s office.
Article 53 of this law provides that “it shall be compulsory to consult the Municipal Council on the regulations governing municipal officials and the applicable provisions, particularly with regard to the hiring, discipline, dismissal or retirement of municipal staff, and on the hierarchical classification of the grades or jobs of these officials or staff and the establishment of salary scales corresponding to these grades or jobs, under the conditions set out in Article 26.1. The Municipal Council shall present the Minister of State with its proposals on the maximum number of permanent jobs by job category to be allocated by sovereign order to each of the Municipality’s departments”.
page 295 / 796 Law No. 1096 of 7 August 1986 on the regulations governing municipal officials provides for a municipal employment committee, which is chaired by the Mayor and comprises municipal councillors and union representatives of municipal officials. The Mayor deals with all general questions relating to the organisation of municipal services (Article 25).
Under the same law, officials are appointed by municipal order, apart from the Secretary General of the Mayor’s office, the municipal tax collector, the Secretary of the Mayor’s office and the heads of municipal departments, who are appointed by sovereign order. The Secretary General is appointed on the Mayor’s proposal while other officials are appointed after consulting the Mayor (Article 19).
Bearing in mind the foregoing, the rapporteurs conclude that Monaco complies with Article 6.
Montenegro [Article ratified - Report adopted on 21 October 2015 ]
Netherlands [Article ratified - Report adopted on 26 March 2014 ]
Dutch municipalities enjoy a fair degree of autonomy in the field of internal organisation, which is commonly considered to be a part of local government. Within the limits of State legislation, the council and the executive board may decide to establish a wide array of different committees and internal structures: a. On the one hand, the council can set up council committees that can prepare the council’s decision-making and consult with the municipal executive or the mayor. The mayor and aldermen are not to be members of such a council committee. The composition of the said council committee must ensure that there is a balanced representation of the parties represented in the council. The chairman of the said committee must be a council member (Article 82, Municipalities Act). b. On the other hand, the council, the municipal executive or the mayor can set up governing committees that can discharge powers which have been delegated to them by the council, by the municipal executive or by the mayor (Article 83, Municipalities Act). c. Thirdly, “the council, the municipal executive or the mayor can set up committees other than those referred” in the precedent letters (Article 84, Municipalities Act). d. Fourth, the council, the municipal executive and the mayor can jointly set up one or more submunicipalities, with a submunicipal authority ruling it. This has to be done by way of council bye-law (Article 87, Municipalities Act). These bodies consist of a submunicipal council and an executive committee to which the representation of a considerable portion of the interests of this submunicipality is assigned and in respect of which the (main) municipal council may even delegate the power to lay down generally binding regulations with respect to that submunicipality. Submunicipal council members are directly elected by the residents of the submunicipality concerned, who are entitled to vote in the election of council members. The cities where municipal structures are most developed are Rotterdam and Amsterdam.
The auditing is another sphere where municipalities can adopt autonomous organisational decisions. The Municipalities Act imposes on municipalities the duty to have a specific organ to discharge that duty, but municipalities are free to choose any of the following options: (a) to set a local “audit office” (b) to establish an “audit office function”; (c) if the first option is adopted, to decide whether the municipality should have its own, specific audit office, or whether several municipalities should set up a joint audit office.
As regards Article 6 para.2 of the Charter, Dutch municipalities have the power and the autonomy to recruit high-quality staff on the basis of merit and competence. There is no centralised system for recruitment, in the sense of a nationwide, French-type territorial public service. The Municipalities Act lays down specific provisions dealing with the municipal secretary (Articles 100-106) and the
page 296 / 796 municipal clerk (Articles 107-107e). The municipal executive is to regulate the replacement of the municipal secretary, but the council is to appoint the municipal clerk, and suspend and dismiss that officer.
Consequently, the current Dutch system meets the requirements enshrined in Article. 6 of the Charter.
North Macedonia [Article ratified - Report adopted on 26 February 2013 ]
Capacity-building programmes are being implemented to assist municipalities in the areas of property tax administration, human resources and financial control. Financial affairs units were established in three more municipalities; 52 municipalities set up internal audit units and, in 46 municipalities, an internal auditor is operating. More than 1000 municipal civil servants have been trained, and progress was made in implementing annual training programmes.
Norway [Article ratified - Report adopted on 26 March 2015 ]
Norwegian local authorities have considerable freedom to determine their own internal administrative structures, in accordance with existing law, in particular the Local Government Act. When it comes to political structures, they can choose between the traditional system of government and the parliamentary system (see above). They can also set up specialised committees to deal with particular sectors and have a fair amount of leeway in organising local public services.
Local authorities are free to recruit their own staff. They are currently having some difficulties finding high-quality staff owing to the extent of the responsibilities which they are required to discharge.
The rapporteurs conclude that as regards the appropriateness of administrative structures and resources for the tasks of local authorities, Norway is in compliance with Article 6 of the Charter.
Poland [Article ratified - Report adopted on 2 April 2019 ]
Article 6, paragraph 1 of the Charter provides that local authorities shall be able to determine their own internal administrative structure.
Polish local authorities are endowed by the Constitution and the law with a fair degree of autonomy in the field of internal organisation. According to Article 169.4 of the Polish Constitution, «the internal organizational structure of units of local government shall be specified, within statutory limits, by their constitutive organs».
Each local authority adopts its own charter (“statut gminy”, Article 3 Law on Municipal Self- Government; “statut powiatu”, Article 2 Law on Powiat Self-Government), which, within the limits of State legislation, defines the internal organization and the mode of operation of the local authority (Article 22 Law on Municipal Self-Government, Article 19 Law on Powiat Self-Government).
However, during the monitoring visit, the representatives of local authorities claimed that internal administrative structures are increasingly determined by the central government, which imposes overly rigid organisational structures on municipalities and powiaty. Paradigmatic examples of this approach that were mentioned include the centres for social assistance that each municipality is required to establish, without the possibility to associate with other municipalities. A concern was also expressed by some local authorities about the impact on the functioning of local government of the recent reform aimed at strengthening participative democracy (especially the obligation to set
page 297 / 796 up a committee of complaints, applications and petitions: Article 18b Law on Municipal Self- Government; Article 16a Law on Powiat Self-Government). A similar claim was presented also during the 2014 monitoring visit.
The rapporteurs, underlying once again the importance of self-organisation autonomy, consider that, notwithstanding some difficulties, Polish local authorities are able to determine their own internal administrative structures in order to adapt them to local needs and ensure effective management. Therefore, the requirements of Article 6.1 are complied with in Poland.
Portugal [Article ratified - Report adopted on 28 September 2020 ]
The Constitution indicates, in Article 237 paragraph 1, that local authorities have a right to autonomy within the limits established by law. This constitutional right includes the definition of internal administrative structures. This means that, in keeping with their own powers, local authorities decide on their internal organisation. Within each authority, it is for the deliberative body to approve the pattern of institutional organisation proposed to it by the executive body.
This means that each authority may organise its departments for optimum fulfilment of its missions: accordingly, the structure of departments and their functioning must be tailored to the authority’s permanent goals. In addition to this prime goal of efficiency, most of Portugal’s local and regional authorities pursue two others: the digitisation of dealings with the communities they serve and greater transparency of administrative procedures.
Consequently, the rapporteurs consider that Article 6 paragraph 1 of the Charter is complied with.
Republic of Moldova [Article ratified - Report adopted on 4 April 2019 ]
As a rule, Moldovan local authorities have the power to determine their own internal administrative structures, with due respect to statutory provisions and limitations. This is usually done through decisions of the local council, on the basis of a proposal from the mayor. The mayor, as the executive head, also has moderate powers to introduce changes and adaptations in the executive apparatus of the local authority.
However, this observation is mainly a legal one, because in the large majority of local authorities, the administrative and human resources are so reduced and weak that in reality there is almost nothing to determine or to adapt in order to ensure “effective management”. This aspect will be developed below.
In conclusion, and with this caveat in mind, the delegation considers that, at least in the law, the Republic of Moldova complies with Article 6.1 of the Charter.
Romania [Article ratified - Report adopted on 3 March 2011 ]
In accordance with the framework regulation on the organisation and operation of the local councils, published in Monitorul Oficial no. 90 of 2 February 2002, local councils can adopt their own regulations on their organisation and operation adapted to their specific needs. These internal regulations must be approved by two-thirds of the elected councillors.
Law no. 215/2001 provides that one of the first tasks of the local council and the county council is to approve the council’s charter and the regulations for the organisation and operation of the council, the town hall and other local public institutions. The activities and internal rules for the organisation
page 298 / 796 and operation of the each community are thus governed by (local or county) council decisions.
Russian Federation [Article ratified - Report adopted on 30 October 2019 ]
According to Article 131 of the constitution, “the structure of local self-government bodies shall be determined by the population independently”.However, it appears that following relevant provisions of Law No. 136-FZ of 27 May 2014 and the related act of 3 February 2015, No. 8-FZ, it appears that municipalities have lost their right to determine the structure and organisation of local government which has been passed over to regional authorities.
Through this legislation, the regulatory discretion of regions has grown considerably. The Russian Constitution stipulates that municipal organs are not State organs and that the population itself decides on their structure and formation within the framework of the law. The previous regulation in Law No. 131-FZ provided that the federal legislator offers a choice of municipal models and the municipalities themselves decide which of them they adopt. The corresponding variant should be anchored in the main statutes of the municipality. After Law No. 136 FZ came into force, the regions received the right to define the municipal models appropriate for their municipalities. In this way, this kind of organisational autonomy was taken away from the municipalities. Other regulations concerning the offices of “municipal heads” (mayors, for example) are particularly sensitive. Although the federal law still provides for direct election (“strong mayor”) and for election by the Council (followed by the appointment of a head of administration – “city director model”), it has now introduced a new model: a person appointed by the Tender Commission can be appointed as mayor or district administrator by the municipal council (city council, district council). Half of the members of the Tender Commission are appointed by the governor of the region who also has the right to nominate candidates. By the end of September 2015, a total of 77 Russian regions had passed corresponding laws on the reorganisation of municipal bodies. Out of these regions, 38 have completely abolished the election of district administrators/mayors and only six have retained the elections, while some regions have left the decision on the respective model to the municipalities themselves. Out of the 77 regional laws analysed by local experts, 32 have already introduced the “hybrid model” with the State-dominated Tender Commission for all or certain types of municipalities. This process continues. Many Russian academics have raised doubts about the constitutionality of these new regulations, and citizens in some large cities filed remedies against the abolition of direct elections in 2015 (in the case of Irkutsk, even going as far with their appeal as the Constitutional Court). So far, however, this kind of mobilisation against the new law has proved to be in vain.[22]
In some cases, however, regional laws are sometimes empowering the municipalities to make their own choices. This seems to be the case, for instance, in the Chuvash Republic. According to information provided by the State Council of the Chuvash Republic, the number of deputies of a representative body (assembly) and the term of its office are determined by the municipality and included in its charter. Assemblies are elected on the basis of universal, equal and direct suffrage. The municipality also defines the procedure for the election of a head of the municipality, the status and the powers of this head and the term of office. He/she can be a person elected from among the deputies, or directly elected by the people or by an assembly from among the candidates selected by the Competitive Commission. For instance, in the capital city of Cheboksary, the head of the municipality is a person elected from among the deputies, who guides the activities of the Cheboksary municipal assembly of deputies. The Head of Administration, chief of the executive body of the city, is assigned under a contract concluded on the basis of a competitive procedure for this position, and his/her term of office is defined by the
page 299 / 796 City Charter.
Only self-sustained municipalities can independently establish their own staff and salaries (that is, between 2 and 4% of all local governments, according to the figures provided to the rapporteurs during their visits). The extent to which local budgets are subsidised determines the degree of their freedom to establish staff and their salaries.
Concerning the autonomous determination of internal administrative structures, the Russian Federation used to be a country where municipalities enjoyed a comparatively high degree of organisational autonomy. Since the regions obtained the right to determine these structures, it was clear that several regions would have this autonomy considerably restricted.
The rapporteurs believe that Article 6, paragraph 1, is not fully respected in practice.
As regard municipal staff and salaries, increased autonomy for self-sustained municipalities is an option that does not exist in many other European countries. In general, the intensity of State regulatory intervention into aspects of employee management in local government is similar to many other European countries.
In this respect, the delegation considers that Article 6, paragraph 2, is respected.
San Marino [Article ratified - Report adopted on 28 March 2018 ]
San Marino municipalities do not have their own professional staff. Municipal operation is based on the civic engagement of the elected politicians and of the citizens as a whole. However, the small size of the country and of the townships is no excuse for the absence of professional staff. Therefore, San Marino does not comply with Article 6 of the Charter.
Serbia [Non ratified - Report adopted on 18 October 2017 ]
The delegation recalls that Serbia has not ratified Article 6 of the Charter (see supra para. 3 of the report). However, during meetings with the representatives of municipalities, the rapporteurs were informed about difficulties in recruiting high-quality specialised staff, notably due to low remuneration and the current ban on recruitment. In this context, the rapporteurs would like to remind the Serbian authorities that inadequate local human resources risk undermining the local authorities’ ability to properly manage their affairs and implement large-scale reforms, notably in respect of the EU accession process. Municipal representatives also raised the issue of the persistent need to train staff in the municipalities, so as to ensure proper management of their functions and provide a high-quality service to citizens.
Slovak Republic [Article ratified - Report adopted on 24 March 2016 ]
As a rule, Slovak local authorities are able to determine their own internal administrative structures, with due respect to general legislation. Thus, each municipality is supposed to have its own office, consisting of administrative officials who are responsible for discharging the instructions of the mayor and other municipal bodies. In large municipalities, the municipal office is sometimes run by a “principal”, appointed by the municipal assembly, responsible to the mayor. Towns and cities in Slovakia are quite independent in the field of human resources and as a matter of fact, they can freely appoint and withdraw their own employees. Municipalities also appoint an internal auditor or comptroller, usually elected for a 6-year term by the Council, as an independent and impartial employee. The comptroller is accountable to the council deputies, not to the mayor.
page 300 / 796 The overall impression is that Slovak local authorities do not have enough qualified personnel. The rapporteurs were told that, in general, the salaries are low, and the work in local administration is usually unattractive for young, qualified people.
Contrary to what happens in some European countries, in the Slovak Republic there is no “fonction publique territoriale”, or any corps or division of local civil servants, regulated or recruited at central level. Each municipality is responsible for hiring, managing and paying its own public employees, within the framework of applicable legislation and the by-laws and regulations adopted by each city. Large cities, such as Bratislava, do sign collective agreements with the local trade unions. These agreements regulate issues such as the mutual relations between the city and the unions, the working conditions and social benefits, the salaries and payments, etc. What is more, Bratislava has its own salary code. Small municipalities follow the general laws and regulations on the matter, and may, eventually take decisions by the council. They may also adhere to collective agreements made at national level for municipalities. In this sense, the ZMOS has the legal capacity to negotiate and conclude collective nationwide agreements, in partnership with the trade unions of the local employees.
Therefore, it can be concluded that the requirements of Article 6 of the Charter are met by the Slovak Republic
Slovenia [Article ratified - Report adopted on 6 November 2018 ]
The mayor is the top executive authority and official representative of the municipality. The Local Self-Government Act states that mayors are elected by direct elections for a period of four years.
For implementation of local policies, the municipal administration is established in each municipality where the mayor is the head of the municipal administration, but everyday operation of the municipal administration is managed directly by the secretary of the municipality, who, in turn, is appointed and dismissed by the mayor.
The Local Self-Government Act in this respect states that “Professional and administrative work for the needs of the municipal council shall be carried out by the municipal administration”.
There are numerous forms of inter-municipal cooperation in Slovenia: 1) establishment of public agencies, public funds, public institutes, public companies and institutions, 2) establishment of joint municipal administrative bodies that carry out individual tasks related to municipal administration, 3) establishment of joint bodies for exercising the rights of municipalities to found joint public institutes or public companies, 4) establishment of joint bodies for legal defence before the courts or other state bodies, 5) establishment of the joint management and execution of individual administrative tasks and for carrying out joint developmental and investment programs and 6) establishment of joint organizations to represent and exercise municipal interests.
In order to promote cooperation among municipalities, especially smaller ones, the government has designed the regulatory framework for a joint municipal administration. According to the Local Self- Government Act (Article 49a): “Municipalities may decide to establish one or more bodies of common municipal administration. A common municipal administration body or common services of the municipalities for performing individual tasks of the municipal administration shall be established by municipal councils pursuant to general legal acts referred to in paragraph two of Article 49 of this Act. The mayors may agree that tasks of a common municipal administration body or common services under the preceding paragraph be performed within one of the municipal administrations.”
Since the self-organisation powers of Slovenian local municipalities are only limited by the law, the
page 301 / 796 provisions of Article 6.1. of the Charter are respected.
Spain [Article ratified - Report adopted on 20 March 2013 ]
As part of their autonomy, local authorities have their own staff and the power to recruit and manage their own human resources. Title VII of Law 7/1985 ensures the legal basis of human resources at local level, as well as regional and sectorial law.
In Spain, local government staff may be of two different kinds: civil servants (funcionarios) and contractual employees (personal laboral). Civil servants are considered under “administrative law” and enjoy a special legal status (in principle, they cannot be fired or made redundant). The recruitment of this type of employee, their rights, services, duties and responsibilities are regulated by Administrative law. Contractual employees, on the other hand, are governed by “private” employment law. Their salaries and working conditions are regulated in a different way: they sign individual contracts; they bargain and negotiate collective agreements with the corresponding local authority (usually the big ones). In terms of personnel management, each local authority is supposed to work as an independent “company”, with its own staff.
In this context, one has to bear in mind that, in Spain, there is a special type of local employee, who has traditionally been recruited and managed by the national government. These so-called “civil servants having a state qualification” or “state-wide qualified” employees (funcionarios con habilitación de carácter estatal) are the only ones who enjoy ‘‘professional mobility’’ across the Spanish territory. In other words, during their career, they may obtain positions within the administration of different local authorities across the country, by participating in “ad hoc” staffing procedures. The status of this special type of civil servant is also regulated by the State (the essential rules and elements) and by the regions. Clearly, the role of such special civil servants is of high importance to each and every local authority, because they discharge (in an exclusive way) crucial legal and managerial functions. The situation of the human resources at local level seems to the rapporteurs to be respected by Spain.
Sweden [Article ratified - Report adopted on 2 April 2014 ]
The Local Government Act prescribes in Chapter 3 that each municipality and each county should have one decision-making body, which is the elected assembly. The Municipal Assembly as well as the County Council Assembly must appoint the Executive Committee (Kommunstyrelsen/landstingsstyrelsen). Otherwise local authorities may determine their own internal administrative structures and appoint any other Standing Committees (Nämnder) needed, in addition to the Executive Committee, for the discharge of their duties.
These provisions, giving local authorities the required freedom to determine their own internal administrative structures and their functions and resulting in a great variation of institutional structures at local level, are in compliance with the Charter.
Switzerland [Article ratified - Report adopted on 20 October 2017 ]
The self-government of the municipalities translates into a right for the municipalities to determine their own administrative structures. They establish their own authorities, determine the number of members on the legislative and executive bodies and choose the system of election. The municipalities’ administrative bodies vary greatly, depending on the size of the municipalities. Large towns have a substantial administration, while small municipalities may only have two or three local government officials, often working part-time. As a rule, the administration is divided into
page 302 / 796 directorates (or dicasteries), according to the areas of the municipalities’ responsibilities: training, security, planning, roadworks, culture, and so on. The heads of these directorates are appointed by the executive and are answerable to it.
The rapporteurs would mention the special role played by the Municipal Secretary. In municipalities where members of the executive exercise their functions in addition to another occupation, the Municipal Secretary has considerable influence on the affairs of the municipality. For example, he or she is responsible for co-ordinating the administration of the municipality, for advising the authorities, and for preparing the working sessions of the executive and legislative bodies and of various committees. Some municipalities have even entrusted the Secretary with the management of the entire administration, making him or her a real City manager, responsible for implementing the decisions taken by the executive.
There are no standard regulations applicable to staff working for the municipalities. Each municipality is free to recruit staff as it wishes. The municipalities have a wide margin of discretion in this field, with the result that it is not easy to identify standard practices. The staff regulations stipulate the different categories of staff. Officials, for example, are the persons appointed by the executive to work full time or part-time in a specific post for an indefinite period of time. Some Swiss municipalities employ persons on the basis of private law contracts, in particular for missions of limited duration.
The municipal council decides on the regulations governing staff working for the municipality and the salary scales, although such regulations are not compulsory. However, there are links between the rules and regulations of the cantons and those of the municipalities, as the latter sometimes adopt some of the rules and regulations applied by the canton. The regulations governing federal officials may also serve as a reference. The Executive Council recruits and appoints municipal staff. It also fixes their salaries and exercises disciplinary authority. The number of staff employed by the municipalities obviously varies considerably according to their size. Municipalities with fewer than 500 inhabitants employ on average two persons in their central administration. In municipalities of over 50 000 inhabitants the municipal administration may employ up to 3 000 staff or even more.
It should also be pointed out that voluntary work is a typical feature of social and political life in Switzerland, in particular in the municipalities. It is an important aspect of the services offered by the municipalities but may vary considerably according to the municipalities concerned. Without such voluntary and optional work, the municipalities, in particular the smallest ones would currently be unable to function.
The delegation concludes that the situation in Switzerland is in compliance with Article 6, paragraph 1 of the Charter. The rapporteurs underline that Article 6.2, though not ratified, is respected in Switzerland.
Turkey [Non ratified - Report adopted on 1 March 2011 ]
The analysis article by article is currently unavailable
Ukraine [Article ratified - Report adopted on 31 October 2013 ]
Cities, villages and settlements have the power to organise the structures of their administrative departments. Furthermore, in pursuance of Article 140 (5) of the Constitution, city councils have power to organise “the administration of city districts”, whereas Article 140 (6) allows village, settlement and city councils to create “popular self-organisation bodies” (Article 14 of the Law on
page 303 / 796 local self-government in Ukraine). Article 26 (5 and 6) of the Law on local self-government in Ukraine does conform to Article 6 of the Charter in that it gives powers to city, village and settlement councils.
More generally, because of serious budgetary problems, the questions of both the structures of local and central government departments and administrative staff at local or regional level remain current. In pursuance of its stand-by arrangement with the IMF, Ukraine has undertaken, where its administrative departments and their staff are concerned, to effect a public administration reform in order to reduce the number of units and make them more efficient, and to adopt restrictions relating to pay rises for central and local government civil servants.
In this context, it should be noted that Ukraine has experienced a fairly large rise in the number of central government civil servants. The chart below shows the increase in staff numbers and their distribution between the different administrative tiers. The increase seems to be due to an expansion of central government’s sector of administration, resulting in particular pressure being brought to bear on the State to rationalise its own administration in one of the following ways: reform to increase the effectiveness and efficiency of administration; a systematic examination and redistribution of powers, based on the devolution and rationalisation experience of civil services in other European countries; reform of the administrative structure of central government at local and regional level; privatisation of the tasks hitherto reserved for central government or, where applicable, local authorities.
Changes in the numbers of civil servants working for central government (upper curve) and local authorities (lower curve):
While it is planned to delegate powers to local authorities, reforms are needed at the same time to make local administrative offices more efficient, with particular emphasis being placed on staff skills, so that large-scale transfers of staff from one tier to the other do not fail to bring about any improvement in the performance of the administrative machinery. Self-evidently, most local authorities, which are of relatively modest size, are unwilling to embark on such reform, or lack the capacity to do so, without a huge amount of assistance from central government.
The Ukrainian national agency for the civil service is currently working to update civil service staffing levels and working hours. The associations are participating in this work with a view to communication of the figures relating to the local and regional civil service. Where staff status is concerned, the government has withdrawn a draft law concerning “local civil service status”, which had been strongly opposed by the associations. A new draft is to be prepared, bringing the reform of the national civil service more closely into line with that of the local civil service.
On the subject of national and local civil servants’ pay, the chart below gives a few significant indications.
The steep rise in local civil service pay between 2005 and 2008 has slowed down in recent years. Average local civil service pay, which declined in 2009, remains stable. Average pay of civil servants working for central government (on the right) and local authorities (on the left) 109. In formal terms, Ukrainian legislation is in conformity with the provisions of Article 6. In practice, however, given the pressure for rationalisation at local level and the low administrative capacity of small entities (particularly rural ones), authorities’ freedom to determine their own structures within the meaning of Article 6 of the Charter is hardly respected.
United Kingdom [Article ratified - Report adopted on 26 March 2014 ]
page 304 / 796 England
Councils can choose how to organise their governance and operations. Not all local authorities are therefore structured in the same way. The internal organisation of English councils may be structured in three different ways (under the Local Government Act 2000), but the system of local governance was changed from the traditional committee system to the UK style cabinet:
The traditional committee system works by delegation to (sub-)committees, each dealing with a separate sector, with ratification by the main body (going back to Local Government Act 1972). No distinction is made between cabinet and backbenchers. This system could be continued in areas with populations below 85.000 residents.
The cabinet system as an executive form of governance in which decisions are made by leader elected by the councillors or by a mayor elected by voters, who appoints a cabinet. Each cabinet member (also: executive member) is responsible for a particular sector. Policy decisions are made by the Cabinet on the whole and only major policy such as Local Plans and Local Transport Plans (LTP) need ratification by the full Council. The sectors can be chosen by the leader. For example, in York there is a Leader with Cabinet and the Lord Mayor chairs the Council.
An executive governance model with a directly elected Mayor supported by a cabinet and specialist advisers appointed by him is the third main system (not to be confused with the fact that all local authorities have mayors or chairmen as ceremonial/civic figureheads; in some larger and older cities these are called Lord Mayor).
In all cases, the full council meeting in which all councillors may vote is the sovereign body. It agrees the budget, sets the policy framework, appoints chief officers and makes fundamental decisions. There are Regulatory Committee and a Licensing as well as a Planning Committee and (sub-)committees for Audit, etc.
Councils operating with executive governance arrangements must establish Overview and Scrutiny Committees (OSCs) to ensure that decisions made by the council and its partners are held to account. For councils operating with the committee system, it is discretionary. OSCs reflect the political balance of the councils, but it is up to councils to determine their overview and scrutiny arrangements and there is considerable local variation on the number of committees and their mandate.
As to the relationship between elected councillors and officers, there is a clear distinction: Councillors, through decisions of the full council and the executive, set the overall policy of the council. The Cabinet members are usually senior members of the Council and cover specialist portfolios, such as housing/property, regeneration, neighbourhoods, children, adults and finance. They work with the Chief Executive and Corporate Directors in those areas. Senior officers, led by the chief executive and chief officers are responsible for advising the cabinet and scrutiny committees on policy and are responsible for implementing councillors’ decisions and for service performance. Officers have a duty to give unbiased professional advice.
The Chief Executive is the statutory Head of Paid Service, responsible for staff appointments. He/she works directly with the Mayor/leader. Corporate Directors are appointed by the Chief Executive and a panel made up of the Mayor/leader and relevant Cabinet members. They are responsible for the delivery of frontline services, staff and financial management.
The Localism Act 2011 opens the choice for English councils and local people to decide how their council should be governed. It appears that the determination of own internal administrative
page 305 / 796 structures and their adaptation is possible. Various interlocutors pointed out that speed and quality of decision-making has much improved making local government far more efficient and effective than it was 20 or 30 years ago. Also accountability has generally become more transparent.
So far, however, outside London only in 10 Councils referendums have been held on the introduction of directly elected mayors, and only one, Bristol, voted in favour (2012). In the UK there is no enthusiasm for the Mayoral model, despite government attempts to stimulate it. This might be due to the importance given to the value of tradition (creating a kind of “path dependency” with the UK parliamentary model). While some have argued that, as the government attempted to impose elected mayors without sufficient consideration of the impact on the current system, people were not convinced they could make it work. Leaving the choice to councils and people appears the best option.
Scotland
Each local authority in Scotland is governed by a council. The council is made up of councillors directly elected by the residents in the population of the area they represent (referred to as a council ward). The Leader of the Council is also often the leader of the largest single political grouping in the council. Each ward will have three or four councillors. In total, there are 1223 elected councillors who are normally elected every 4 years (legislation in 2009 moved local government to two consecutive five-year terms to decouple local government elections from elections to the Scottish Parliament).
In the full council meeting all councillors meet to debate and take the key decisions of the Council. These include electing the convenor (equivalent to Mayor in other parts of UK), appointing councillors to all committees and panels, deciding on strategic objectives and corporate policies and setting the annual budget and council tax.
However, provisions in the Local Government (Scotland) Act 1973 allow local authorities to devolve most decision-making to a committee, sub-committee or officer of the council. Traditionally, authorities have tended to operate through a structure of committees and sub-committees. There is no requirement for councils to adopt a particular political decision-making and scrutiny structure: it is a matter for each council to decide what the most appropriate structure is for its particular circumstances and context. In recent years, some councils have streamlined their committee structures, by reducing the number of service-specific committees, and instead concentrating on broader, more cross-cutting thematic areas. Others have dispensed with committee structures in favour of executive structures, in which responsibility for most strategic decisions is delegated to an executive of between 5 and 13 councillors. In this kind of structure, it is the role of non-executive elected members to scrutinise the executive’s activities. There are limits to the number of remunerated senior Councillors which entails a form of administrative control.
The Chief Executive, who is the head of the Council’s paid staff and its principal adviser on policy matters, has the responsibility for ensuring the efficient, effective and equitable discharge of responsibilities of the Council. This is very different to the situation in many other European countries which have a Mayor with executive functions (‘Mayor in Council’ system) instead of a Leader.
Wales
Local authorities in Wales have a cabinet-style executive: the dominant political group or coalition makes decisions under the scrutiny of the council as a whole. The Local Government Act 2000 introduced significant changes to the political management arrangements of local
page 306 / 796 authorities. In particular, the Act required authorities to replace the old committee system with a system in which a small, clearly identified executive is responsible for providing leadership and taking decisions, and where new overview and scrutiny committees review the performance of the executive and seek continuous improvement and development. The executive could be organised in three broad forms set out in the Act: a directly-elected mayor, a leader and cabinet model and a directly-elected mayor with a council manager. Most Welsh local authorities adopted the leader and cabinet model. Three authorities had initially adopted a fourth option (a modernised committee structure with enhanced scrutiny powers in place of the cabinet system), but were subsequently required by the Welsh Government to change to a Cabinet system. The Local Government (Wales) Measure 2011 amended the Local Government Act 2000 in respect of the political management structures of local authorities in Wales. There is now only a choice between two options: a leader and a cabinet or an elected mayor and a cabinet system.
The Localism Act 2011 requires English and Welsh local authorities to prepare pay policy statements for 2012-13 and for each financial year thereafter. The statements are required to articulate an authority’s own policies towards a range of issues relating to the pay of its workforce, particularly its senior staff and its lowest paid employees.
In Wales, pay scales for chief executives of local authorities are determined by each local authority. However, a national negotiating body produces a set of benchmark salaries for authorities of different size and type as a guide. This body is the Joint Negotiating Committee for Chief Executives of Local Authorities. Recently the salaries paid by some Welsh local authorities to their senior officers and chief executives have drawn considerable media attention and criticism.
Local authorities are able to determine their internal structures. Directly elected Mayors are the exception in England, but the Cabinet and the Committee systems function through elected councillors and effectively so in all four entities. The Rapporteurs consider that the situation is in compliance with Article 6 of the Charter.
[1]. Where an authority is called a district council, it will have a chairman and where the authority is a borough or city council it will have a mayor (or a Lord Mayor).
[2]. Liverpool and Leicester decided to move to the mayoral system of governance without a referendum.
[3]. Each local authority elects a civic leader, the Provost or Convenor, who chairs council meetings and acts as a ceremonial figurehead for the area. In the cities of Glasgow, Edinburgh, Aberdeen and Dundee, the Provost is known as the Lord Provost.
[4]. See National Assembly’s 2004 paper ‘The Operation of New Political Management Structures in Local Government’ [http://www.assemblywales.org/n0000000000000000000000000021314.pdf].
[5]. Following the Local Government (Wales) Measure 2011 Merthyr Tydfil (from May 2010), Powys (from May 2011) and Gwynedd (from May 2012) Councils; text available at
[http://wales.gov.uk/topics/localgovernment/publications/lgmeasure11/?lang=en].
[6]. Source [http://www.walesonline.co.uk/news/wales-news/more-50-welsh-council- bosses-3867881].
page 307 / 796 Article 6.2 Appropriate administrative structures and resources for the tasks of local authorities
The conditions of service of local government employees shall be such as to permit the recruitment of high-quality staff on the basis of merit and competence; to this end adequate training opportunities, remuneration and career prospects shall be provided.
Albania [Article ratified - Report adopted on 31 October 2013 ]
As to paragraph 2 of Article 6, the Rapporteurs think that the Albanian system of local government and civil service is formally in compliance with the Charter. There is a need to create a more comprehensive legal framework for municipal public service, especially with regard to communes and regional councils, where conditions of service and employment are regulated by the labour code of Albania and not by the civil service code. It is critically important for Albania to develop a civil service code that will establish and regulate equal conditions of service in all LGUs of the country.
The rapporteurs have been informed that recently, Parliament has approved amendments to the Law on Civil Service, which is a positive development. However, the text not being available to them, the Rapporteurs would abstain from comment on its scope at this stage.
Andorra [Article ratified - Report adopted on 28 March 2018 ]
As regards article 6, paragraph 2 of the Charter, Andorran municipalities have the power and the autonomy to recruit high quality staff on the basis of an open competition. However, rapporteurs were told by the local authorities of Andorra la Vella that the municipality is overstaffed (with 478 employees) and that 45% of the municipal budget is spent on staff. The mayor would like to reduce this expenditure, but she is unable to do it, as the staff has the status of civil servants. Therefore, employees cannot been dismissed, and the only remaining possibility is to not replace them after retirement.
The rapporteurs consider that the requirements of Article 6 of the Charter are respected in Andorra.
Armenia [Non ratified - Report adopted on 15 June 2021 ]
Article 6.2
2 The conditions of service of local government employees shall be such as to permit the recruitment of high‑quality staff on the basis of merit and competence; to this end adequate training opportunities, remuneration and career prospects shall be provided.
184. Referring back to the preceding point, the rapporteurs note that the administrative capacities in the vast majority of municipalities are not sufficient to deliver public services fully and with due quality, and scarce budget resources are only sufficient for remunerating municipal staff. The limited administrative capacity and the lack of qualified human resources are serious problems in particular in small municipalities. For example, in Solak, a municipality with approximately 2 700 inhabitants, fewer than 20 people are employed by the community, and even local taxes are difficult to collect. During the consultation procedure, the Ministry of Territorial Administration and Infrastructures indicated that the territorial reform and the consolidation of communities aim at, among other
page 308 / 796 things, improving organisational capacity and that there are several new initiatives that directly support development of staff competences in municipalities in various functional areas and disciplines, following the new realities (enlarged municipalities) and increased public pressure for good governance and increased responsiveness. The ministry also underlined that it is currently reviewing the existing training system to make it more adequate and up to date, which is based on real needs and linked to employees’ performance, and which strikes a balance between central and decentralised components of the system, among other things.
185. The rapporteurs trust that the ongoing initiatives will improve the situation with regard to the conditions of service of local government employees and will demonstrate the awareness of the government about the importance of these issues. However, under the current circumstances, most local authorities are still not able to provide adequate training services for their staff members and offer a long-term career in public service.
Austria [Article ratified - Report adopted on 28 September 2020 ]
All Austrian Länder have regulations for civil servants and contractual employees at local level: e.g. Burgenland Municipal Employees Act,62 Vorarlberg Municipal Employees Act,63 etc. These regulations include specific elements pertaining to rights, career prospects and benefits.
Article 21.1, B-VG, regulates that legislation and execution in matters pertaining to the service code, including the regulations on service contracts, and for staff representation rights of employees of the Länder, the municipalities, and the municipal associations are, save as provided otherwise, incumbent on the Länder. Disputes arising from contractual employment are settled by the courts of justice.
During the monitoring visit, the rapporteurs noted the concerns raised by small and medium sized municipalities that local effective management is unlikely to occur when professional, technical advice is not available. All local authorities need to be able to recruit and retain high quality personnel in order to provide high quality services to their local communities. During the consultation procedure, the Association of Austrian Municipalities also pointed out that as local government becomes increasingly complex in terms of the legislation to strictly comply with to avoid personal liability, both elected representatives and administrative staff need more extensive legal knowledge.
The rapporteurs invite the Austrian authorities to reflect on opportunities to intensify trainings for local personnel, and to identify solutions for ensuring a high quality, proficient and continuous delivery of local public services in all, but especially in small and medium-sized municipalities. According to the Association of Austrian municipalities, this would also enable small municipalities to cope with ever-increasing legal complexity without being forced into unwanted mergers.
Despite those reservations and that the situation in practice could be improved, the rapporteurs note that overall Austria formally complies with the provision of this paragraph.
Azerbaijan [Article ratified - Report adopted on 17 June 2021 ]
Staff can work for municipalities on two different contractual bases: tenured civil servants and officials working on an employment contract. The law provides for the incompatibility between the position of municipal officer and that of member of legislative, executive or judicial bodies. Salaries are determined in accordance with the organizational chart approved by each municipality. Other working conditions, such as hours, vacation, retirement benefits and social security, are regulated by
page 309 / 796 the appropriate labour legislation. Individual municipal governments may assign additional payment to municipal employees according to their financial capabilities. The head of the appropriate municipal division is responsible for the employment and dismissal of municipal personnel.
In 2015 the Law on Municipal Services has been amended introducing new rules on the selection of personnel. Municipal staff is now hired based on an evaluation by a commission consisting of five persons after a selective process (competition). It is also provided that relatives of the head of the municipality and his/her deputies cannot be hired by the municipality.
Municipal officials can be dismissed only in cases explicitly detailed in law. According to article 21 of the Law on the Status of Municipalities, these are: conviction by a court; health reasons; if a court has judged a staff member not to be responsible for his or her actions; termination of citizenship, or if the person becomes a citizen of a foreign state or makes a similar commitment to a foreign government; death.
In 2016, Article 146(I) of the Constitution has been amended and the civil liability for municipal staff has been established if they cause damage to the rights of citizens. No information was provided on the amount of such cases. The authorities informed the delegation that litigation regarding municipalities affects in most cases property disputes and that in this area it is not infrequent that citizens sue the municipality on damages caused to their (property) rights. It must be recalled that one of the main reason for complaints regarding local issues is the still incomplete legislation on separation between state and municipal land and it would be unfair to hold municipal staff liable for damages caused by the inactivity of the legislator rather than by their blameworthy conduct. During the consultation procedure, Azerbaijani authorities informed the rapporteurs that a joint working group was set up in order to intensify cooperation between the Centre for work with municipalities of the Ministry of Justice and the State service for Property Affairs (Ministry of economy) in order to ensure compliance with legislation in the field of municipal land management, increase efficiency and provide methodological assistance to municipalities.
The executive body of a municipality is referred to by law as the “executive apparatus”. It consists of the municipality’s executive departments in accordance with the municipal charter and is managed by the chair of the municipal council, who appoints the chief official. Many municipalities, in particular in rural areas, do not have sufficient well-trained staff capable of preparing and executing the council’s decisions.
The opportunity to adapt the internal administrative structure of municipalities to local needs is further restricted in practice by the severe difficulty in hiring qualified staff. Recent amendments and additions to the Law on Municipal Service related to the staffing of municipalities as well as several training programmes coordinated by the Ministry of Justice have reportedly started to improve the situation, which however remains not satisfactory.
For example, since municipalities are not labelled as a part of public administration, their officials are not considered as public servants, but the Law on Municipal Service nevertheless provides that admission to the municipality service is arranged by competition. Furthermore, municipal staff has in principle the right and the opportunity to participate in the vocational training available to their counterparts in the state administrative structure. While state officials may attend vocational training courses sponsored by the state, municipal employees are participating much less frequently due in particular to the lack of financial resources and to the limited support received by their municipalities that traditionally do not invest in training of their staff. All in all, working for municipalities remains less attractive than working in the state administration. Salaries remain not competitive and personal development opportunities are limited.
page 310 / 796 The Law on Rules of Ethical Conduct of Municipal Servants contains the basic ethical rules that apply to municipal employees, focusing in particular on the prevention of corruption and of conflicts of interest, on the secrecy of information connected to the public responsibilities. The anti-corruption plans developed in the country31 generally affect municipal staff too. The government has recently adopted a promising 2019-2025 Civil Service Development Strategy, which contains a series of measures targeted towards the professional development of civil servants. The delegation could not receive information as to whether and to what extent this strategy extends to municipal staff or is only targeting state employees. It would be in any case advisable to include municipal personnel in the strategy.
Despite some efforts in improving professionalism of the staff, including recruitment on a merit- basis, adequate training opportunities, remuneration and career prospects, as required by Article 6.2 of the Charter, are not provided. After the remote meetings, the rapporteurs were informed by the Government that a work was underway to provide local self-governments with highly qualified personnel. The rapporteurs will keep a follow-up on this issue. However, they conclude that at the moment of the monitoring, the situation in Azerbaijan is of only partial compliance with this provision.
Belgium [Article ratified - Report adopted on 15 October 2014 ]
Flemish Region (Vlaanderen)
Consult reply indicated at article 6.1.
Walloon Region and German-speaking Community
With regard to paragraph 2, the local authorities in the Walloon Region and the German-speaking Community have different types of staff: regular staff (civil servants) or contract workers, who can only occupy posts not governed by any staff regulations. Staff are recruited according to the administrative regulations, and the law states that individuals recruited by the public authorities are in principle civil servants. This rule applies to all levels of government and constitutes a general principle. Accordingly, in the case of the local authorities it is the responsibility of the municipal or provincial council to recruit staff (in principle by means of a competitive examination) and to determine their conditions of service.
In the Walloon Region, according to the Civil Service recruitment takes place through competitive examinations, and staff are given grade promotions, promotions to managerial posts or promotions by accession to a higher rank. Staff are also given an assessment every two year. Within the local authorities, the current trend is for an increase in the recruitment of contract staff, which may to some extent contribute to the relative insecurity of public service employment.
On 1 January 2012, the “Act ensuring the long-term funding of pensions of permanent members of staff of provincial and local government administrations” came into force. For the local authorities, this reform means a substantial rise in the basic contribution rates and in the additional rates in respect of so-called “responsibility contributions”, which are significant amounts for the entities and constitute a considerable differential between their actual pension costs and their basic contribution rate. During the first four years of the municipal legislature, the basic contribution rates will not stop rising and will reach a single rate of 41.5% of the payroll for regular staff in 2016.
The crucial problem of municipal staff pensions can only be resolved by a consistent approach to the pensions of regular staff and those of contract staff.
page 311 / 796 Between its entry into force in 2012 and 2016, the reform of the funding of the pensions of regular staff will mean accumulated additional costs of €2.250bn for the country’s municipalities, social services centres, police force areas and intermunicipal partnerships. The UVCW has never denied the need for a reform of the system for funding the pensions of local authority staff aimed at ensuring its sustainability. As the UVCW is of the opinion that this law has been constructed around a balance between the mutual solidarity of all the local authorities and their responsibility for their own pension costs, this law was essential, but it was an inadequate measure in the absence of other structural changes.
On the basis of data for 2012, the UVCW has made a number of estimates that seem to give cause for concern up to 2016, especially the fact that the accumulated extra costs of refinancing pensions will reach €2.250bn for the Belgian local authorities, with €582m for the Walloon local authorities alone, then €238m for the municipalities, nearly €150m for their police areas, more than 105 million for their social services centres and more than €87m for the intermunicipal partnerships and other local bodies.
Measures concerning the volume of jobs, such as a zero recruitment policy or lay-offs, proved in 2013 that the municipalities have borne the full brunt of the impact of the financial difficulties. As laying off staff to be able to pay pensions was not an acceptable option, and aware that a considerable number of local government staff will reach retirement age in the next fifteen years, the UVCW has issued an urgent appeal to the federal level to take measures.
In short, the UVCW has called for measures that will enable staff to receive a reasonable pension but remain financially sustainable for the employer.
In the same context, the local authorities have called for the use of the Old-Age Fund (Fonds de vieillissement), the reserves of which exceeded €19bn in 2013. The federal state is financially involved in the payment of pensions of everyone – civil servants, salaried staff and even self- employed people – apart from local authority pensions. In this connection, the towns and municipalities alone bear the costs associated with the pensions of their regular staff, which is an enormous burden for the local entities.
The rapporteurs support the demands of the UVCW and its two sister associations, the VVSG for the Flemish Community and the AVCB for the Brussels-Capital Region), which is calling on the Federal Government to study possible solutions likely to have a significant impact on the local authorities’ pension costs and to implement the most appropriate of these solutions. It will not be enough to increase receipts, and it will be essential to reduce the funding expenditure.
Brussels-Capital Region
Consult reply indicated at article 6.1.
Bosnia and Herzegovina [Article ratified - Report adopted on 31 October 2019 ]
The Congress delegation did not hear any complaint from representatives of municipalities regarding the conditions of service or particular difficulties in recruitment. However, in general, the emigration of skilled workers to other European countries, notably Germany, affects the chances of smaller municipalities of finding trained and qualified staff, in particular for specialised tasks.
The Federation of Bosnia and Herzegovina framework law regulates the principles for salaries at municipal level, but it is allegedly not well respected and many municipalities seem to decide themselves on the salaries for their staff, which is bad for the comprehensive budgetary system, but
page 312 / 796 does not constitute a violation of Article 6.
Problems have been signalled with the recruitment of civil servants, as the higher education system is not adequate, the number of inspectors too low for guaranteeing effective supervision (in Sarajevo Canton there are only 4 labour inspectors), and a Book of Rules on Professional Qualification has not yet been adopted. A particular problem affecting the local level is the lack of building-inspectors, which results in a lack of enforcement of decisions and, more generally, in a lack of respect of rules.
As municipalities have broad liberties in law regarding recruitment and conditions of service, although less so in practice, the rapporteurs conclude that Article 6.2 is generally respected.
Bulgaria [Article ratified - Report adopted on 21 January 2021 ]
Article 6.2
1. With due respect to the general laws and regulations on civil service, local authorities should have the autonomy to determine the conditions of service of their own employees and to establish a sound and efficient personnel policy, also offering sufficient training and career opportunities. Local authorities should have the possibility to attract, recruit and maintain their qualified administrative staff. Naturally, these possibilities will largely depend, however, on the size and resources of each local entity41.
1. The Congress has noted in its monitoring exercises that in many countries the national and/or regional authorities do regulate in a comprehensive way the status of local government staff, thus limiting discretion of local authorities. Also, in Bulgaria some local interlocutors complained about domestic laws and government regulations which restrict the activities of local governments in terms of selecting and evaluating staff, as well as in terms of offering an adequate remuneration.
1. The rapporteurs consider, however, that the most important issue in this context is not the legal restrictions but the lack of the necessary staff. Local government officials emphasised the weak professional skills of many staff members, especially in smaller municipalities. Apart from in the big cities, it is extremely difficult for local authorities to attract specialised quality staff. Another problematic aspect is the lack of an efficient, reliable and easily accessible system for training, mainly because relevant experience and necessary resources are still missing. During the consultation procedure, the NAMRB informed the delegation that it seeks to fill this gap by organising trainings on the implementation of the latest amendments in the legislative basis, important for the activities of the sectorial policies’ experts in the municipalities. At the beginning of each new term of the local self-government NAMRB, organises trainings for newly elected local representatives - mayors and municipal councilors.
Croatia [Article ratified - Report adopted on 20 October 2016 ]
The guarantees of the social and career development of local government servants depend to a great extent on the size of the territory and financial possibilities of the local self-government unit. During their visit the delegation had the impression that the financial provisions and career development of local government servants in Zagreb and other large towns are higher and frequently better than conditions of those employed in the central government agencies; the same cannot be said of the municipal servants employed in small units. Their remuneration and social conditions lag behind the conditions of those employed in counties and large towns. Such a
page 313 / 796 difference in the social and career development of municipal servants opposes the universal principle of the Charter requirements. The on-going reforms for the improvement of public administration provide an opportunity for the Croatian government to effectively address these issues and ensure equal conditions for local government servants, as well as for consolidating tiny municipalities. Associations also make the point concerning local government employees that for decentralisation to be effective it is important to strengthen the capacity of local and regional public servants to be able to take over the responsibilities from the central administration.1
The Act on Salaries in the Local and County (Regional) Self-Government passed in 2010 has been criticised by local self-government associations as further intensifying the disparity between the large and small, in particular the tiny, municipalities. The act has introduced the maximum pay of local government servants as well as restrictions in the municipalities where the central government’s budgetary aid exceeds 10%. The Associations further complain about this Act that they were not consulted during the law-making process (in this respect see further comments on Article 4 paragraph 6 supra).
Although certain difficulties have been highlighted in relation to small municipalities, the rapporteurs conclude that overall Croatia is in conformity with Article 6 paragraph 2 of the Charter.
In summary, the rapporteurs conclude that Croatia complies with Article 6 paragraph 1 and paragraph 2 of the Charter.
Cyprus [Article ratified - Report adopted on 20 October 2016 ]
See answer at article 6.1
Czech Republic [Non ratified - Report adopted on 8 March 2012 ]
On the other hand, the country has decided not to submit to Article 6 para. 2 of the Charter on the conditions of service for local (and regional) government employees. This fact may be understood in light of the wide discretion enjoyed by local and regional authorities in shaping their administrative and technical services and deciding about the staff needed to fulfil the different tasks. For that reason, training opportunities or requirements, career prospects etc. provided by central government may be considered as an interference in the autonomy of local and regional authorities within the limits established by generally applicable labour law within the framework of the national (and European) labour market.
Denmark [Article ratified - Report adopted on 31 October 2013 ]
Consult reply indicated at article 6.1
Estonia [Article ratified - Report adopted on 29 March 2017 ]
With regard to the remuneration of local staff, the associations generally had no objections vis à vis the governmental instructions. Concerning the remuneration of teachers, who are local employees, the government has made use of earmarked grants for this purpose.
Finland [Article ratified - Report adopted on 28 March 2017 ]
Finnish legislation in general and the Local Government Act in particular grant local authorities organisational discretion, which enables them to determine their own internal administrative
page 314 / 796 structures, and it is intended for the situation to be the same in the future autonomous regions. Therefore, Finland fully complies with para. 2 of Article 6 of the Charter.
It can be concluded that Finland fully complies with Article 6 of the Charter.
France [Article ratified - Report adopted on 22 March 2016 ]
Consult reply indicated at article 6.1
Georgia [Non ratified - Report adopted on 7 November 2018 ]
According to Article 76, paragraph 2, of the constitution, “a self-governing unit shall independently establish its organisational structure in accordance with the organic law, and shall make decisions with regard to human resources in accordance with the organic law and legislation governing public service”.
Staff of the Gamgeoba (city hall) are appointed by the Gamgebeli/mayor on the basis of open competition. Staff of the Sakrebulo (council) are appointed by the head of the council (chairperson). Appointment and dismissal of municipal staff are regulated by the Law of Georgia on Public Service.
Salaries of civil servants in Georgia are regulated by the Law of Georgia on the Remuneration in Public Institution as referred to in the Law of Georgia on Public Service; this legislation uses special coefficients for to calculate the salary of each category of municipal employee. The law indicates 12 categories of civil servant, and municipalities are free to assign a relevant category to each employee who has passed procedure. According to several interlocutors during the Congress monitoring visit, salary schemes in Georgian municipalities are highly competitive in the domestic labour market. According to NALAG, however, a lack of adequate human resources at local level is the biggest problem. Moreover there are a number of municipal sectors such as spatial planning, urban design and urban transport management, where the shortage of qualified personnel is evident, even in Tbilisi. Aiming at raising the level of qualifications of civil servants, Article 101, paragraph 2, of the Code now obliges municipalities to spend at least 1% of the total amount of budgetary allocations intended for remuneration on professional development of their civil servants.
As already mentioned, apart from civil servants, local government entities employ many people on an individual contract basis. Both limited liability companies and non-profit entities serve as “shelters” for retired civil servants and other people having close ties with local government officials. As at 1 January 2017, local governments (not including Tbilisi) employed 11 913 individuals directly and an additional 19 825 individuals through non-profit entities, making a total of 31 738 employees. The Government proposed legislation aiming at regulating the number of non-commercial entities per municipality and introducing a limit on the amount of administrative costs. This initiative, according to local experts, is still under consideration of the Government.
In general, municipalities have the power to recruit and select the required staff, evaluate their performance and offer training and re-training opportunities. Contracting is easily possible within the reasonable procedures stipulated in Georgian law. The procedures (competitions) for selection are prescribed by law and enforced by the Civil Service Bureau. The scale and limits of remuneration are set by law, but municipalities have the power to decide on the amount of remuneration within these limits. Municipalities cannot increase their budget for employee salaries without the consent of the Ministry of Finance of Georgia (according to changes made in 2018 to the Law of Georgia on Remuneration in Public Institutions).
page 315 / 796 In spite of such restrictions (which can be found in many European countries), it can be stated that Georgia complies with Article 6, paragraph 2, of the Charter, and that this provision could be ratified by the Georgian authorities.
Germany [Article ratified - Report adopted on 14 March 2012 ]
Consult reply indicated at article 6.1
Greece [Article ratified - Report adopted on 26 March 2015 ]
As regards Article 6, para. 2, of the Charter, on the recruitment of staff, this is presently a very controversial issue in Greece, also as a consequence of the economic and financial crisis and the measures imposed to address it.
The public service system in Greece is a career system: officers are recruited at the base of a pyramid and advance progressively to higher posts. The current constitutional status for civil servants is also applied to employees of local self-government authorities (Article 103, para. 6 of the Constitution). Civil servants have tenure and they have an obligation of political neutrality. The whole formal status of local authorities’ staff, although governed by a special code, is assimilated in its major aspects to that of the staff of the state public service, although the administration units of local government authorities have many special profiles and, usually, a smaller size.
Article 103, para. 2 of the Constitution establishes that personnel with the status of civil servants (so called “permanent personnel”) can only be hired if a corresponding post is provided in the organisation chart (“organigram”) of the local authority. “Long-term private law employees” can only be hired as “special scientific” or “technical” or “assistant” personnel. Short-term employment according to private law is only allowed in view of “unexpected” or “urgent” needs.
Since the constitutional revision of 2001, control of an independent regulatory authority (the High Council for the Selection of Personnel, known under the acronym 'ASEP') over hiring and contracting of all kinds of personnel in the whole public sector – already introduced in 1994 – is being constitutionally guaranteed. Although this means that respective hiring and contracting procedures can require a long lead time, this centralised system has been deemed necessary in order to terminate traditional patronage practices that frustrated meritocracy and overloaded public administration with high numbers of personnel that lacked the necessary skills, while it undermined professionalism and ethics of public servants. Furthermore, the Constitution explicitly prohibited the adoption of laws that would turn temporary employment into any kind of permanent employment, since several laws, in the past, used to “legalize” ex post a plethora of patronage practices that circumvented constitutional provisions on hiring and employment status in the public sector.
Apart from rigid legal restrictions concerning recruitment, local government has practically no possibility to develop a human resources management system of its own. Negotiations between employees and employers are organised nationally, given that salary increases and other claims are settled at the level of central government. In the case of local government, although the employer is the authority concerned, bargaining is conducted with the central government (especially the Ministry of Interior and the Ministry of Finance).
As for the quality of the staff, an important role in improving the capacities of local government employees is played by the National Centre for Public Administration & Local Government (EKDDA). It is the strategic agency of Greece for the development of the public administration and local government human resources. It was founded back in 1983 as a Public Law Entity with
page 316 / 796 administrative and financial autonomy and is supervised directly by the Minister of Administrative Reform & e-Governance.
For budgetary reasons, restrictive measures on hiring of public sector personnel have been introduced by the beginning of the eighties, while nowadays, due to financial crisis and consequent conditionality, they have been further tightened. Since 2010 several exceptional measures have been taken in order to cut the cost of local government staff, as for the overall public administration employees, such Article 11 of Law 3833/2010, which defined that the number of annual recruitments and hiring could not be higher than the ratio of 1:5 (one recruitment per five exits) for all the entities and the provision contained in 2013-2016 MTFS of reduced recruitments under the rule 1:10. Another important aspect was the cuts in public sector seasonal bonus and in wages. New laws ordered internal re-organisation of local authorities: in 2011 new and “lean” organisational charts were adopted, in 2012 municipalities and regions had to abolish existing vacancies (posts without staff), in 2013 internal units (directorates, departments, offices etc.) had to be reduced by 30%. Employees on contract basis (without civil servant status) have been fired (ca. 30,000, 1/5 of local government employees in total in 2011). Employment contracts should be reduced, in 2012 only 4,477 contracts were approved, in 2013 the number was reduced to 3,582, further reducing is foreseen for 2014 (-20%) and 2015-2016 (-10%). Even employees with civil servant status (3,500 municipal policemen and 2,200 school guardians) were removed from their offices in 2013.
According to the 2015-1018 MTFS, the process of appointing and recruiting permanent staff and staff with private law contracts of indefinite duration of secondary and compulsory education, for first and second degree local authorities and their legal entities under private law, is suspended until 31 December 2016. Local authorities may appoint and recruit regular staff (university and technical education) within the limitations set by the provisions of article 11 of Law 3833/2010 as applicable, according to which, a decision by the Minister of Administrative Reform and e- Government is needed for implementing the ratio 1:5.
It should be noted that the planning of recruitments for first and second level local government staff falls within the public sector staff planning, under the jurisdiction of the MAREG, which is responsible for keeping the relevant data. Finally, Article 30 of Law 4223/2013, as amended and applicable (article 51, par 8 of Law 4250/2014) provides for the program of voluntary mobility within the two levels of local government, according to which staff from first degree local authorities may upon their request, be transferred to first and second degree local authorities.
In conclusion, at the moment Greek municipalities lack the possibility to recruit high‑quality staff on the basis of merit and competence, according to Article 6, para. 2. Many interlocutors pointed out that local authorities (as well as the rest of Greek public administrations) have been over-staffed with unqualified people hired in the past. However, nowadays most municipalities deal with an important lack of specialized staff. Rapporteurs cannot avoid to point out that this weakness on human resources is likely to undermine the local authorities’ ability to manage their competences and, in substance, the very scope of local self-government.
Hungary [Article ratified - Report adopted on 12 February 2021 ]
Article 6, paragraph 2 of the Charter refers to the conditions of service of local government employees: they shall be such as to permit the recruitment of high-quality staff on the basis of merit and competence.
A parliamentary act regulates the main elements of the status of civil servants, most of the dispositions actually concern both local civil servants and Cabinet civil servants. Consequently, there are considerable differences between the status of civil servants and that of private employees,
page 317 / 796 while the differences between the two categories of civil servants are not so significant.75
Differences between local civil servants and civil servants under the Government’s direction are given by Chapter VIII of the Act76. Employer’s rights over civil servants of the mayor’s office are exercised by the chief executive, and strategic decisions – such as a staff reductions or general pay raises, meaning fixing the base salary, as well as holidays for the administration – are made by the body of representatives. In local administration, rules of incompatibility might be less strict, given the difficulty of finding the adequate and qualified staff for a post in a small village.
Although it must retain the weekly number of working hours, the body of representatives is entitled to determine a daily work schedule different than the general one fixed by the Act for the civil service as a whole. The system of promotion is generally the same, taking into account time spent in service and educational background. The same grades can be achieved in local administration as under the direction of the Government. Remuneration is one of the fields where particularities can be found in local administration in comparison to Cabinet civil servants. Some important decisions are made by the body of representatives in the framework established by the Act.
During the monitoring visit, the delegation was informed that staff of local self-government institutions are legally public employees, whose salaries are fixed centrally and are significantly below pay scales in the private sphere. This results in a migration of labour - for example, the migration of health workers and those employed in the social sphere is a problem afflicting Hungary as a whole - and it is not merely a problem for the local self-government, but it also affects the State sector. During the consultation process the Hungarian government pointed out that “In 2017-2019 considerable changes occurred due to salary increase as a result of significantly raised and guaranteed minimum wage. To this end the funds required for the local governments are provided by the annual budget”. Recommendation 341 (2013) asked the Hungarian government to “ensure that local and regional authorities are equipped with the administrative structures and resources needed for performing their tasks”.
In light of the preceding considerations, it has to be concluded that the requirements of Article 6.2 of the Charter are not complied with in Hungary.
Iceland [Article ratified - Report adopted on 29 March 2017 ]
See answer at article 6.2
Ireland [Article ratified - Report adopted on 31 October 2013 ]
Consult reply indicated at article 6.1
Italy [Article ratified - Report adopted on 18 October 2017 ]
Concerning Article 6, paragraph 2, it should be noted that each municipality, province and metropolitan city has its own bureaucratic apparatus, consisting of administrative officials who are responsible for discharging the instructions of the mayor and other municipal bodies. In large municipalities (above 100,000 inhabitants), the municipal office may be run by “managers” (dirigenti) and by a “director general” (direttore generale) placed at the top of the professional staff.
Municipalities, provinces and metropolitan cities are quite independent in the field of human resources and as a matter of fact, they can freely appoint and withdraw their own employees. Each
page 318 / 796 municipality is responsible for hiring, managing and paying its own public employees, within the framework of applicable legislation, the by-laws and regulations adopted by each city and the applicable collective agreements signed with the trade unions. According to a leading expert, “the legal regime of local government personnel, as well as all the Civil Service, changed radically with the reforms to privatize Public Administration staff” (starting in 1993). Current government employees are normally regulated by the Civil Code.
A specific feature of the Italian system, common also in countries such as Spain or France, is the existence of the town or province secretary (segretario municipale, segretario provinciale). These special and highly regarded civil servants have a peculiar legal nature (a hybrid dependence from the State and the local entities where they work) and play a leading role in the day-to-day business of the local authorities. Usually, they manage some specific proceedings under his responsibility, they oversee the legality of the decisions, plans and regulations approved by the local body, they attend the meetings of the Council and the Executive board (and records the minutes), etc. The local clerk may be pooled by several neighbouring municipalities, something that happens more and more frequently for the sake of reducing costs of administration.
As for the specific requirements of Article 6, paragraph 2 of the Charter, the overall impression is rather negative. Italian local authorities do not have enough qualified personnel, as a consequence of the structural reforms and budget cuts implemented in the last years. Those entities have no possibility to have a meaningful “personnel” policy, due to the financial and budget cuts (tagli lineari) established by different State laws and regulations (especially by the annual Stability plans). For instance, a cross-cutting “freeze” on personnel was established, so as a rule there is no possibility for local authorities to hire new personnel. There are exceptions in case of mergers of municipalities, as mentioned supra.
This appraisal is especially severe in the case of the Provinces. In fact, those bodies had to reduce significantly their staff (up to 50%, according to provincial leaders). This obligation was accomplished by means of anticipated retirements, transfers to the regions or to other bodies, etc. The implementation of the Delrio Act involved the transfer or reassignment of up to 20,000 provincial civil servants. This is supposed to be the biggest public employees reorganisation in the history of the republic. The situation was described as almost catastrophic by the said representatives. They claim that there is as a total “blockade” by provincial leaders in terms of new recruits, continuous training, and professional career.
Furthermore, the delegation was also told that, in general, the work in local administration is usually unattractive for young and qualified people, not only for economic reasons but also for the lack of a meaningful administrative “career” and the few possibilities for promotion.
In conclusion, it seems to the rapporteurs that the requirements of Article 6, paragraph 2 of the Charter are not met in general in Italy.
Latvia [Article ratified - Report adopted on 27 March 2018 ]
Municipalities and cities in Latvia are quite autonomous (and even independent from each other) in the field of human resources and in the management of their own staff. For instance, they can freely appoint and dismiss their own employees without the need to get the approval from State authorities. As a rule, the personnel working in Latvian local authorities are not “civil servants”, but contractual employees. Each and every local entity is considered to be an independent “company” for the sake of labor relations. This means that, contrary to what happens in other European countries (such as France) there is no fonction publique territoriale at all, and there is no “professional career” in the local sector nationwide.
page 319 / 796 Big cities, such as Riga, do sign collective agreements or deals with the local employees or local trade unions, which are signed by the Council Chairman. These agreements establish provisions on different matters such as the working conditions, working time, salaries etc, as long as they do not contradict the general employment and labor laws and regulations of the country. Small municipalities follow the general laws and regulations on the matter, and may eventually take decisions by the council. They may also adhere to collective agreements made at national level for municipalities.
In the domain of remunerations and wages for the local employees, since 2010 local governments have discretion to decide on the remuneration of their staff. Local remuneration order has to be established within the frame set by the law on remuneration of officials and employees of State and local government authorities of 2009.
The LPS representatives reported that, prior to 2008, the situation was more satisfactory because the local governments enjoyed greater autonomy and freedom to establish the salaries of their own staff. However, after this date, and due to the economic crisis, the Government implemented a set of austerity measures, which rendered the situation more rigid and restrictive. They assessed the situation as negative, because in general local authorities cannot recruit qualified personnel, since the salaries paid in the local public sector are clearly poorer than those paid by the private sector. The rapporteurs were told that, in general, the salaries are low, and the work in local administration is usually unattractive for young, qualified people. During the Consultation procedure, national authorities informed the Delegation that for both the public sector and the local government employees remuneration is set by The Law on Remuneration of Officials and Employees of State and Local-government Authorities. The law determines that monthly salary of employees of local governments should not exceed upper limits of monthly salaries set for positions of similar difficulty and responsibility in the direct administration institutions. Also the law sets various different bonuses up to 60 % which employees can receive in addition to monthly salary.
With this caveat in mind, the Delegation concludes that art.6.2 of the Charter is complied with in Latvia.
Liechtenstein [Article ratified - Report adopted on 28 March 2018 ]
Consult reply indicated at article 6.1
Lithuania [Article ratified - Report adopted on 6 November 2018 ]
Consult reply indiated at article 6.1
Luxembourg [Article ratified - Report adopted on 21 October 2015 ]
Consult reply indicated at article 6.1.
Malta [Article ratified - Report adopted on 29 March 2017 ]
According to Article 6, paragraph 2 of the Charter, the conditions of service of local government employees shall be such as to permit the recruitment of high-quality staff on the basis of merit and competence and to this end, adequate training opportunities, remuneration and career prospects have to be provided.
There is no legislative provision in the Local Councils Act dealing expressly with this requirement.
page 320 / 796 Nevertheless, as regards the position of the executive secretary, prior to his/her appointment such a person has to successfully complete a training course for executive secretaries. This constitutes a mechanism for ensuring that the persons employed as executive secretaries have the required training, skills and competence to discharge their responsibilities.
Apart from the aforesaid practice which regards only the position of the executive secretary, there seems to be no other known practice to date for a similar system as to the recruitment of employees. The law gives the ability to the local councils to assess the candidates’ skills, competence and ability to perform the duties and responsibilities accompanying the vacant position, and employ the most suitable person for the vacancy.
There seems to be no violation of Article 6, paragraph 2 of the Charter.
Monaco [Article ratified - Report adopted on 28 March 2018 ]
With regard to Article 6, paragraph 2, of the Charter on the recruitment of staff, it should be noted that, under Law No. 1096/1986, officials are recruited through competitions. The general organisation of competitions is decided through a sovereign order issued after consultation with the municipal employment committee (Article 20). The composition of the competition panel is established by municipal order (Article 21).
According to recent reports sent to the rapporteurs, the Municipality had 673 officials in 2016, representing 14.9% of the Monegasque public sector. No mention was made during the visit of any problems for the Municipality in recruiting high-quality staff.
Bearing in mind the foregoing, the rapporteurs conclude that Monaco complies with Article 6.
Montenegro [Non ratified - Report adopted on 21 October 2015 ]
Montenegro has declared not to be bound by Article 6, paragraph 2.
As the Law on Local Self-Government prescribes in its Article 20, the municipality shall have the capacity of a legal entity. It can be interpreted that this legal entity shall be able to determine its own internal administrative structures in order to adapt them to local needs and ensure effective management. Also Article 34 of the same law stipulates that the municipality shall establish local administrative bodies.
The municipal administration is divided into two branches: executive (with the mayor being the central figure of this branch) and parliamentary (the local parliament, or the assembly is a fundamental institution within this branch). The assembly is a legislative body and adopts: the statute; regulations and other general acts. The assembly also establishes: the level of municipal taxes, fees and charges and public services. Two important positions at the local level are the local manager and the administrator, the latter with responsibilities to manage major projects and capital investments. Local administration bodies (secretariats, offices, directorates, bureaux, etc.) are established to perform administrative affairs. The mayor may decide to establish agencies to perform affairs that require specific expert and technical knowledge.
page 321 / 796 Consequently, it seems from a legal point of view, that municipalities are able to determine their own administrative structures. In practice the operational capacities and management at local level still present great challenges. These challenges are mostly related to insufficient fiscal decentralisation; lack of transparency and accountability; inadequate human resource capacities; lack of knowledge, skills and experiences in assuming new and complex tasks, limited capacities for drafting and implementing of local development strategies and inability to adapt quickly to the needs of a modern society.
The rapporteurs heard that a major problem at the local level is under-qualified or under-skilled local employees who may not be capable of assuming responsibilities acquired through the decentralisation process. Moreover, certain interlocutors pointed to the high cost of funding over- staffed local-government units as one of the causes leading to their difficult financial situation. According to the Ministry of Finance, the numbers of employees in local self-government units is steadily increasing. Consequently, the total number of employees at the end of 2013 was 11 304, and the number of employees in local government authorities, public enterprises and institutions founded by local self-government units at the end of 2014 was 11 778. In this respect, national authorities have instructed the Union of Municipalities by to introduce a system of merit into municipalities, which would be the basis for a system of appraisal, reward and promotion according to results, and which would also improve accountability. During the consultation process the rapporteurs have been informed by the national delegation of Montenegro that the Government has accepted this initiative and it is integrated in the Bill of the law which is in the procedure of adopting.
The rapporteurs also heard that the Government of Montenegro adopted, on 15 January 2015, the Strategy of Professional Development of Local Civil Servants and Government Employees in Montenegro for the period 2015-2018 with the Action Plan for the implementation thereof. This Action Plan envisages that municipalities harmonise their statutes and decisions on the organisation of local government authorities including the setting up a strategic framework to establish, by the third quarter of 2015, an equivalent and sustainable system of development of human resources at local level. In addition guidelines on creating a system of employment positions with relation to the Act on Changes and Amendments to the Law on Local Self-Government will be submitted to the European Commission for opinion. In the “Strategy for Professional Development of Local Civil Servants and Employees in Montenegro for the period 2015-2018”, the Government of Montenegro analysed the situation in local governments and set out a plan for further development. The Ministry refers to Article 6 of the Charter. This can be interpreted as an expression of the commitment to comply with the rules although Montenegro is not bound by paragraph 2.
The provisions of Article 6, paragraph 2 relate to adequate working conditions of employees in local government authorities and provide for employment of high quality staff on the basis of merit and competence. Currently adequate opportunities for training, remuneration and prospects of career advancement are lacking in Montenegro. Solutions may be proposed through the Act on Changes and Amendments to the Law on Local Self-Government, currently in its drafting procedure, and will provide a legal framework for quality management of human resources, employment of appropriate expert staff, planning and training, etc. A system of employee reward and promotion based on performance and merit will also greatly depend on the establishment of an adequate legislative framework to regulate the system of local self-government organisation. According to the Union of Municipalities of Montenegro the reform will be a great improvement in this regard.
The rapporteurs see as a positive development the provisions of the draft Act on Changes and Amendments to the Law on Local Self-Government that concern the development of new solutions which will introduce a system of merits and rewarding of staff members who are ready to provide quality services to citizens.
page 322 / 796 The rapporteurs are concerned about the fact that operational capacities and management of local level encounters great challenges. In this respect, they consider that a development and rationalisation of the local administrative capacities in the next period has to be a priority for the Government.
Netherlands [Non ratified - Report adopted on 26 March 2014 ]
Consult reply indicated at article 6.1
North Macedonia [Article ratified - Report adopted on 26 February 2013 ]
Consult reply indicated at article 6.1
Norway [Article ratified - Report adopted on 26 March 2015 ]
Consult reply indicated at article 6.1.
Poland [Article ratified - Report adopted on 2 April 2019 ]
It is worth mentioning that according to that Law, the category of “self-government employees” includes in Poland elected representatives, appointed representatives and contracted employees. In this report we will deal with elected and appointed representatives further infra, sub Article 7 of the Charter.
As for employees with a contract of employment, the Law (Article 37) assigns to the Council of Minister the power to determine: the list of positions, the minimum qualification requirements, the conditions and manner of remuneration for local government employees, the conditions for granting and paying an allowance for long-term work; the conditions for determining the right to the jubilee award and its payment. The Council of Minister must take into account: 1) the type of tasks carried out and the nature of the activities performed with regard to individual positions; 2) the need for a local government employee to have professional skills and necessary experience; 3) the number of inhabitants of a local government unit.
The Congress delegation was not made aware of any complaint from Polish local authorities on this matter. The claim presented by the Association of Polish Cities refers to the remuneration of elected and appointed representatives and will be dealt with further infra, sub Article 7. Therefore, the rapporteurs consider that requirements of Article 6.2 are satisfied in Poland.
Portugal [Article ratified - Report adopted on 28 September 2020 ]
Article 243 paragraph 1 of the Portuguese Constitution stipulates that “local authorities shall possess their own staff, as established by law”. Local authority civil servants therefore have an institutional guarantee comprising principles common to all public administration staff as well as others specific to local authorities. As Article 243 paragraph 2 of the Constitution puts it: “The rules governing state staff and officials shall apply to local government staff and agents, as laid down by law, mutatis mutandis”. The principles common to all public administration staff and therefore also applicable at local level include the following:
the competence of the national legislature to lay down the bases of the staff regulations; equal access to public-sector employment, in particular, via competitive examination; the obligation to serve the public interest within the limits of the powers of the employing
page 323 / 796 corporate entity; exclusivity in the exercise of the function, i.e. supervision of the rules governing the accumulation of functions and incompatibilities; protection in respect of political authority (neither pressure nor privilege); the right to be heard and defend one’s case in disciplinary proceedings.
The rapporteurs further note that local authority staff must comply with the principles specific to them, which are set out in a basic list drawn up by the Constitution:
the principle of local authority autonomy in staff management (recruitment, career management and leaving service); the equivalence of local authority staff regulations with those of state administration staff, as a guarantee of mobility between public administrations and equal rights and obligations for all; the principle of technical co-operation: one example being where staff are moved from the state administration to local administrations in certain spheres of competence which have been transferred to local authorities (such as education), or the possibility of granting financial aid for the recruitment of staff for a fixed duration in connection with certain programmes developed to fulfil common interests.
At local level, it should be noted that municipal and inter-municipal industrial public enterprises (municipal or inter-municipal public corporations) have working regulations governed by private law. The same applies to certain forms of associations of local authorities, resulting in the expanding use of work contracts in local public administration.
Finally, the Constitution states that municipalities shall have a representative assembly, without the power to dismiss the local government, and a collegiate executive body, appointed on the basis of proportional representation, with a president. The law gives the president power to “decide on all matters relating to the administration and management of the human resources of the municipality’s departments”, except with regard to the exercise of disciplinary powers, which lie with the collegiate executive body. The municipal assembly has the power to define the establishment table or staff lists and vote to approve bonuses intended as an incentive to local authority staff to stay in post in the long term. There is an equivalent system in the parishes: there the local assembly also has the power to establish the number of posts, but human resources management is the responsibility of the collegiate executive body.
The report produced by the Congress in 2003 (in Part II, paragraphs 46 and following) mentioned problems linked to the existence of two local “representative” and “collective” bodies, namely the deliberative bodies (“assemblies”) and executive bodies (“authorities”). However, during the 2012 and 2019 visits, these issues were not brought up by the talking partners of the Congress and may therefore be regarded as being settled or at least accepted.
The rapporteurs conclude, therefore, that Article 6 paragraph 2 is complied with.
Republic of Moldova [Article ratified - Report adopted on 4 April 2019 ]
The delegation has the clear impression that the present conditions of office of local government employees do not allow Moldovan local authorities to recruit high-quality staff; and that there are neither “adequate training opportunities”, nor “remuneration and career prospects”. In reality, the delegation was impressed to hear the testimonies and data provided by local leaders and by the national local associations on the matter. In many local entities, especially in the smallest ones, the number of staff members is very low, and they are poorly paid. Many local authorities do not have
page 324 / 796 lawyers, architects or auditors, as would be required by some of the responsibilities put on the shoulders of local authorities by the law. For instance, the delegation was told that only Chișinău can afford to have internal auditors, the other local authorities cannot afford them. Most Moldovan local authorities are clearly understaffed. The delegation was told by local leaders that three quarters of all local administrative units have an average of six employees, and that 24% have four or fewer staff members.
Concerning salaries and wages for local employees, local governments have no discretion to decide on the remuneration of their staff. Salaries cannot be determined freely by the local authority, and there is no individual or collective bargaining as the remuneration of local employees is rigidly regulated by national laws and regulations.
In this sense, local leaders made a double claim: first of all, salaries of local officials are very low, for instance a lawyer may be paid 100€ per month, a figure that appears to be extremely low. Another example, a local staff member of the municipality of ChiÈ™inău (clerical position) makes 100€/month, and an official may be paid 200€/month (one should remember that the city of ChiÈ™inău concentrates almost 70% of all local staff of Moldovan local authorities). This situation was qualified by some mayors as “unacceptable”. Secondly, the remuneration of the civil servants working in the central administration is much higher, which amplifies the salary gap. The example was given of the director of the state energy regulation agency, with a monthly salary of 3 000€/month.
There is low remuneration for local civil servants and officials, and the local authorities cannot afford better salaries for their staff. This unsatisfactory situation produces many negative results: on the one hand, this facilitates the spread of corruption. On the other hand, employees leave the local administration and local authorities have many vacancies that they cannot fill. There is also a more subtle consequence: the lack of specialised and qualified staff prevents many local authorities from fulfilling their responsibilities in an appropriate and professional way, and when they refrain from taking action or intervening in a given issue, mayors are prosecuted for prevarication by omission. An example was given of a case concerning the competences in the area of the protection of children. Under Law No. 140 of 2013, towns and villages must provide protection for children at risk and for minors who are abused or abandoned, but the local bodies do not have social workers, psychologists, etc. as needed to provide adequate protection to children. The delegation was told that in a couple of cases the mayors had been prosecuted for failure to take action in such situations. Another example of the impact of the lack of human resources in specific competences is that, under the law, the villages and towns are responsible for the inspection of buildings. However, most local authorities do not have specialised staff (for instance, architects) to discharge that function. Therefore, some local elected representatives told the delegation that in the Republic of Moldova the problem is not that local authorities want more competences, but that in reality there are some local competences that they do not want because they simply do not have the staff or the administrative capacity to discharge them. In recent years, the government has promoted new laws giving more responsibilities to local authorities, but no additional means (especially human resources) to discharge them.
Moreover, this lack of managerial and administrative capacity of most local authorities has been also detected and underlined by studies carried out by international organisations. A performance audit accomplished by the Court of Auditors and released in 2017 concluded that the staff of local authorities is poorly paid, that the employees frequently leave local offices and that there is a high level of turnover and unfilled vacancies.
Furthermore, villages and towns in Moldova are not autonomous in terms of human resources and in the management of their own staff. There is no “professional career” in the local sector in the
page 325 / 796 country and working in local administration is usually unattractive for young, qualified people.
During the consultation procedure, the Government argued that its work agenda provides for a review of the wage system and uniformity of salaries in the budgetary sector, starting with the next budget cycle. It further claimed that the amendments made to the Law no. 355/2005 on the salary system in the budgetary sector of 26.07.2018 increased the incentive payments for civil servants dealing with a mandate obtained directly after the election, or indirectly, and contributed to the increase of their wages.
The rapporteurs come to the conclusion that Article 6.2 of the Charter is clearly not complied with in the Republic of Moldova.
Romania [Article ratified - Report adopted on 3 March 2011 ]
Staff are governed by Law no. 188/1999 on the civil service conditions of service (the local authorities also employ contract staff) and by various ministerial orders relating to pay. Staff salaries, which are paid from public funds, are now governed by Framework Law no. 330/2009, while the number of staff that may be employed by the central and local public authorities is laid down by Government Emergency Order no. 63/2010.
Russian Federation [Article ratified - Report adopted on 30 October 2019 ]
Consult reply indicated at article 6.1
San Marino [Article ratified - Report adopted on 28 March 2018 ]
Consult reply indicated at article 6.1
Serbia [Non ratified - Report adopted on 18 October 2017 ]
Consult reply indicated at article 6.1
Slovak Republic [Article ratified - Report adopted on 24 March 2016 ]
See answer indicated at article 6.1
Slovenia [Article ratified - Report adopted on 6 November 2018 ]
A person elected as the mayor of the local municipality cannot be a deputy mayor, a member of a municipal council or of a supervisory committee, and cannot work in the municipal administration. The amendment of Members of Parliament Act of 2011 also abolished dual mandate – that is the cumulation of the office of a member of parliament and a mayor.
Conditions of office of local elected representatives and their financial compensation are regulated by the Local Self-Government Act. Article 34a of the Act states that members of the municipal council, the mayor and the deputy mayor are municipal functionaries and they shall perform their functions on a non-professional basis. However, the mayor may decide to perform his/her functions on a professional basis. At the same time, the deputy mayor may also decide to perform his/her functions on a professional basis if he/she obtains consent from the mayor.
page 326 / 796 Thus, municipal officials have the right to a salary if performing their functions in a professional capacity, or to an allowance if performing functions in a non-professional capacity. According to the Local Self-Government Act, mayors who perform their functions on a non-professional basis may receive their wages in the amount of 50% of the wages they would have received if they had decided to perform tasks on a professional basis.
Following the general policy in Slovenia, salaries for professional municipal officers are determined by the law regulating public sector wages as prescribed in the Public Service Salary Act.
On these grounds, the delegation concludes that Article 6.2 of the Charter is complied with in Slovenia.
Spain [Article ratified - Report adopted on 20 March 2013 ]
Consult reply indicated at article 6.1
Sweden [Article ratified - Report adopted on 2 April 2014 ]
Consult reply indicated at article 6.1.
Switzerland [Non ratified - Report adopted on 20 October 2017 ]
The delegation reiterates that Article 6.2 of the Charter has not been ratified by Switzerland.
Turkey [Article ratified - Report adopted on 1 March 2011 ]
The analysis article by article is currently unavailable
Ukraine [Article ratified - Report adopted on 31 October 2013 ]
Consult reply indicated at article 6.1
United Kingdom [Article ratified - Report adopted on 26 March 2014 ]
Consult reply indicated at article 6.1
Article 7.1 Conditions under which responsibilities at local level are exercised
The conditions of office of local elected representatives shall provide for free exercise of their functions.
Albania [Article ratified - Report adopted on 31 October 2013 ]
Article 27 of Law No. 8652 establishes the conditions of service for the elected local officials.
page 327 / 796 Members of local deliberative bodies have the right to express their opinion freely, as well as the right to request any information needed for the execution of their mandate. Councillors have the right to receive compensation for the execution of their functions as determined by the legislation.
Their term of office is 4 years for all elected officials.
Conditions of service for appointed officials in municipalities are determined by the law on civil service, which sets up qualification requirements, procedures for hiring and firing of municipal servants, remuneration schemes and conditions for career development. The status and conditions of work for employees in the communes and regional councils are determined by the labour code of Albania and not by the law on public service. This differentiation between the staff of municipalities and communes is explained by the fact that municipalities (cities) have more qualified human resources than communes and that the application of civil service law to communes would result in a massive loss of personnel.
Albanian legislation regulates conditions of work as well as procedures for financial compensation and for avoiding of conflict of interest in a very efficient way, providing proper guarantees to the locally elected officials. The mandate of the mayor of a municipality/commune is verified by a court; this can sometimes take a long period of time. As a conclusion, the rapporteurs would like to state that the Albanian system meets the requirements of Article 7 of the Charter but Albanian lawmakers should nevertheless be invited to think about simplifying the process of validation of credentials for the mayors of communes and municipalities
Andorra [Article ratified - Report adopted on 28 March 2018 ]
Article 7, paragraph 1, aims at ensuring the free exercise of functions by local elected representatives. To this purpose, Article 7, paragraph 2, refers to an appropriate financial compensation.
No particular issues were raised in this respect during the visit. Under the Order on the organisation and functioning of the Comuns, the mayor and deputy mayor, as well as other members of the Junta de Govern are entitled to a monthly financial compensation. The other councillors enjoy a financial compensation for their effective participation in the meetings of the council and its committees. The minimum is fixed by the Reunió de cònsols de les valls. Rapporteurs have been told that each municipality establishes the financial compensation to elected representatives at the beginning of each term after elections and that the amount is appropriate.
Armenia [Article ratified - Report adopted on 15 June 2021 ]
Article 7.1
1 The conditions of office of local elected representatives shall provide for free exercise of their functions.
186. Having regard to the findings of the previous paragraph, the poor conditions for administrative staff in the municipalities and the current political climate, which some interlocutors have described as “uncertain”, local councillors in a number of municipalities are hardly in a position to exercise their functions freely. However, this experience cannot be generalised.
187. According to the LGA, it is an obligation of the Chief of Community to create necessary conditions within the community residence building to ensure the activities of the Community
page 328 / 796 Council in accordance with this law and the council regulations.
Austria [Article ratified - Report adopted on 28 September 2020 ]
A free exercise of the local mandate implies free access to resources (electronic, material, etc.) necessary to perform properly the tasks indicated by existent regulations. Article 22, B-VG, provides that the Federation, the Länder, the municipalities and the municipal associations as well as the other self-administering entities (as described by Chapter 6, Section B, B-VG) are bound within the framework of their legal sphere of competence to render each other mutual assistance.
In relation to the accessibility of the legal norms to the locally elected, the Legal Information System of the Republic of Austria (Rechtsinformationssystem des Bundes - RIS) is a computer-assisted information system on Austrian law, which is coordinated and operated by the Federal Ministry for Digital and Economic Affairs. RIS started in 1983 when the essential features of the system were designed. After federal legislation had been incorporated, the court decisions were included as well. Since June 1997, RIS, which previously had been accessible only to the public administration, is available on the Internet free of charge.64 In addition, the platform www.offnerhaushalt.au, a service of KDZ, Centre for Administrative Research, offers free access to municipal financial data of Austrian municipalities. Furthermore, the Federal Budget Act 201365 states that the Federal Minister of Finance supports the personnel of municipalities and municipal institutions by providing standardized ICT solutions and IT processes, by means of prior arrangements or contracts (Article 44a.1).
Resolution 393 (2015) on conditions of office of elected representatives66 acknowledges that “elected representatives need to work harder than ever to meet the unsatisfied needs and expectations of their constituents. Although most local and regional politicians have to combine their elected political responsibilities with another full-time job, they are at the same time expected to be available quasi full-time for their political work, often at the expense of their family responsibilities and leisure time” (paragraph 1). It also recognises that “the low levels or absence of pay for local and regional elected representatives is also an important factor, as is the lack of appropriate training for them”.
During the monitoring visit, the rapporteurs understood that although the status of locally elected representatives is well established and generally enjoys popularity amongst their constituencies, it becomes increasingly difficult to attract interested men and women to take over executive responsibilities in some municipalities in Austria. This was partially explained by a combination of factors, amongst which interlocutors with whom the delegation met during the visit mentioned the low level of salaries received by mayors or the low level of social security. This leads to a reduced political engagement in local politics, in particular by women as stressed by the Association of Austrian Municipalities during the consultation procedure. This situation is aggravated by the fear of personal liability67 for political decisions of local elected representatives, i.e. under section 153 of the Austrian Criminal Code.68
Pertaining to the salaries, the figures valid for January 2020 are presented in Table 2 - Comparative overview of mayors’ salaries (except Statutory cities), gross earnings69 (Page 26 of the PDF file of the report)
Pursuant to section 153 of the Austrian Criminal Code, breach of trust (Untreue) is defined as follows: “Whoever knowingly abuses the authority conferred to him by statute, official order or contract to dispose of property not belonging to him or to oblige this other person and causes damage to another person in this way, shall be liable to imprisonment for up to six months or a fine of up to 360 daily rates. Authority is misused by anyone who unjustifiably violates such rules that serve to protect
page 329 / 796 the property of the beneficial owner. Whoever causes a damage exceeding 3 000 Euros shall be liable to imprisonment for up to three years, whoever causes damage exceeding 50 000 Euros shall be liable to imprisonment from one to ten year.”70
Article 119.3, B-VG, states that: the mayor can - without detraction from his/her responsibility - on account of their factual connection with matters pertaining to the municipality's own sphere of competence transfer individual categories of matters pertaining to the assigned sphere of competence to members of the municipal executive board (city council, city senate), other organs created in accordance with Article 117.1, B-VG or members of official bodies for performance in his/her name. In these matters the organs or members concerned are bound by the instructions of the mayor and responsible in accordance with paragraph 4. The latter (Article 119.4, B-VG) continues: in so far as intent or gross negligence can be laid at their charge, the authorities named above can on account of breach of law as well as on account of noncompliance with an ordinance or instruction be declared to have forfeited their office, by the Governor if they were acting in the field of federal execution, by the Land Government if they were acting in the field of Land execution. Should such a person belong to the municipal council, the membership is not thereby affected.
Also, Article 23, B-VG, provides that the Federation, the Länder, the municipalities and the other bodies and institutions established under public law are liable for the injury which persons acting on their behalf in execution of the laws have by illegal behaviour culpably inflicted. Therefore, persons acting on behalf of Länder and municipalities are liable, in so far as intent or gross negligence can be laid at their charge, for the injury for which the legal entity has indemnified the injured party. Similarly, they are liable for the injury which in execution of the laws they have by illegal behaviour inflicted directly on the legal entity.
The rapporteurs draw attention to the fact that the vulnerability of elected representatives (pertaining to inadequate payment and insurance liability) was also raised in 2011, by the Report on Local and Regional democracy in Austria (CG(20)8). Considering that the new Government Plan acknowledges the need to analyse the Criminal Code, the rapporteurs express their confidence that this time elected representatives would receive proper attention and their status will be improved.
In light of the foregoing, the rapporteurs consider that it is important to modify the criminal legislation with regard to the liability of local and regional elected representatives when carrying out their duties so that it does not infringe on their autonomy to exercise their elected mandate. In the rapporteurs’ view this would also encourage citizens from all sectors of the population to stand for local election.
Until this is achieved, the rapporteurs conclude that Austria partially complies with the requirement of this paragraph.
Azerbaijan [Article ratified - Report adopted on 17 June 2021 ]
Consult reply indicated at article 6.1
Belgium [Article ratified - Report adopted on 15 October 2014 ]
Flemish Region (Vlaanderen)
Any person of Belgian nationality aged 18 and entered on the population register of a municipality, is eligible and can become a local/provincial councillor. More broadly, any EU citizen residing in Belgium, aged 18 and entered on the population register of a municipality, is eligible and can
page 330 / 796 become a local councillor. The conditions for exercising responsibilities at the local level in Flanders are set out in the Municipal Decree of 2005, the CPAS Decree 2008 and the Provincial Decree of 2005.
Functions and activities incompatible with the office of a local councillor can only be laid down by law or by fundamental legal principles. The latter are set out in Article 15 of the local and provincial Electoral Decree of 8 July 2011, in the Municipal Decree (Article 11), the CPAS Decree and the Provincial Decree (article 11).
According to Article 70 of the communal Decree (2005) burgomasters’ and aldermens’ salaries are determined by the Flemish Government. By a decision of the Flemish Government in 2007, salaries of burgomasters are set according to the number of inhabitants by applying the percentages set for the sessional indemnity of members of parliament. The percentages of the maximum point of the salary scale of the clerk of the relevant municipality to be applied is listed below:
- municipalities with up to 5,000 inhabitants: 75%;
- municipalities with 5,001 to 10,000 inhabitants: 80%;
- municipalities with 10,001 to 20,000 inhabitants: 85%;
- municipalities with 20,001 to 50,000 inhabitants: 95%;
- municipalities with 50,001 to 80,000 inhabitants: 105%;
- municipalities with more than 80,000 inhabitants: 120%.
Salaries of deputy burgomasters are fixed at 60% or 75% of that of the burgomaster of the relevant municipality, depending on whether the number on inhabitants is lower than or equal to 50,000 or higher than this figure.
The salary of a burgomaster in Flanders mainly depends on the size of his or her municipality. For example a burgomaster of a municipality with a maximum of 300 inhabitants earns less than €22,273 gross a year, while a burgomaster of a municipality with more than 150,000 inhabitants earns about €130,038 gross a year.
However, according to Professor Kristof Steyvers of the University of Ghent (Eastern Flanders), burgomasters’ satisfaction with their remuneration is mainly due to the changes made by Flemish policy in the last ten years. “Their salaries are now commensurate to those of MPs and depend on the size of the municipality in which they are elected. In a small municipality, the burgomaster earns 25% of the salary of a Flemish MP. In a large municipality, his or her salary may be as much as 151% of that of a Flemish MP. This means that in an average-sized municipality a person can actually make a career of this and live on this salary if they wish”, Professor Steyvers concludes.
According to several statements received by the rapporteurs during their mission, burgomasters in Flanders are satisfied with their remuneration.
All public office-holders (at the municipal level: the burgomaster, échevin, the president of the CPAS council) are obliged, on the one hand, to lodge a list of their offices, functions or professions once a year with the Court of Auditors and state whether they are paid or unpaid and, on the other hand, to submit in a sealed envelope a declaration listing their assets (only an investigating magistrate is authorised to consult this list in connection with a criminal investigation conducted against the
page 331 / 796 individual concerned with respect to his/her office or function) .The list of offices, functions or professions of public office-holders is published in the Belgian Gazette (Moniteur belge). The list of persons who have failed to submit the required declarations is also published. An omission or false declaration is subject to penalties under the Criminal Code.
The following are considered paid executive offices:
- the office of burgomaster, échevin and president of a CPAS council;
- any office exercised within a public or private body as a representative of the state, a Community or Region, a province or a municipality provided that it gives the individual more power than the mere status as a member of the annual general meeting or the board of that body and whatever the income concerned;
- any office exercised within a public or private body as a representative of the state, a Community or Region, a province or a municipality provided that the relevant gross taxable monthly income is at least €500. This amount is adjusted annually in line with the consumer prices index.
During the visit, the rapporteurs were informed about a reduction in the number of executive office- holders in Flanders. The minimum and maximum number of executive office-holders in Flanders has in fact been reduced by one. To be precise:
- from 1 January 2019, the executive will comprise the burgomaster, the president of the CPAS council (who has been a member of the executive since 1 January 2013) and at least one échevin. The maximum number of échevins, which depends on the number on inhabitants, will also been reduced by one in each case;
- the maximum number of members of the district college will be reduced from five to four from 1 January 2019;
- from 3 December 2018, the delegation of the provincial council will comprise five members instead of six.
Political leaders in Flanders believe that the reduction in the number of executive offices does not adversely affect the quality of the administration. Moreover, it will result in lower administrative costs, which is not insignificant in the period of economic austerity that all European countries are currently experiencing.
The general provisions of Flemish legislation concerning Article 7 and its application are in compliance with the Charter.
Walloon Region and German-speaking Community
A municipality in Wallonia and the German-speaking Community comprises several political “bodies”: the burgomaster, the municipal council and the municipal college. The work of these three bodies is supported by a director general, a financial director and an administrative apparatus.
The burgomaster is the first law officer of the municipality and its central figure and has significant administrative powers (for example, he/she issues administrative orders when an urgent situation requires the prompt restoration of public order). The municipal council, which is the local parliament, passes regulations, issues administrative ordinances and adopts the budget and accounts. The municipal college is the municipal executive and consists of the burgomaster and échevins. Since
page 332 / 796 the recent reform of the Code of Local Democracy, the president of the CPAS council has also been a member of the college, which facilitates the relations and synergies between the municipality and its social arm, the social services centre.
The rapporteurs have listened to the concerns of local elected representatives regarding criminal liability. These concerns are common to many European countries, and the rapporteurs are therefore of the opinion that, strictly speaking, Article 7.1 should not understand criminal liability as a limitation in the free exercise of the elected representative’s functions. They believe the situation in Wallonia and the German-speaking Community is in compliance with Article 7.1.
Elected representatives in the Walloon Region and the German-speaking Community must satisfy conditions of eligibility (age, civil and political rights, nationality, residence, etc) and enjoy a special status in connection with the exercise of their functions. This specific legal framework concerns both rules on financial status and social insurance cover and provisions on professional ethics and limits to their liability.
Local office-holders, whether in the municipalities or the provinces, are subject to the provisions of the Code of Local Democracy, which specifies the amount of remuneration (unchanged under the decree of 2009), leaving the provinces and municipalities little room for manoeuvre. For example, a burgomaster receives a salary according to the number of inhabitants in the municipality, and this can vary from €13,785.16 a year gross for municipalities with 300 inhabitants and less to €80,492.09 a year gross for municipalities with 150,000 inhabitants and more. Municipal councillors do not receive a salary but attendance tokens according to their attendances at meetings of the council, committees and subdivisions of the municipality. The amount of the token is determined by the municipal council.
With regard to provincial office-holders, the Code of Local Democracy has established a similar system of tokens for provincial councillors. The offices of chair, vice-chair, clerk and committee chair are considered special offices that may be subject to remuneration, the maximum amount of which is laid down (chair: €1,585 a month gross; vice-chair: €160 a month gross).
The Code of Local Democracy also specifies the functions and activities that are incompatible with the office of a local elected representative and, in particular, prohibits dual mandates (CLD, Article L1125-1, New Municipal Act, section 71, 7).
Article 7 does not raise any problems in Wallonia and the German-speaking Community.
Brussels-Capital Region
The legal basis for the conditions under which responsibilities at local level are exercised in the Brussels-Capital Region (as in the two other regions) is to be found in the new Municipalities Act (section 19) and the law of 4 May 1999 improving the pay and conditions of local representatives. Thus holders of public office are entitled to pay and social insurance cover.
Since 1 January 2001 executive officers with no other occupation are required by the municipality to pay insurance covering health care, unemployment benefits and family allowances.
The total number of municipal councillors in the Region is six hundred and twenty-six, distributed according to size of municipality. Executive power in the municipalities is exercised by an executive consisting of the burgomaster and échevin and led by the burgomaster. Traditionally, burgomasters and échevins are also municipal councillors, although this is not actually mandatory.
page 333 / 796 The burgomaster’s salary is a percentage of the municipal clerk’s, and an échevin’s salary is a percentage of the burgomaster’s. Burgomasters and échevins have not just a salary but also an end- of-year bonus and holiday pay.
Paragraphs 2 to 4 of section 12 of the special law of 12 January 1989 on Brussels institutions provides that a member of the Brussels-Capital Region Parliament cannot hold various other posts. Article 12 bis specifies that a member of this parliament elected as a current member of certain other parliamentary assemblies will be disqualified from this parliament.
The new Municipalities Act specifies the functions that may entail the disqualification referred to in Article 7, paragraph 3, of the Charter. Under paragraphs 1 to 3 of section 71 of the new Municipalities Act, provincial governors, the governor and vice-governor of the Brussels-Capital administrative district, the deputy governor of the Flemish Brabant province and members of the executive set up by section 83 quinquies, paragraph 2, of the special law of 12 January 1989 on Brussels institutions cannot be members of a municipal council. Similarly, nobody who is a member of staff or receives an allowance or salary from a municipality, apart from volunteer firefighters, can be a municipal councillor (new Municipalities Act, section 71.6). There are disqualifications under other legislation, such as the Judicial Code, the consolidated laws on the Council of State, the Integrated Policing Act and the CPAS Act. Judges cannot be municipal councillors, whether they sit in the ordinary courts or tribunals, the Council of State or the Court of Arbitration.
The amendment of the new Municipalities Act also covered disqualifications for office. It thus introduced incompatibility between the holding of local executive office and:
- holding of office in a regional, Community or bi-Community authority in Brussels,
- holding of office or an executive function in a public-interest body,
- a post as a permanent member of the management committee of a public-interest body.
The draft special ordinance of 10 February 2014 limiting plurality of office for members of the Brussels-Capital Region Parliament aimed, in line with Chapter 7 of the 2009-2014 regional government agreement (‘Effective public services for residents of Brussels’), to limit the number of members of the Brussels-Capital Region Parliament simultaneously holding the posts of burgomaster, échevin or CPAS president. There was no vote on this draft ordinance because of the imminence of the 25 May 2014 elections. It will rest with the new members of the Brussels Parliament to vote on this.
As regards actual management of municipalities, the AVCB has drawn the Region’s attention to the fact that more and more representatives, especially burgomasters, have to face criminal proceedings for a variety of offences in their municipalities. The primary and secondary sentences may be particularly severe, even including actual prison and loss of civil and political rights. Such penalties are very serious for individuals holding public office and generally incommensurate with the offences with which they are charged. There is a genuine danger that over time it will become harder and harder to find people willing to occupy public office. Limitation of representatives’ criminal liability is therefore imperative, without necessarily introducing full immunity. Representatives’ liability should be limited to gross misconduct, recurrence of slight negligence, and deliberate offences.
The rapporteurs here refer to their conclusion in paragraph 278 and find that paragraph 1 of Article 7 is observed, as are paragraphs 2 and 3, which call for no specific comment.
page 334 / 796 Bosnia and Herzegovina [Article ratified - Report adopted on 31 October 2019 ]
The legal basis can be found in Article 1.1 of the Election Law of BiH which stipulates that the principles which shall be in force at all levels of government in BiH shall be determined by the Election Law of BiH. Accordingly, the Law on the Election, Termination of Mandate, Revocation and Replacement of Heads of Municipalities in the Federation of Bosnia and Herzegovina regulates all issues relating to the directly elected Mayors in the Federation of Bosnia and Herzegovina, while the election of municipal councillors is regulated by the Election Law of BiH. The Election Law of Republika Srpska stipulates that the election of local bodies (councillors in the Municipal Assemblies) shall be conducted pursuant to the Election Law of BiH, while an Entity law regulates the election and revocation of the Mayor’s mandate. The Election Law of the Brčko District regulates the election of councillors of the Assembly of the Brčko District, and its Article 1.1.(2) stipulates that provisions of the Election Law of BiH shall be directly applied in case of any issues not expressly regulated by the Election Law of the Brčko District.
Mayors are elected directly by a first past the post system. Elections in BiH are held under an open- list proportional representation electoral system with a 3% threshold. The Sainte-Laguë method is used for distributing seats among parties that pass the threshold, giving preference to smaller parties.
Since 2017, the new Law on local self-government (2016) is in force in Republika Srpska as well as the new Law on Civil Servants and Employees introducing significant changes, in particular for Assemblies which shall overcome frequent blockades: in the past, a recall of the Mayor was possible, but not for Councillors. However, it has been often tried (ca. 5-6 times), even only few months after elections, upon the initiative of a minority of Councillors or those who had left the majority. The new recall procedure provides for the Council being dissolved as a sanction, if the referendum fails. Under the new procedure, no recall referendum has been held, so far. Also, at least once every two months regular Council sessions have to be held.
In view of the rapporteurs, in general, local recall election may pose threats to the exercise of local self-government in view of all risks that may be caused by the abuse of this practice, such as above- mentioned blockades. The rapporteurs understand the need to establish effective safeguards to limit the possibility of misuse of local recall election that motivated the Republika Srpska legislative efforts. However, they have doubts whether councils’ dissolution can serve as an adequate safeguarding measure from the perspective of the right of local elected representatives to freely exercise their functions in the light of Article 7.1 of the Charter. The rapporteurs believe that simply rescinding the provision on a local recall election in the 2016 Law on local self-government could prove to be the most adequate solution.
Specific rules for ethnic or national representation apply: the Chairpersons of the Council have to be from a different ethnic group in municipalities where more than 80% of the population belong to one constituent people. Members of national minorities are entitled to representation in the Council in proportion to the percentage of their share in the total population according to the last census in BiH. The number of the members of national minorities who are elected directly to the Council is defined by the Statute of the particular Municipality or City as appropriate; national minorities which make up more than 3% in the total number of population of the particular constituency according to the last census, shall be guaranteed the minimum of one seat (article 13.14 BiH Electoral Law).
Various interlocutors have pointed to the problem of working under a permanent electoral campaign with different kind of elections being held every two years in BiH. In this regard, the rapporteurs would like to reiterate the previous Congress recommendation[16] to consider grouping together the
page 335 / 796 elections of a local nature (local elections and elections to Cantonal Assemblies).
The rapporteurs consider Article 7.1. generally respected in Bosnia and Herzegovina.
Bulgaria [Article ratified - Report adopted on 21 January 2021 ]
Article 7.1
1. Local authorities are required to provide all elected representatives with the facilities, equipment and technical support needed to carry out their tasks. This has to be done irrespective of their political affiliation; moreover, elected local politicians should have access to training programmes on their role, status, duties and limitations42.
1. Elected representatives should not be prevented by the action of a third party from carrying out their functions. For instance, they should be protected by law against threats from social media or against infringements of their privacy. Another example could be the laws that favour the “judicialisation” of local politics, or where local elected representatives are de facto threatened with the prospect of being prosecuted even on trivial charges. In this connection, the fight against corruption should be balanced against the need to ensure that local politicians are not unduly threatened by the prospect of arbitrary prosecutions43.
1. The status of the municipal councillors, determined according to the Bulgarian legislation, gives them the right to be elected in the standing and temporary commissions of the council, to propose the inclusion in the agenda of the municipal council meetings of issues within the competence of the council and to submit draft decisions, to participate in the discussion and resolution of all issues within the competence of the council, to address questions to the mayor. State bodies, economic and public organisations are obliged to provide assistance to municipal councillors, as well as to provide them with information and documents they need in connection with their activities as councillors, except when they compile classified information constituting a State or official secret.
1. According to information provided by the Ministry of Regional Development and Public Works (MRDPW), the existing norms for the premature termination of a term of office are applied precisely and there are no significant violations of the rights of local elected officials. The LSGLA exhaustively determines the cases in which a municipal council may be dismissed and new elections may be held (for instance, if it does not hold a meeting for three months: Article 27, paragraph 1). Likewise, the cases in which the powers of a municipal councillor and the mayor are terminated prematurely (respectively Article 30, paragraph 4 and Article 42, paragraph 1 of the LSGLA) are exhaustively determined. Temporary removal from office of a mayor is provided for as an option in the Criminal Procedure Code (Article 69) in the framework of pre-trial proceedings, when the person is charged with an intentional crime of a general nature, if there are grounds to believe that their official position will prevent the objective clarification of the circumstances of the case. A decision for the temporal removal can be taken only by the court at the request of a prosecutor.
1. It is worth mentioning that elected posts in Bulgarian local government still attract a remarkable number of candidatures. During the last elections, according to the CEC, a total of 66 parties and coalitions were registered to run in the local elections. Some 29 477 candidates for municipal councillors, 1 253 candidates for mayors of municipalities, 463 candidates for district mayors in 35 districts in the cities with district division Sofia, Plovdiv and Varna and 5 040 candidates for mayors of 1 966 mayoralties with populations over 350 were registered at the municipal election commissions.
page 336 / 796 1. Compared to the local elections held in 2015, however, there is a certain decrease in the number of registered candidates: there were 35 772 candidatures for municipal councillors; 1 600 for mayors of municipalities and 635 for district mayors in the cities with district division. The registered candidates for mayors of 3 190 mayoralties with a population at that time over 100 were 10 077 persons.
1. The results of the 2019 elections show that 5 134 municipal councillors were elected; 265 mayors of municipalities, of which 160 (60.38%) were elected in the first round and 105 (39.62%) in the second round; 35 mayors of districts, of which four (11.43%) were elected in the first round and 31 (88.57%) in the second round; 1 966 mayors of mayoralties, of which 1 525 (77.57%) were elected in the first round and 441 (22.43%) in the second round. The average turnout for the country in these elections was 49.76% in the first round and 42.10% in the second round.
Croatia [Article ratified - Report adopted on 20 October 2016 ]
During meetings with the delegation certain experts made the point that council members cannot exercise own powers in relation to municipal companies and local budget control, nevertheless local representatives were satisfied in general with the conditions under which they exercise their functions.
The rapporteurs consider that Croatia complies with Article 7 paragraph 1 of the Charter.
Cyprus [Article ratified - Report adopted on 20 October 2016 ]
Studying the relevant laws on the municipalities and the communities, it is striking that, apart from their elections, and some incompatibility rules, none of them regulate the legal standing of the elected members of the local councils. Neither their rights, nor allowances are enumerated by these laws. Nevertheless, during the consultation procedure, the Ministry of Interior indicated that pursuant to a decision of the Council of Ministers, mayors and municipal councillors benefit from an actual remuneration, whereas according to a specific law, the central government gives compensation to all community council presidents. The rapporteurs have not found any legal guarantee for the conditions of the free exercise of the councillors’ functions. That is why Article 7 of the Charter, according to the assessment of the rapporteurs, seems not to be implemented in Cyprus.
Czech Republic [Article ratified - Report adopted on 8 March 2012 ]
No elements suggest that the free exercise of the functions of local and regional electedrepresentatives is hampered under Czech law in a way contradicting Article 7 para. 1 of the Charter.The same goes for paragraph 3 of that article on incompatibilities.
Denmark [Article ratified - Report adopted on 31 October 2013 ]
Danish legislation provides for the free exercise of the functions of local elected representatives. In most municipalities, the only elected representatives considered as exercising their functions full- time are the mayors, while other municipal councillors generally devote about fifteen hours per week to their functions. The 2007 local government reform decreased the number of municipal councillors from 4 597 to 2 520. Moreover, since 2007 municipal councils have been required to make public the different types of remuneration paid to their members, including both payments resulting from the exercise of their functions and those received by the persons in question from other sources.
page 337 / 796 According to Article 16 of the Law on Local Self-Government, members of local councils must receive regular remuneration. Mayors, aldermen and regional council chairs receive an allowance corresponding to a full-time occupation; standing committee chairs receive an allowance corresponding to the salary of a part-time employee. The other local and regional council members receive an annual allowance calculated on the basis of the size of the authority in question and the work performed by the committee. Mayors, aldermen and regional council chairs are entitled to a private pension after at least one year in office. Mayors, aldermen, regional council chairs and local council committee chairs are entitled to an allowance for several months after their term of office, calculated on the basis of the length of the latter. Legislation also contains provisions on travel allowances, expenditure relating to a physical disability, etc.
The Ministry of the Economy and the Interior establishes the modalities of remuneration. This remuneration is made public, as are the salaries of persons employed by state-owned enterprises to meet the needs of the municipality. The LGDK periodically examines the amount of the remuneration paid, in order to ensure that it has not been devalued by inappropriate indexing mechanisms.
The Law on Local Self-Government contains rules geared to preventing any conflict of interest where an individual is both a local councillor and a member of the municipal administration. For instance, a mayor cannot be employed by the municipality or supply it with goods. The mayor and aldermen of a municipality cannot simultaneously chair a regional council. Apart from this restriction, local council members can hold other elective offices such as membership of a regional council or Parliament.
The provisions geared to preventing conflicts of interest apply to all elected representatives. The rules on activities incompatible with an elected mandate are set out in the Law on municipal elections. They are in conformity with general Danish legal principles and are generally unobjectionable.
The rapporteurs conclude that the conditions for the exercise of responsibilities at the local level set out in Article 7 of the Charter seem generally to be respected in Denmark from both a theoretical and a practical point of view. The rapporteurs heard no criticism in this regard during their visit.
Estonia [Article ratified - Report adopted on 29 March 2017 ]
The rapporteurs heard no objections concerning the compatibility of Estonian rules and practices with Article 7 of the Charter. Details with respect to municipal councils are set out in Article 156 of the Constitution and Chapter 2 of the Local Government Organisation Act, as well as in the Municipal Council Election Act. Concerning remuneration, the details are set out in section 17, paragraph 3, of the Local Government Organisation Act.
The upcoming reform affecting the accumulation of mandates between local government membership and parliamentary membership is of particular concern. The associations are sceptic as to whether this reform project will improve local self-government. As already mentioned, the Constitutional review proceeding against the law introducing the accumulation of mandates is currently pending before the Supreme Court of Estonia. The rapporteurs would like to refer to projects in other Council of Europe member states (for example, France) where the aim is to separate functions in the clear interest of preventing confusion between state and local affairs.
Finland [Article ratified - Report adopted on 28 March 2017 ]
One of the main aims of the new Local Government Act (410/2015) is to promote representative democracy by ensuring good working conditions for elected officials and transparency of decision-
page 338 / 796 making. The Government recognised that “there have been problems with the overload of work and difficulties to combine private life and position of trust”. These reasons led to changes to the Local Government Act in 2015 with some changes that will enter into force after the next local government elections in 2017. If a municipality has decided to have full-time or part-time elected officials, under the new act, full-time elected officials are entitled to leave of absence from their jobs for the duration of the full-time position. In the case of any leave of absence that is required to fill a part-time position, the elected official must agree this with his or her employer. The local council decides on the payment and remuneration of elected officials in general and also sets the monthly pay and remuneration of any full-time and part-time elected officials. Full-time and part-time elected officials have the right to annual leave, sick leave and family leave, as well as occupational health care services, on the same basis as local government officers. The provisions of the Employment Accidents Act (608/1948) concerning employers and employees apply in the same way in municipalities to both full-time and part-time elected officials. The law also introduces new management models, such as chairperson or standing committee models, with the aim of strengthening political leadership. According to the Government, the new Local Government Act aims also to clarify the position and distribution of work between the municipal manager, the council and the Executive Board. The Ministry told the delegation that it intends to address the problem of bureaucracy burden through the reduction of municipalities’ tasks. Attention should be drawn, however, to the fact that full-time and part-time elected politicians are rare in Finnish municipalities, a fact that further strengthens the power and influence of professional executives and municipal bureaucracies. Municipalities are also service providers, but the local government concept of the Charter is based upon the political and democratic essence of self-government, which can be frustrated when in practice decisions are already taken by the heads of municipal bureaucracies.
Local councils decide on the principles underlying financial benefits for elected officials. Municipalities usually have a fee rule. Meeting fees are paid for almost all meetings attended by elected officials. According to information provided by the AFLRA, the average meeting fee is €70 for the members of the council and the executive and about €100 for the chairperson of the council and the executive. Fees are usually larger in the larger municipalities. For example, meeting fees range from an average of €43 in municipalities with fewer than 2000 inhabitants to €197 in municipalities with more than 100 000 inhabitants. A fee for a fixed period (month or year) is paid to the chairpersons of the municipal council and executive more often than to the members. The average yearly fee is about €2,000 for the chairperson of the council, €2,500 for the chairperson of the executive and €864 for the chairpersons of committees. Provision is made for compensation for loss of earnings and for costs incurred in engaging a substitute, while childcare costs are covered, amounting to an average of €23 per hour, but varying from municipality to municipality between €8 and €64. Electronic meeting systems have become more common in municipalities, so web conference interfaces are often also used for meetings between elected officials.
All elected officials' salaries and compensation are taxable. It is also quite common for political parties to charge elected officials a fee called a party tax, provided that they are authorised to do so, and this may apply to all fees, or just for example to meeting fees. The amount of the party tax is set by the party's municipal branch, with the result that there can be quite large differences between municipalities and political parties in this respect. Most commonly it is 10% but it can range from 5% to 80% of the fee. Usually, party tax is charged on gross incomes but because of the very high percentages involved, it has sometimes been charged on net incomes. There can be an upper limit on the amount of party tax that can be charged, such as €90-100 a year. Municipal branches of the political parties can charge different party taxes. On average, the highest tax is charged by the Greens (about 19%) and the lowest by the Swedish Party of Finland (about 12%).
With regard to the legal framework, it can be concluded that Finland fully complies with Article 7 of the Charter.
page 339 / 796 France [Article ratified - Report adopted on 22 March 2016 ]
In March 2015, a new law was adopted to facilitate local elected representatives in exercising their mandate, in accordance with Article 7 of the Charter. The rapporteurs received positive comments on this law, during their meetings with representatives of local and regional governmental associations and/or associations of different groups of elected persons. It was clear that the new law provides improvements for elected representatives, so that conditions of office are able to provide for the free exercise of functions according to Article 7 paragraph 1 of the Charter.
More precisely, this law stresses the need to offer better conditions to elected representatives for reasons of public interest, to be better able to meet the challenges of their mission. In Article 2, the law incorporated the “Charter of locally elected representatives”), introducing fundamental principles for the exercise of a local mandate (impartiality, diligence, integrity, dignity), and highlighting obligations concerning, for example, the conflict of interest (which is particular importance in local government and especially in small municipalities). The new lawexpanded the rights for special leave during the election campaign also for candidates in small municipalities under 1000 inhabitants (Article 6), it also provided the possibility to suspend labour contracts in municipalities with less than 10 000 inhabitants (previously the threshold was 20 000) for mayors, deputy-mayors, vice-presidents of EPCI’s and even members of an arrondissement council in the communes of Paris, Lyon and Marseille (Article 8), while it introduced provisions about the professional re-integration after two succesive mandates. Article 1 stipulated compensation rights for mayors of arrondissements in Paris, Lyon and Marseille who are not councillors of the cities. Furthermore, Article 3 also introduced compensation for members of inter-municipal councils (in communautés des communes). These new regulations corresponded to the provisions of Article 7 paragraph 2 of the Charter (see below). At the same time, the law introduced penalties for absence (Article 4) and further concretised the obligations of elected persons.
However, during the monitoring visit in France, there were still strong complaints from rural mayors highlighting their paradoxical situation, since they are obliged to spend much more time ontheir duties compared to mayors of largermunicipalities who have specialised staff, but rural mayors recieve much lower remuneration. Through the new law, the status for locally electedrepresentatives in municipalities with more than 2 500 inhabitants hasimproved, but in municipalities with less than 2 500 inhabitiants, they do not recieve an appropriate remuneration (the remuneration of the elected municipals depends on the population range the municipality belongs to, according to article L2123-23 of the Code Général des Collectivités Territoriales, “CGCT”. It is of €646,25 gross for mayors of municipalities with less than 500 inhabitants – €250,25 for a deputy mayor – and of €1178,45 for mayors of municipalities of 500 to 1,000 inhabitants – €313,62 for a deputy mayor) and they use their own means and ressources in order to be able to exercise their functions.
It is also worth mentioning that the recent law of 2014 (see above) prohibits cumulating local executive functions with a national parliamentary mandate (as deputy or senator) or a mandate at the European Parliament, starting from 2017. It seems that the French tradition of “cumul des mandats” willbe phased out gradually. These new incompatibilities are provided by law, in accordance with Article 7 paragraph 3 of the Charter.
Georgia [Article ratified - Report adopted on 7 November 2018 ]
Local elected representatives have the right and the possibility to exercise their mandate freely and unconditionally. Members of the Sakrebulos (councils) have the right to monitor the activities of municipalities and to organise hearings on reports provided by the mayor and heads of departments.
page 340 / 796 Local elected representatives are entitled to discuss, adopt and monitor local budgets; they also have the right to request any information on the spending of public funds by local executive bodies and entities subordinated to the municipal administration.
On 23 March 2018, Mr Irakli Nadiradze, Chairperson of the faction “United National Movement” (UNM) of the Tbilisi City Municipal Assembly, addressed a complaint to the Congress with regard to the alleged violations of local self-government principles in Tbilisi Municipal Assembly. He claimed that the ruling party denied the rights which are supposed to be legally attributed to a member and a faction of the municipality by several legal acts, in such areas as the access to certain information, the modalities of convening and holding of sessions.
Indeed, during the visit in Georgia the rapporteurs met with local elected representatives from the opposition and some interlocutors expressed complaints that members of the municipal assemblies are being denied access to information. However, it seems that these are rather exceptional cases and in most instances members of opposition parties do get information on local budgets’ spending, public procurement and privatisation. This is indicated through the fact that the opposition has reported cases on misuse of public funds on television and in printed media.
An interesting court case was the case of “Ms Sharashenidze against the Ozurgeti City Municipality” when a member of Ozurgeti city council from an opposition party, applied to the civil court of Ozurgeti accusing the mayor of City of preventing her from having access to information on public procurement. She claimed that the Mayor of the city refused to provide her with the copies of procurement contracts because they would include a vast number of pages and the city could not spend so much money on their copying. The Civil Court of Ozurgeti has recognised the mayor’s decision as legal. Subsequently, Ms Sharashenidze applied to the Court of Appeal in Kutaisi. The court of appeal obliged the city municipality to provide to the applicant council member a workplace equipped with a desktop computer or an internet connection for a reasonable period of time in order to enable her to have access to electronic copies of all procurement contracts.
In this respect it should be noted that most of the local authorities and experts met by the delegation have indeed underlined that Georgian legislation includes sufficient remedies in order to ensure the free access by members of local deliberative bodies to legally required information.
Nevertheless, the rapporteurs believe that capacity building programmes for local council members to enhance the use of available legal instruments, notably in remote municipalities, would help them to better protect their rights as local elected representatives and thus would positively contribute to strengthening the role of opposition parties in local self-government.
Unfortunately, in many member States of the Council of Europe, municipalities shall cope with sometimes difficult relationships among their local elected representatives, notably between the representatives of the ruling parties and the opposition. The number of complaints addressed to the Monitoring Committee in this respect has been gradually increasing recently which shows that this issue is becoming a problematic trend for local self-government.
Following the 2012 parliamentary election, negative developments took place in a number of municipalities and some locally elected representatives came under heavy pressure. However, it seems that these instances were the result of the transfer of power and that they were rather exceptional cases. According to NALAG, the Government of Georgia took specific steps to prevent national political interference in local affairs. More specifically, the Georgian criminal code has since been amended and tougher penalties have been introduced for violent interference in the operation of a local administration. In addition, the minister of justice has established a specific interministerial commission with the tasks of overseeing election procedures and prevention of violations during
page 341 / 796 electoral and post-electoral periods. It is worth mentioning that all international observation missions have evaluated the work of this commission positively. After the 2014 local government reform, national political influence upon local authorities has been decisively pushed back. The Code of Local Self-Government clearly defines the mandate, role and responsibility of local elected representatives and provides specific legal measures to guarantee free and full execution of the mandates of local elected representatives.
During the monitoring visit and following several discussions, and in spite of some protests from opposition parties, the rapporteurs’ general impression was that Georgian authorities have tried to respond to the recommendations in Recommendation 334 (2013) on local and regional democracy in Georgia, and that Georgia generally complies with Article 7, Paragraph 1, of the Charter.
Germany [Article ratified - Report adopted on 14 March 2012 ]
Local authorities have different sorts of responsibilities and duties, as far as their freedom to choose how fulfill them. In local public affairs, which are the primary mandatory functions of local governments (Pflichtaufgaben), local authorities decide whether and how to accomplish them, while in case of voluntary tasks (freiwillige Aufgaben), municipalities have the widest discretionary power. The local power is the narrowest when local government carries out delegated tasks (vom Staat zugewiesene Aufgaben), because in all these cases, it exercises power on behalf of the central government, under its instructions and control.
These types of tasks and functions of local government are quite typical in the Council of Europe member states. The practice of delegating tasks and functions from the central government to local authorities under the strong control of the former is not incompatible with the principles of the Charter, provided that the central government simultaneously provides adequate financial compensation.
According to the Charter, the central administrative supervision of local authorities must be based on constitutional or statutory provisions, and normally can aim only at ensuring compliance with the law. Thirdly, central control must be exercised in a way so as to ensure proportionality between the extent of the intervention into local autonomy and the public interest for which it is exerted.
The rapporteurs’ opinion is that all conditions prevail in Germany.
Greece [Article ratified - Report adopted on 26 March 2015 ]
As for Article 7, para 1 of the Charter, under Greek law, the conditions of office of local elected representatives do provide for the free exercise of their functions. This point has never been put into question by facts or reality, although in the recent years the financial crisis determined an important cut in remuneration of elected representatives (e.g. only the mayor and one or two deputy mayors, depending on the size of the municipality, are remunerated; the amount of the remuneration has been reduced; municipal councillors do not receive any payment or allowance).
Mayors, deputy mayors, and the presidents of the municipal councils who are employed as civil servants, public entities employees or state private legal entities or business employees are entitled to unpaid mandatory special leave throughout their term of office. No such possibilities of unpaid leave exist for private employees being councilors, nor allowances for councils meetings are provided.
Mayors or their relatives whose private interests come into conflict with municipal interests are
page 342 / 796 required to abstain; in this case their powers are exercised by the deputy mayor. As a part of the transparency program carried out in the framework of Kallikratis, mayors, deputy mayors, all members of the economic committee and the quality of life committee are required to submit an annual statement of their assets and post it on the municipal website.
Hungary [Article ratified - Report adopted on 12 February 2021 ]
The purpose of Article 7, paragraph 1, is to guarantee the free exercise of their functions by elected representatives.
In Hungary, according to the Fundamental Law, local representatives are elected for five years and cannot be recalled.
Their mandate shall terminate before the end of the five years term in the cases mentioned in Article 29 of the Cardinal Act on Local-Self Government. Among them, it is worthy mention the letter e), establishing early termination “if the local representative fails to participate in assembly meetings continuously for a year from the date of the first meeting missed”.
No professional standards are required. However, representatives must participate in professional training organised by the Government Office within 3 months after taking his/her oath at the inaugural meeting, which is held within 15 days of the election.77
Local representatives are required to make a declaration of assets every year (Cardinal Act on Local Self-Government, Article 39). As long as they do not fulfil this obligation, they may not exercise the rights arising out of the office or receive any allowance from the local government.
Local representatives have the right to and are entitled to get involved in the work of the body of local representatives. During the session, a local representative may request information on local public affairs from the mayor (vice-mayor), the notary (town clerk), or from the head of the committee. The answer must be given orally during the session or in writing no later than fifteen days following the session. At his/her request, proposals are noted in the minutes; his/her oral remarks are included.
The local representative may attend any committee meeting and propose a debate on any question related to committee tasks to the committee chair. The debate based on the proposal made by the local representative is then submitted to the next session to which the local representative is invited. S/he may call for the revision of decisions on local municipal issues made by a committee, the mayor, the body of the local partial government, or by the body of the local minority government under delegated power. The administrative assistance required for his/her tasks is ensured by the Office of the body of representatives.
Therefore, the rapporteurs believe that Article 7.1 of the Charter is respected in Hungary.
Iceland [Article ratified - Report adopted on 29 March 2017 ]
As for Article 7, para 1 of the Charter, under Icelandic law, the conditions of office of local elected representatives do provide for the free exercise of their functions. This point has never been put into question by facts or reality, as Iceland is an advanced democratic country. Article 24 of the Local Government Act provides that “Municipal councillors are independent in their work. They are bound solely by the law and their own convictions in their positions on individual matters”.
page 343 / 796 Municipal councilors are entitled to unpaid mandatory special leave throughout their term of office (article 33 Law 138/2011) and employers may not dismiss employees because they have stood as candidates in municipal elections or been elected to a municipal council. If an employee who has stood as a candidate in a municipal election or been elected to a municipal council is given notice of termination of employment, the employer shall demonstrate that the termination cannot be attributed to these events.
Ireland [Article ratified - Report adopted on 31 October 2013 ]
The LGA significantly improved the status of local elected officials, but some obstacles still remain. The LGA clearly defines the code of conduct that applies and also the incompatibilities.
As indicated under its Section 3.2.5, most members of councils work for local self-governments on a part time basis and receive financial compensation. However, there is no legislation containing rules for private employers to provide “free time” to elected officials for participation in local matters. This situation prevents many private sector employees to be a candidate for local elections, despite of the fact that most of the official business of councillors occurs outside of normal business hours.
Italy [Article ratified - Report adopted on 18 October 2017 ]
The analysis of Article 7 in the Italian context should be carried out following the different indents of that provision. Thus, apparently there is no problem with Article 7, paragraph 1, that deals with the “free exercise of the functions” of local elected representatives. This independent action is enshrined in the legislation and the interlocutors met during the visit did not report cases of political coactions or similar hindrances on the “free” exercise of political level (the rapporteurs do not refer, of course, to criminal constraints or pressures coming from the organised crime, unfortunately a well know problem in the Italian landscape, especially in some areas of the country).
Latvia [Article ratified - Report adopted on 27 March 2018 ]
For what concerns the conditions of service for members of the local council and for the Chairman, it should be noted that the members of the local council who attend the meetings of the council are allowed to receive an allowance for attending such meetings. The council meets at least once a month. The same happens when they attend the meetings of the different local committees. The representatives of the LPS considered that the amount of money that is paid currently as allowances is fair. In the case of large cities (such as Riga) there are also local council members who work as such on a full time basis. In this case, they receive a salary, which is set up by the council. In the field of conflicts of interests. During the consultation process the delegation was informed that there are range of restrictions for joining posts for Council Chairman, deputy chairman, and some restrictions for councillors.
Mayors are remunerated for their job, as it is proclaimed in art. 63 of the Law on local governments. They receive a remuneration, which is determined by the Council, in compliance with the Law on Remuneration of Officials and Employees of State and Local Government Authorities. Local councils determine the remuneration of the chairperson in the context and within the “fork” that is determined by that piece of legislation and by implementing Cabinet regulations. Therefore, the salaries are not the same throughout the country and vary in accordance with different factors (such as the number of local residents) These remunerations were assessed as inadequate in the small municipalities, while fair in the cities. Local government elected officials are also provided with social guarantees in case of job loss.
page 344 / 796 Consequently, and although the situation could be improvable, the Delegation understands that article 7 of the Charter is respected in Latvia.
Liechtenstein [Article ratified - Report adopted on 28 March 2018 ]
In relation to paragraph 1 of Article 7, the rapporteurs would underline that the Municipalities Act does not specify the legal status of councillors, but does regulate the status of the entire council as the supreme managing and executive body of a municipality. While the Act includes provisions relating to the rights of local voters as members of the municipal Assembly to initiate referendums, make proposals, address questions to municipal bodies or participate in local elections, it does not specify the rights enjoyed by members of the municipal council.
During the monitoring process, the rapporteurs did not identify any obstacles that would impede local elected representatives in the exercise of their functions.
The rapporteurs observed that, in general, mayors work full-time. Members of municipal councils work part-time within the council (Gemeinderat) and combine their electoral mandate with other professional activities. They are entitled to a fair allowance to cover the costs of performing their official duties and receive appropriate compensation for loss of remuneration.
The Municipalities Act contains strict incompatibility rules for the election of municipal councils. Close relatives of councillors and staff of the municipality, members of the Government, and judges of the Administrative and Constitutional Courts may not be elected as representatives of the council (section 47). The Act lays down conflict of interest rules not only for council membership, but also for the work of the municipal council. For example, section 50 of the Act specifies the matters in which the representatives concerned are to be excluded from the decision-making process. The rapporteurs therefore have sufficient evidence that Article 7 paragraph 3 of the Charter is duly implemented.
Consequently, the rapporteurs conclude that Liechtenstein complies with paragraphs 1, 2 and 3 of Article 7.
Lithuania [Article ratified - Report adopted on 6 November 2018 ]
Article 7, paragraph 1, aims at ensuring the free exercise of their functions for elected representatives. This Article does not raise any special concern in Lithuania, where the democratic process at local level is fully guaranteed.
Article 7, paragraph 2, refers to an appropriate financial compensation for elected representatives. For municipal councillors, Article 26 of the Law on Local Self-Government establishes that “such remuneration shall be calculated in accordance with the amount of the average monthly wage, taking into consideration the actual length of work, the duration of which is confirmed pursuant to the procedure laid down in the rules of conduct. The amount of the remuneration for the performance of the duties of the municipal councilor shall be fixed by the municipal council”. As for the mayor and deputy mayor, their salaries shall be approved by the municipal council in accordance with the ratios established by the law (Article 19, paragraph 8).
During the meetings with elected representatives in the municipalities, the delegation was informed that the conditions of office are satisfactory, but the salaries are low. Normally, the councillors are only compensated for the expenses related to their activities as the councillors and only the mayor and deputy receive a salary.
page 345 / 796 As for Article 7, paragraph 3, according to which “Any functions and activities which are deemed incompatible with the holding of local elective office shall be determined by statute or fundamental legal principles”, the incompatibilities are determined by Article 91 of the Law on elections of municipal councils.
According to this Article, “The office of municipal councillor shall be incompatible with the office of President of the Republic, Seimas member, European Parliament member, Government member, head of a government agency or an agency under a ministry, whose work is related to the supervision and control of activities of municipalities, Government representative in the county, Auditor General and his deputies”. Moreover, the office of councillor of a municipality shall be incompatible with several positions of the municipality (like the office of the office of director of the administration of that municipality etc.).
The rapporteurs consider that the requirements of Article 7 of the Charter are satisfied in Lithuania.
Luxembourg [Article ratified - Report adopted on 21 October 2015 ]
In Luxembourg, mayors are appointed by the Grand Duke. Aldermen are appointed by the Minister of the Interior, with no distinction being made between “cities” and communes. All mayors and aldermen must be appointed from among the communal councillors and the practice is for the majority faction on the newly elected communal council to put forward a proposal to the state authorities. This system has not given rise to any criticism from Luxembourg’s local elected representatives, especially given the fact that the Communal Law provides for the possibility of a no- confidence motion when the communal budget is being voted on, which is a sign that the communal executive body is indeed accountable to the elected council.
Under Article 107, paragraph 3, of the Constitution, the Grand Duke has the right to dissolve the communal council, which is directly elected. In the event of commonly acknowledged misconduct, fault or gross negligence, aldermen may be suspended by the Minister of the Interior, while mayors may be suspended by the Grand Duke. The terms “commonly acknowledged misconduct” and “gross negligence” are not defined by the law. They are rather vague and allow central government a wide margin of discretion. The rapporteurs were told that although the Grand Duke has the right under the law to dissolve the communal council and dismiss the mayor, in practice this option has never been exercised.
It is not prohibited to hold office at local and national level simultaneously. The Minister of the Interior told the delegation that this possibility might be ruled out in future.
The question of the possibility of the full-time employment of mayors and aldermen, particularly in communes above a certain size, is a recurring issue. Any development of this sort would represent a move towards the professionalisation of communal executives, particularly in those communities with the largest number of inhabitants. For communes with 10,000 or more inhabitants, the mayor is granted political leave of 40 hours per week (full time) and the aldermen, 8 hours per week.
Persons holding the office of mayor or alderman are paid an allowance which is intended to offset the expenses incurred in the performance of their duties. Allowances for mayors and aldermen are set by the communal council with the approval of the Minister of the Interior. The amended Grand Ducal regulation of 13 February 2009 establishes the upper limits for these allowances. Besides these allowances, mayors and aldermen may not receive any remuneration financed by the commune under any pretext or designation whatsoever (Article 55 of the Communal Law). For example, it has been found in court that the Communal Law prohibits the communes from providing mayors with a free official residence.
page 346 / 796 Mayors and aldermen are not entitled to the fees which may be paid to communal councillors for attending meetings of the council and its committees. However, this prohibition, set out in Article 55, does not apply to travel expenses, subsistence costs or telephone charges.
Mayors, aldermen and communal councillors who work in the public or private sectors, along with those who are self-employed or not working and under 65, are entitled to leave for political activities in order to discharge their duties. The detailed rules on leave for political activities are set out in Articles 78 to 81 of the Communal Law.
The rapporteurs are of the opinion that the situation in Luxembourg is in compliance with the provisions of Article 7.
Malta [Article ratified - Report adopted on 29 March 2017 ]
There is no provision in the Local Councils Act pointing to anything contrary to the obligations imposed under Article 7, paragraph 1 of the Charter. Instead, the Local Councils Act provides immunity to Councillors from legal proceedings in certain cases. Article 21 of the Local Councils Act gives immunity to Councillors in the event that the statements, copies of the agenda, particulars and copies of other documents given by them to the media contain defamatory statements, provided that this is not done with malice.
Furthermore, Article 13(1) of the Local Councils Act prohibits the central government from transferring a Councillor without his/her consent to an office or position which disqualifies him/her from being a Councillor.
Apart from the aforesaid provided to the Councillors, the Local Councils Act obliges the Councillors to disclose any pecuniary interest in any matter discussed during the meetings of the local council and refrain from taking part in any meeting of the local council during which such an issue will be discussed. Furthermore, Article 20 of the Local Councils Act imposes the obligation on every Councillor to disclose to the local council in writing any relevant family relationship known to him/her to exist between himself and any person who he/she knows that either holds, or is a candidate for appointment to, any office in the local council. These obligations safeguard the local councils, requiring every Councillor to abide by his/her duty of disclosure. In other words, the free and uninfluenced exercise of a Councillor’s functions constitutes both, a right and an obligation.
In light of the above, there is no violation of Article 7, paragraph 1 of the Charter.
Monaco [Article ratified - Report adopted on 28 March 2018 ]
With regard to Article 7, paragraph 1, of the Charter, which provides that the conditions of office of local elected representatives must provide for free exercise of their functions, the rapporteurs have not been alerted to any objections concerning potential compatibility problems between Monegasque regulations and practices and this paragraph. Once elected, councillors cannot be dismissed. The Municipal Council may be dissolved by a reasoned ministerial order, after consultation with the Council of State (Article 83 of the Constitution and Article 24 of Law No. 959/1974).
Bearing in mind the foregoing, the rapporteurs conclude that Monaco complies with Article 7.
Montenegro [Article ratified - Report adopted on 21 October 2015 ]
page 347 / 796 Montenegro is not bound by Article 7, paragraph 2.
The mayor and deputy mayor of a municipality, as well as the president of the assembly and the chief administrator, are local officials. Employees in local administration bodies have the status of civil servants and professional employees1. Legislation that regulates the status of state officials, civil servants and employees is also applied to the legal status of local officials, local civil servants and employees - unless otherwise provided for bylaw. The conflict of interest clause is stipulated in Article 91 of the Law on local self-government.
With regard to paragraph 2 of Article 7, the Union of Municipalities informed the rapporteurs that the Assemblies of Municipalities define, in their internal regulations, the amount of wages for elected representatives and officials. The statute of the municipality and decisions of the municipal assembly provide the right to remunerate councillors from €120 to 200 per month. The Union of Municipalities confirmed that this right is respected in practice. Irrespective of this, the Congress’ delegation heard no claims that the payment of mayors and other key representatives of the municipalities were regarded as insufficient.
The rapporteurs are of the opinion that the situation in Montenegro is in compliance with the provisions of Article 7. The rapporteurs believe that the Article 7, paragraph 2 should be ratified as it is de facto applied.
Netherlands [Article ratified - Report adopted on 26 March 2014 ]
Under Dutch law, the conditions of office of local elected representatives do provide for the free exercise of their functions. This point has never been put into question by facts or reality, as the Netherlands is an advanced democratic country.
As for the financial compensation of local representatives, it should be recalled that the Netherlands made a declaration in their instrument of acceptance deposited on 20 March 1991 to the effect that “it shall not consider itself bound by the provisions of Article 7 paragraph 2 of the Charter” and are consequently not bound by it. Council members receive no salary but an allowance for their work. The position of council member is a part-time position and is considered as an “additional” position, the allowance being a compensation for missed income arising from the main position of the councillor. The level of the allowance depends on the number of residents of the municipality (Decree on the Legal Status for Council and Committee Members).
According to the Municipalities Act, council members are to receive a payment for their activities and an allowance for their expenses in a bye-law to be enacted by the council (Article 95). In addition, and insofar as they are not members of the council or the municipal executive, the members of a committee, of a submunicipal council or of an executive committee of a submunicipality as set up by the council, the municipal executive or the mayor, are to receive an allowance enacted by a bye-law from the council (Article 96). Even if these provisions were not ratified by the Netherlands it is interesting to underline that consequently it appears that the situation in this respect would have been considered as satisfactory in the light of the above mentioned (not ratified) provisions. According to the local representatives met by the Congress delegation, the amount of allowances may be considered “fair” or “reasonable”.
As regards Article 7 para.3 of the Charter, the Municipalities Act describes in detail what functions and activities are incompatible with the holding of local elective offices (arts. 15 for council members, 36b for aldermen ) and even with the holding of the position of mayor (Article 69). Therefore, this section of the Charter is fully respected in Dutch local government law.
page 348 / 796 North Macedonia [Article ratified - Report adopted on 26 February 2013 ]
Municipalities perform part of the public services through local public institutions and public enterprises.
Local public institutions perform the competences in the field of education, culture, child protection and protection of elderly people, which have been transferred on the basis of special laws. Funds for the performance of these competences are provided from the central budget.
Public enterprises are established by municipalities for the purpose of performing services in the field of utilities infrastructure (water supply, sewerage waste, transportation, etc). Municipalities can use their own property pursuant to the Law on Local Self-Government and the Public Procurement Law.
Supervision over the operation of municipal authorities and their organs is regulated in Title IX of the LSG Law 2002 (Articles 69-73): In the sphere of “own” competences, supervision is limited to the legality and verification of local authorities’ financial operations in the performance of their functions. It is carried out by the Ministry responsible for the fulfilment of functions related to local self-government and by the State Audit Bureau as regards financial operations. With regard to the performance of delegated competences, supervision also includes an efficiency-control which is carried out by the State administration whose competencies are delegated. Prior supervision is possible in cases determined by law. Municipal organs are obliged to cooperate with the supervisory authorities.
The Law on the State Inspectorate for Local Self-Government (2010) establishes a supervisory authority controlling the legality of all acts adopted by the municipal council or the Mayor. The State Inspectorate for Local Self-government is a body within the Ministry for Local Self-government. Subject to its control is the legality of regulations adopted by the municipalities in order to guarantee conformity of all activities and decisions with the Constitution and with the relevant laws, international agreements and other legal regulations. The surveillance takes regular and unannounced forms and includes checking the removal of contested irregularities (Article 17). Should the Inspectorate determine that there is reasonable suspicion for a violation or a criminal act, i.e. that administrative or other measures have to be taken, it is obliged to initiate offence or criminal procedures, and to immediately notify the competent body for proceeding with the measures in question.
According to the information provided to the delegation, it is not clear whether and how it is possible to remove a Mayor from office or to apply sanctions against a Mayor who does not fulfil his/her obligations. The Rapporteurs believe that, for legal certainty, procedures and conditions under which such measures can be adopted in extreme cases should be determined and regulated in legislation.
However, there are other types of administrative control as well, especially regarding the areas of education, environmental protection, communal activities, urbanism and spatial planning, financial works, auditing, etc. Specific laws regulate the procedures in these special areas, such as urbanism and spatial planning, education, protection of the environment, communal activities, etc.
Administrative acts of municipalities that are adopted in violation of public interest or protection of personal data are annulled. Should a municipality fail to assume its responsibilities, the obligation to act is taken over by a relevant state body. Article 21 para. 3 of the LSG Law authorises the withdrawal of transferred powers in single cases, if established in specific laws. For example, education and health services are under the surveillance of State inspectors and penalties and
page 349 / 796 procedures for withdrawal are established in case minimum standards are not fulfilled. The same applies to specific laws on construction, urban planning and taxation. These are temporary measures, until municipalities are able to fulfil these functions properly.
The Directorate for Personal Data Protection also has separate competences and authorities; it ensures that regulations are respected and verifies alleged violations of citizens’ personal information. The procedures are established and regulated by specific laws. Regarding general administrative law, the Law on Inspection Control might also be applicable to the supervision of local authorities. The employees of local authorities might be subject to supervision by the State Inspectorate for Public Administration as well. The latter performs the supervision of administrative acts in a special procedure.
Financial audit of municipalities and public enterprises at local level is carried out according to the Law on State Audit. The State Audit Office (SAO) carries out different types of audits: compliance audits, performance audits and horizontal audits (e.g. regarding construction land) and thematic audits for a systematic inquiry of weaknesses, e.g. regarding the establishment and collection of municipal taxes. All resulting reports are published on the SAO website and submitted to the Parliament (they are also sent to the Ministries of Local Self-Government and of Finance). The delegation was informed during the visit that the SAO conducted performance audits in 12 municipalities, examining the efficiency of procedures for determining and collecting revenues such as local taxes and fees etc. While international standards incorporated in national legislation serve as a framework, the compliance with procedures is examined as well as the compliance with the indicators set by the municipality concerned itself. In 2012, the SAO will conduct a performance audit of regional development. The audit will encompass the eight planning regions in addition to the Ministry for Local Self-Government and the Bureau for Regional Development.
Having noted the progress made in setting up and developing supervision processes, the Rapporteurs have also taken note of the EU Commission’s assessment, according to which “significant additional efforts are needed at central and local levels in order to strengthen the administrative capacity of certain municipalities, particularly in the areas of financial control, strategic planning, human resources management and economic development. The State Audit Office reported numerous shortcomings by the Ministry of LSG in applying financial control standards and procurement rules, as well as poor follow-up of previous recommendations.” (EU Commission, Progress Report, October 2011).
To sum up, three main problems concerning supervision can be identified: i) Although the State LSG- Inspectorate created within the Ministry of Local Self-Government is the main supervisory authority monitoring the legality of municipalities’ activities, line Ministries remain involved in some kind of monitoring and supervision related to their specific competences (in particular related to transferred competencies, such as currently land-management, transport, education, etc.). These parallel tracks imply a high number of interlocutors for municipalities and might require coordination or concentration in one supervisory authority. ii) A general procedure for reacting to cases of incapacity or serious mismanagement by Mayors does not seem to exist (e.g. temporary removal and substitution by an appointed commissioner). The lack of pre-established procedures and measured might carry the risk of political pressure from central government and/or lead to an early use of the criminal law, not always suited for these cases. iii) Regarding the internal audits, technical qualification and capacity still seems to be a major problem. Strengthening the administrative capacity of municipalities in this field is important also for the transfer to the next stage in the decentralisation process.
Norway [Article ratified - Report adopted on 26 March 2015 ]
page 350 / 796 The conditions of office of local elected representatives are such as to enable them to exercise their functions freely and efficiently, with a satisfactory system of financial compensation. Within municipal councils, safeguards exist to protect the rights of the opposition (distribution of posts according to election results, right to ask written or oral questions, access to information, provision of documents, etc.). It is not customary for officials in Norway to hold more than one elective office at a time.
The situation is in conformity with Article 7 of the Charter.
Poland [Article ratified - Report adopted on 2 April 2019 ]
The purpose of Article 7, paragraph 1, is to guarantee the free exercise of their functions by elected representatives. This was not an issue during the 2014 monitoring visit, which pointed out that “Poland is an advanced, democratic country”. Unfortunately, during the 2018 monitoring visit, the delegation heard many concerns and received many complaints by local authorities’ representatives about a change in the factual situation. Many mayors mentioned the excesses in prosecutions and anticorruption investigations, with the purpose to instil in the citizenship a feeling of distrust in local authorities.
As the free exercise of the functions requires both legal and factual accommodations, the rapporteurs would like to point out the importance of stability in office and the need for a judicial decision to suspend or remove mayors from office.
Having said that, the rapporteurs consider that, for now, Article 7.1 is not violated in Poland.
Portugal [Article ratified - Report adopted on 28 September 2020 ]
On this point, the Charter appears to be complied with even though certain restrictions were introduced as of 2013 to limit the number of terms of office of mayor to a maximum of three. Furthermore, this reform conforms to Article 118 of the Constitution, which states that the law may specify limits on successive renewals of mandates of holders of executive political office. The reservations expressed in 2012 (in the previous report) by representatives of the ANMP regarding this reform were not reiterated, suggesting that it has now been accepted. It is true that an age limit might have been opted for by the legislature, but its choice, which conforms to the Constitution, has therefore prevailed.
Among others, the rapporteurs put questions to the Secretary of State for Local Authorities during their visit in June 2019, who emphasised the governmental measures taken in the area of liability which put on an equal footing the liability under civil law of local elected representatives and that of their administration where it had provided guidance and support to that representative in the taking of the decision. On the other hand, criminal liability remains a logical counterpart to the exercise of new responsibilities, as observers could see during the major fires of 2017 and the indictment of local elected representatives for manslaughter.
On the more specific question of remuneration and compensation connected to local office, the rapporteurs did not hear any particular complaints. A socialist member of Parliament who sits on the Committee on Environment, Spatial Planning, Devolution, Local Government and Housing and is the former mayor of a large municipality told them she was not in favour of increasing local elected representatives’ allowances, as they were already well remunerated, this was a very sensitive issue in public opinion. The rapporteurs saw the main challenge above all as the participation of women in the municipalities (less than 10% of them were presided over by women) and parishes, despite the
page 351 / 796 fact that the Constitution is supposed to guarantee gender equality, and the law now imposes a minimum of 40% women in elections.
Finally, the problem of corruption was raised several times in interviews with the rapporteurs during their visits in June and November 2019. It appears to be an issue but remains difficult to accurately quantify the phenomenon – criminal convictions of elected representatives being only what is visible – and to distinguish how much of such activity is local or national. Various solutions have been put forward or experimented with, such as increasing allowances, with no real success so far. However, the Congress has already had occasion to stress the extent to which corruption could be directly linked to the low level of remuneration of local elected representatives, even adopting a recommendation to this effect at its 36th session.6 Articles 6 and 7 of this recommendation state that “Corruption in all its forms is a destructive threat to the efficiency and quality of good governance at both local and regional level. For this reason, not only should the financial compensation of local and regional representatives be appropriate and adequate, it should also be publicly transparent. Applying such transparency at the local and regional level will contribute to instilling trust in local and regional governments. The means, levels and sources of financial compensation for local and regional representatives should be made clear and accessible. Reliance on systems of local and regional elected representation which are voluntary and nonremunerated representation can result in certain socioeconomic groups of the population dominating elected positions. Only in the smallest councils, where duties are light, should it be considered acceptable for elected representatives to be voluntary or unrecompensed.” It cannot be denied that the phenomenon is a reality in Portugal, but it must not be overstated.
Paragraph 3 of Article 7 on the rules on incompatibilities does not in itself give rise to any difficulties, as Portugal complies with it to the letter: it is in fact a legal and regulatory mechanism that establishes these rules and therefore ensures the proper exercise of local mandates.
Notwithstanding the above reservations, particularly with regard to paragraph 2, the rapporteurs consider that the three paragraphs of Article 7 of the Charter are generally complied with.
Republic of Moldova [Article ratified - Report adopted on 4 April 2019 ]
The compliance with Article 7.1 of the Charter in the Republic of Moldova was twice the subject of attention by the Congress in 2017, in connection with the fact-finding missions carried out in Chișinău (see point 3.4, above). The conclusions drawn during those visits was that, on paper, Moldovan legislation does provide for conditions of office of local elected representatives guaranteeing them the free exercise of their functions (Law No. 436 on Local Public Administration and Law No. 768 of 2 February 2000 on Conditions of Office of Local Elected Representatives).
However, and beyond this formal compliance, the Congress rapporteurs who carried out those visits were seriously concerned about the impact of local recall referendums on the “free exercise of functions”. Under Moldovan Law (Article 177 of the Electoral Code) a local referendum can be called by the council to recall or dismiss the mayor of a city or town. The reports and explanatory memorandums produced following these fact-finding missions already analysed in depth this peculiar feature of Moldovan legislation, so there is no need to carry out another extensive explanation of what was said at that time. In addition, and as a consequence of this monitoring visit, the delegation learned that there is specific case law of the Constitutional Court that has determined that local recall referendums are not unconstitutional, “given that under the constitution, the mayor is elected by the citizens, it is them (the local community) who are the competent subjects, under the law, to decide the revocation of the mayor” (Ruling 13/2002 on local autonomy, paragraph 7, applicant: Parliamentary faction).
page 352 / 796 Despite the fact that this mechanism may comply in abstracto with the Moldovan Constitution, the delegation understands that it contains unsatisfactory aspects which might go against the Charter, at least in the way that the mechanism is regulated in domestic legislation. The most important one is that the grounds or reasons for activating such a mechanism do not meet appropriate standards of certainty. In other words, the local recall referendums may produce a serious dysfunctioning of local democracy, for mayors work under the permanent “sword of Damocles” of a revocation referendum. In addition, the law leaves the door open to organised factions of citizens, who may want to use this mechanism in a perverse way to revoke a mayor. Finally, there are still negative outcomes and open questions in the practical application of this instrument. For instance, what happens if the local referendum is “successful” and later the suspended mayor is judged on the merits and acquitted by a court? In this case he or she would have been removed “by the people” on the basis of accusations that eventually turned out to be unfounded. In the light of the above considerations, the delegation understands that it would be advisable to revise the current legal scheme governing local recall referendums, in order to provide for more certainty and predictability of the grounds for calling those referendums; to ensure the participation of the mayor in the preceding electoral campaign, and to avoid distorting consequences of the application of this instrument in local democratic life.
Another matter of concern in connection with Article 7.1 is the political and judicial context surrounding the discharge of mayoral functions. Claims have been repeatedly made by the CALM and by local representatives that there is a systematic and unfair use of the opening of criminal files (dossar penale) against mayors, who are later suspended from office and even subject to restrictions of liberty. The monitoring visit has confirmed the existence and seriousness of that pattern, which de facto weakens the “free exercise” of functions by local elected rulers (see point 6 of this report, below).
In conclusion, Article 7.1 is not respected in the Republic of Moldova.
Romania [Article ratified - Report adopted on 3 March 2011 ]
The conditions of office of local elected representatives are guaranteed by Law no. 393/2004 on the conditions of office of local elected representatives. The free exercise of their functions is provided for by Articles 4 and 20 of that law.
Russian Federation [Article ratified - Report adopted on 30 October 2019 ]
Recommendation 297 (2010) called on national authorities to remove the provisions included in Article 74 of Law 131-FZ for the dismissal of mayors, but this has not happened and governors can remove from office mayors and heads of local administration in local authorities. However, the delegation was informed that nowadays this power is rarely used.
During the consultation procedure, the Ministry of Justice of the Russian Federation agreed that this mechanism is based on a judicial review but stressed that “it is extremely rarely used”. It also stressed that “this mechanism does not go beyond the generally accepted understanding of the responsibility of the head of municipality before the population and local deputies”.
Federal Law No. 131 introduced restrictions on the number of deputies who can work in a representative body on a permanent basis and who can receive monetary compensation at the level of municipal employees. Accordingly, deputies exercising powers on a non-permanent basis, as a rule, are not allowed to make permanent use of the premises (offices in the representative body, offices outside the representative body). Some deputies have public reception rooms, which are held at the expense of their own funds and donations, or of the parties of which they are members.
page 353 / 796 Financial conditions for the activities of elected officials of local self-government are characterised by a certain territorial irregularity. Therefore, a general uniform assessment about the sufficiency of remuneration of deputies, members of elected local self-government bodies and elected officials of local self-government exercising powers on a permanent basis is not possible. In general, these people are provided with sufficiently adequate working conditions. At the same time, however, representatives of the Federation Council admitted that many municipal entities whose budgets are subsidised do have a need to improve financial support to elected members of local self-government bodies.
In some municipalities, as a rule, deputies exercising their powers on a non-permanent basis do receive permanent monetary compensation for expenses for the execution of their powers, as per the established tradition before the entry into force of Federal Law No. 131. Although the law does not prohibit such forms of compensation, attempts by deputies to introduce regulations providing for such forms of compensation have often been blocked by the strong resistance coming from the administration, aimed at limiting the influence of independent and opposition deputies.
Conditions of office are also very different for elected officials at the regional/State entity level. In Moscow, deputies of the City Duma have worked both on a professional permanent basis and also in parallel with their main jobs. The following posts in Moscow are considered to include work on a professional basis: the Chairman of the Duma, his deputies and, by decision of the Duma, the heads of its permanent structural subdivisions. They are forbidden to undertake other paid work, except teaching, academic or other creative activity, or participate as defence counsels or representatives in civil, criminal or administrative cases. Deputies who work on a permanent basis receive financial remuneration, travel expenses, communications expenses, and so on.
Deputies who serve in parallel with their main job in Moscow do not receive any financial remuneration for their work as deputies but are not subject to any restrictions concerning their main job. Deputies are excused from their jobs when they attend sessions of the Duma, committees, working groups and parliamentary groups, but for no more than six working days a month. For journeys related to the exercise of their powers as deputies, they are provided with official transportation upon request.
During the consultation procedure, representatives of the Leningrad region said that it should be noted that the legislation of the Russian Federation does not contain provisions on the right of governors to dismiss mayors, and all the powers of the heads of regions of the Russian Federation to initiate the judicial procedures are well described in terms of both the legal grounds and procedures, and the deadlines.
The rapporteurs wish to highlight that still the dismissal of mayors by decisions of politicians (governors) elected at the regional level raises serious doubts about compliance with Article 8 of the Charter. As it was stressed in the previous report, the rapporteurs consider that the right of governors to dismiss mayors, which constitutes a violation of Article 7, paragraph 1, of the Charter, undermines the principle of free exercise of functions by elected politicians in local authorities. Even if governors make very rare use of this power, the possibility offered to elected politicians at the regional level to dismiss mayors should not exist.
Concerning paragraphs 2 and 3 of Article 7, it seems that the Russian Federation complies with these provisions. However, the rapporteurs would like to stress that they did not have the opportunity to examine the situation in several federal subjects, where conditions for compensation and remuneration of elected representatives can be very different.
San Marino [Article ratified - Report adopted on 28 March 2018 ]
page 354 / 796 Mayors and councillors in San Marino enjoy the free exercise of their functions. The law also provides for the remuneration of councillors for each session (35 Euros), the Mayor (an additional 200 Euros) and the Secretary (an additional 100 Euros ), a council member elected as secretary from among the members of the Council (Art. 21 of the Law 127/2013). During the monitoring mission, the interlocutors complained to the rapporteurs that there were not sufficient provisions for special leave and social security, especially for the Mayors and the Secretaries who “do not simply do a full time job, but offer a 24 hour-service”.
In fact, Art. 35 of Law No. 127/2013 also provides for special leave for elected persons (“Permessi Speciali”), but the rapporteurs nevertheless suggest that more generous provisions be introduced offering leave and contributions (or parts thereof) to the Mayors and the Secretaries of the Townships.
The rapporteurs conclude that San Marino complies with Article 7 of the Charter.
Serbia [Article ratified - Report adopted on 18 October 2017 ]
The first paragraph of Article 7 emphasizes the importance of the independence of locally elected representatives. As underlined in the Explanatory Report to the Charter, representatives must not be subject to any interference from third parties when carrying out their functions. The status of the local assembly is protected by the Constitution. Further regulations on the status of elected representatives are to be found in the Law on Local Self-Government. The Constitution also proclaims the right of national minorities to be represented in the autonomous provinces and local self-government units with mixed nationalities.
The rapporteurs are of the opinion that Serbia generally complies with the ratified paragraphs of Article 7 of the Charter.
Slovak Republic [Article ratified - Report adopted on 24 March 2016 ]
Slovak municipalities cannot determine freely the remuneration or financial compensation to be granted to the mayors or to the members of the local council. As a rule, local council members do not receive a permanent “salary” or wages. Only in big and some middle-sized municipalities do they receive a compensation for attending the regular meetings of the councils.
Slovak mayors are entitled to a minimum salary. They do receive such fixed remuneration, but this is strictly regulated by national legislation, in a manner that may summarised as follows: first of all, the gross average salary in the country serves as the basis for calculation (in 2014: 882 €). Then, this figure is multiplied by a coefficient, which differs according to the number of inhabitants of the municipality, for instance: a. 501 to 1000 inhabitants: 1,65; b. 50,000 to 100,000 inhabitants: 3,19; c. more than 100,000 inhabitants: 3,58 (in this case, the maximum salary would be around 3,150 €). In addition, this “fixed” remuneration may be increased by the local council in up to 70%, according to the performance of the mayor, additional responsibilities, special dedication, etc. Apart from this main “retribution”, mayors may receive allowances and other types of compensations for expenses incurred in the fulfilment of their tasks. In general, local leaders are satisfied with the present system of remunerations for the mayors. They find it fair in the light of the overall economic situation of the country and the salaries that are paid in the public and private sectors.
page 355 / 796 Consequently, the current Slovak system complies with the requirements of Art. 7 of the Charter.
Slovenia [Article ratified - Report adopted on 6 November 2018 ]
Conditions of office of local elected representatives are regulated by the Local Self-Government Act. Article 34a of the Act establishes that members of the municipal council, the mayor and the deputy mayor are municipal functionaries. As mentioned earlier, municipal functionaries shall perform their functions on a non-professional basis taking into account exceptions for a mayor who can decide to perform his/her tasks on professional basis and the deputy mayor who may also perform the functions professionally if agreed by the Mayor. Salaries for professional municipal administrators are regulated by Public Service Salary Act.
At the same time, the Public Sector Salary System Act regulates mayors’ salary. However, the salary of a mayor may differ from one municipality to another since, according to the mentioned Act, local municipalities are classified in seven groups based on the number of inhabitants.
During the interviews the representatives of local authorities pointed out that the salary of the mayor, deputy mayor and municipal councillors are well regulated. However, the problem is that there is no connection between the salary of the mayor and the directors of public institutions that are under municipal jurisdiction and the municipality has no influence on the directors salary (for example the principal of the kindergarten, the director of the cultural center, teacher in the kindergarten). According to the Association of Municipalities and Towns of Slovenia in particular in smaller municipalities the salaries of the teachers in the kindergarten, some municipal employees, directors of public institutions are higher than those of mayors and, in the view of the Association, the salaries of elected representatives should be determined more proportionally in correlation with those of other civil employees in institutions under the municipal jurisdiction.
Thus, the Delegation concludes that Article 7.1 of the Charter is generally complied with in Slovenia.
Spain [Article ratified - Report adopted on 20 March 2013 ]
In Spain there are currently almost 2.7 million public employees. Half of these employees work for the regions. Almost 600 000 public employees work at local government level.
The Rapporteurs was informed that the salaries of locally elected officials vary enormously. According to the information provided by several interlocutors, the vast majority of mayors do not receive remuneration and there is a large gap between the respective wages of most mayors in Spain which receive remuneration.
In addition, the Rapporteurs were informed that there is no public register giving the details of the salaries of locally elected officials. In this respect, the FEMP approved in 2009, the Code of good local governance which includes some recommendations on the remuneration of elected officials.
According to various sources, the government intends to establish a framework for the remuneration of mayors in order to establish either a balance between salaries of mayors or a ceiling for the salaries of mayors. The Rapporteurs would suggest that a minimum threshold be established as well therefor.
Another important issue to be considered and to be followed in the current monitoring process is the Government Programme of Reforms/Second Half of 2012 to 13 July 2012. One of the objectives thereof is the reform of the Civil Service Employees and Public Offices, by adapting the civil service
page 356 / 796 employee and public office regime to the economic reality, contributing thereby to budgetary stability and competitiveness. An exceptional measure in this Programme concerns the suspension of the extraordinary salary instalments given in December (or an equivalent reduction) for all civil servants. Civil servants will recover this amount after 2015 only, through contributions to their pension funds. There is a ceiling on salaries paid to mayors (and a 30% reduction in the number of local councillors (which means 21.338 consejales) to a maximum of 35 in the largest municipalities).
Austerity measures have also been imposed on the regional members of parliaments, namely through pay cuts (dedicación exclusiva) for deputies. The Government of Castile La Mancha, with a budget of 8,500 million euros and 133,000 public employees, is one of those which adopted the most drastic measures. From 1 January 2013 on, 42 out of 49 regional deputies of Castile-La Mancha will no longer receive the “dedicación exclusive”. In addition, most autonomous communities have decided to reduce the number of regional deputies. Representatives of the Socialist Group expressed their worries in this respect to the Rapporteurs, because they believe that these measures are not genuine austerity measures, but simply consist in a direct threat to regional democracy.
So far, it seems to the rapporteurs that the situation in this respect is not in compliance with the requirements laid in the Article 7 of the Charter.
As regards the plan to limit mayoral salaries and dedicación exclusiva of regional deputies, the Rapporteurs would draw the national authorities’ attention to the above mentioned provision of the Charter, and specifically to the requirements which imply an appropriate financial compensation for expenses incurred in the exercise of the office as well as where appropriate, compensation for loss of earnings or remuneration for work done (Article 7(2) of the Charter).
Sweden [Article ratified - Report adopted on 2 April 2014 ]
Under the Local Government Act (Chapter 9) an audit scheme was established at the municipal as well as at county council level. The auditors are appointed by the council and are independent in reviewing the activities of the board, committees and the administration. “The auditors inspect whether the activities have been carried out in an appropriate and financially satisfactory way and whether the accounts are true and fair and whether the internal checks carried out within the committees are sufficient” (section 9). The elected auditors are assisted by experts and carry out their function according to generally accepted auditing standards called “good auditing”.
The County Administrative Boards (CABs) and central government agencies are commissioned by the government to supervise municipalities and county councils for compliance with the laws and regulations. The areas where oversight is exercised extensively are environmental protection, social services and education. Different monitoring instruments are used such as evaluations, inspections, bench-marking systems and follow-ups.
Given the above, the Swedish supervision system can be said to be in compliance with the Charter.
The rapporteurs recall, nevertheless, that concerns were raised by some interlocutors, notably on the trend towards harmonisation of standards regarding the services provided by local authorities, to the detriment of justifiable local differences. The concern here is that too strict a harmonisation may restrict local autonomy. In addition, according to SALAR central government agencies such as the National Board of Health and Welfare and the Swedish Work Environment Authority, within the framework of their supervision, provide regulations which can be contradictory and in certain cases also reach beyond their competence.
Switzerland [Article ratified - Report adopted on 20 October 2017 ]
page 357 / 796 In view of the large number of municipalities, the number of municipal councillors involved in managing the municipalities is particularly high (some 110 000). The municipalities (like the parliaments of the Confederation and the cantons) function according to the “militia system”, which is a longstanding historical tradition. The militia system means that members of the public volunteer to fulfil public responsibilities or public office, outside of their profession and in an honorary capacity, and receive very little if any payment for their work. This system has the advantage of making citizens responsible for local affairs and avoiding the formation of a caste of professional politicians. In some cantons (such as Uri) the inhabitants are even obliged to fill such posts.
Nevertheless, the rapporteurs note that the militia system is currently encountering difficulties, in particular at the level of the municipalities where it is becoming increasingly difficult to find enough candidates to stand for election at local level, because it is proving hard to strike a balance between professional activities and the responsibilities that go with municipal posts. The rapporteurs believe that the militia system may lead to certain socioeconomic profiles being placed at an advantage in terms of access to elective offices.
There is a high degree of autonomy in this respect as every municipality is free to decide on its own rules governing the financial compensation that can be granted to local elected representatives for the performance of their duties. It is impossible to harmonise the situation because the cantons do not have authority to intervene in such matters. Although the rapporteurs are aware that neither the Confederation nor the cantons have the authority to intervene directly in a field which is the sole responsibility of the municipalities, we nevertheless think that the three levels of administration (Confederation, cantons and municipalities) should together consider what changes could be made to improve the militia system currently in force, as it has reached its limits.
It is the municipalities themselves which decide which functions and activities are incompatible and there is no uniform legislation in this field.
In conclusion, the situation in Switzerland with regard to the application of Article 7, paragraph 3, of the Charter is entirely satisfactory. Moreover, the rapporteurs conclude that the situation is more or less compliant with Article 7, paragraph 1. The reason for their reservation here is that this article is closely connected to paragraph 2 of Article 7, which has not been ratified by Switzerland. As Article 7, paragraph 2, relates to appropriate financial compensation, the lack of a guarantee of that compensation may in some cases lead to a status of local elected representative that does not allow the individual concerned freely to exercise his/her functions as guaranteed by Article 7, paragraph 1. Nevertheless, the rapporteurs are unable to comment on non-compliance with Article 7.2 because Switzerland has not ratified it, and have consequently decided to consider Article 7, paragraph 1, separately and therefore to conclude that it is complied with.
Turkey [Article ratified - Report adopted on 1 March 2011 ]
The analysis article by article is currently unavailable
Ukraine [Article ratified - Report adopted on 31 October 2013 ]
According to Article 141 (3) of the Constitution, “The status of heads, deputies and executive bodies of a council and their authority, the procedure for their establishment, reorganisation and liquidation, are determined by law”. The details are governed by the Law on the status of members of local
page 358 / 796 councils and the Law on local self-government in Ukraine. A draft law also exists on “mechanisms for the dismissal of councillors”. Where the fight against corruption is concerned, Law No. 320-VI of 7 April 2011 also applies to members of local and regional councils.
Elected members of a council or one of its executive bodies are remunerated as civil servants working on a full-time basis. That remuneration is subject to taxation.
Where the fight against corruption at national level is concerned, the rapporteurs took note of a communication of the Interior Minister dating from 2012 and of the legislative measures taken to remedy this problem. The rapporteurs were told that the dismissal of the mayors of several cities of Ukraine, in the regions of Sumy, Yuzhne, Chernivtsi and Ternopil, had given rise to a discussion in the associations of whether the strengthening of the anti-corruption legislation had not served as a pretext for starting disproportionate legal proceedings against these mayors.
Women’s participation in local political life is more marked in villages and settlements, where 50% of mayors and 70% of councillors are female. The figure in oblasts is around 15 to 20%. In the city of Dnipropetrovsk, for example, 20 of the 120 councillors and 72% of the administrative staff are women.
Overall, Ukrainian legislation complies with the principles laid down in Article 7 of the Charter. That said, where the application of paragraph 1 is concerned, the rapporteurs are concerned about the allegations made to them relating to cases in which mayors had been dismissed, cases considered to be arbitrary, based on application of the Law against corruption. Whether or not such allegations are justified, since such dismissals have not been followed by elections, the office of mayor of the authorities concerned has remained vacant for a very long time (and sometimes for years), and this clearly raises a problem in terms of local democracy, particularly from the viewpoint of Article 7 (1) of the Charter.
United Kingdom [Article ratified - Report adopted on 26 March 2014 ]
England
In the report of 1998, problems were reported regarding discrepancies between the salaries of Council Leaders or other councillors working full time for local authorities and the top officials in the same authorities. It was also reported that Councillors receive very low allowances for their work. (1997 CoE Report, 6). Mayors, Council Leaders and Members have political roles which, in case of backbench members, are not supposed to be full-time jobs. They receive allowances (as opposed to salaries) which are recommended by an independent commission and are the agreed by the full council. According to interlocutors, the allowance is low, but compared to earlier years more in line with the work expected. According to the LGA, a councillor receives £10.000 per year on average, while a Council leader or executive member will receive £34.000 per year (average). By comparison, a Member of Parliament receives a salary of £65.000. For example, in the Borough of Hackney, where Mayor and Cabinet Members devote their full time to their respective roles, their remuneration is at the level of a second or third tier Local Government Officer.
The Government’s approach is, on the one hand, to enable councils to determine the amounts to be payable to elected members, having regard to local circumstances and, on the other, to sharpen the accountability by having to appoint a local panel whose members are required to be independent of the council. Thus, each local authority has an Independent Remuneration Panel which provides the council with advice on its Members’ Allowances Scheme and the nature and level of allowances to be paid. The council must have regard to this advice when reviewing or amending its scheme. The considerable differences between different councils in terms of remuneration are explained in that
page 359 / 796 allowances are based on the size of the ward.
However, various interlocutors have pointed to difficulties in attracting genuinely qualified people for elected functions in Councils. Some interlocutors have been both part and full-time during their political career. As part of the difficulties, they reported the inflexibility of employers who find it difficult to accommodate the time spent doing council business even in case of part-time councillors. The lack of career structure for people in local government and not having pensions were also mentioned. The pensions issue appears as unfair and sends a wrong message to young people, who might be interested in engaging in politics. Any system should ensure that people are at least not financially disadvantaged at any time when working in public service and for community. Government was criticised by many interlocutors for preferring and promoting a part-time logic of engagement in the councils. This is simply not considered possible due to the workload which is to be managed. Many people already see local authorities as a body which has less impact and meaning as most decisions are taken in London and consider them as functional to the implementation of central government policy.
Scotland
Until 2007 elected members in Scotland did not receive salaries for their work, even if this was equivalent to a full time job. Councillor salaries were introduced in 2007 in order to widen access as well as to recognise the time and dedicated effort of elected members to their local communities. The basic salary for elected members is now £16.234 per year (frozen since April 2009) which was based on an assessment of the work burden anticipated for an average councillor (it represents around 75% of the average Scottish wage). The Scottish Local Authorities Remuneration Committee has recommended a substantial increase which was declined by government. A full-time engagement is thus often not considered as attractive, in particular for senior members.
Wales
In Wales, allowances payable to councillors are set by the Independent Remuneration Panel for Wales each year. All local authority members are to be paid an annual basic salary which was set as a maximum amount in previous years; from 2012-13 onwards, the Panel determined that every councillor in Wales would receive the same basic salary in order to achieve consistency. Councils can then decide to pay a certain number of senior salaries to the authority’s leader and deputy leader, to members of the executive, to chairs of committees, to the leader of the largest opposition group, and to leaders of other political groups. The maximum proportion of the membership of a council which can be paid such a senior salary is limited depending on the size of the council. Local authorities are required to publish and maintain an annual Schedule of Member Remuneration on the salaries received by all members.
A Code of Conduct for Local Government
Codes of Conduct to ensure that the highest standards of behaviour are maintained by local authority councillors and members (such as board members) of certain public bodies are more and more part of the local government landscape in member States.
The Standards Board for England, which previously regulated such matters, was abolished under the provisions of the Localism Act 2011. Now, local authorities are required to draw up their own codes of conduct for their councillors, consistent with criteria set out in the Localism Act 2011 and in line with the seven “Nolan principles” for public life (selflessness, integrity, objectivity, accountability, openness, honesty, leadership).
page 360 / 796 A Code of Conduct was introduced in Scotland with the Ethical Standards in Public Life etc. (Scotland) Act 2000. A Public Standards Commissioner (formerly the office of the Chief Investigating Officer) receives complaints by any citizen or resident about non-compliance and the Standards Commission for Scotland shall hold hearings into alleged breaches of the Codes.
For local government in Wales, Part III of the Local Government Act 2000 established a new ethical framework requiring all councils to adopt of conduct for their members (Section 51). The Local Authorities (Model Code of Conduct) (Wales) Order 2008 sets out what is expected of members and co-opted members of relevant authorities in Wales. Every local authority must have a Standards Committee responsible for adopting a local code of conduct, for monitoring conduct, and for adjudicating on cases of misconduct. All councillors are required to sign the code of conduct to ensure they uphold the highest standards. The Public Services Ombudsman for Wales will hear written complaints about alleged cases of misconduct and can take several courses of action including referral of cases to the Adjudication Panel for Wales. In September 2012, the Public Ombudsman issued a second guidance on the Code of Conduct.
Another problem mentioned in the 1998 Congress report as discriminatory practice was unequal treatment related to “surcharges”. Unlike central Government officials, local elected representatives and appointed staff could be held financially responsible for their decisions, not only if they went against the norm but also if they were guilty of "gross negligence". It seems that the situation has changed for the better, as interlocutors told the Congress delegation that surcharges no longer apply in local government in England. The sole sanction against Members under the Localism Act 2011 is criminal prosecution for any failure to declare a “disclosable pecuniary interest, without reasonable excuse, on an interest form or to declare full or relevant interest at meetings. These interests include matters relating to a Member, or their spouse/partner, related to employment, trade or vocation; sponsorship to carry out role as a Member; election expenses; contracts with the Council; beneficial interest in a property.
In the rapporteurs’ opinion, the situation is overall in compliance with Article 7. However, the work of executive councillors should be re-evaluated so that their status corresponds better to their responsibilities. While the status and conditions of elected representatives seem to have slightly improved compared to 1998, in particular regarding allowances, there are concerns that engagement in councils, in particular for the younger generation, is not attractive due to economic disadvantages for full-time councillors and an unequal distribution of workload. A part-time model might work for backbenchers, but definitively not as a general model.
Article 7.2 Conditions under which responsibilities at local level are exercised
They shall allow for appropriate financial compensation for expenses incurred in the exercise of the office in question as well as, where appropriate, compensation for loss of earnings or remuneration for work done and corresponding social welfare protection.
Albania [Article ratified - Report adopted on 31 October 2013 ]
Consult reply indicated at article 7.1
page 361 / 796 Andorra [Article ratified - Report adopted on 28 March 2018 ]
Consult reply indicated at article 7.1
Armenia [Non ratified - Report adopted on 15 June 2021 ]
Article 7.2
2 They shall allow for appropriate financial compensation for expenses incurred in the exercise of the office in question as well as, where appropriate, compensation for loss of earnings or remuneration for work done and corresponding social welfare protection.
189. The weak financial situation in which most local authorities find themselves apparently makes it difficult to compensate for all legitimate costs of the exercising of the rights and functions of council members.
190. It is worth noting however that the members of the Community Council are entitled to receive reimbursement against the costs incurred by them while fulfilling their duties, although the law does not guarantee salary even in the greater municipalities.
Austria [Non ratified - Report adopted on 28 September 2020 ]
In accordance with Article 12.2. of the Charter, Austria has not declared itself bound by this provision.
As mentioned above, during the monitoring visit local and regional elected representatives and their associations raised the issue of unfair material compensation for their work.
In this regard, in line with Congress recommendation 383 (2015) on conditions of office of local elected representatives, the rapporteurs note that the levels of payment established at national or regional level should be such as to avoid disparities among authorities and the financial reward should be adequate for the work performed by local and regional elected representatives. This would also stimulate the interest of a broader range of people to stand for local election and contribute to preventing risks of corruption.
Given that there is material compensation for local and regional elected representatives in Austria, but its adequacy does not appear to be achieved, the rapporteurs conclude that the situation in Austria is partially compliant with the requirement of this provision.
The rapporteurs would like to reaffirm their opinion that social welfare protection of Austrian local elected representatives needs to be strengthened as an important measure to safeguard local democracy and local public interest.
Azerbaijan [Non ratified - Report adopted on 17 June 2021 ]
Azerbaijan has not ratified Article 7(2) of the Charter.
The rapporteurs note, however, that Article 15 of the Law on the Status of Municipalities, referred to above under Article 7.1, if consistently applied, should be sufficient to fulfil the requirements of Article 7.2, whose aim is simply to ensure that local elected representatives receive “appropriate
page 362 / 796 financial compensation” and to avoid conditions preventing, limiting or even excluding potential local candidates from standing for office because of financial considerations.
Belgium [Article ratified - Report adopted on 15 October 2014 ]
Flemish Region (Vlaanderen)
Consult reply indicated at article 7.1.
Walloon Region and German-speaking Community
Consult reply indicated at article 7.1.
Brussels-Capital Region
Consult reply indicated at article 7.1.
Bosnia and Herzegovina [Article ratified - Report adopted on 31 October 2019 ]
The Federation of Bosnia and Herzegovina laws on salaries regulate principles for staff and councillors establishing principles and setting ceilings (through co-efficients); however, 10 different laws exist in the 10 Cantons. All Mayors are professionals (no other activity is permitted), their income is calculated on the basis of a minimum salary multiplied by a co-efficient. Overall, salaries are relatively low (850 KM, on average). Councillors receive a provisional fee decided by the municipal council. In Jablanica, this fee is quite low and amounts to 300 KM per month and covers the sessions, participation in committees, travel expenses (within municipality) and office hours (once a week); reportedly, in other municipalities it may go up to 800 KM.
In Republika Srpska, the compensation of local self-government unit officials, i.e. mayor, chief municipality executive, their deputies, as well as the president and vice-president of the assembly, is to be decided in accordance with the Law on Officials’ Status in the Local-Self Governing Units. Compared with the Federation of Bosnia and Herzegovina, the situation is similar: all Mayors are employed professionals, but the basis for the Mayor's salary is the average salary in the municipality multiplied by a Council decision (1.100 KM, on average; range from 750 KM to 2.500 KM in Banja Luka and Bijelina). Article 41 of the Republika Srpska Law on Local Self-Government states that local councillors may receive an allowance, which is determined by the decision made by the local assembly (amount of up to 50% of the average net wage paid by local authority).
In conclusion, currently the requirements of Article 7.2 appear to be satisfied.
Bulgaria [Article ratified - Report adopted on 21 January 2021 ]
Article 7.2
1. This paragraph again refers to the conditions of office of local elected representatives and focuses on the financial aspect of their work. The aim of the paragraph is to ensure that local elected representatives receive “appropriate financial compensation” and to avoid the conditions of office preventing, limiting, or even excluding potential local candidates from standing for office because of financial considerations44.
1. Concerning elective office adistinction can be drawn between three degrees of commitment:
page 363 / 796 - elective duties considered as a full-time responsibility (engagement in another occupational activity at the same time is barely possible);
- duties considered as a part-time responsibility (40%, half time, etc.);
- political duties which constitute an ancillary activity (not generally affecting the main occupational activity). The elected representative can keep a full-time job.
1. The distinction between these three categories does not reflect the practice in all countries. Some consider that any elected office, even if it involves only a few hours’ work a month, is a part-time job. In many countries full-time engagement is often implied only for members of parliaments since engagements are usually not so demanding for local councillors. While a mayor (and in some cases one or several deputy mayors) can possibly be considered as a full- time responsibility, a substantial proportion of the local elected councillors hold part-time responsibilities, or their political duties constitute an ancillary activity.
1. In Bulgaria, despite numerous legal changes in the last 10 years, the issue of renumeration for municipal councillors is relatively stable in the LSGLA Act, as the country has lifted reservations under Article 7.2 of the Charter. Remuneration of municipal councillors is determined as a percentage of the remuneration of the chairman of the municipal council or of the average remuneration of the municipal administration for the municipalities of different scales. The remuneration of the chairman is determined by the municipal council as an amount of up to 90% of that of the mayor of the municipality.
1. Moreover, according to Article 34 of the Local Government and Local Administration (LGLA) Act, the municipal councillor shall use unpaid official leave for the time required for fulfillment of his or her obligations. Travel and other expenses used by the municipal councillor in connection with his or her work in the council, shall be taken from the municipal budget.
Croatia [Article ratified - Report adopted on 20 October 2016 ]
In Croatia the executive bodies, such as the mayor, are salaried positions. Other members of the local representative body (councillors) are not paid but are given financial compensation for the expenses incurred in exercising their powers as prescribed by the law. The law clearly defines the conditions for exercising the powers of locally elected persons. In 2009 the introduction of direct election for mayors and prefects brought discord between the local representative bodies and the elected mayors, even causing a government crisis in the City of Zagreb1. This was due to a problem of cohabitation – where the mayor and the council majority represented different political options. In order to harmonize relations between the elected mayor and members of the representative body, the Parliament of Croatia, in December 2012, passed amendments to the Law on Local and Regional Self-Government and increased the powers of the elected mayors.
The rapporteurs are satisfied that Croatia complies with Article 7 paragraph 2 of the Charter.
Cyprus [Non ratified - Report adopted on 20 October 2016 ]
See answer at article 7.1
Czech Republic [Non ratified - Report adopted on 8 March 2012 ]
page 364 / 796 On the other hand, the country is not bound by Article 7 para. 2 about financial compensation to elected representatives. This must be understood in the light of the fact that such questions are left to the discretion of the local and regional council themselves.
Law 128/2000 sets out the conditions of remuneration of municipal councillors as public civil servants. Councillors are divided into two categories, namely “released” and “non-released” members. Those who belong to the first group, i.e. who are “released” on a long-term basis in order to perform their office and those who were not in an employment relationship before being elected to the council, are remunerated by the municipality (this includes monthly salaries plus any additional remuneration and remuneration at the end of term of office). The “non-released” members of the municipal council, ifthey are in an employment relationship, are granted leave by their employer with a salary compensation for performance of their office. The salary compensation is transferred by the municipality to the employer. Non-released members who are not employed receive a lump sum from the municipality as compensation for loss of earnings in relation to the performance of their office.
Denmark [Article ratified - Report adopted on 31 October 2013 ]
Consult reply indicated at article 7.1
Estonia [Article ratified - Report adopted on 29 March 2017 ]
Consult reply indicated at article 7.1.
Finland [Article ratified - Report adopted on 28 March 2017 ]
Consult reply indicated at article 7.1.
France [Non ratified - Report adopted on 22 March 2016 ]
France has declared not to be bound by Article 7 paragraph 2 this may now be outdated, since the new law of 2015 incorporating the “Charte de l’elu local” meets the requirements set by Article 7 paragraph 2. In addition, a withdrawal of this declaration would force the legislator to pay more attention to elected representatives in small municipalities, who still criticise the conditions they face when exercising their functions. Therefore, the rapporteurs believe that France should be able to withdraw this declaration.
Georgia [Article ratified - Report adopted on 7 November 2018 ]
The head of Sakrebulo and his or her deputies, as well as the heads of committees and fractions enjoy the status of local elected public officials and as such they receive allowances for the execution of their mandates. Those members of local councils who do not hold official administrative positions receive compensation for the execution of their mandate, the amount varying between municipalities and being dependent on the size of local budgets; it is higher in big cities and lower in small municipalities with limited own revenues.
Georgia therefore complies with Article 7, paragraph 2, of the Charter.
Germany [Article ratified - Report adopted on 14 March 2012 ]
page 365 / 796 Consult reply indicated at article 7.1
Greece [Non ratified - Report adopted on 26 March 2015 ]
Although Greece is not bound by paragraph 2 of Article 7, rapporteurs would like to point out the risk that important cuts in remuneration of elected representatives, if brought to extremes, may prevent some categories from standing for office and, in the end, undermine the free exercise of their functions.
Hungary [Article ratified - Report adopted on 12 February 2021 ]
Article 7, paragraph 2, refers to an appropriate financial compensation for elected representatives.
Local representatives are entitled to receive a salary and benefits in-kind (Cardinal Act on Local Self- Government, Article 35). Both can only be provided if the local government’s own-source revenues can cover them and the allocation does not endanger the performance of obligatory municipal tasks.78 A local representative may only claim expenses related to his/her work as a local representative. There is a local government decree on the compensation (honorarium, benefits in kind) of representatives. The compensation of the mayor and deputy mayors is regulated by an act of parliament.
The remuneration and benefits in kind of the local representative who breaches his/her obligations may be reduced or withdrawn based on the decision of the body of representatives (Cardinal Act on Local Self-Government, Article 33).
Therefore, the rapporteurs consider that Article 7.2 of the Charter is respected in Hungary.
Iceland [Article ratified - Report adopted on 29 March 2017 ]
As for Article 7, para. 2, of the Charter, according to Article 32 of the Local Government Act, municipal councils are obliged to determine appropriate stipends to municipal councilors for their work. Travelling costs, accommodation and maintenance costs, if needed, shall also be covered. The representatives met by the rapporteurs shared very different views on the appropriateness of financial compensation for councilors. Some interlocutors pointed out the low level of the remuneration, others seemed to be satisfied. An explanation could be that the level of remuneration for councilors falls within the autonomy of municipal councils. Nevertheless, the fact that the law refers to an obligation of municipal council to determine “appropriate” stipends and the lack of strong complaints may be considered sufficient indicators of the fact that Article 7, para 2 of the Charter is complied with.
Ireland [Article ratified - Report adopted on 31 October 2013 ]
Consult reply indicated at article 7.1
Italy [Article ratified - Report adopted on 18 October 2017 ]
As regards Article 7, paragraph 2, the assessment may differ according to municipalities and provinces and metropolitan cities. In the case of municipalities, local council members do not receive, as a rule a permanent “salary” or pay. At most (especially in big and some middle-sized municipalities), they receive an allowance or indemnity (gettone di presenza) for participating in the different meetings of the council and its commissions (Article 82, paragraph 2, Testo Unico), and the
page 366 / 796 reimbursement of the costs of travelling (Article 84, Testo Unico).
The mayors do receive a remuneration for the exercise of their functions (called “indennità” by the Unified Laws and by Decree-Law No. 174/2012). This pay is regulated in detail by a Decree that is approved by the competent State minister, in the framework of the guidelines and criteria established by the legislation on local authorities (for instance, the population of the Comune). Italian municipalities can determine in an autonomous way the remuneration or financial compensation to be granted to the mayors, within the limits of the said State decree. For instance, in municipalities having up to 1,000 inhabitants, the maximum is 1,291€ per month. This amount escalates according to the population, and in the municipalities with more than 500,000 inhabitants, the indennità´s amount is 7,019€. The members of the local council receive an “allowance” or compensation for assisting to the meetings of the said council or other statutory bodies thereof (Gettoni di presenza). Here again the amount varies according to the city´s population: from 17€ in towns with up to 1,000 inhabitants, to 103€ in cities having more than 500,000 inhabitants. As for the actual amount of the said pay, in general the feeling is that it may be considered as “fair”, taking into account the different national realities in Europe and the delicate economic situation of the Italian public sector. Apart from this main “retribution”, mayors and the members of the local councils may receive allowances and other types of compensations for expenses incurred in the fulfilment of their tasks.
In the case of provinces and metropolitan cities, however, the situation is far less satisfactory. As a matter of fact, the Delrio Act broke the historical practice and legislative provision that provincial councillors and presidents should receive remuneration or at least compensation for their work as local representatives. The same rule was extended to the Metropolitan cities that have replaced some of the provinces. In this sense, Article 84 of the Delrio Act provided that the positions of President and members of the Provincial Council will be discharged in a non-remunerated way (sono esercitati a titolo gratuito), and Article 24 of the same Act did the same with the positions of presidents and members of the metropolitan cities.
This deplorable situation was the target of strong disapproval uttered by the provincial leaders and by the Union of the provinces. They complain of course about this strange situation, but also by the fact that the non-existence of retributions, salaries or allowances has a catastrophic effect on the possibility to have qualified leaders engaged in the provincial political life, a contention which seems understandable. Many people are “de facto” prevented from getting involved in provincial politics.
Ministerial representatives, replicated that the situation is not truly as the one depicted by provincial leaders and see the situation from another perspective. First, the measure was taken to get savings in the public expenses. Second, they content that in reality provincial representatives do get a sort of payment: if the mayor of one municipality is elected as president of his province, he still obtains the allowances and indemnities that corresponds to him as a mayor. This indication does not deny the fact that, under the current legislation, someone will be responsible for discharging two positions (that of mayor and that of President of the province) that are highly demanding, but receiving only one “salary”. That is, two jobs with only one salary. It is clear that “nobody can serve two masters…” In the case of the members of the provincial Giunta, the situation seems to be even worse, for there is no fixed remuneration for any of the jobs.
In the light of the above, the rapporteurs consider that Article 7, paragraph 2 is not respected in Italy, in the case of Provinces and Metropolitan Cities.
Latvia [Article ratified - Report adopted on 27 March 2018 ]
Consult reply indicated at article 7.1
page 367 / 796 Liechtenstein [Non ratified - Report adopted on 28 March 2018 ]
Consult reply indicated at article 7.1
Lithuania [Article ratified - Report adopted on 6 November 2018 ]
Consult reply indicated at article 7.1
Luxembourg [Article ratified - Report adopted on 21 October 2015 ]
Consult reply indicated at article 7.1.
Malta [Article ratified - Report adopted on 29 March 2017 ]
Article 7, paragraph 2 of the Charter provides that appropriate financial compensation should be allowed for expenses in the exercise of the office in question as well as appropriate compensation for loss of earnings or remuneration for work done and corresponding social welfare protection.
This requirement of the Charter is partly addressed by Article 32 of the Local Councils Act, which provides for the payment of an honorarium to the Mayor and the allowance payable to the Councillors of each locality.
As regards the honorarium payable to Mayors, in localities with less than 5.000 residents, this honorarium amounts to 1/3 of the honorarium payable to a member of Parliament. In localities having less than 15.000 residents, the honorarium is equal to ½ of the honorarium payable to a member of Parliament and in all localities having more than 15.000 residents, the honorarium shall be 2/3 of the honorarium payable to a member of Parliament. The delegation was informed that the honorarium of Mayors ranges from €300 up to €1.000 per month depending on the population of each locality. The Local Councils Act indicates that the said honorarium may, at the choice of the Mayor, be deemed as income for the purposes of the Social Security Act.
As regards the allowance payable to Councillors, Article 32(2) of the Local Councils Act provides that the Minister responsible for Local Government may by regulations establish the allowance payable to Councillors. Such an allowance has to be proportionate to the number of meetings attended by each Councillor and no payments for reimbursement of expenses may be allowed.
As can be deduced from the above, the Councillors and the Mayor of each locality are indeed provided with an allowance for their service in office. Nevertheless, what the Congress delegation observed during the meetings with local councils and the Local Councils Association is that the allowance payable to Councillors and the honorarium payable to Mayors are by no means adequate. The insufficiency of the Councillors’ allowance is further aggravated by the inexistence of a provision in the Local Councils Act for the payment for loss of earnings or remuneration for work done and corresponding welfare protection to Councillors and the Mayor, despite the express wording of Article 7, paragraph 2 of the Charter. Hence, accommodation and travel expenses for trips to other States, as well as other expenses incurred in the execution of the Councillors’ duties are not reimbursed and this is an issue that should be revisited by the Republic of Malta. Simultaneously, the current transportation, telephone and internet reimbursements included in the allowance payable to Councillors are deemed insufficient.
The sum of €300 up to €1,000 per month payable to Mayors and the allowance of €100 per month
page 368 / 796 payable to Councillors needs to be increased. Service at the positions of Mayor and Councillor is seen as almost voluntary, since the honorarium/allowance payable is not even enough to cover their expenses and the value of the time spent in the execution of their duties. Local authorities suggested that the system for the payment of honorariums and allowances should be revisited and reformed in order to ensure that Mayors and Councillors receive adequate remuneration and compensation for their service. At the same time during their meetings, the rapporteurs were told that the service of the Mayor should become a full time profession, for which the person elected should be adequately remunerated and reimbursed in order to perform his/her duties and obligations. Reform of the current system of Mayors’ and Councillors’ remuneration and reimbursement is expected to encourage greater public interest in the local elections, increased participation on behalf of the residents in the local affairs and higher levels of devotion demonstrated by Mayors and Councillors in the execution of their duties and responsibilities.
In light of the above, there is part conformity of the Republic of Malta with the requirements of Article 7, paragraph 2 of the Charter and non-compliance with the requirement of the said Article for appropriate compensation for loss of earnings or remuneration for work done and corresponding social welfare protection.
Furthermore, it should also be stressed that during the monitoring visit the delegation was informed that out of the 68 mayors of local councils in Malta only 8 of them are women and the participation of women in local councils as Councillors is limited.
Monaco [Non ratified - Report adopted on 28 March 2018 ]
Monaco has not ratified Article 7.2 on financial compensation for local elected representatives. All elected representatives keep their original job and no elected representatives perform their public duties full time. Elected representatives receive emoluments but they do not make pension or social contributions. In the rapporteurs’ view, this system does not encourage unemployed persons to get involved in local politics.
Montenegro [Non ratified - Report adopted on 21 October 2015 ]
Netherlands [Non ratified - Report adopted on 26 March 2014 ]
Consult reply indicated at article 7.1
North Macedonia [Article ratified - Report adopted on 26 February 2013 ]
Consult reply indicated at article 7.1
Norway [Article ratified - Report adopted on 26 March 2015 ]
Consult reply indicated at article 7.1.
Poland [Article ratified - Report adopted on 2 April 2019 ]
Article 7, paragraph 2, refers to an appropriate financial compensation for elected representatives.
page 369 / 796 As for the financial compensation of local representatives, council members receive no salary but an allowance for their work, which is on a part-time basis and considered to be an “additional” position. The extent of the allowance depends on the number of residents of the gmina or powiat. The council sets the remuneration of its members by means of a resolution, within the framework of national regulation. The remuneration of the mayor and the starosta (which legally are considered in Poland local government employees) follows similar rules, since the council decides on their salary, which is also capped by the national regulation and depends on the population. They receive a special duty allowance, which is also dependent on the population of the community.
The delegation was informed that on 15 May 2018 a new Regulation of the Council of Ministers was adopted (according to Article 37 of the Law on Self-Government Employees of 21 November 2008), establishing the minimum and maximum of the remuneration and of the special duty allowance. The new Regulation reduced the maximum and minimum by 20%. The Association of Polish Cities submitted to the delegation a legal opinion supporting the claim which points out, among other elements, that the reduction is not supported by a transparent justification and that there was a lack of consultation, as the draft was not submitted to the Joint Committee. The written reply of the Ministry of the Interior and Administration to the questionnaire underlines that there is a social expectation by the public opinion that remunerations must be reduced since the general perception is that politicians’ salaries are too high. In its reply, the Ministry also emphasised that the adopted solution is based on the amendment to the Law on the exercise of the mandate of Deputy or Senator, adopted by the Sejm on 10 May 2018 which provides for a 20% reduction in the salaries of members of parliament.
The rapporteurs would like to express their concerns regarding this trend, especially as the 20% reduction does not happen as a consequence of a financial crisis, and is actually implemented at a time of economic growth. For now, the rapporteurs do not consider the reduction as a measure sufficient to determine a violation of Article 7.2, but they maintain that the situation must be closely monitored in the future.
Portugal [Article ratified - Report adopted on 28 September 2020 ]
See answer at article 7.1
Republic of Moldova [Article ratified - Report adopted on 4 April 2019 ]
The testimonies, data and information collected by the delegation on this point clearly show that, at present, the conditions of office for local elected representatives do not provide for appropriate financial compensation. In fact, the remuneration awarded to mayors is extremely low, which results in the economic situation of the local officials and civil servants analysed above. This has been a structural complaint made by the CALM association in recent years. The following figures were given to the delegation during their visit: the Mayor of ChiÈ™inău, the largest and most important city in the country, has a salary of 400€/month, which seems to be extremely low; a regular mayor may earn about 200€ or 300€/month. In 2015, the situation was even worse, and the salary for the mayor of a small to medium sized town was 2 800 lei (about 130€/month), but the mayors went on strike and the then Prime Minister Filat increased the salaries to 200€/month, the present average figure.
A president of a Raioane Council also receives approximately 300€/month. Many mayors have to work part time in other professional activities, such as teaching, or running their own private businesses. This prevents many mayors from discharging their duties in a professional manner. Moreover, those salaries are strictly determined and regulated by national laws and regulations, therefore there is no possibility for local councils or bodies to establish a higher or different level of
page 370 / 796 remuneration for mayors or for the presidents of the Raioane Councils. These figures speak for themselves and they create many ancillary problems, for example the difficulty to get young and qualified people involved in local politics and the lack of professionalism in local management. In addition, this creates fertile ground for the spread of economic corruption.
In the light of the above, the rapporteurs conclude that Article 7.2 is violated in the Republic of Moldova.
Romania [Non ratified - Report adopted on 3 March 2011 ]
As far as Article 7(2) is concerned, our delegation reiterates that Romania made a reservation concerning this paragraph when it signed the Charter. Nonetheless, it is interesting to note that Law no. 393/2004 provides for several arrangements for paying elected representatives bonuses and financial compensation in the exercise of their functions, and even afterwards in the case of former elected representatives who reach retirement age.
During the visit, the associations stated that in some cases local administrative officials received a salary higher than that of the mayor. However, the Ministry of the Administration and the Interior informed us about a draft legal instrument aimed at reassessing the mayor’s salary in the light of the pay of local officials.
Russian Federation [Article ratified - Report adopted on 30 October 2019 ]
Consult reply indicated at article 7.1
San Marino [Article ratified - Report adopted on 28 March 2018 ]
Consult reply indicated at article 7.1
Serbia [Non ratified - Report adopted on 18 October 2017 ]
The delegation recalls that paragraph 2 of Article 7 on appropriate financial compensation has not been ratified by Serbia (see supra, para. 3 of the present report).
Slovak Republic [Article ratified - Report adopted on 24 March 2016 ]
See answer indicated at article 7.1
Slovenia [Article ratified - Report adopted on 6 November 2018 ]
The Local Self-Government Act is precise regarding salaries of municipal functionaries. It states precisely that “Mayors who perform their functions on a non-professional basis shall be entitled to wages in the amount of 50% of the wages they would have received had they performed this function on a professional basis”. This clause ensure that mayors are entitled to receive the financial compensation during their office even they keep their other business and/or employment options.
A member of a municipal council is entitled to an attendance fee for the session of the municipal council or meetings of the working body of the municipal council. The amount of fee to be paid to members of municipal council for attendance of meetings may not exceed 7.5% of the salary of the mayor.
page 371 / 796 The municipal council decides on criteria for the payment of attendance fee for members of municipal council, member of working bodies of the municipal council and other municipal bodies. However, benefit for years of services for elected local representatives is not taken into account. Anyway, the level of wages or partial wages and the partial wages of members of the municipal council shall be stipulated in a municipal council act.
Therefore, the Delegation concludes that Article 7.2 of the Charter is complied with in Slovenia.
Spain [Article ratified - Report adopted on 20 March 2013 ]
Consult reply indicated at article 7.1
Sweden [Article ratified - Report adopted on 2 April 2014 ]
Consult reply indicated at article 7.1.
Switzerland [Non ratified - Report adopted on 20 October 2017 ]
The delegation reiterates that Article 7.2 of the Charter has not been ratified by Switzerland.
Turkey [Article ratified - Report adopted on 1 March 2011 ]
The analysis article by article is currently unavailable
Ukraine [Article ratified - Report adopted on 31 October 2013 ]
Consult reply indicated at article 7.1
United Kingdom [Article ratified - Report adopted on 26 March 2014 ]
Consult reply indicated at article 7.1
Article 7.3 Conditions under which responsibilities at local level are exercised
Any functions and activities which are deemed incompatible with the holding of local elective office shall be determined by statute or fundamental legal principles.
Albania [Article ratified - Report adopted on 31 October 2013 ]
Consult reply indicated at article 7.1
Andorra [Article ratified - Report adopted on 28 March 2018 ]
page 372 / 796 As for Article 7, paragraph 3, according to which “Any functions and activities which are deemed incompatible with the holding of local elective office shall be determined by statute or fundamental legal principles”, the incompatibilities are determined by Articles 16, 17, 63 and 74 of the Llei qualificada del règim electoral i del referèndum (Qualified Law on electoral system and referendum),.
The rapporteurs conclude that the requirements of Article 7 of the Charter are fully respected in Andorra.
Armenia [Article ratified - Report adopted on 15 June 2021 ]
Article 7.3
3 Any functions and activities which are deemed incompatible with the holding of local elective office shall be determined by statute or fundamental legal principles.
Austria [Article ratified - Report adopted on 28 September 2020 ]
According to the explanatory report on the Charter, this paragraph provides that disqualification from holding local elective office should only be based on objective legal criteria and not on ad hoc decisions.
In this respect, the Austrian Land regulations provide specific and objective criteria for disqualifying a locally elected person. In addition, municipal codes of different Länder clearly state the conditions when office is lost (e.g. for Burgenland, Article 48; in Carinthia, Section 68a; and in the case of Salzburg, Articles 21 and 22).
The rapporteurs conclude that Austria complies with the requirement of this paragraph.
Azerbaijan [Article ratified - Report adopted on 17 June 2021 ]
As mentioned above, the legislation lays down the functions and activities which are deemed incompatible with the holding of the elective mandate in the municipal councils. The Electoral Code also provides that local elected representatives cannot at the same time hold another position at local level or in regional or national government or in State or municipally owned enterprises.
This provision is fulfilled.
Belgium [Article ratified - Report adopted on 15 October 2014 ]
Flemish Region (Vlaanderen)
Consult reply indicated at article 7.1.
Walloon Region and German-speaking Community
Consult reply indicated at article 7.1.
Brussels-Capital Region
Consult reply indicated at article 7.1.
page 373 / 796 Bosnia and Herzegovina [Article ratified - Report adopted on 31 October 2019 ]
Specific Laws on Conflict of Interest in the Federation of Bosnia and Herzegovina, Republika Srpska and Brčko Districtdetermine which functions or activities are incompatible with the mandate of a mayor or council member. No specific issues regarding an excessive limitation have been raised during the visit of the delegation.
The situation in Bosnia and Herzegovina appears to be in conformity with Article 7.3.
Bulgaria [Article ratified - Report adopted on 21 January 2021 ]
Article 7.3
1. Restrictions on holding elected office should be as limited as possible and set out in national laws, which means they apply to all levels of government. The main restrictions on holding office should be related to potential conflicts of interest or involve a commitment that prevents the local representative from discharging his or her duties for the local authority in a professional way45.
1. Over the past 10 years, several changes have been made to the legal framework regulating the election and activities of local authorities. The conditions for the election of local authorities were regulated in the Electoral Code adopted in 2014, regulating the conduct of all types of elections in the country, including those for members of European Parliament. It introduced a new requirement for candidates for municipal councillors and mayors: to have lived in the respective settlement at least in the last six months, which also applies to citizens of EU member States, when applying for positions as municipal councillors.
1. A significant change is the adoption of the new Counter-Corruption and Unlawfully Acquired Assets Forfeiture Act (CCUAAFA, 2018). It regulates the procedures for prevention and establishment of corruption, as well as conditions for incompatibility of taking and holding posts in both elected offices and senior positions in municipal administrations. At the same time, through this law, changes were made in the LSGLA, which introduced new conditions for incompatibility of municipal councillors. Some of these changes led to limitations for some active and prominent citizens in local communities to run in the 2019 elections.
1. More precisely, according to Article 34(5) of the LSGLA, the municipal councillor cannot: 1. be a member of a managing, supervisory or a control body, board of directors, a controller, manager, procurator, commercial proxy, syndic or a liquidator of trade companies with municipal participation or a director of a municipal enterprise; 2. occupy a position of municipal councillor or similar position in another Member State of the European Union; 3.carry out activities, which lead to violation of a prohibition or restriction under Chapter Eight, Section II of the CCUAAFA.
1. According to paragraph 6 of the same article of the LSGLA, within one month from taking the oath, a person, who, upon their election as a municipal councillor, holds a position under paragraph 5, items 1 and 2, shall apply for their dismissal from the position, and shall notify in writing the chairman of the municipal council and the municipal election committee. When a municipal councillor has a private interest, they shall be obliged to take action to prevent a conflict of interest under Chapter Eight, Section III of the CCUAAFA.
page 374 / 796 Croatia [Article ratified - Report adopted on 20 October 2016 ]
The term of the mandate of elected members of the local representative bodies and the regime to implement their functions’ are established by the Law on Local and Regional Self-Government. Local representatives are elected for a term of 4 years (Article 29). Article 30 of the same law clearly defines a procedure for preventing a conflict of interests and incompatible activity.
The rapporteurs consider that Croatia complies with Article 7 paragraph 3 of the Charter.
From the foregoing it can be concluded that Croatia complies with Article 7 of the Charter governing the conditions under which those holding local elective office exercise their responsibilities.
Cyprus [Article ratified - Report adopted on 20 October 2016 ]
See answer at article 7.1
Czech Republic [Article ratified - Report adopted on 8 March 2012 ]
Consult reply indicated at article 7.3
Denmark [Article ratified - Report adopted on 31 October 2013 ]
Consult reply indicated at article 7.1
Estonia [Article ratified - Report adopted on 29 March 2017 ]
Consult reply indicated at article 7.1.
Finland [Article ratified - Report adopted on 28 March 2017 ]
Consult reply indicated at article 7.1.
France [Article ratified - Report adopted on 22 March 2016 ]
Consult reply indicated at article 7.1
Georgia [Article ratified - Report adopted on 7 November 2018 ]
Functions and activities that are incompatible with the work of a local council member are laid down in the Code of Local Self-Government (Articles 39, 42, 55 and 58) and other relevant legislation.
Georgia therefore complies with Article 7, paragraph 3, of the Charter.
Germany [Article ratified - Report adopted on 14 March 2012 ]
Consult reply indicated at article 7.1
Greece [Article ratified - Report adopted on 26 March 2015 ]
page 375 / 796 As for Article 7, para 3, objective criteria of incompatibility are provided by the law. In order to safeguard public interests, judicial and religious officers, armed forces and security forces officers as well as any person having any relation with the municipal authorities, or any debt or owing money to the municipality may not stand for the offices of mayor, deputy mayor or member of the municipal council. Standing for elections at both levels of local government is prohibited. Any election of the same person as an elected representative of the first and second level local government is precluded. Rapporteurs were told that a prohibition existed between the office of mayor and the practice as a lawyer that could prevent lawyers from engaging in local democracy, but that eventually that prohibition was lifted.
Hungary [Article ratified - Report adopted on 12 February 2021 ]
As for Article 7, paragraph 3, according to which “Any functions and activities which are deemed incompatible with the holding of local elective office shall be determined by statute or fundamental legal principles”, in Hungary the incompatibilities are determined by several legal provisions. One novelty of the 2011 reform has been the introduction of the incompatibility between mayors and members of the parliament.
According to the Cardinal Act on Local-Self Government, Articles 36 and 37, a strict regulation on the conflict of interest has been introduced. Article 36 lists several precise reasons for conflict of interest, that must be removed (according to Article 37) within thirty days after being elected or after the reason for incompatibility arises. If, after a waiver and the following delay, the local representative fails to remove the conflict of interest, the proceeding may bring to the termination of the mandate.
Therefore, the activity that are incompatible with the office can be considered determined by statute. The only concern is raised by the opening statement of Article 36.1, according to which “Local representatives shall not engage in any activity which threatens the public confidence that is necessary to perform his/her functions”. Rapporteurs believe that, in order to comply with Article 7.3 of the Charter, this provision has to be interpreted as specified by the following text of the paragraph in which it is included, i.e. not as a general open provision.
In the light of this interpretation, the rapporteurs are of the opinion that Article 7.3 of the Charter is respected in Hungary.
Iceland [Article ratified - Report adopted on 29 March 2017 ]
As for Article 7, para. 3, of the Charter, the Local Government Act provides for disqualification from participation to the examination of, and final decisions regarding, individual matters (Article 20). In those cases, the alternate should be summoned for the examination and final decision of the matter. To the knowledge of the delegation, no rules exist on the disqualification from the holding of local elective office. According to Article 2 of Local Government Election Act, Law 5/1998 with subsequent amendments, “Every Icelandic national who has reached the age of 18 years when an election takes place and who is legally domiciled in the municipality is entitled to vote in municipal elections. According to Article 3 “ Any person who is eligible to vote in a municipality, as provided for in Article 2, and who has not been deprived of legal competence shall be eligible to stand for election to a municipal council.”. If a councillor on a municipal council loses his or her eligibility for election, he shall step down from the municipal council (Article 30 Law 138/2011). In that case, his alternate
page 376 / 796 should take his seat (Article 31).
Consequently, the rapporteurs consider that Article 7 of the Charter is respected in Iceland.
Ireland [Article ratified - Report adopted on 31 October 2013 ]
Consult reply indicated at article 7.1
Italy [Article ratified - Report adopted on 18 October 2017 ]
As regard Article 7, paragraph 3 of the Charter, this provision is complied with, in the sense that the Testo Unico (Articles 63 to 65) and the electoral legislation determine what functions and activities are deemed incompatible with the holding of local elective office.
Latvia [Article ratified - Report adopted on 27 March 2018 ]
Consult reply indicated at article 7.1
Liechtenstein [Article ratified - Report adopted on 28 March 2018 ]
Consult reply indicated at article 7.1
Lithuania [Article ratified - Report adopted on 6 November 2018 ]
See answer indicated at article 7.1
Luxembourg [Article ratified - Report adopted on 21 October 2015 ]
Consult reply indicated at article 7.1.
Malta [Article ratified - Report adopted on 29 March 2017 ]
Article 7, paragraph 3 of the Charter prescribes that any functions and activities which are deemed to be incompatible with the holding of local elective office shall be determined by statute or fundamental legal principles.
The aforesaid requirement of the Charter is fully complied with according to Article 12 of the Local Councils Act, which provides that no person shall be qualified to stand for election as a member of a local council or to continue holding office as a Councillor in the event of being: A member of the House of Representatives or any similar institution in another Member State or the EU, or A member of the European Parliament, or A member of a disciplined force as defined in Article 47(1) of the Constitution of Malta, or An employee of the local council for which elections are to be held or an executive secretary in any one of the local councils, or A person who holds any office the functions of which involve any responsibility for or in connection with the conduct of any election of members of the Council or the compilation of or revision of any electoral register, or He/she is an undischarged bankrupt having been adjudged or otherwise declared bankrupt or for prodigality by a Court in Malta, or is otherwise determined to be of unsound mind, or He/she is serving a sentence of imprisonment exceeding 12 months, imposed on him/her by any Court in Malta, or He/she is a member of the judiciary, or He/she is disqualified from membership to the Local Council by or under the Act or any other law for the time being in force in the Republic of Malta.
page 377 / 796 Hence, the Republic of Malta complies with the requirements of Article 7, paragraph 3 of the Charter.
Monaco [Article ratified - Report adopted on 28 March 2018 ]
With regard to Article 7, paragraph 3, of the Charter, which provides that functions and activities which are deemed incompatible with the holding of local elective office shall be determined by statute or fundamental legal principles, Articles 16 and 17 of Law No. 839/1986 set out the grounds for ineligibility and incompatibility of Municipal Council members. Voters over the age of 21 on voting day who have had Monegasque nationality for at least five years are eligible for the Municipal Council. Persons whose situations are incompatible with the holding of local elective office are those who have a job or manage a department that is under the supervision of, or dependent on, the municipal authority, and the functions listed in Articles 14 and 15 of the same law (Crown counsellors; members of the Supreme Court or the Council of State; voters who, through another nationality, hold public or elected office in another country; members of the royal household, members of the Government Council, diplomatic staff, members of the judiciary; members of the National Audit Board; persons working directly with the Minister of State or a member of the Government Council; General Commissioners; the Secretary General of the Minister of State; the Controller of Public Spending; the General Inspector of Administration; the Territorial Administrator; the Director of Public Works; the Director of the Budget and Treasury; the Director of Labour and Social Affairs; the Secretary General of the Directorate of External Relations; the Treasurer or General Treasurer of Finance; the Head of Public Security and police commissioners; the Secretary General of the Directorate of Judicial Services; the Secretary General of the National Council; the Secretary General of the Mayor’s office; officials from state legislative departments; and officers in the Law Enforcement, Public Security and Municipal Police departments).
Under Article 18 of the same law, “all national or municipal councillors finding, when elected, that their situation is incompatible shall, in the 30 days after the election or, if their election is challenged, after a final court decision, either resign from the functions that are incompatible with public office, or be placed in the position provided for by their conditions of service if performing a public service job; failing this, they shall be automatically considered to have resigned from office. All national or municipal councillors who, for a reason occurring after their election, find themselves in a situation of ineligibility or incompatibility or deprived of their right to vote, shall be required either to resign from their elected office or resign from the function causing ineligibility or incompatibility within eight days; failing this, they shall be automatically considered to have resigned from office”.
Bearing in mind the foregoing, the rapporteurs conclude that Monaco complies with Article 7.
Montenegro [Article ratified - Report adopted on 21 October 2015 ]
See answer indicated at article 7.1
Netherlands [Article ratified - Report adopted on 26 March 2014 ]
Consult reply indicated at article 7.1
North Macedonia [Article ratified - Report adopted on 26 February 2013 ]
Consult reply indicated at article 7.1
Norway [Article ratified - Report adopted on 26 March 2015 ]
page 378 / 796 Consult reply indicated at article 7.1.
Poland [Article ratified - Report adopted on 2 April 2019 ]
As for Article 7, paragraph 3, according to which “Any functions and activities which are deemed incompatible with the holding of local elective office shall be determined by statute or fundamental legal principles”, in Poland the incompatibilities are determined by several legal provisions. In addition to the Law on Municipal Self-Government and the Law on Powiat Self-Government, the Law of 21 August 1997 on Restricting Business Activity by Persons Performing Public Functions is aimed at limiting the plurality of functions performed by, among others, heads of gminy (mayors, city presidents) and their deputies, members of powiat boards, members of voivodeship boards, treasurers, secretaries.
Recently, the amendments introduced by Law of 11 January 2018 are aimed at adding more and more functions or activities that cannot be combined with the office of an elected representative at local level. The Association of Polish Cities claimed that this tendency, combined with the lowering of remuneration for elected representatives, could exclude entire categories of people from the access to elective mandates.
The rapporteurs share these concerns and believe that the issue has to be closely monitored, as it can severely harm pluralism and local democracy. However, for now, they do not consider Article 7.3 to be infringed in Poland.
In conclusion, the requirements of Article 7 are, at present, complied with in Poland. Nevertheless, the rapporteurs consider that the situation requires a closer monitoring in the future.
Portugal [Article ratified - Report adopted on 28 September 2020 ]
See answer at article 7.1
Republic of Moldova [Article ratified - Report adopted on 4 April 2019 ]
The Law on Local Public Administration and the Law on the Conditions of Service of Local Representatives regulate what functions and activities are deemed to be incompatible with the holding of local elective office.
Consequently, Article 7.3 is respected in the Republic of Moldova.
Romania [Article ratified - Report adopted on 3 March 2011 ]
Any functions and activities that are deemed incompatible with the holding of local elective office are set out in Part IV of Law no. 161/2003 on certain measures for guaranteeing transparency in the exercise of public activities and missions and in the business sphere, as well as guaranteeing the prevention and punishment of corruption. They are also set out in Law no. 176/2010 on integrity in the exercise of public offices and functions, which amends and complements Law no. 144/2007 on the creation, organisation and operation of the National Integrity Agency and amends and complements other legislative instruments.
page 379 / 796 Russian Federation [Article ratified - Report adopted on 30 October 2019 ]
The analysis article by article is currently unavailable
San Marino [Article ratified - Report adopted on 28 March 2018 ]
Consult reply indicated at article 7.1
Serbia [Article ratified - Report adopted on 18 October 2017 ]
The third paragraph states that any condition deemed incompatible with holding local elective office must be determined by law. Serbian law stipulates that employees of the municipal administration cannot simultaneously be members of the municipal assembly. Further, if a member of the assembly is appointed as mayor, deputy mayor or a member of the municipal council, they must relinquish their elected office.
The rapporteurs are of the opinion that Serbia generally complies with the ratified paragraphs of Article 7 of the Charter.
Slovak Republic [Article ratified - Report adopted on 24 March 2016 ]
See answer indicated at article 7.1
Slovenia [Article ratified - Report adopted on 6 November 2018 ]
The limits and all activities assumed incompatible with holding local elected office are included in the domestic legislation. A person elected as mayor is not allowed to hold a position of a deputy mayor, member of a municipal council or in a supervisory committee. The law prohibits to a mayor to be municipal bureaucrat. Finally, since 2011, mayors are not allowed to represent their electorate in the parliament since a dual mandate, that is as a member of parliament and a mayor, has been prohibited. The office holding limits have been introduced to ensure that mayors fully devote themselves for the benefit of people who voted for them.
Consequently, the rapporteurs consider that Article 7.3. as well as paragraphs 1 and 2 of Article 7 are fully respected in Slovenia.
Spain [Article ratified - Report adopted on 20 March 2013 ]
Consult reply indicated at article 7.1
Sweden [Article ratified - Report adopted on 2 April 2014 ]
Consult reply indicated at article 7.1.
Switzerland [Article ratified - Report adopted on 20 October 2017 ]
Consult reply indicated at article 7.1
Turkey [Non ratified - Report adopted on 1 March 2011 ]
page 380 / 796 The analysis article by article is currently unavailable
Ukraine [Article ratified - Report adopted on 31 October 2013 ]
Consult reply indicated at article 7.1
United Kingdom [Article ratified - Report adopted on 26 March 2014 ]
Consult reply indicated at article 7.1
Article 8.1 Administrative supervision of local authorities' activities
Any administrative supervision of local authorities may only be exercised according to such procedures and in such cases as are provided for by the constitution or by statute.
Albania [Article ratified - Report adopted on 31 October 2013 ]
Administrative supervision
Article 22 of Law No. 8652 establishes the general principle of control aimed at ensuring compliance with the legislation on finance and budgeting. The law on Prefects regulates the supervision of controls of legality for all local government acts.
Law No. 8927, dated 25 July 2002, “On the Prefect” as amended, establishes the Prefect’s right of supervision over the legitimacy of decisions and regulations issued by LGUs, which are implemented on the basis of Article 33(6) of the Organic Law. The examination of local government acts by the Prefect does not necessarily lead to suspension of execution of the acts under scrutiny.
Each LGU sends all normative acts to the Prefect for supervision within 7 days after adoption. The Prefect examines the legal act during 10 days and if the act corresponds to the legislation, an official notification is sent to the respective LGU. If the Prefect observes a legal inconsistency, the act is sent back to the respective LGU with recommendations to amend the act. A revised version is sent to the Perfect in 7 days and, if irregularities are observed again, the Prefect applies to court for a judicial review and sends notification thereof to the LGU. The law on Prefects stipulates that the Prefect can request a local government only once to revise their legal act. However, Article 14, para. 2, line “c” thereof gives the Prefect the right to send additional recommendations to LGUs on acts that are already before a court. Neither Law No. 8652 nor Law No. 8927 give local authorities the right to apply to the court against the Prefect’s decisions. Moreover, Law No. 8927 stipulates clearly that, based on the recommendation from the Prefect, “the local government organ revises the act” (Article 14, para. 2, line “b”). The Rapporteurs draw attention to the fact that this is an imperative statement which obliges LGUs to revise their act according to the recommendations provided by the Prefect.
page 381 / 796 Albanian legislation does not differentiate between regimes of supervision for own and delegated functions, the procedure being the same for both. In addition, the Prefect enjoys the right to examine citizens’ appeals on the legality of normative and individual acts by LGUs. The Prefect has the right to conduct audits on all normative and individual acts adopted by LGUs every 6 months. If a specific act has not been submitted for supervision by the LGU to the Prefect, the latter requests from the court the invalidation of that act, regardless of its compliance with the national legislation (Law No. 8927, Article 15, para.2).
The rapporteurs are of the opinion that, formally, the system of administrative supervision is in compliance with the requirements of the Charter. However, there are some key issues that need clarity and better regulation, namely:
It is difficult to understand what type of supervision (a priori or a posteriori) is used as regards the own functions of LGUs. The legislation stipulates that the examination of an act by a Prefect does not lead to suspension of its legal power. However, if the normative act has not been submitted to the Prefect (i.e. it is not registered with the Prefect’s chancellery), the Prefect has the right to request its annulment by the court. Taking into account that Article 14, para.2, line “b” of Law No. 8927 imperatively obliges LGUs “to revise the local act” according to the recommendation of the Prefect, the rapporteurs conclude that the Albanian system of administrative supervision is closer to an a priori than to posteriori supervision, To avoid such a wide interpretation, the Rapporteurs would recommend that Albania introduce, for local acts, the kind of provision the Constitution provides for national legislative acts (Article 117, para.1), when these acts enter into force after their publication in the official journal.
Albania uses the same regime of supervision for both delegated and own functions, while the Charter (Article 8, para.2) maintains that supervision over the expediency of decisions must be used for delegated functions. Albanian legislation does not specify a regime for supervision over expediency as it only recognises legal supervision over the decision of local governments. Taking into account that Albanian LGUs have a wide range of delegated and shared functions, it is clear for the Rapporteurs that the country needs to have a clear and applicable regime for supervision with regard to the expediency of decisions taken by communes and municipalities regarding delegated and shared functions.
Albanian legislation allows Prefects to examine citizens’ appeals on the illegality of LGU acts. This provision may be viewed as an impediment for local authorities, as it allows a higher administrative body to examine local acts that have already been supervised (as, inter alia, these acts are already in force). Normally, such appeals should be examined by a civil court and not by Prefects.
The rapporteurs would also draw attention to a translation issue: Law No. 8927 dated 25 July, 2002 "On the Prefect” as translated, states that the “… prefect checks the realisation of the functions and competences delegated by the central government and the use of the funds contemplated for them, both when they are contemplated by law and when they have been set by joint agreement between a central institution and an organ of local government.” The difficulty lies in the translation of the word ‘kontrol’ from Albanian. This may be rendered as “audit”, “check” or “control” which all signify different degrees of involvement and some of which may indeed involve a ‘control of opportunity” by the Prefect rather than a simple control of legality. This may indeed lead to a direct interference by the Prefect in the exercise of the local authority’s “functions and competences”. So, it would be important to use the proper terminology of the law in official translation.
Audit and financial control
Article 21 of the Law No. 8652 establishes the conditions for the internal control of LGUs. Each
page 382 / 796 council sets up a finance committee for controlling the local budget during the mandate of the council. Local executives are obliged to report to the finance committee on the execution of the local budget and public expenditure. The committee has free and full access to all financial documents. In case of necessity finance, it may request an external audit.
Law No. 8652 stipulates that external audits in LGUs should be conducted by the Supreme State Control, which checks the legality of spending public funds. Additional financial control is carried out by relevant line ministries, such as the Ministry of the Interior and the Ministry of Finance. During the monitoring visit, the delegation has been informed by the representatives of communes and municipalities that the Ministry of Finance performs financial audits regularly according to an adopted calendar. Communes are audited once every two years while municipalities are checked on an annual basis. Municipalities and communes are also audited by the Ministry of the Interior. The 65 municipalities are divided into 6 groups (10 municipalities in each group) and each group is audited once every 2 years. Communes are divided into groups (20 or 25 communes in each group) and each group is audited according to the specific calendar adopted by the Ministry.
Andorra [Article ratified - Report adopted on 28 March 2018 ]
Article 8 of the Charter concerns the supervision of local authorities. In Andorra, Article 82.2 of the Constitution provides that “The acts of the Local Councils shall be directly enforced through the means established by law. Against such acts administrative and jurisdictional appeals may be lodged with the purpose of controlling their conformity with the legal system”. A similar provision is included in Articles 5 and 6 of the Qualified Law on competences.
As result of those provisions, the Government has no supervisory power on the activities of the Parishes. Only the courts, the Constitutional Tribunal and the Tribunal de comptes – which do not depend on the government – are entitled to control the activity of the municipalities.
In particular, the Constitutional Court decides the conflicts “arising from the interpretation or exercise of jurisdiction between the general organs of the State and the Local Councils” (Article 82.1).
The Tribunal de comptes (Court of Auditors) is responsible for the financial audit of each municipality as regards the regularity and compliance with the standards of the public administration and the law (legality control). It also prepares reports on the expenditures addressed to the parliament and to the municipalities, which have to implement the recommendations. If crimes are detected, they are notified to the prosecutor’s office.
Law no. 32/2014 of 27 November 2014 on fiscal sustainability sets out a ceiling for indebtedness and strengthens internal controls, widening the powers of the internal auditors. The Law will be applied to municipalities starting from 2019, when the term of the councils elected in 2015 will end.
The rapporteurs consider that the requirements of Article 8 of the Charter are fully respected in Andorra.
Armenia [Article ratified - Report adopted on 15 June 2021 ]
Article 8.1
1 Any administrative supervision of local authorities may only be exercised according to such procedures and in such cases as are provided for by the constitution or by statute.
page 383 / 796 193. Supervision provides for a direct influence by central government on the management of local authorities. It is therefore very important that the scope of oversight be limited to ensuring the legality of the operation of the municipalities.
Austria [Article ratified - Report adopted on 28 September 2020 ]
Pursuant to Article 119a.2 and 3, B-VG, the Land has the right to examine the financial administration of a municipality with respect to its thrift, efficiency, and expediency. The result of the examination is conveyed to the mayor for submission to the municipal council. Within three months, the mayor informs the supervisory authority of the measures taken by reason of the result of the check. In so far as a municipality’s own sphere of competence comprises matters deriving from the sphere of federal execution, the right of supervision and its legislative regulation lie with the Federation, in other respects with the Länder; the right of supervision is exercised by the authorities of the ordinary public administration, in matters of their own sphere of responsibilities, the Federation and the Land have the right of supervision over the municipality.
As indicated by Article 121.1, B-VG, the Austrian Court of Audit is the competent institution to examine the administration of public funds by the municipal associations and the municipalities. It is directly subordinate to the National Council and independent from the Federal Government and the Land Governments. Article 127a, B-VG clarifies the scope of supervision in the case of Länder. The Austrian Court of Audit examines the financial administration of municipalities with at least 10 000 inhabitants as well as the financial administration of endowments, funds and institutions administered by the authorities of a municipality or persons (groups of persons) appointed for the purpose by the authorities of a municipality. The examination extends to the arithmetical correctness, compliance with existing regulations, and the employment of thrift, efficiency and expediency in the financial administration. The mayor transmits annually to the Austrian Court of Audit and simultaneously to the Land Government the budget estimates and the final budget accounts. The Austrian Court of Audit also examines the financial administration of enterprises where a municipality with at least 10 000 inhabitants is either the sole participant or holds at least fifty per cent of the share, stock, or equity capital together with other legal entities falling within the competence of the Austrian Court of Audit or where the municipality is either their sole or joint operator with other such legal entities. The Austrian Court of Audit is competent to examine the financial administration of corporations under public law using funds of a municipality with at least 10 000 inhabitants. At the substantiated request of the Land Government the Court examines the financial administration of municipalities with less than 10 000 inhabitants. Each year only two such requests may be filed. Such requests are only allowed regarding such municipalities which, compared to other municipalities, show a conspicuous development in debts or liabilities.
Tables 3 and 471 offer a simplified outline of the auditing of local government in Austria (Pages 28 and 29 of the PDF file of the report)
One of the Audit missions focusing on the fiscal equalisation scheme for financially weak municipalities – BUND 2017/38 took place between February and May 2016 and audited the Ministry of Finance, Salzburg, Styria and Tyrol between 2011 and 2015. The auditors found undesired distributive effects and a lack of distributive goals.72 On other accounts, the audits substantiated the lack of transparency of the financial flows between municipalities and Länder and the lack of strategic goals and eventually led the path to a reform (in 2017, with the Financial Equalisation Act).
Pursuant to Article 129, B-VG, all Länder have Administrative Courts. They pronounce judgment on complaints on allegations of illegality against rulings by administrative authorities; against the unlawful exercise of direct administrative power and compulsion on the ground of breach of duty to reach a decision by an administrative authority. Pursuant to Article 130.2, B-VG, “Federal or Land
page 384 / 796 legislation may confer other competences on the Administrative Courts to decide on 1. complaints of unlawful conduct of an administrative authority in executing the law; or 2. complaints of unlawful conduct of a contract making authority in matters of public procurement; or 3. disputes in matters relating to the employment of civil servants; or 4. complaints, disputes or requests in other matters. In matters of federal enforcement which are not directly dealt with by federal authorities, as well as in matters of Art. 11, 12, 14 paras. 2 and 3 and 14a paras. 3 and 4, federal acts pursuant to sub- paras. 1 and 4 may only be promulgated with the consent of the Länder”.
Pursuant to Articles 137 to 138a, B-VG, the Constitutional Court pronounces on pecuniary claims against the Federation, the Länder, the municipalities and municipal associations which cannot be settled by ordinary legal process nor be liquidated by a ruling of an administrative authority. At the request of the Federal Government or a Land Government concerned, it establishes whether an agreement within the meaning of Art. 15a.1, B-VG exists and whether the obligations arising from such an agreement, save in so far as it is a matter of pecuniary claims, have been fulfilled. If it is stipulated in an agreement within the meaning of Article 15a.2, B-VG, the Constitutional Court also establishes on application by a Land Government concerned whether such an agreement exists and whether the obligations arising from such an agreement, save in so far as it is a matter of pecuniary claims, have been fulfilled.
Considering the above, as well as the exchanges held during the monitoring visit, the rapporteurs conclude that Austria complies with the requirements of this paragraph.
Azerbaijan [Article ratified - Report adopted on 17 June 2021 ]
Article 146(III) of the Constitution provides that the state shall supervise the activities of municipalities, but the text does not specify what kind of supervision is exercised over local governments. The Law on the Status of Municipalities clarifies the nature of the administrative supervision of the activities of municipalities and provides that “the relevant executive body must monitor compliance with the Constitution and laws by municipalities, municipal bodies and municipal officials” and that “relevant municipal commissions and voters may be involved in the implementation of administrative control over the activities of municipalities” (Article 52), although no information exists as to how the involvement of municipal commissions and of voters takes place.
The Law on the Status of Municipalities only states that the “relevant executive body” shall exercise legal supervision over municipalities but it fails to specify which particular administrative authority is the “relevant” one. The Azerbaijani authorities stressed in their comments that by way of Decree of the President of the Republic of Azerbaijan no. 162/1999 and Order of the President of 27 September 2003 formulated in application of the Law on Administrative Supervision over Activities of Municipalities, the competences of the “relevant bodies of executive power” are carried out only and directly by the Ministry of Justice. The legal supervision of municipalities is therefore exercised by the Ministry of Justice, more specifically by its Centre for Working with Municipalities, which, in addition to its supervisory work, provides methodological support for and legal advice to municipalities. The methodological reason for the supervisory power on legality being vested with the Ministry of Justice seems to be the fact that the charters of municipalities must be registered with that Ministry.
The Ministry of Justice also reports yearly to Parliament on its supervision activity on municipalities. According to Article 9 of the Law on Administrative Control over the Activities of Municipalities, the Ministry of Justice prepares an annual report on the implementation of administrative control over the activities of municipalities and presents it to parliament. Through this report, the Ministry can also make proposals for changes in the laws governing the activities of municipalities.
The Law on the Administrative Control over the Activities of Municipalities provides that the purpose
page 385 / 796 of the central government supervision of municipalities is to guarantee the compliance of municipalities and their officials with the country’s Constitution and laws, decrees of the President and decisions of the Cabinet of Ministers. Pursuant to these rules, the supervision extends to overseeing and checking the legality of the work and actions of municipalities. The same law also states that the supervisory body may consider any request by individuals or legal entities that claim that a municipality has caused them damage. Although insufficient information is available about how this procedure is handled in practice (see above, Article 6.2), it is a strange piece of legislation because any dispute relating to the legal liability of municipalities (such as legal claims for damages caused by their actions) should be subject to the jurisdiction of the ordinary courts and not to the supervision by state bodies in the first place.
Municipalities are obliged to forward their decisions no later than 5 working days after the date of their adoption to the Centre for Working with Municipalities in the Ministry of Justice for legal and administrative control. The Ministry has no power to suspend municipal decisions, but it can only recommend changes if it finds them unlawful or inappropriate. Municipalities can reapprove their decisions and in case of further disagreement a court case can be started. According to information provided by the Ministry of Justice, most cases of recommendations issued by the Centre for Working with Municipalities by way of supervision regard financial decisions. For example, the Law on the Fundamentals of Municipal Finance (Article 8.2) states that not more than 50% of the municipal budget can be spent for salaries, but in practice this is often the case. In general, litigation is reportedly limited.
Another constitutional provision (Article 146(IV)) states that municipalities are obliged to submit reports to the Parliament in cases and in the manner prescribed by law. This rule was inserted into the Constitution in 2010 after a national referendum the previous year. The Law on the Status of Municipalities was amended accordingly by adding a new provision stipulating that municipalities are obliged to report to the Parliament on the implementation of the additional powers assigned to them by law and on the use of state budget funds transferred to their budget by law. In its Opinion on the draft amendments to the Constitution of the Republic of Azerbaijan, the Venice Commission stressed that: “the rationale behind the obligation for the municipalities to submit reports to the Milli Majlis is unclear. It suggests some form of control by the Legislature. [...] This unusual form of supervision may undermine the independence of local self- government”.32
After the Congress recommended to clarify the issue of reporting, in 2019 the process to amend the Law on the Status of Municipalities started, with a view of providing that reporting to Parliament is only on delegated powers and no (longer) on own powers of municipalities, and according to the authorities met by the delegation, no reporting of this kind has taken place so far. In any case, the very existence of a reporting to Parliament remains questionable and its purpose unclear, as it is difficult to imagine how the Parliament will supervise the activities of municipalities in this way. Even if the national authorities highlighted during the consultation process that this reporting should not be seen as an oversight of municipalities, the rapporteurs consider though that such an unusual process appears incompatible with the legislative function of a Parliament and with the aim of the Charter.
Financial supervision is exercised by the Ministry of Finance. According to Article 32.2.2 of the Law on the Budget System, municipalities and their national associations are required to submit proposals, by March 15 each year, for the implementation of projects on the adoption and implementation of local social protection, environment, economic and social development programmes, as well as the allocation of subsidies from the state budget to finance additional powers delegated to municipalities by legislative and executive authorities. The Ministry of Finance considers the proposals within 30 days and the relevant municipalities are informed about their acceptance. The law does not specify whether rejection of the proposals can be appealed, and no
page 386 / 796 information has been provided in this regard as to the practical implementation of this provision.
The financial and economic management of municipalities is monitored by the Chamber of Accounts, a body that carries out the financial supervision of the spending of state budget transfers by municipalities. The Chamber of Accounts may exercise external state financial control in the form of audit, analytical activity and monitoring in municipalities and legal entities with shares of municipalities as an auditee. At the same time, the Chamber of Accounts has the authority to forecast, calculate and analyse the implementation of municipal revenues and expenditures within analytical activities. It is not clear to the rapporteurs whether this type of scrutiny also extends to the spending of local revenues and to the efficiency of local governments’ financial management.
According to the law, local governments are obliged to carry out internal audits. The municipalities monitor the implementation of the local budget and at least once a year involve independent auditors for this purpose. In this area, the Chamber of Audits allows the activities of independent auditors.
The Law on the Budget System contains a provision stating that if a municipality receives a subsidy from the state budget its draft budget has to be submitted to the relevant executive authority (Section 35(2)). According to the authorities, such provision has no control function: as the allocations are given based on requests by municipalities, it is normal that state authorities are informed on how the money is used. No relevant information is available about the consequence of such reporting and the provision specifies neither the objective of this rule nor the power of the executive authorities in this connection. The rapporteurs consider it essential that such an obligation on municipalities does not result, in practice, in a hierarchical relationship between them and the respective executive authority. It must be recalled that state subsidies make up an important share of the municipal budget (see below, Article 9).
The rapporteurs note that the legal framework on supervision is not sufficiently clear. The Law on the Status of Municipalities does not specify that the competent authority is the Ministry of Justice, nor the meaning and the procedures of the possible involvement of “relevant municipal commissions and voters in the implementation of administrative control over the activities of municipalities”. Furthermore, and even more importantly, the law regulating reporting by municipalities has not yet been adopted. As to financial supervision, the de facto relationship between municipalities and local executive authorities in case of state subsidies remains unclear and potentially problematic. In this respect, the comments made by national authorities in the framework of the consultation procedure state that allocations from the State budget are provided to municipalities on the basis of their request, and that it aim at covering budget deficits or contributing to finance municipal budgets.
The rapporteurs refer to the Contemporary Commentary which provides that “from the perspective of local self-government, Article 8 is probably one of the most relevant, since “supervision” is the very opposite of autonomy, to the same extent as control is the very opposite of freedom or self- administration. The greater the supervisory powers of the higher levels of government are, the smaller the actual scope of local self- government will be” (Paragraph 126).
They also point to the Recommendation issued by Committee of Ministers of the Council of Europe to member States on supervision of local authorities’ activities,33 which contain key principles and guidelines in the area of supervision. According to the Committee of Ministers, the 12 Principles of Good Democratic Governance are applicable to supervision. These principles include openness and transparency, the rule of law and competence and capacity. Administrative supervision should be governed by following principles and guidelines: a) the activities subject to supervision should be clearly specified by law; b) compulsory automatic administrative supervision should be limited to activities of a certain significance; c) administrative supervision should normally take place after the
page 387 / 796 exercise of the competences (a posteriori); d) a priori administrative supervision should be kept to a minimum and normally be reserved for delegated competences; e) the law should define the time limit or period granted for the supervisory authority to perform the supervision; f) in the case of a priori supervision, absence of a decision by the supervisory authority within a specified time should mean that the planned activity may take effect.
These conditions are overall not given in Azerbaijan. For these reasons the rapporteurs consider that the requirements of Article 8.1 of the Charter are not met.
Belgium [Article ratified - Report adopted on 15 October 2014 ]
Flemish Region (Vlaanderen)
With regard to paragraphs 1 and 3 of Article 8, in Belgium it is not the federal state that is responsible for the local authorities’ budget plans and situation. Rather, it is the regions that carry out the ultimate financial supervision, so they have the legal power to supervise the local authorities (supervisory oversight). The communities and regions are not subject to supervision. The supervisory oversight concerns both the legality and the expediency of the local authority’s activities.
In Belgium, supervision has two aims: to prevent the law from being breached or public interests from being harmed (Constitution, Article 162).
The acts of the provinces are subject to supervision by the region. There are two types of supervision:
- special supervision concerning the approval of decisions: this applies to the most important decisions of the local authorities (for example, on levies or staffing levels), which may not be implemented before being approved by the supervisory authority (the Region);
- general supervision concerning the possible annulment of decisions: a number of decisions of average importance are subject to general supervision and must be transmitted for approval. A decision may only be implemented after being forwarded to the supervisory authorities (in most cases, these decisions involve public procurement), whereas a limited list of important decisions (mainly on budgets/accounts, tax regulations, staff complement and regulations) are subjected to specific supervision concerning their approval: the decision may only become effective after being approved or after the supervision deadline had expired. It should be pointed out that the danger that decisions taken, especially in connection with public procurement, will subsequently be set aside will lead to delays in processing documents and, consequently, investment delays since the local authorities prefer to await the end of the supervisory authority’s investigation.
The Flemish Region has the power to regulate the administrative supervision of all municipalities situated in Flanders but may not, according to the Pacification Act, amend the provisions contained in the new Municipal Act as far as the peripheral Flemish municipalities and Voeren (Fourons) are concerned.
As far as local budgets are concerned, it is important to mention that the local authorities have to submit their budget for the approval of the region in which they are located. If the budget does not enable zero budget balance to be achieved, the region may, as the supervisory authority, reject it and impose management plans to re-establish sound public finances. In Flanders, general supervision of cancellation is applicable to multi-annual plans, budgets and budget changes. Multiannual plans and budgets that do not meet the balance requirements, are suspended by the governor. The approval of the annual accounts is also subject to supervisory approval. The governor
page 388 / 796 of the province can also suspend a municipal budget that shows a deficit.
The rapporteurs heard several comments to the effect that the administrative supervision of the municipalities and provinces is very cumbersome. While administrative supervision in general is the responsibility of the regions, the authority competent for a specific matter can organise “specific” supervision. This is reflected in processes for suspending, setting aside or substituting decisions that are in breach of the law or against the public interest. Financial supervision is tending to increase for authorities failing to achieve a balanced budget, with the supervisory authority’s overriding right to take any measure likely to reduce expenditure and increase income if the municipality still fails to present a balanced budget.
Walloon Region and German-speaking Community
As mentioned above, the oversight of the local authorities’ activities takes the form of ordinary or specific supervision, the exercise of which with respect to the local authorities is laid down in section 7 of the Special Act on institutional reforms of 8 August 1980. For the local authorities in the Walloon Region, ordinary supervision is carried out by the Region, while for the local authorities in the German-speaking Community it is carried out by the Community. Specific supervision is carried out by the federal state, the Community or the Region in the context of delegated functions. At the local level, the municipalities exercise the same type of supervision over their public facilities, in particular their social services centres.
In the Walloon Region, ordinary supervision is organised by the Law on Local Democracy and Decentralisation, which provides for two types of supervision:
- special supervision concerning the approval of decisions: this applies to the most important decisions of the local authorities (for example, on levies, staffing levels, the budget, the accounts, the property tax surcharge, etc). These decisions may not be implemented before being approved by the Region.
- general supervision concerning the possible annulment of decisions: this applies to the other local authority decisions (for example, award of a contract, punishment of a provincial staff member, loan guarantees, etc). Decisions subjected to general supervision can be carried out immediately but the supervisory authority can set them aside within a period of thirty days. The authority responsible for general supervision is the Minister for Local Authorities.
Brussels-Capital Region
The legal basis for administrative supervision in the Brussels-Capital Region is to be found in the Belgian Constitution (Article 162.2), the new Municipalities Act (sections 117, 264 et seq.) and the ordinance of 14 May 1998 on organisation of administrative supervision in the municipalities of the Brussels-Capital Region.
Administrative supervision encompasses both the lawfulness of subordinate administrative bodies’ legal transactions and contracts and their expediency and compliance with the public interest. Consequently, administrative supervision extends further than the power of the courts – and therefore of the Council of State – as they can only rule on a legal transaction’s compliance with the law.
There is normal supervision and special supervision.
Normal supervision concerns local-government decisions relating to local matters and is supervision
page 389 / 796 of local management in general. It may be:
- General supervision (discretionary): In the Brussels-Capital Region the government may suspend or reverse a municipality’s decision by decree. This is general, discretionary, supervision, since municipal decisions are open to supervisory action, but the government is not obliged to take it. In determining whether or not a decision is contrary to the public interest, the supervisory authority can intervene only if the decision by the local authority is prejudicial to a higher public interest, that is, if the authority takes a decision harmful to a sphere of interests broader than the municipal sphere (to regional interests, for example). If a decision is suspended, the municipality may either withdraw it or uphold it by proving it to be warranted. Reversal remains possible after a municipality has upheld a decision.
- Specific supervision concerning approval of decisions (mandatory): A number of decisions listed in Articles 13 and 14 of the ordinance of 14 May 1998 on organisation of administrative supervision in the municipalities of the Brussels-Capital Region have to be approved by the Region before being able to take effect. This is specific supervision concerning approval of decisions. Such supervision is more extensive and allows a supervisory authority to reject a decision by the subordinate authority on the grounds not only that it is contrary to the public interest in the shape of higher public interests but also that it adversely affects the municipality’s interests. Decisions are subject to approval in the following fields: staff framework, budgets, accounts, creation of municipally-owned enterprises, public procurement, staff pay and staff dismissal.
- Relief supervision: Lastly, in the rare cases of failure on the part of a municipality, the Region can replace the latter. This type of supervision is used when the subordinate authority fails to meet its statutory obligations. It is imposed only for failure to comply with the law and never for breach of public interest. This relief supervision may be exercised through ex officio measures or by sending a special commissioner to the municipality concerned. To facilitate the authority’s work and avoid overburdening its departments with too much paperwork, the ordinance of 14 May 1998 and its implementing decree of 16 July 1998 list the decisions that municipalities have to send the Region in full (that is, with all the records relating to the decision), including those subject to specific supervision concerning approval of decisions, and many other decisions. The legislation also provides that the government must respect time-limits when examining municipal decisions and exercising administrative supervision. Once the examination time-limit is past, a decision is no longer open to supervisory measures.
Special supervision is supervision that departs from the rules of normal supervision. It is instituted by the authority responsible for the federal, Community or regional interests that are to be protected by the special supervisory measures taken. This supervision thus enables the authority responsible for these interests to protect them by supervisory measures for which it sets its own rules. In other words, when the state, a Community or a region assigns tasks to local authorities and decides how they should be carried out, it may establish special supervision in this field. It will then specify in the relevant legislation which decisions are subject to supervision, together with time-limits and the supervisory body as well as basic elements of the procedure.
These two types of supervisory procedure can coexist. The following are some examples of special supervision in the Brussels-Capital Region:
- Police-zone supervision by the Governor;
- Supervision by the Vice-Governor regarding use of languages in administration;
- Planning supervision by the Brussels-Capital Region Government: burgomaster’s decrees for
page 390 / 796 demolition of protected or listed buildings are subject to approval by the Brussels Government;
- Supervision by the Region’s mobility minister of additional road-traffic regulations.
Administrative supervision in the Brussels-Capital Region is the statutory responsibility of:
- The Brussels-Capital Region Government for municipalities, municipally-owned enterprises, intermunicipal partnerships, some institutions managing secular matters for faiths, and the Mont-de- Piété (state-owned pawnshop). In actual fact it is the Brussels Local Authorities organisation that exercises this power on behalf of the government.
- The Joint Board of COCOM for the CPASs, CPAS joint associations and the IRIS hospital network. In a memorandum of understanding between COCOM and the Brussels Government it was agreed to set up, within Brussels local government, a unit responsible for processing paperwork with a view to exercising administrative supervision over the CPASs.
- The Governor of the Brussels-Capital administrative district, who exercises special supervision over decisions taken by the police board and council with regard to the organisation and management of the local police. However, the Brussels Local Authorities organisation exercises general administrative supervision over decisions outside the Governor’s supervision.
The Brussels Local Authorities (BLA) organisation organises, advises, supervises and funds local authorities in a relationship of mutual trust. In doing so, the BLA ensures that important values, such as equal treatment, transparency and compliance with regulations, are observed. Brussels Local Authorities works in the following fields:
- Control and supervision of local-authority finances, staff, public procurement, etc.;
- Assistance and funding for local authorities, public investments and special initiatives;
- Preparation of regulations governing local-authority organisation, organisation of municipal elections, and advice to local government.
As far as staff supervision is concerned, the BLA’s Municipal Staff Directorate and Special Initiatives Directorate supervise staff decisions taken by the municipal council or municipal executive. The CPAS Supervision Directorate supervises decisions taken by the Social Services Centres (CPASs). These decisions must respect the provisions of the Social Charter and their own staff regulations (ordinance of 14 May 1998).
As for financial supervision, certain local-authority decisions with financial repercussions must be submitted to the BLA Finance Directorate for approval. This is the case for the municipalities’ budgets and accounts, their multi-year management plans, off-budget expenditure and creation of municipally-owned enterprises. CPAS budgets and accounts must be submitted to the municipal council for approval, while the COCOM Joint Board (through the CPAS Supervision Directorate) rules on decisions taken by the CPASs.
Bosnia and Herzegovina [Article ratified - Report adopted on 31 October 2019 ]
According to Article 8, paragraphs 1 and 2, any administrative supervision of the activities of local authorities has to be carried out according to pre-established procedures and can only aim at ensuring compliance with the law and constitutional principles.
page 391 / 796 In the Federation of Bosnia and Herzegovina, the Ministry of Justice carries out supervision over administrative procedures and employment issues of civil servants (of Cantons and municipalities). Although already the Congress Recommendation 2012 had called the Federation of Bosnia and Herzegovina authorities to consider the institution of a separate Ministry for Local Self- Government (similar to the one in Republika Srpska), as an interlocutor for both, Cantons and municipalities, such a Ministry has not been established so far. Up to date, the municipalities have to approach different Ministries (at Federation of Bosnia and Herzegovina level and in the Cantons) for every issue; the same is true for supervision of municipalities. The Federation of Bosnia and Herzegovina Ministry of Justice, Department for Public Administration continues to act as interlocutor for local government affairs.
Cantonal authorities perform administrative control over municipalities by supervising the legality of administrative and other acts adopted under cantonal legislation or for implementing this legislation (in case of non-implementation, as an extreme measure, substitutive action by the Cantonal government is possible). Detailed cantonal inspections concern every aspect of administrative action, such as construction permits and utility services and a strict and frequent supervision over the keeping of civil registry books (every 6 months). These inspections include control over expenditure by budget users, including how local authorities manage allocated grants.
In the Federation of Bosnia and Herzegovina, administrative control of activities of municipalities by cantonal authorities is limited, regarding the sphere of execution of their own responsibilities, to control of legal compliance of performed activities; in case of delegated competencies, also expediency may be subject to control.
In 2018, the Federation of Bosnia and Herzegovina Audit Office audited 3 cities and 5 municipalities (with a total budget of 96.7 mil BAM) and 5 cantons. Due to many auditees within the jurisdiction of the Audit office of the Institutions in the Federation of Bosnia and Herzegovina (over 2000), when the total number of audits is planned each year, the main factor considered is the availability of human resources. Then, based on a risk assessment, the remaining audits are selected, with the main focus of the last couple of years being on auditees which have never been audited before.
The Republika Srpska Ministry of Administration and Local Self-Government has an inspection department which conducts supervision of legality regarding activities of municipalities. Specialist inspections may be conducted in specific fields by the departments of the relevant ministries (public contracts, health, etc). Until 2016, courts in Republika Srpska had been flooded by requests and complaints, as supervision and controversies regarding all acts of local self-government units necessarily had to be resolved by courts. The new Republika Srpska Law (2017) provides for supervision through courts over general acts and debts (over 10.000 BAM) as well as a competence for citizens' complaints.
The Republika Srpska Auditor General exercises a supervision regarding financial management and performance over Republika Srpska local self-government units; 5 years are needed to cover all 64 local self-government units. All audit reports with negative findings relate to municipalities or to their enterprises. As a consequence, these municipalities are revisited in order to check whether compliance has improved according to recommendations given. Typical problems comprise the accounting treatment of property, the execution of the budget, borrowing, the consolidation of financial reports of enterprises owned by municipalities. The main reason, according to the auditors, is the lack of qualification and of training of municipal staff. In reaction, the Republika Srpska Ministry of Finance has developed an Accounting Framework for Municipalities.
The rapporteurs consider the supervision framework to be in conformity with the principles enshrined in Article 8, paragraphs 1 and 2.
page 392 / 796 Bulgaria [Article ratified - Report adopted on 21 January 2021 ]
Article 8.1
1. In its Recommendation to member States on the supervision of local authorities’ activities CM/Rec(2019)3E46, the Committee of Ministers set out three different types of supervision: administrative, financial, and democratic, only the first of which falls within the ambit of Article 8 of the Charter. It does not apply to any form of supervision or control exercised by the Ombudsman, by criminal prosecutors or by the legislature. The existence of administrative supervision is justified by the need to comply “with the principles of the rule of law and with the defined roles of various public authorities, as well as the protection of citizens’ rights and the effective management of public property”.
1. The Explanatory Report to the Charter limits the subject matter of Article 8 to the supervision that is carried out “by other levels of government”, that is to say, by central authorities or bodies (line ministries, Ministry of the Interior, and so forth) or regional authorities. As for the matters that can be “supervised”, the Charter refers to the broad concept of activities, which covers all types of plans, projects, rules, decisions or strategies approved at local level.
1. The Charter establishes an important principle here in the area of intergovernmental supervision of local authorities: any form of such supervision must be provided for by the constitution or by statute, that is to say, the Charter introduces the legality principle into the supervision of a local authority. Supervision cannot be improvised or ordered by the higher level without a clear legal basis. At the same time, supervisory authorities must strictly comply with the procedures established by law for the exercise of such supervision (time, manner, competence, and so on)47.
1. According to Article 144 of the Constitution of the Republic of Bulgaria (CRB) the central bodies of State and their local representatives shall exercise control over the legality of the acts of the bodies of local government only when authorised to do so by law. Article 145 of the CRB provides that every municipal council shall be free to challenge before a court any act which encroaches on its rights.
1. The nature and scope of the administrative supervision of local authorities are specified in detail in the Local Government and Local Administration Act (LGLAAct. Article 45, paragraphs 1-12 of the LGLA Act provides the following mechanism for administrative supervision over the acts of local authorities.
• The acts of the mayor of a municipality can be appealed under administrative procedure before the regional governor, unless otherwise provided in a law.
• The municipal council can revoke administrative acts, issued by the mayor of a municipality, which disagree with acts, adopted by the council, within 14 days after their acceptance. Within the same term the council can dispute the unlawful administrative acts, issued by the mayor of a municipality, before the respective administrative court.The acts of the municipal council can be appealed before the respective administrative court.
• The regional governor shall exercise control for the lawfulness of the acts and actions of the local governments and the local administration (Art. 31, para. 1, item 5 of the Administration Act), unless otherwise provided in a law. He or she can bring the unlawful acts back for new consideration by the municipal council or to dispute them before the respective administrative court. The appeal
page 393 / 796 shall suspend the application of individual and general administrative acts and the application of sub- legislative legal acts, unless otherwise resolved by the court.
• To all matters concerning issuing, appealing and implementation of acts of municipal councils and mayors, not covered herein, the provisions of administrative procedure, set in a law, shall be applied.
1. Another important piece of legislation is the APC. The rules for the administrative procedure, established by law, shall be applied for the unsettled issues on the issuance, contestation and implementation of the acts of the municipal councils and the mayors. The APC provides for the possibility for any citizen of the municipality, including a mayor or municipal councillor, to contest an administrative act (according to Article 15, paragraph 1, of the APC, “parties in the administrative proceedings may be the administrative body, the prosecutor and any citizen or organisation, whose rights, freedoms or legitimate interests are or shall have been affected by the administrative act or by the court decision, or for whom they shall have raised rights or obligations”).
Croatia [Article ratified - Report adopted on 20 October 2016 ]
Article 8 is concerned with supervision of local authorities’ activities by other levels of government, such as requirements of prior authorisation to act or of confirmation of acts to take effect, accounting controls or power to annul a local authority’s decisions etc.1
Article 137 of the Constitution provides that in performing their functions units of local and regional self-government shall be autonomous and subject only to review of the constitutionality and legality by the authorised national government bodies. The 2001 Law on Local and Regional Self- Government, in its Chapter X, regulates state supervision and protection of local and regional self- government and states – in Article 78 – that supervision of the work and acts of local and regional self-government units shall be conducted in the manner and the procedure determined by the law regulating the state administration. Pursuant to Article 79 of the Law of Croatia on Local and Regional Self-Government, supervision is performed by the body of the central state administration in charge of local and regional self-government, which is the Ministry of Public Administration. This article further defines the head of municipality, mayor and county prefect shall be obliged to forward, within eight days from the day of adoption, the statute and general acts adopted by the representative body of the local or regional self-government unit, to the head of the county office competent for the tasks of general administrative affairs. This refers to the State Administration Office in the county (hereafter the Regional Office) which is responsible to the Ministry of Public Administration in particular but also to other line ministries.
The procedure for the supervision of the legality of general acts is set out in Articles 79 to 82. Should the decision contradict the Constitution or other legislation, the Regional Office shall decide on its suspension and forward a respective direction to the mayor/prefect of the self-government body. The decision on suspension of the act shall be communicated to the Ministry of Public Administration. The latter examines the Regional Office’s conclusion and decides in 8 days on the merits of the decision on suspension made by the self-government body. Where the Minister considers that the decision on suspension of the act adopted by the self-government body is unjustified, they notify the corresponding Office and the self-government unit in writing. Where the self-government’s decision is in conflict with legislation, the Minister addresses the government to decide on referral to the Constitutional court. The final decision on revocation of the self-government’s act is made by the Constitutional Court. If within 30 days from the decision on suspension of the act the central government fails to address the Constitutional Court, the suspension of the act is no longer valid.
page 394 / 796 A further procedure, under Article 84, provides for dissolution of the representative body under certain circumstances. A 2012 amendment to the Local and Regional Self-Government Act further provides for simultaneous dismissal of the local elected body and the directly elected head of executive.
It should be noted that prior to 2013 the Constitutional Court maintained supervision over all local regulations but since 2013 it supervises only the local statutes. Following the entry into force of the Administrative Disputes Act (1 January 2012), the High Administrative Court has been given the competence to review the legality of general acts of the units of local and regional self-government, legal persons vested with public power and legal persons performing public services.
The rapporteurs conclude that Croatia fully complies with Article 8 paragraph 1 of the Charter whereby administrative supervision must be exercised according to the constitution and to statute.
Cyprus [Article ratified - Report adopted on 20 October 2016 ]
Any administrative supervision of the activities of the local authorities can only aim at ensuring compliance with the law and with constitutional principles. Administrative supervision may, however, be exercised with regard to expediency by higher-level authorities in respect of tasks the execution of which is delegated to local authorities.
Another important requirement which can be derived from the Charter’s provisions is that the law should precisely determine which administrative authorities are empowered to exercise legal supervision over municipalities, thus eliminating the uncertainty of the current legislation.
According to the rapporteurs, the central government control exercised by the line ministries, the Audit Office, the District Officers, and even by the Parliament is not limited to legal supervision. In fact, through the supervisory powers, the central authorities exert great influence on the daily work as well as on the strategic decisions of local councils. The central approval of a number of local government decisions surely goes far beyond the legality control of local acts which practice is not compatible with the Charter.
Consequently, as far as the practice of central supervision exerted by central government agencies exceeds the legality control over local governments’ acts, the requirements of Article 8 are not met.
Czech Republic [Article ratified - Report adopted on 8 March 2012 ]
In the Czech Republic, supervision of local and regional authorities’ activities by central government is systematically carried out according to the Constitution or statutory law and is basically limited to the legality of those activities (Article 8 paras. 1 and 2 of the Charter). In principle, discretionary power is left with the local and regional authorities themselves, and the final word when agencies of central government think the territorial authorities have acted or decided against the law is systematically left to the judicial branch of government. In this way, the requirement for proportionality between the controlling activities and the importance of the aims pursued under Article 8 para. 3 of the Charter, seems well taken care of.
The Supreme Audit Office (SAO), an independent body, is responsible for the “audit the management of state property and financial resources collected under the law for the benefit of legal persons, with the exception of resources collected by municipalities or regions under their independent jurisdiction” (Act 166/1993, Part 2, Section 3). This means that it can only control the use of means allocated by central authorities. The SAO also controls ministries which manage subsidies granted to
page 395 / 796 local authorities (for example for construction of water works).
Local authorities call on external auditors for all activities that fall outside the competence of the SAO. There is an additional “cascade” system of control through the regions, whereby the Ministry of Finance audits the regions to verify their control over the municipalities.
The rapporteurs have heard during their visit a number of complaints about an overburden due to suboptimal coordination of the controls, collection of statistical data etc. exercised by different branches of central government. Even if part at least of this supervision seems to have been directed towards activities that have little or nothing to do with the particular status of local and regional authorities (such as food and water supply hygiene), the complaints are linked to the need for a rational exploitation of limited resources in a way that clearly deserves attention by central government, possibly starting with due mapping of the problem.
It is also interesting to note that the National Reform Programme 2011 of the Czech Republic enumerates under its heading of “Concrete reform priorities”, para. 3 (a), that measures will focus on local government units in order to “increase transparency in decision making processes, both in the decision-making of policy bodies (assemblies and councils) and in decision-making at official level”. According to this, the SAO will be given the power to supervise local and regional government units; the relationship between assemblies and councils will be revised in order to prevent circumvention of the law, and assembly members will have easier access to information relevant to their decisions and supervisory activities. In addition to these steps, a register of violations will be introduced and public authorities will be required to prepare and publish a code of ethics.
It is not clear from the text whether this supervision by the SAO is intended to go beyond the verifications related to delegated tasks. However, it is clear from the above paragraph that there is a will to move towards more rigorous supervision of local authorities on the overnment’s part.
The problems raised by the Czech system of local and regional government are essentially linked to the financial system. However, the main problem is not a clear violation of Article 9 of the Charter. It lies rather in the fact that the Czech Republic has decided not to ratify important parts of that Article (paragraphs 3, 5 and 6), but behaves in accordance with these declarations and reservations (see further in the following text devoted to Article 9 paragraphs 3, 5 and 6).
Denmark [Article ratified - Report adopted on 31 October 2013 ]
Administrative supervision of local and regional authorities takes several different forms. First of all, Article 82 of the Constitution provides for State supervision of municipalities, and secondly, Chapters VI and VII of the Law on Local Self-Government set out the rules applicable to such supervision. Furthermore, the municipalities and regions are subject to inspection by the Ombudsman. The highest supervisory body is the Ministry of the Economy and the Interior.
Supervision operates at two levels: firstly the Statsforvaltninger (State administrations) provide for devolved central supervision in five cities (one per region); they supervise the legality of decisions taken by municipal and regional councils. The supervision exclusively targets the legality of decisions and legislation on government departments, including regulations adopted by the municipal or regional councils for their own administration. The Statsforvaltninger supervise neither labour regulations nor any fields that can be dealt with by special public bodies.
Secondly, the Ministry of the Economy and the Interior supervises the legality of decisions taken by municipalities and regions in the same legal fields as the five Statsforvaltninger. The Ministry is also empowered to annul or modify sanctions ordered by a Statsforvaltning. This role played by the
page 396 / 796 Ministry in “judging” legality has attracted controversy and criticism. It has been suggested that it might be replaced with a kind of administrative court in order to avoid speculation about the reasons behind any controversial or unexpected decisions from the Ministry. Even though the organisation of first-level supervision is to change over the next few years, to involve five agencies working in parallel to the single agency which will be based outside the capital and will be responsible for supervising all municipalities and regions nationwide, the question of ministerial powers has not been mentioned in connection with this change.
In accordance with legislation, special supervisory or appeal boards have been set up in a wide variety of fields in order to verify local authority decisions and the execution of their tasks and to consider complaints in this regard.
The cases dealt with by the supervisory authority are usually the subject of a consultative declaration in which the authority provides a legal opinion on the case in question. The supervisory authority informs the local council of its responsibilities under current legislation. It can also impose sanctions for decisions taken by a local council or against specific councillors having colluded in an illegal municipal act. The sanctions available are annulment, suspension, fines and actions for damages. According to various interlocutors, the sanctions are very seldom used.
The supervisory authority can bring an action for damages against the members of a local or regional council responsible for a loss suffered by the municipality or region as a result of an illegal decision or action.
In addition to supervision of legality, auditors must verify the accounts of all local and regional authorities. In the case of most authorities, this role is played by the Local Authority Auditing Service, an inter-municipal body operating under the association of local authorities, or by a private company.
The municipalities and regions must therefore transmit their audited accounts to the supervisory board (Statsforvaltning) so that it can verify whether the municipalities’ and regions’ activities are in conformity with current legislation.
In June 2007 Parliament adopted a Law amending the Law on local and regional authority audits, in order to confer greater independence on the auditors. The amendment came into force on 1 January 2012.
The general provisions of Danish legislation on supervision of local authorities by the higher levels are in conformity with Article 8 of the Charter. Similarly, the supervision as actually effected would seem to comply fully with the aforementioned provision.
Estonia [Article ratified - Report adopted on 29 March 2017 ]
With regard to the supervision of local authorities, the principle is laid down in Article 160 of the Constitution: “The administration of local governments and the supervision of their activities shall be provided by law.” Details are set out in sections 66 and 66.1 of the Local Government Organisation Act. There are two main forms of supervision of municipalities. Internal supervision is carried out by the audit committee, the council and the Government (executive body of the local government). External supervision is carried out by the county governor, the Chancellor of Justice and the National Audit Office. Administrative supervision over the activities of local governments is also exercised by ministries, boards and inspections (for example, Ministry of Finances, Data Protection Inspectorate, Language Inspectorate, Labour Inspectorate, etc). The main supervision functions have been described by the Minister of Public Administration in functions as
page 397 / 796 follows: the county governor has the right to monitor individual legislative measures of councils and local authorities. At the same time the county governor has no authority to stop or declare void any measures taken by local authorities; he/she can only suggest that the local authority take the necessary measures to comply with the law. If the municipality does nothing to bring the act into line with the law the county governor must appeal to the courts. The Chancellor of Justice reviews the local government regulations for conformity with the Constitution and the laws. The National Audit Office exercises economic control over local authorities insofar as they use immovable and movable property of the state which has been transferred into their possession; it also exercises control over the municipal use of allocations for specific purposes, such as earmarked grants, and subsidies granted from the state budget; and funds allocated for the performance of state functions. The mandate of the National Audit Office also includes the audit of local authorities regarding the possession, use and disposal of municipal assets; the audit of the foundations and non-profit associations founded by a local authority or where a local authority is a member as well as of companies where a local authority exercises dominant influence through a majority holding or otherwise, and the subsidiaries of such companies. The National Audit Office verifies whether public funds have been properly used – i.e. economically, efficiently and effectively – and that their use is lawful. In order to avoid conflict with the principle of autonomy of local government, the National Audit Office may not, however, assess the expediency of the activities or use of funds by local authorities. In other words, the National Audit Office may not conduct performance audits of local authorities. The National Audit Office also has the right to make proposals to the government, ministers and local authorities to draft legislation or amend or modify legislation in force. The purpose of supervision is to ensure the lawfulness and appropriateness of municipal activities. The rapporteurs believe that the requirements of Article 8 are met in Estonia.
In order to interpret the scope of the legal limits of administrative supervision of local authorities, the Supreme Court of Estonia has referred directly to Article 8 of the Charter. “To preserve the essence of the local authorities’ right to self-organisation the restriction thereof must be proportional, i.e. suitable for achievement of the desired aim, necessary and reasonable.” (See the Constitutional Review Chamber on the Supreme Court's judgment of 16 January 2007 in case No. 3-4-1-9-06 – RT III 2007, 3, 19; paragraph 23). The same requirement concerning administrative control is expressed in Article 8(3) of the Charter. In this judgment the Court held that “the Charter does not preclude economic control over the state assets allocated to local governments in the extent described in § 6 of the NAOA, if the control is exercised - in conformity with Article 8(2) of the Charter – according to such procedures and in such cases as are provided for by the constitution or by statute”. However, with respect to the limitations of this aspect of control it deemed that the control of the use, possession and disposal of municipal property would be in conflict with the Charter. This possibility is not provided for in the National Audit Office Act.
With regard to the supervision of the upcoming administrative reform project, the Minister of Public Administration in functions explained to the rapporteurs that during the voluntary phase there will be minimal supervision (limited to the legality of the proceedings) of the merging agreement and other decisions made by local councils in preparation for the reform. In addition to the legal supervision, the Minister of Public Administration is financing seven merger consultants to support all the municipalities interested in additional expertise. One of their roles is to support the preparation process and guarantee the inhabitants’ involvement in it. In the state-initiated phase there will be a larger – supportive, not supervisional - role for county governors, as in certain situations they will have lead the merger process. As the voluntary phase ends in early 2017, the state will initiate mergers in line with its regulation in mid-February, so that local government council elections can be held in October. During the process inhabitants will be polled and local authorities' opinions will be obtained. The rapporteurs will follow with interest whether the new government will continue the former government's supervision strategy or whether it will completely or partially change the administrative procedures.
page 398 / 796 Finland [Article ratified - Report adopted on 28 March 2017 ]
Financial supervision is primarily the task of the municipalities themselves, in accordance with the relevant provisions in the Local Government Act. However, there is growing concern about the increasing body of state norms interfering with the details of municipal activities. According to A. Ryynänen, Orimattila town councillor, “the tendency for some years has been increasing state control of administrative norms”. Supervision of the legality of municipal activities is mainly exercised by the administrative courts in individual cases. Any municipal resident has standing in cases concerning the exercise of the general competence of the municipality. Appeals against the decisions of a municipal body (often as the result of an application for a revised decision) are made by submitting an appeal against a municipal authority decision to the (Regional) Administrative Court (of municipal appeal). Such an appeal may be made on the grounds that: 1) the decision was not taken in accordance with proper procedure; 2) the body exceeded its powers; or 3) the decision was otherwise unlawful. All natural and legal persons resident in the municipality are entitled to appeal (actio popularis), together with any individually affected parties. In most cases Administrative Courts may uphold the decision or repeal it, but not directly amend it. Further appeals may be lodged with the Supreme Administrative Court. Regional level authorities control municipalities formally only through the supervision of legality which is performed by Regional State Administrative Agencies. Economically and functionally, the regional level does not control municipalities in any way. State regional authorities control and allocate state resources in their own area. These are of significance to municipalities as well and the relationship between the two is more like a partnership than a hierarchy. Municipalities have to adjust their policies, like those on infrastructure for example, to state policy, and vice versa. Efforts are made to arrive at decisions through negotiations working towards a mutual understanding or sometimes even a more formal agreement.
In exceptionally critical circumstances the State may take a municipality into economic and administrative “guardianship”, under specific legislation. Such extreme situations may also result in the compulsory merger of municipalities (Supreme Administrative Court 2014: 197). In the context of a specifically regulated nation-wide structural reform of local governments and entities, compulsory co-operation between municipalities – and mergers – are possible outcomes (Supreme Administrative Court 2014:195 and 2014:144).
Two important institutions in both the human rights and the local government rights fields are the Ombudsman and the Chancellor of Justice. The formal and actual independence of the Chancellor of Justice is guaranteed by his/her constitutional position and long history (since 1809). Municipalities can file complaints with the Chancellor of Justice. The Chancellor of Justice also checks the lawfulness of decisions made by the government and the President of the Republic prior to their implementation. Such decisions may relate to government bills and decrees and may also concern matters connected with municipalities such as decisions on municipal mergers. The Chancellor of Justice receives a considerable number of complaints from citizens concerning municipal administration. Most often they are related to maladministration or social, health care and educational services. There are no regional or local ombudsmen in Finland and it seems that there is no prospect of establishing such institutions. There are, however, patients’ ombudsmen and social ombudsmen with duties which partly resemble one another in their respective fields of operation. In Recommendation 311 (2011) the Congress drew particular attention to the need to increase funding so as to optimise the operation of the institution of Ombudsman and strengthen his/her role at local level.
The tasks of the Parliamentary Ombudsman are defined in the Constitution (sections 110 and 111) and in the Parliamentary Ombudsman Act. The Ombudsman has the task of exercising oversight to ensure that authorities and officials observe the law and discharge their duties. In addition to
page 399 / 796 authorities and officials, the scope of the Ombudsman's oversight extends to other parties performing tasks of a public nature. The Ombudsman pays special attention to the implementation of fundamental and human rights. The Eduskunta, the parliament of Finland, has also requested that particular attention be paid to the implementation of children's rights. The Ombudsman mainly supervises lawfulness by examining the complaints he/she receives. He/she can also intervene to address perceived shortcomings on his/her own initiative. The Ombudsman also inspects offices and institutions, especially prisons, military garrisons and other closed institutions like hospitals and homes for the elderly.
The amount of complaints submitted to the Parliamentary Ombudsman and the Chancellor of Justice varies every year but the statistics show that they have increased considerably in recent years. By contrast, there has been a slight decrease in the number of investigations made by the Parliamentary Ombudsman or the Chancellor of Justice on his own initiative. In 2011 the Ombudsman received more than 4,100 new complaints and issued decisions on nearly 4,400 complaints and matters that he had investigated on his own initiative. In 2015 the Ombudsman received more than 4,700 new complaints and about one third of them, nearly 1 600, were related to procedures of municipalities. The largest group of complaints concerned social welfare services, about 800, and about 500 concerned health care services, while about 150 concerned general administration and the decision-making power of municipalities. In 2011 the Chancellor of Justice received more than 1,400 new complaints and issued decisions on nearly 1,700 complaints and matters, while in 2015 he received more than 1,800 new complaints and issued decisions on nearly 2,000 complaints and matters.
In view of the aforementioned legal and administrative practice, the rapporteurs conclude that Finland fully complies with Article 8 of the Charter.
France [Article ratified - Report adopted on 22 March 2016 ]
According to the last paragraph of Article 72 of the French Constitution: “In the territorial collectivities of the Republic, the State representative, representing each of the Members of the Government, shall be responsible for national interests, administrative supervision and compliance with the law”. In addition to the Constitution, rules on supervision are included in common legislation, in accordance with Article 8.1 of the Charter.
Georgia [Article ratified - Report adopted on 7 November 2018 ]
With the new Code of Local Self-Government, the office of prime minister replaced State governors and the ministry of justice as the new supervising authority of municipal bodies. Putting a single body in charge of oversight instead of having two bodies supervise the same issue is in line with Council of Europe Recommendation No. R (98) 12 of the Committee of Ministers to member States on supervision of local authorities’ action. However, a number of questions arise as to performance of the legal oversight function by a prime minister: in none of the other Council of Europe member States is a prime minister directly responsible for legal supervision of local authorities. There are also several formal difficulties in the current system: the Code in force does not allow the prime minister to delegate his or her legal oversight function, which means that, formally speaking, legal findings of an oversight commission have to be endorsed by the prime minister, which is not very easy in practical terms. The existing practice is that legal findings are signed by a chief of the relevant department in the government administration.
In most countries, the function of State supervision over local authorities is vested in a government ministry with responsibility for local self-government policy. The rationale is that such a ministry
page 400 / 796 would have the expertise to perform this demanding function. The system that is currently in place in Georgia could cause overlapping of certain functions in the executive branch of the government, since ministries and administrations would also supervise municipalities in performing delegated tasks. In order to optimise the existing legal oversight system, it is being considered whether or not to give this function back to State trustees – Governors, but interlocutors of the Congress delegation were sceptical, since the record of informal control that State trustees – Governors used to exercise over municipal activities has not yet been forgotten.
Financial control and audit of local authorities is undertaken by the State Audit Office (SAO), which conducts audits of municipalities according to annual plans and publishes audit reports to inform the public. The SAO organises training for its staff and develops new methodologies for auditing of local authorities in co-operation with international partners. As a result, it seems that the suggestion in Recommendation 334 (2013) on local and regional democracy in Georgia to improve training and provide standards for auditing has been followed. Today, audits at the local level are performed by both internal and external auditors. External audits are carried out by the SAO (notably the local self- government entities audit department; the Audit Department of the Autonomous Republic of Adjara and the Audit Department of the Autonomous Republic of Abkhazia, which are the structural entities of the SAO), and independent auditors. More specifically, audit reform in Georgia included: i) the Law of Georgia on Public Internal Financial Control; ii) standards on internal audits; and iii) the central harmonisation unit (CHU) that was established by the ministry of finance to co-ordinate and harmonise the creation of internal audit and financial management and control systems in the public sector, including development of and updates to relevant standards and methodologies. According to the legislation, internal audit departments have been set up in municipalities as separate independent units.
Finally, it should be mentioned that the Public Defender of Georgia is also mandated to monitor local self-governing authorities and also to examine the statements and appeals of both Georgian and foreign citizens and stateless persons, legal entities under private law, and political and religious associations regarding actions or acts of local self-governing authorities that violate the rights and freedoms defined in the laws and Constitution of Georgia, and in treaties and international agreements to which Georgia is a party. In her reports, the public defender has pointed out the most frequent shortcomings in this area by municipal administrations, such as a lack of clear reasoning when taking decisions, a lack of impartiality combined with discriminatory practices, and a lack of awareness for persons with disabilities, etc.
The rapporteurs concluded that Georgia complies with Article 8, paragraph 1, of the Charter since supervision procedures are described in law and there has been no systematic violation of these procedures in recent times.
Germany [Article ratified - Report adopted on 14 March 2012 ]
Consult reply indicated at article 7.1
Greece [Article ratified - Report adopted on 26 March 2015 ]
Article 8 of the Charter deals with supervision of local authorities’ activities by other levels of government. Greece is not bound by paragraph 2 of this article. However, the expediency control (to which paragraph 2 refers to) is not contemplated by the Greek legal system. Following the 2001 constitutional revision, Article 102, para. 4 of the Constitution explicitly refers to “the review of legality” and provides that State supervision “shall not be allowed to impede” the “initiative and freedom of action” of local authorities. Legislation has been amended accordingly.
page 401 / 796 In the past (as observed by Recommendation 247 (2008)) one of the most problematic issues of local and regional democracy in Greece was the role of the Secretary General of the deconcentrated State administration vis-à-vis the local authorities. The Recommendation considered that it “infringes the principle of local self-government, particularly owing to the administrative interventions which this office is allowed to make in the settlement of local affairs, that is, in the field of planning and management of community funds and the powers of administrative and financial control and surveillance of both levels of local authorities”.
The rapporteurs notice with satisfaction that important progress has been made by Kallikratis reform, as a completely new system of legality supervision has been introduced (described above), although the system has not been fully implemented yet and Greece is still in a transition period, in which the previous system is still in place. During the monitoring visits, rapporteurs were told by several representatives of local authorities that many difficulties still exist, as the State’s supervision of local government is still extensive.
In practice, control procedures are lengthy, also due to the weakness and lack of human resources in State deconcentrated administrations, determining, especially in the numerous cases of ex ante compulsory control, a paralysis of the local administrative action and, in some cases, a denial of citizens’ rights.
The Greek Ombudsman, in his written answers to the rapporteur’s questions, pointed out that maladministration, which often characterises local government authorities, is due, to a great extent, to the unwillingness or weakness of the deconcentrated State administration in monitoring practices, to ensure legality and transparency. The investigation of the complaints submitted to the Greek Ombudsman has revealed incapacity on the part of the Secretary of deconcentrated administration to review citizens’ complaints within the required 60 day absolute deadlines from the submission’s date. If there is no action on the part of the deconcentrated administration the complaint is overruled implicitly.
Furthermore, very often legality control shifts towards expediency control. Examples were provided of cases in which State control voids the local autonomy, leaving no discretion to municipalities, also in matters relevant to their competence.
Another important concern expressed by local authorities is in relation to the financial controls introduced as consequence of financial crisis, and especially in relation to the creation of an observatory for local government’s fiscal management (the official title was “Observatory of financial autonomy of Local Authorities”, hereafter “Observatory”).
The Observatory was firstly established in 2012, by the new mid-term framework for fiscal strategy (MTFS) and it has been launched through Law 4111/2013 (Article 4). It is a Committee supported by the Financial Directorate of the Ministry of Interior and consisting of Fiscal Judges and high civil servants, while it also includes representatives of Local Government Associations (from the first and, respectively, the second tier). Law 4270/2014 (“Fiscal management and supervision principles, incorporation of directive 2011/85/EU - Public accounting and other provisions”) redefined the tasks of the Observatory.
The main role of the Observatory – according to the MTFS 2015-2018 – is to ensure the preparation of realistic and balanced budgets by local authorities, in accordance with the applicable budgetary Law as well as the monthly monitoring of budget execution by local authorities and their legal entities included in the Register of General Government Entities. Moreover, the Observatory provides its opinion to the Ministers of Interior and Finance on the draft budgets, by drawing up proposals, which are taken into consideration in the preparation of the consolidated local government budget
page 402 / 796 that is reflected in the MTFS and the State Budget.
In the above mentioned context, the Observatory: a. Assesses the revenue forecasts presented by local authorities in their budgets and the Integrated Action Plan and draws up proposals concerning the modification of targets, mainly when revenues appear to be overestimated and unrealistic; b. Assesses and controls the proper budget implementation, and in case of deviation greater than 10% from the quarterly budgetary objectives, it informs the local authority involved and its supervising authority and provides guidance on correcting the deviation. In the case of deviation from the targets for two consecutive quarters and if no appropriate measures have been taken, by decision of the Minister of Interior issued upon a proposal of the Observatory, the local authority concerned is placed under the fiscal consolidation program. The Observatory is responsible for defining the way of implementation of the programme.
According to the experts’ opinion, up to now, however, no such case has been recorded yet. Even in cases of persistent budget variance, the Observatory tends to apply “soft” methods of persuasion. Mandatory opinions of the Observatory on several matters and occasions have been submitted to all entities (893 in total), sometimes even containing instructions for draft budgets of 2014. Corrective mechanisms to control the budget execution for annual targets had already been introduced in 2012, however, such mechanisms proved not to be useful to the full extent if ceilings are not used in the budgetary process over time. In its comments sent to the rapporteurs during the consultation process, the Minister of Interior stressed that the opinions of the Observatory concern the drawing up of the annual budgets and focus on checks related to realistic budget drawings. Compliance with the directives and the ceilings, provided for in the annual Joint Ministerial Decision on the preparation of the budget issued by the Ministers of Finance and of Interior, is the essential tool for evaluating the realistic aspect of local budgets. In case of deviation in the execution of the budgets, the Observatory gives instructions to the entities that deviate so that they carry out actions with a view to correcting the deviations.
In 2013, Local Authorities’ budgets were not fully consistent with the projections of the MTFS for the local government sector as a whole. Consistency between the MTFS projections and Local Governments' budgets of 2014 became obviously more effective through the cooperation between the Observatory from one side and local government from the other side.
Institutionalisation of such an “Observatory” and other mechanisms of central fiscal control including obligatory measures faced vehement opposition from local government associations as well as from trade unions of local government employees. National Associations of Local Governments appealed in Council of the State against acts of the Observatory. They claimed this Institution would violate constitutional safeguards and especially the provisions on operational and economic autonomy of local government authorities (Article 102 para 2 of the Constitution).
The Council of State decided that legal provisions about the Observatory would not violate the financial autonomy of local government. The new institution would restrain in guidelines and instructions while municipal and regional councils still have enough space of discretion. Furthermore, the court stated that fiscal targets imposed by international agreements of the Greek government with the Troika and the European partners would be directly binding for all entities of general government
In conclusion, as for the compliance with Article 8, paras. 1 and 3, rapporteurs are perfectly aware that in the Greek context after 2010 – deeply marked by the financial crisis and by the subsequent international conditionality – a certain degree of centralised supervision, especially budgetary, over local government cannot be avoided. In addition, they were told by most interlocutors, not only at State level (such as the President of the Observatory or the representatives of the Minister of
page 403 / 796 Finance) but also at municipal level, that some degree of budgetary control was needed, due to the long-established and very common practice for Greek local authorities to present inaccurate provisional budgets.
The rapporteurs highly appreciate the efforts made by Greece, since the 2008 recommendation, in modifying the administrative supervision system. However, they cannot avoid expressing their concern about the existing situation: the lack of full implementation of the new system of legality supervision; the excessive length and bureaucratisation of procedures; the tendency of the legality control to shift to expediency control. Especially delicate is the role of the Observatory, given the risk that its control is not kept in proportion to the importance of the public interests which it is intended to protect and that it undermines the local financial autonomy and especially the freedom of local authorities to determinate expenditures priorities (in relation to Article 9, para. 1, of the Charter, see infra).
So far, it seems to the rapporteurs that the actual situation in Greece is not in compliance with the requirements laid down in article 8, paras. 1 and 3 of the Charter and those factual developments should be further monitored.
Hungary [Article ratified - Report adopted on 12 February 2021 ]
Article 8 of the Charter deals with supervision of local authorities. According to Article 8, paragraph 1, any administrative supervision of the activities of local authorities must be exercised according to such procedures and in such cases as are provided for by the constitution or by statute.
In line with the requirements of the Charter, in Hungary the rules governing central control over local authorities and the powers of the central authorities concerned are determined by the Constitution and by the law.
Article 32 of the Fundamental Law establishes the rules on supervision on local government decree, which shall no conflict with any other law. Local governments shall send local government decrees to the capital or county government office immediately after their promulgation. If the capital or county government office finds the local government decree or any of its provisions to be in breach of any law, it may initiate a judicial review of the local government decree. The capital or county government office may apply to a court for the establishment of the omission of a local government of its obligation that is based on an Act to adopt decrees or make decisions. Should the local government fail to comply with its obligation to adopt decrees or make decisions by the date determined by the court in its decision establishing omission, the court shall, at the initiative of the capital or county government office, order the head of the capital or county government office to adopt the local government decree or local government decision required to remedy the omission in the name of the local government.
The Cardinal Law on Local Self-Government in Article 132 further details those provisions (see above).
Therefore, the rapporteurs believe that Article 8.1 of the Charter is respected in Hungary.
Iceland [Article ratified - Report adopted on 29 March 2017 ]
Article 8 of the Charter deals with supervision of local authorities’ activities by other levels of government. Recommendation 283 (2010), para.5 lett. d), invited the Icelandic authorities to “stipulate in domestic legislation the cases in which the minister responsible for local government
page 404 / 796 may exercise supervision over local authorities’ performance, and set out the related procedures, which must be based on the principle of local authorities being given a due hearing”. At that time, basic legislation from one hand did not provide for general and systematic controls of the acts of local authorities; on the other hand, it established the monitoring by the Ministry of the performance of the local authority, opening the doors, in case they neglect their duties, to financial penalties.
The new Local Government Act clarified the rules on administrative supervision and financial supervision, by introducing detailed regulation in Chapter XI (administrative supervision) and in Chapter VIII (financial supervision), especially on categories of matters under monitoring and on the consequences of the monitoring. Nevertheless, the principle of local authorities being given due hearing is still missing from the legislation.
Considering that Article 110 of the Law 138/2011 provides that the Minister “shall choose the measure that is most likely to produce the desired result, taking into account the autonomy of the municipalities” and that during the meetings no complaints have been raised about the supervision system, the rapporteurs consider that Article 8 of the Charter is respected in Iceland.
Ireland [Article ratified - Report adopted on 31 October 2013 ]
The adoption of the LGA and consequent amendments to the legislation did not manage to decrease the high level of different forms of central supervision on local government activities (a telling statistic: the word “Minister” appears 461 times in the LGA).
The administrative supervision of local government is detailed – national government remains highly interventionist in local decision-making. In their written replies to questions put by the rapporteurs, the DECLG maintained that: “Where responsibilities rest with local authorities, the exercise of these is occasionally subject to control and monitoring by Government Departments at central level with a view to – aiming to ensure consistency (e.g. in terms of standards and level of service) throughout the State in programmes and schemes; maintaining control over the financial impact of local authority activities; keeping Government abreast of the progress of programmes and activities at local authority level; ensuring adequate compliance with national objectives and international obligations. For example, the specific sanction of the Minister for the Environment, Community and Local Government is required in particular instances, such as for borrowing and lending, which are set out in the Local Government Act 2001. In the light of the current very difficult economic circumstances, it has been necessary for the Department of the Environment Community and Local Government to introduce additional financial management controls and monitoring in relation to local government expenditure.”
The following are some further examples of this “interventionist” approach: The central government can, under Section 199, 8a of the LGA, still revoke any local bylaw, if it is considered “objectionable”, even if they have never done so. According to the section 212 of the LGA, the Minister may cause such public local inquiries to be held as he or she may consider necessary or desirable (a) for the purposes of section 216(1) (a) or the functions conferred on him or her or by any other enactment, or (b) in relation to the performance of the functions of any local authority. The DECLG explains that Part 20 of the LGA, of which section 212 is part and which provides for matters related to public local enquiries, has not yet been commenced. Part 20 thereof was intended to replace a number of existing provisions in local government legislation, the key provision of which is section 83 of the Local Government Act 1941 (which remains in place). Section 83 enables the Minister to appoint a person to carry out a local enquiry “for the purposes of any of the powers and duties for the time being conferred or imposed on him”. This power was envisaged to be appropriate where a local authority’s functions are not being duly and effectually performed. The power has been used only in the most exceptional circumstances.
page 405 / 796 As mentioned before, the new Action Programme contains the risk, if implemented as it is, of increasing the level of supervision even more through the establishment of a new additional National Oversight Office to monitor the efficiency and effectiveness of local authorities including, inter alia, their compliance with national objectives and policies. A lot will depend on the final Statute of the Office that is expected to operate independently of the DECLG. The DECLG also argues that the main goal of the Office will be evidencing local authority performance and consistency with government policy and not direct supervision. The Government stresses that local authorities are expected to be important stakeholders of the process.
The specific issue that should be mentioned here is that there are quite a number of cases where local government issues have been raised in courts in the context of the services which local councils provide and the law concerned with such services (legal supervision). For example in the case of Brady v Cavan County Council [2000] 1 ILRM 81, the applicant claimed an order against the local council requiring it to keep the roads in its care in an adequate condition, despite the plea that to do so would leave the council with inadequate funds to discharge their duties in other areas such as public housing or water sewerage facilities. A majority of the members of the Supreme Court rejected this claim, resting its decision on the ground that the council did not have the means to comply with the order and that there was no way of knowing whether the central government would have assisted it. This case concerned a poor local authority that would take twenty two years to bring its entire road network into a satisfactory condition. Another aspect of the judgment is the separation of powers between the judicial branch of government and the legislative branch of government which is established by the Constitution. The role of the courts is not to make policy decisions or to direct how government monies should be spent. That is a matter reserved for the legislature.
Another specific way of supervision is when members of the public, who feel that they have been treated unfairly, may also make complaints against local authorities to the Ombudsman. The Ombudsman can examine complaints about how local authority staff carries out their everyday executive and administrative activities. These include complaints about delays or failing to take action.
Italy [Article ratified - Report adopted on 18 October 2017 ]
As a rule, the control of the State (or of the region) over local authorities is very limited, it is strictly regulated in the Law and covers aspects of legality. Two different aspects need to be addressed here: the system of inter-administrative controls. The role played by other State bodies such as the Court of Auditors (corte dei Conti).
The inter-administrative controls over local authorities have experienced a profound change in the last decades. For a long time, a rather strong control over local authorities was in place (mainly performed by the region, which could annul local decisions) and this situation was already criticised by the 1997 Congress Recommendation. There were different types of controls: control of legality and control of expediency. In the nineties, though, the system was totally revamped in order to grant local governments more autonomy and to reduce the controls exercised so far by State and regional bodies. Another constitutional reform in 2001 eliminated most of the inter-administrative controls that were exerted by regions, as they were found ineffective. Consequently, as a rule local authorities do enjoy full autonomy in their day-to-day activities in adopting their decision, plan, policies and regulations without the need to get the prior approval of State or regional bodies (while in the case of delegated competences, however, the legislation or the delegating decision may establish specific sorts of supervision).
This general rule does not mean that there are no inter-administrative controls. These are regulated
page 406 / 796 by the Constitution, by the general legislation on local authorities and by sectoral legislation. Different techniques and controls may be identified. To begin with, under Article 120 of the Constitution the government may intervene in certain cases of measures adopted by local and regional authorities. This power (called “power of substitution”) is only possible in three cases or situations: non-compliance of the local authority with legal rules, international treaties and EU legislation; serious threats to public safety and security; when it is necessary to preserve the legal or economic unity of the country, and particularly if this is needed to guarantee the basic levels of social and civil entitlements of the population (Article 120, paragraph 2 of the Constitution).
Those constitutional provisions were supplemented by Act No 131, of 2003, which regulates in detail the procedure to implement this substitutive power of the State or the regions, a procedure where the local or regional authority must be heard. Scholars underline that this power must be construed as an extraordinary device, according to the case-law of the Constitutional Court.
A second type of inter-administrative control is now enshrined in the general legislation on local authorities (mainly, the Testo Unico). Under Article 138 of this legislation, the central government, on proposal of the Ministry of the interior, may annul the illegal (or illegitimate, in Italian) decisions adopted by the local authorities. This device is called extraordinary annulment (anullamento straordinario) and a precise procedure must be followed: this power has to be discharge by means of a decree of the President of the Republic, with the previous deliberation of the Council of Ministries and the opinion of the Council of State. The delegation did not hear complaints about a possible misuse or abuse of this extraordinary form of control. In any case, the procedural and legal guarantees that are established make us understand that it is only applied when the protection of the legal order is required (as this is the main ground for exercising it).
Other types of controls may be specified by sectoral legislation. For instance, the prefect (prefetto) may carry out supervisory and substitutive controls over the functions that are discharged by the mayor in his capacity of State government representative, which include the civil register, elections, statistics and military service matters.
Beyond the typical forms of inter-administrative controls, there are (like in other countries) exceptional powers of the State over local authorities, such as the power to dissolve the local entity. In this sense, the Unified Laws or Testo Unico also provides for the possibility to dissolve the local council and to remove the local administrators as a sanction in some circumstances, like the non- approval of the local budget in the way prescribed by the Law. It should also be recalled that in 1991, the possibility to dissolve the municipal and provincial councils that were suspected to have “mafia-like” infiltrations was introduced in the legislation.
The outbreak of the economic and financial crisis has had a notable impact in the pre-existing system. In the last years, the financial and budgetary controls over the economic activity of local authorities have been multiplied, with the justification that there were necessary to attain different objectives in the struggle against the public deficit, the consecution of balanced budget and some stability objectives.
This leads to consider the growing role of the Court of Auditors (Corte dei Conti). The Court of Auditors is an independent institution established by the Constitution (Article 100) and according to that provision it carries out the “ex ante” audit on Government acts and the compliance, financial
page 407 / 796 and performance audit on State budget and local government budgets. The Law 20/1994 is the main reference for the audit activity. The Court of Auditors supervises, among other things, all financial and budgetary and financial operations of local governments. In doing so, it performs different types of controls, fact finding and verification practices. These powers are constitutionally enshrined at Article 81 of the Constitution. Currently, this State body performs a key role in the control of local (and regional) accounting, budgeting and public expenditures. Since 2003 the Court of Auditors carried out a « verification » on the respect of budgetary balance as respected by municipalities, provinces and metropolitan cities. This role has been dramatically reinforced by the successive annual Stability Plans and by different pieces of legislation, especially the Act No. 213 of 2012. In this sense, the Court of Auditors enjoys increased power to carry out its « verification » powers. While confirming a collaborative nature audit, the Regional Audit Chambers verify, every six months, the legality and regularity of the management, the functioning of internal controls and the budget balance as well as the respect of the annual objectives fixed by the internal Stability pact (until 2016) and the debt constraints established by the Article 119 of the Constitution. They verify the implementation of the measures addressed to the rationalization of public expenditures of local bodies (so-called spending review) and in some circumstances (negative result in the audit activity) may determine prohibitive measures on expenditure laws, as well as procedures concerning financial bail lout plan. That is, in some circumstances, a negative result in this « verification » process may determine some sanctions on the concerned local authorities, something that has an evident impact on the local autonomy, as has been pointed out by some scholars.
In light of the foregoing, Article 8 of the Charter is respected in Italy.
Latvia [Article ratified - Report adopted on 27 March 2018 ]
In Latvia, the control and supervision of local authorities by the State is performed by different bodies and institutions. The control of the State ministries and departments over local authorities is very limited, and strictly regulated in the Law. To begin with, the line Ministry that is in general responsible for the supervision and control of the local entities is the Ministry of Environmental Protection and Regional Development (hereinafter, “MEPRD”). It may seems weird that a Ministry with such a name would be responsible for supervising local authorities, however the reason is that this body is the result of a merger of two pre-existing ministries, one of which was responsible of this tasks. Within the MEPRD there is a General Department that is especially responsible for this activity.
The MEPRD carries out a limited control over local authorities, due to the fact that they are autonomous under the Law. For what concerns the individual or particular decisions adopted by the local bodies (administrative acts), the Minister cannot cancel, revoke, quash or suspend those decisions. In those cases, the individual or company that is affected by the said decision can sue the local body in the administrative court.
In the case of local binding regulations adopted by the council, the controlling scenario is different, but here again the control of the MEPRD over local bodies is only a control of legality and “ex post facto”. As a rule, whenever a local authority approves a local binding regulation it has to send it, together with the explanatory memorandum to the MEPRD, for the provision of an opinion. The draft is analysed from the legal perspective (lack of competence, infringement of national laws or regulations, etc.) during a period of 30 days. If, during that time, the Minister does not release an opinion raising objections to the local regulation, then the local government shall publish the adopted regulation in the official journal (Latvijas VÄ“stnesis). If the Ministry finds that there is a problem of lawfulness, it will forward an opinion in that sense to the local authority. The local authority may amend or change the regulation in conformity with the said ministerial opinion and after that the local regulation may be officially published.
page 408 / 796 If the local council refuses to do so, then the Minister may suspend the regulation by means of a substantiated order, which will be published in the official gazette. In this case, the Chairperson of the local council must convene an extraordinary meeting of the council in order to analyse and discuss the situation, a meeting of which the Minister must be informed. If the local council decides not to revoke or to amend the local regulation in accordance with the ministerial order, it must submit an application to the Constitutional Court regarding the revocation of the suspensive order of the Minister. In this case, the order remains in force until the proclamation of the judgment of the said court. The delegation was told that during the process there are informal talks and dialogue between the local authorities and the MEPRD. This procedure is regulated at arts. 45 and 49 of the Law on Local Governments.
In general, the current system of inter-administrative control by State ministries does not seem to raise concern or controversy on the part of local authorities, and they feel free to take the decisions that they find more convenient. Most of the interlocutors met by the rapporteurs said that they did not have experienced any real case of attempt of unlawful control from the State authorities, and that the control takes place at the legality stage.
There also two extraordinary measures that can be adopted by State authorities in this domain. The first is the dismissal of the Council Chairman, in cases of neglect of duty or serious irregularities in his behaviour. The decision about the dismissal of a “mayor” is adopted by the MEPRD after the appropriate contradictory procedure (under art. 91 of the Law on Local Governments). Once the Minister adopts such decision, the affected individual can litigate in the competent court.
The second form of extraordinary control that the State may exert on a local authority is the dissolution of the local council. This decision must be adopted by the Saeima by means of an Act, although the MEPRD is responsible for triggering the procedure. This device is strictly limited to situations of serious malfunctioning of the local council, or when it repeatedly fails to observe the Constitution or to execute court judgments. Ministry´s representatives reported that in 25 years there have been only two cases of dissolution of a council in Latvia.
Still at State ministries level, and apart from the MRDEP, Latvian local authorities may be also controlled by the Ministry of Finance. The Ministry of Finance monitors the local government’s commitment process related to borrowings and guarantees according to the established procedure, and regularly analyses the financial situation of local governments based on monthly reports. The Ministry of Finance carries out the above-mentioned activities in order to avoid initiating the process of financial stabilization of municipalities in case of extraordinary financial difficulties in which the municipality has come. The stabilization process is carried out according to the Law "On Stabilization of Local government Finances and the monitoring of Financial Activities of Local Governments". The purpose of this Law is to regulate the procedures by which the stabilization of local government finances shall be performed, in order to ensure the continuous fulfilment of the functions of local governments as prescribed by Law in cases when local governments have come into extreme financial difficulties. The procedure set by the law prescribes a strict monitoring process for the arrangement of the financial situation of the local government. Beyond the State ministries, local entities may be also controlled by the State Audit Office (hereinafter, “SAO”), by the Anti-corruption Agency and even by the Competition Authority. Since the last two bodies exert a marginal influence in this domain, we will focus on the activity carried out by the SAO.
The SAO of Latvia performs an important role in the control of local accounting, budgeting and public expenditures, a role that has been reinforced by recent measures adopted in the wake of the economic crisis and the control of deficit. The SAO is an independent agency that reports to the Saeima. It audits all the public sector and entities, and of course all the local entities and their commercial companies, foundations or structures. In this sense, art. 74 of the Law on Local
page 409 / 796 Governments provides that “the SAO within the scope of its competence shall supervise the actions of local governments with financial means and property”. In carrying out its functions, the SAO performs financial audits on the one hand, and compliance and performance audits on the other hand.
In the field of financial audits, the main form of local government’s financial control is an obligatory audit performed by a private Audit Company. Activities of the SAO are complementary. In Latvia the main forms of financial control of local authorities is two-fold: (a) on the one hand, an internal control performed both by the finance committee, which is one the standing committees that must be set up in every local authority (art. 51 of the Law on Local Governments; art. 60 thereof enumerates its competences) and by the Audit Commission, which is not compulsory, and even more frequent in the cities than in the small municipalities. In this sense, it should be noted that the system relies on the responsibility of the local elected ruler, since there is no internal inspector verifying ex ante the regularity of the expenses. (b) However the main form of local governments financial control is an obligatory annual audit, that is performed by a private audit company, which audits the account of local authorities.
As concerns other types of audits, the SAO supervises the economy, efficiency and effectiveness of particular sector, field or issue of the local authorities, what is chosen for audit. Legislation permits the SAO to decide on the content of local policy decisions. For instance, the SAO had analysed whether local governments provide some administrative services to residents at reasonable costs. The SAO appraises the ability of municipalities and cities to perform their original competences within their remit, as well as the competences transferred from the State. The SAO though, has no power to paralyse or suspend a public expenditure by a local authority, and it cannot declare or impose responsibilities on the local officials. If criminal behaviour is detected, the case is reported to the criminal prosecutors. The SAO also issues recommendations on budgeting, expenditure process and financial management. The Latvian association of local and regional authorities claimed that the current legislation permits the SAO to decide de facto on the content of local policy decisions.
In the light of the precedent, the Delegation draws the conclusion that the provisions of article 8 of the Charter are respected in Latvia.
Liechtenstein [Article ratified - Report adopted on 28 March 2018 ]
Any administrative supervision of the activities of local authorities can only aim at ensuring compliance with the law and constitutional principles. Administrative supervision may, however, be exercised by higher-level authorities with regard to expediency in respect of the tasks delegated to local authorities. Another important requirement which can be inferred from the Charter provisions is that the law should precisely define the administrative authorities empowered to exercise legal supervision over municipalities, thus eliminating the uncertainty inherent in the current legislation.
In line with the requirements of the Charter, the rules governing central control over local authorities in Liechtenstein, and the powers of the central authorities concerned, are determined by the Municipalities Act (sections 116-118).
Regarding local government responsibilities, oversight is generally confined to a review of the lawfulness of municipal acts. As far as delegated powers are concerned, the review also extends to the appropriateness and effectiveness of local measures. The Government may lodge a complaint with the municipal council against a decision on local matters (Verwaltungsbeschwerde).
However, the rapporteurs wish to raise a particular concern about the system of central government approval of local budgets. The delegation was told that when approving local budgets the
page 410 / 796 government only checks whether the particular municipal budget is well–balanced (i.e., there is no deficit). During the consultation procedure, the government informed the rapporteurs that the municipalities are urged to maintain a balanced budget in the medium term according to Article 3 of the Act on the Financial Budget of the Municipalities (Gesetz über den Finanzhaushalt der Gemeinden) of 2015. The government further argued that it does not check the content and the volume of the local budgets but only their form and legality according to Article 10 of that Act.
It is worth noting, however, that the adoption of a municipal budget is not a delegated power, but a so-called “own responsibility”, the core function and entitlement of local government, which gives municipalities greater autonomy. The Government’s power of approval is not necessary for the conduct of a legal review. The rapporteurs are of the opinion that the existence of such a system of local budget approval permits state intervention in local economic management and opens up the possibility for the Government to keep local government budgets under control, even though this possibility is only theoretical since no such intervention has been reported as taking place in practice.
The rapporteurs also consider that the extent of financial oversight made possible by central government approval of local budgets constitutes disproportionate interference in local self- government. Moreover, with regard to the well-balanced financial situation of the municipalities, the Government’s approval based on checking whether municipalities have planned a budget deficit does not appear necessary.
The rapporteurs therefore conclude that paragraph 1 of Article 8 is complied with in Liechtenstein, while paragraphs 2 and 3 of Article 8 are not complied with.
Lithuania [Article ratified - Report adopted on 6 November 2018 ]
Article 8 of the Charter deals with supervision of local authorities. Any administrative supervision of the activities of local authorities can only aim at ensuring compliance with the law and constitutional principles. Administrative supervision may, however, be exercised by higher-level authorities with regard to expediency in respect of the tasks delegated to local authorities. Another important requirement which can be inferred from the Charter provisions is that the law should precisely define the administrative authorities empowered to exercise legal supervision over municipalities.
In line with the requirements of the Charter, the rules governing central control over local authorities in Lithuania, and the powers of the central authorities concerned, are determined by the Constitution and by the law.
According to Article 123 of the Constitution, “The observance of the Constitution and the laws as well as the execution of decisions of the Government by municipalities shall be supervised by the representatives appointed by the Government. The powers of the Government representative and the procedure of their execution shall be established by law. In cases and according to the procedure provided for by law, the Seimas may temporarily introduce direct rule in the territory of a municipality”.
The Law on administrative supervision of municipalities provides that the supervision is performed by the government representatives in the counties. Government representatives check whether the legal acts of municipal collegial and non-collegial administration entities are in conformity with laws, resolutions of the Government and other legal acts related to the implementation of laws and adopted by the central entities of state administration.
According to Article 5 of the Law on administrative supervision of municipalities, upon having
page 411 / 796 established that a legal act adopted by a municipal administration entity does not comply with laws or decisions of the Government, a Government representative shall by presenting a reasoned motion, propose to the appropriate municipal administration entity to consider amending or repealing the said legal act. The Government representative must be informed about the adopted decision within ten days after the adoption of such decision. Within ten days after the receipt of a notification about the refusal to satisfy the motion (if upon the consideration of the motion of the Government representative, a municipal administration entity refuses to amend or repeal the legal act under dispute), appeal against such a legal act to the court.
Upon having established that a municipal administration entity fails to implement laws, to execute decisions of the Government, a Government representative shall submit to the appropriate municipal administration entity a written request to immediately implement the law, to execute the decision of the Government. The Government representative must be informed about the adopted decision within ten days of the adoption of such decision. Within ten days after the receipt of a notification about the refusal to satisfy the request (if upon the consideration of the Government representative’s request a municipal administration entity refuses to execute the said request), appeal to the court regarding the omission of this municipal administration entity.
When carrying out the advanced control of draft legal acts of municipal collegial administration entities, a Government representative may examine draft legal acts submitted to municipal collegial administration entities for adoption. Government representative also may attend meetings of municipal collegial administration entities and, where appropriate, inform the municipal councillors that the drafts under consideration do not comply with laws or decisions of the Government.
According to the Law on Local Self-Government, municipal controller (municipal control and audit service) carry out the external audit in the municipality. In his activities the municipal controller (municipal control and audit service) shall observe this and other laws, State audit requirements, methodologies prepared by the National Audit Office, and other legal acts.
The National Audit Office shall carry out audit of the use of State budget funds allocated to municipal budgets. The National Audit Office shall perform audit of the implementation of municipal budgets and the management, use and disposal of municipal property in accordance with the scope of public audit. 162. During this visit, the delegation did not hear any complaints from municipal representatives and the ALAL on the State supervision and on the National Audit Office system. 163. In its written remarks, the ALAL pointed out that the Ministry of the Interior has drafted a new version of the Law on administrative supervision of municipalities, aimed at changing the legal status of the government representative and at allocating 5 government representatives (one for two counties). The Association expressed its concerns, especially on the possibility that, by reducing the number of government representatives, the supervision of draft legislation would also be reduced. The Association considers that prior surveillance of draft legislation reduces the risk of decisions infringing the Constitution, the laws or government resolutions.
In conclusion, the rapporteurs consider that Lithuania complies with Article 8 of the Charter.
Luxembourg [Article ratified - Report adopted on 21 October 2015 ]
Administrative supervision of the communes is governed by Part 3 of the modified Communal Law of 13 December 1988 entitled “Administrative supervision”. However, numerous other texts require decisions by communal authorities to be approved by a higher authority.
The Constitution, in granting communes communal self-government, provided for a supervisory procedure that would aim to prevent communal decisions from undermining the fundamental
page 412 / 796 interests of the state. That is why Article 107 of the Constitution also provides for oversight of communal administration. Such oversight, which the Ministry of the Interior indicated is due to end, constitutes “administrative supervision” and is exercised by the Grand Duke and the Minister of the Interior. The supervision exercised by the state authorities over the communes is regulated by statute, which envisages various measures for overseeing the activities of communal authorities.
In the case of administrative supervision, a distinction is made between supervision of activities and supervision of persons.
Supervisory power proper (annulment, suspension, approval, substitution of actions) is vested in the Grand Duke and the Minister of the Interior, according to the arrangements described below.
Administrative supervision of activities is intended to verify the legality of communal authorities’ activities.
The law establishes various means of supervising the activities of communal authorities. The Directorate of Communal Affairs is mainly responsible for reviewing the legality of any acts or decisions of communes, groupings of communes or public institutions placed under the supervision of communes which are submitted to it. It exercises power of approval in the cases expressly provided for by law. In this context, it prepares the decisions of the higher authority, Grand Ducal decrees or ministerial decisions as the case may be, especially in the following areas: real estate transactions above a certain value prescribed by law, large-scale construction projects, leases above a certain value, communal staffing matters and tax regulations.
Ex officio measures may be taken in the following circumstances:
- If the budget does not comply with the laws and regulations, the Minister of the Interior will rectify it (Communal Law, Article 124);
- If the budget is not put forward by the college of the mayor and aldermen or if the communal council does not approve it within the prescribed time, the Minister of the Interior will step in and either propose or adopt ex officio a budget covering merely mandatory costs as well as revenues and expenditure that are essential for the functioning of the commune (Communal Law, Article 125);
- In the event that the communal council should seek to avoid payment of mandatory costs which it is required to bear by law, by refusing to allocate all or some of those costs, the Minister of the Interior, after hearing the communal council, will personally charge the expenditure to the budget, in proportion to need, without prejudice to the recourse provided for in Article 107 (Communal Law, Article 125);
- If the college of the mayor and aldermen refuses or omits to authorise expenditure which the commune is required to bear by law, the Minister of the Interior may order that the expenditure be effected immediately. Such decision constitutes an order and the revenue officer is bound to pay the relevant amount (Communal Law, Article 133);
- If the college of the mayor and aldermen refuses or omits to draw up an order for outstanding revenue, the Minister of the Interior may order that the sum be recovered immediately. Such decision constitutes a revenue order requiring the revenue officer to collect the amounts in question. (Communal Law, Article 137);
- In all cases where budgets, accounts or other documents are not submitted within the prescribed time, the Minister of the Interior may, in accordance with Article 108 of the Communal Law, appoint
page 413 / 796 a special commissioner to carry out the outstanding work at the expense of the defaulting parties (Communal Law, Article 165).
Supervision of persons may be exercised in respect of individuals (dismissal of a mayor or alderman) or groups (dissolution of the communal council) and amounts to a disciplinary power.
Supervision of individuals may be exercised only in respect of mayors and aldermen, who are instruments of local government and, at the same time, representatives of the state. It does not apply to communal councillors.
Supervision of persons is referred to in the following legislative provisions: a. Dissolution of the Communal Council, collective measure: under Article 107, paragraph 3, of the Constitution, the Grand Duke has the right to dissolve the communal council. Neither the Constitution nor the Communal Law specifies in what circumstances such dissolution may take place. b. Individual measures: the mayor and the aldermen are not merely involved in the administration of the commune; they also act as the state’s representatives at local level. Under the Communal Law, therefore, the government has the power to discipline mayors and aldermen, but not communal councillors.
In cases of commonly acknowledged misconduct, fault or gross negligence, aldermen may be suspended by the Minister of the Interior for a period which may not exceed three months unless it is renewed by reasoned decision (Article 41 of the Communal Law). The mayor may be suspended by the Grand Duke in the same instances and on the same terms (Article 63 of the Communal Law).
Mayors and aldermen may also be dismissed, by the Grand Duke and the Minister of the Interior respectively, if the situation is sufficiently serious to warrant such measures. Any mayor or alderman who has been dismissed cannot sit on the college of the mayor and aldermen until after the next communal council election following his or her dismissal.
The terms “commonly acknowledged misconduct” and “gross negligence” are not defined or clarified by law. The rapporteurs note that these terms are rather vague and allow scope for interpretation, as court rulings have shown. The current conditions governing dismissal allow central government a wide margin of discretion, therefore.
The provisions on financial supervision are found in Part 4 of the same law, under the heading “Communal accounts”. Here too, many communal authority decisions, such as approval of the budget and any amendments made thereto during the year, and adoption of the accounts, are subject to ministerial approval. At the same time, the Minister of the Interior has a department responsible for carrying out on-site audits of local government accounts.
In its Recommendation 175 (2005), the Congress questioned the conformity of the system of administrative supervision with the Charter and invited the Luxembourg authorities to “revise their legislation on supervision of local authorities with a view to confining such control to a posteriori verification of strict legality”.
During the meeting with the rapporteurs, SYVICOL complained of an increase in central government supervision since the 2005 recommendation, notably in the field of urban planning. The Minister of the Interior, for example, can even amend a general development plan (PAG) adopted by the communal council. Although it is enshrined in law, such scrutiny could in some instances amount to a review of expediency.
page 414 / 796 The rapporteurs note that so far, no changes have formally been made to the legislation in question with the aim of relaxing the supervision. There is a law abolishing districts (passed on 7 July 2015, entering into force on 3 October 2015), but it does not make any substantial improvements in this area given that the powers and responsibilities hitherto vested in the district commissioners are simply transferred to other authorities, in most cases the Ministry of the Interior.
The previous government indicated in a 2013 activity report that 2013 had been devoted to further efforts to reform the system of administrative supervision with a view to tabling a bill amending Part 3 and various other provisions of the amended Communal Law of 13 December 1988. The aim of this reform was based on the proposals set out in the report by the Chamber of Deputies’ Special Commission on the Territorial Restructuring of Luxembourg and on the objectives set in the governmental declaration of 2009.
The reform was accordingly designed to implement the following principles: a. General supervision concerning the possible annulment of decisions and suspension to be abolished. b. Supervision concerning the approval of decisions to become the exception. c. Mandatory transmission of communal decisions to become the rule. d. A list of decisions which do not have to be transmitted to be drawn up. e. An institutional dialogue on issues relating to legality to be introduced. f. Disputes over purely legal questions to be settled by the administrative court.
The rapporteurs’ understanding is that the current government is aware of the problem since it states in its governmental programme that “the government believes that the Ministry of Interior must be able to act in a more flexible, effective and speedy manner than is the case at present. To ensure better co-operation between the Ministry and the communes, the Ministry of the Interior needs to be less concerned with supervising and more concerned with partnering and advising the communal councils. In future, the various processes and responsibilities within the Ministry will be made transparent and verifiable...”.
At the time of the monitoring visit, there was no evidence of any tangible progress on the reform of supervision. That said, the rapporteurs were informed by the Ministry of the Interior of plans being drawn up in this area which should lead to a fundamental reform in this respect, taking account of the following points: application of the principles of proportionality and subsidiarity redefinition of the scope of ministerial supervision revision of the principle of double ministerial supervision establishment of transparent criteria for the allocation of subsidies to communes establishment of e- government.
The rapporteurs therefore consider that the situation is only partly compliant with Article 8. Particularly problematic in their view is the implementation of Article 8, paragraph 3, notably where urban planning and the hiring of local government officers are concerned.
Malta [Article ratified - Report adopted on 29 March 2017 ]
The Local Councils Act provides for various kinds of financial oversight, namely through the appointment of Local Government Auditors, Ministerial measurement of performance, the Ministerial
page 415 / 796 power to request books and accounts from the executive secretary and the preparation of a Business and Financial plan.
Under Article 65 of the Local Councils Act, the Auditor General appoints persons known as “local government auditors”, who may be either individuals or partnerships, to audit the accounts of every local council, including those of the Local Councils Association and the Regional Committees, subject to such conditions as deemed fit to ensure the required level of quality and assurance. Such an appointment is for a period of 1 (one) year renewable each year, for a total period of not more than 5 (five) consecutive years. In the case of appointment of individual local government auditors, they must neither be Councillors of the locality whose books they are auditing, nor be in the employment of the Council of the said locality or be related by consanguinity or affinity in the direct line or up to the 3rd degree in the collateral line, to any Councillor of that locality. According to Article 65(3) of the Act, in the exercise of their duties, local government auditors have access to all books, records, returns and other documents relating to the accounts of local councils and may require any person holding or accountable for any such books or documents to appear before them at the audit. Furthermore, under Article 66(2) of the Act, the local government auditors are required to satisfy themselves that local councils have made arrangements for securing economy, efficiency and effectiveness.
The second kind of administrative supervision mentioned above is undertaken by the Minister responsible for Local Government and the Minister of Finance. According to Article 66 of the Local Councils Act, the Minister responsible for Local Government after consultation with the Minister of Finance prescribes indicators to measure the performance of local council services, such indicators directed towards facilitating comparisons of cost, economy, efficiency and effectiveness between local councils over time. Performance Indicators for local councils are established by the Minister responsible for Local Government and regular appraisals on the basis of such indicators are made and then published.
Thirdly, according to Article 64 of the Local Councils Act, the Minister responsible for Local Government may, either of his own accord or at the request of the Minister of Finance, by notice in writing require the executive secretary to produce such books or accounts, records and any other documents as may appear to him/her to be necessary without giving any reason for such demand.
Finally, local councils have the obligation to prepare, discuss, approve and send to the Minister responsible for Local Government and the Minister of Finance 3-year business and financial plans, which are revised or confirmed annually.
Further to the above, the central government exercises indirect supervision over local councils through the allocation of annual grants upon taking into consideration based on the formulae prescribed under or on the basis of the Local Councils Act and the budget prepared by each Local Council.
The aforesaid provisions of the Local Councils Act and the tight supervisory powers of the central government over the financial management and expenditure of local councils indicates that the system insists much more on preventive or even day-to-day control than on verifying in the aftermath whether wrongdoings have been committed, suggesting that this is due to the young age of the local governance system in Malta and the existence of an element of distrust towards the local councils. The latter aspect is dealt with by the National Audit Office, through its ex post financial and compliance audits, the Office identifies any possible shortcomings committed during the previous financial year and puts forward relevant recommendations to address such issues. Furthermore, when combined with the extended intervention powers of the central government in the local affairs and the execution of functions that should normally be undertaken by local councils, this kind and
page 416 / 796 extent of administrative supervision of local councils by the central government limits the autonomy of local councils even further, compromising the aim of self-governance pursued by the Charter.
Concern was already voiced in the 2011 Monitoring Report as to the tightness of the administrative monitoring observed over the local authorities by the central government. Nevertheless, no legislative amendment was pursued or effected to date in order to address such concerns.
In light of the above, the Republic of Malta is not in conformity with Article 8 of the Charter.
Monaco [Article ratified - Report adopted on 28 March 2018 ]
Article 8, paragraph 1, according to which any administrative supervision of local authorities may only be exercised according to such procedures and in such cases as are provided for by the constitution or by statute, poses no problem and Monaco must be considered to comply fully with this article.
Although no provision for the administrative supervision of municipal measures is made in the Constitution, Law No. 959/1974 has established regulations on the matter. None of the persons we met mentioned supervision that is not provided for by law.
Montenegro [Article ratified - Report adopted on 21 October 2015 ]
Montenegro is not bound by Article 8, paragraphs 2 and 3.
The legal framework for auditing financial statements of local self-government units is prescribed mainly by Constitution of Montenegro and the Law on State Audit Institution. The audit on the financial statement of local self-government units is also performed in line with the following: Law on Budget; Law on Local Self-Government Financing; Law on Local Self-Government; Regulation on uniform classification of accounts for the budget; Extra-budgetary funds and budgets of municipalities; Instruction on methodology of performing financial audit and regularity audit, International accounting standards and International standards of supreme audit institutions etc.
The audit of financial statements of local self-government units consists of: a preparatory audit phase (planning and adoption of the budget of local self-government units), execution of the budget (audit of final statement), as well as compliance with laws and internal legal acts of the local self- government units). The State Audit Institution performs the financial audit of the annual final statement of the local self-government units as well as a compliance audit (compliance of the operations of the local self-government unit with law and internal legal acts).
There are two types of supervision: external administrative supervision and hierarchy (administrative) supervision. Article 55 of the Law on Local Self-Government financing prescribes the structure of the final budget statement of the municipality. Apart from the basic structure, the final budget statement consists of an external auditing report on financial reports, which is carried out by a private audit firm.
The proposal of the final budget statement is determined by the mayor who submits it to the municipal assembly by the end of May of the current year. The final budget statement is delivered to the Ministry of Finance within 30 days from the day of its enactment. Along with the final budget statement, the bills of profits and losses of public enterprises and institutions, permanent reserves and the balance of property dated on December 31st of the year the budget refers to are also submitted to the municipal assembly. The municipal assembly supervises the budget execution and
page 417 / 796 purposeful utilisation of the funds that are appropriated for certain purposes in the budget, as determined by the Statute. The mayor supervises financial, material and accountancy management of the budget users regarding the purpose, extent and dynamic of the use of the funds, as determined by the Statute. The competent local administration body performs an administrative supervision of the implementation of the Law on Local Self-Government financing.
The State Audit Institution informed the rapporteurs of the performed audits in the municipalities of Nikšić, Danilovgrad, Ulcinj, Kolašin, Rožaje, Herceg Novi, Tivat, Kotor, Plav, Bar, Bijelo Polje, Plužine, Mojkovac and Cetinje. The key irregularities identified in the audit of the local self- government units refer to the following areas: a. Legal inconsistencies: ï€
- Internal control and internal audit within the municipalities – the procedures are not prescribed or prescribed procedures are not implemented; ï€
- Propriety – the management of state propriety (records and management) is not appropriate due to inconsistency with the real estate cadaster1, and in many cases the value of the assets is underestimated.
- Documentation – it is insufficient and incomplete. Some legal acts are missing at the level of the municipality. A number of the municipalities did not require an approval from the Government on borrowings according to the Law on Budget;
- Public procurement – the procedures related to a number of audited entities do not comply with the legal regulations. b. Financial issues:
- The Treasury General Ledger does not include the data on changes in assets, liabilities and equity;
- Incorrect records of expenditures on the basis of incomplete documentation;
- The liabilities are not recorded upon their incurrence, but upon the timing of their payment;
- Non-financial assets – incomplete records, incompliance with the real estate cadaster;
- Long term financial assets – the share is not recorded in the equity of the public enterprises;
- Ancillary books – are not maintained for assets; the current value expressed is unrealistic;
- Borrowings – adjustments are not made. c. Unrealistic forecasting and planning:
- The comprehensive collection of own source revenues is not achieved – local taxes, fees, and charges;
- The Cooperation between local and state bodies is not completely adequate: the local self- government bodies and Tax Administration and Propriety administration are not adequately interlinked;
page 418 / 796 - The process of planning and adoption of the budget and final budget account is not always performed in due time, or in accordance with prescribed deadlines;
- There are no long-term investment plans – which form the basis for adequate planning of the annual capital budget.
The issue of supervision raised in Articles 124 of the Law on Local Self-Government gives the Government the role to interfere with local governments’ decisions in cases of a legally relevant misconduct within municipalities, namely the right “to suspend from execution a regulation or general act of the Assembly or the Mayor, if it estimates that such regulation or general act is not in accordance with the Constitution or it restricts freedoms, rights and duties of citizens as prescribed by the Constitution or laws”. In Article 125 and 126, the cases of misconduct that may lead to supervision are the failure of the assembly to perform its functions in a legal way and non- compliance of the mayor with her/his obligation to call elections.
The rapporteurs heard that good communication exists between the State Audit Institution and the audited entities (for example self-government unit). The process begins with the adoption of the decision on performing the audit and notices given in writing. The preliminary audit report on the financial statement is submitted to the audited entity for comment and suggestions. On receipt of this opinion the State Audit Institution may organize a meeting with the representatives of the audited entity to clarify disputable issues. Its written response includes: its approved suggestions and proposals on the preliminary report and reasons for declining some proposals from its opinion. The draft final audit report takes account of the opinion of the audited entity.
Some interlocutors felt that certain procedures entail an administrative supervision that is too onerous for municipalities, such as the right of local self-government to manage its own properties. One hand the Constitution guarantees the right of local self-government to manage its own properties, but on the other the Law on State Property breaches this right. As municipalities require the approval from state authorities in order to sell municipal property. A further example is that municipalities cannot acquire loans without the approval of the state authorities.
The rapporteurs believe that the audit system of municipalities in Montenegro is a well-defined procedure involving the co-operation of local authorities. They therefore consider that Article 8, paragraph 1 is respected in Montenegro and believe that the non-ratified Articles 8, paragraphs 2 and 3 should be the subject of ratification as they seem de facto to be complied with.
Netherlands [Article ratified - Report adopted on 26 March 2014 ]
In Dutch constitutional and political tradition, supervision of municipal activities by the province and the central bodies is seen as a part of the system of self-government, a feature that counterchecks local autonomy in order to ensure the unity of the country. This supervision is strictly regulated by the law, and can only be enforced under the law. Thus, the Dutch constitution itself provides for such supervision: Article 132 establishes that the supervision of the municipal administrative organs “shall be regulated by Act of Parliament” and that decisions taken by a municipality´s organs “shall be subject to prior supervision only in cases specified by or pursuant to an Act of Parliament”.
At this point, it should be recalled that the Netherlands made a declaration in their instrument of acceptance (1991) that “it shall not consider itself bound by the provisions of Article8 paragraph 2 of the Charter”. In any case, the Dutch system excludes any form of “a priori” or “ex ante” intergovernmental supervision of local decisions, plans and ordinances by the central authorities, except in those exceptional cases provided for by the law. Intergovernmental supervision can be implemented “ex post”, and local decisions may be quashed only by royal decree and on the ground
page 419 / 796 that they conflict with the law or the public interest (Article 132 of the Constitution).
Articles 259 to 281 of the Municipalities Act regulate the cases where State authorities are to approve, suspend or to annul municipal decisions. a. Prior approval: Decisions of municipal authorities can be subject to approval only in cases determined by Act of Parliament or a provincial bye-law pursuant to Act of Parliament (Article 259.1). This approval must be given by royal decree. To obtain such approval, the local decision is to be sent to the Minister of the Interior. This Minister makes a recommendation to grant or to withhold the approval sought. The Council of State must be consulted, too. The minister takes the final decision, on the basis of the report of the Council of State (art. 266, the Municipalities Act ). b. Suspension and reversal of local decisions: An order or a non- written decision adopted by the municipal administration may be reversed by Royal Decree, on the grounds of legality or for the protection of the general interest. In this case, state control is triggered by a demand of the mayor. The Municipalities Act describes the procedure. If the mayor is of the opinion that a decision should be considered for reversal, within two days of it coming to his or her attention, he or she is to inform the Minister of the Interior through the Provincial Executive. Simultaneously, the mayor is to inform the body which took the decision (the council or the executive board), and, if necessary, the body that has been charged with its implementation. Within one week of the date of the mayor’s notification, the Provincial Executive is to forward the documents, together with its opinion, to the Minister of the Interior. Then, the said minister is to make a recommendation for the suspension of the contested local decision. The Royal Decree to suspend, withdraw or extend the suspension of a decision or to reverse it, is to be published in the Bulletin of Acts, Orders and Decrees. When a royal decree has been granted, the municipal authority is to make a new decision on the matter that formed the subject of the reversed decision, taking the Royal Decree into account when doing so.
The Generic Supervision Act provides for other types of control or supervision of municipal activities, focusing on enforcement issues.
Consequently, the system indeed provides for “a posteriori” controls, which are discharged either by the Minister of the Interior or by another sectoral agency. Those controls cannot be based on expediency grounds, but only on reasons of legality, or for the protection of the public interest. In reality, and according to the information facilitated to the Congress delegation, the actual application of such controls is very rare.
The laws and regulations on local budgeting and financial relations (Financiële Verhoudingswet) and The Municipalities Act also allow for a specific sort of intergovernmental intervention in that, in general, provinces monitor the budgets of municipalities. When a municipality’s budget becomes unbalanced, the province can intensify its control mechanisms, which means that it approves of the proposed expenditures of the municipal boards. When the province’s measures do not suffice to improve the municipality’s financial situation, there is an article in that law that makes it possible that the municipality gets extra funding from the Municipality Fund.
Beyond this verification, there are other forms of more subtle supervision: for instance, the “Nerpe Act” (compliance with European rules by public entities) allows for fines imposed by the EU on the State to be collected from the municipalities. Other indirect controls are introduced when the State imposes performance or efficiency standards on the work of municipalities. However, this cannot be depicted as a true “expediency control”.
North Macedonia [Article ratified - Report adopted on 26 February 2013 ]
Consult reply indicated at article 7.1
page 420 / 796 Norway [Article ratified - Report adopted on 26 March 2015 ]
Administrative supervision of local authorities’ activities is exercised by the governor (fylkesman) who acts as the representative of central government in the counties. Under Section 59 of the Local Government Act, the governor exercises supervision to ensure that acts and decisions adopted by local authorities comply with the law. Section 59 of the Local Government Act limits the supervision applied to acts of local authorities to a simple verification of compliance with the law. This can concern the inherent lawfulness of the act (the act must be lawful in terms of content), the empowerment of the authority issuing the decision (made by a person or persons empowered to make such a decision) or the lawfulness of the procedure which resulted in the decision (came into being in a lawful manner). A decision deemed unlawful will be annulled.
There is no requirement to submit local authorities’ acts and decisions to the governor, who exercises supervision by monitoring local authorities’ decisions on-line. The governor may carry out reviews on his or her own initiative, or if asked to do so by at least three members of the municipal council. The governor has the authority to revise any acts or decisions which he or she considers unlawful. He or she may also issue directives to local authorities, drawing their attention to the need to comply with the law.
In this regard, the Ministry of Local Government and Modernisation clarified, that it is responsible for rules on the framework, procedures and instruments for government supervision of municipalities and county authorities in the Local Government Act Chapter 10 A. The Local Government Act stipulates amongst others that the audit should provide legality supervision, i.e. supervision of the municipality’s compliance with the duties imposed on it by the ministry, which by law is given the authority to supervise. Which parts of the municipality's activities are to be supervised, has to be specified in each separate law. Ministries themselves are responsible for special statute authorizations for audits and that these are in accordance with the general supervision rules of the Local Government Act. Through the allocation letter to the supervisory bodies each ministry sets financial limits for supervisory activities, provides possible guidelines for methodology, volume etc. The role of the governor and other supervising bodies is in actual fact much wider, as he or she likewise has the power to oversee the running of local public services. Consultations with the KS supported the delegation’s observation that by overseeing the municipalities, the supervising bodies actually deviate to a substantial amount from existing legislation related to procedures, documentations while showing a lack of administrative routines. This appears to be the case at least from the perspective of governmental institutions and the way those bodies interpret the legal framework. The governor may also be asked to examine appeals from members of the public who consider that their individual rights in relation to health, social welfare, education or construction and planning have been infringed by local authority decisions. These decisions can thus be reversed in favour of the individuals concerned.
Besides supervising compliance with the law, it appears that governors can also exercise a form of supervision with regard to expediency and issue recommendations or even instructions to local authorities and raise objections, e.g. in matters relating to town planning. Some local elected representatives, notably those from the municipality of Bergen as well as the representatives of the local government association KS, expressed the wish that the supervision competences of governors should be strictly limited to legality control. KS has expressed its view that supervision should neither be based on an increasing number of guidelines nor recommendations by the central government, but solely on statutory law. The current Norwegian government seems willing to better regulate the powers of governors. The principle of subsidiarity, meanwhile, is not specifically mentioned in the texts relating to supervision and its application is not systematic in practice.
page 421 / 796 Norwegian legislation and particularly section 59 of the Local Government Act appears compliant with the requirements of the Charter in so far as it limits state supervision of the acts of local authorities to a simple verification of lawfulness. It nevertheless appears in practice that certain governors exercise supervision over local authorities exceeding simple verification of lawfulness and akin to a review of expediency (merit). The rapporteurs have reservations regarding a certain amount of administrative supervision carried out by governors on the own competences of local authorities. This practice remains variable, but the delegation wishes to draw the attention of Norwegian authorities to the issue.
Poland [Article ratified - Report adopted on 2 April 2019 ]
According to Article 8, paragraphs 1 and 2, any administrative supervision of the activities of local authorities can only aim at ensuring compliance with the law and constitutional principles. Administrative supervision may, however, be exercised by higher-level authorities with regard to expediency in respect of the tasks delegated to local authorities. Another important requirement that can be inferred from the Charter provisions is that the law should precisely define the administrative authorities empowered to exercise legal supervision over municipalities.
In line with the requirements of the Charter, in Poland the rules governing central control over local authorities and the powers of the central authorities concerned are determined by the Constitution and by the law.
According to Article 171 of the Polish Constitution, “1. The legality of actions by a local government shall be subject to review. 2. The organs exercising review over the activity of units of local government shall be: the Prime Minister and voivods and regarding financial matters - regional audit chambers. 3. On a motion by the Prime Minister, the Sejm (Parliament) may dissolve a constitutive organ of local government if it has clearly violated the Constitution or a statute”.
The legislation, as previously indicated, carefully defines the authorities, procedures, and cases in which the supervision, that is limited to the control of the legality of the acts, is exercised. If the voivode eventually overrules a local body decision, then both the local authority and the citizens may challenge the voivode´s decision, by lodging a complaint with the Regional Administrative Court, where a public hearing will then take place. The judgment may be appealed to the Supreme Administrative Court. Therefore, the judiciary is responsible for ensuring that the administrative supervision of State authorities is carried out with due respect to the grounds and procedures established by the law.
Therefore, they consider that the requirements of Article 8, paragraphs 1 and 2, are complied with in Poland,
Portugal [Article ratified - Report adopted on 28 September 2020 ]
The government, through the Minister of Finance and the Minister responsible for Local Government, is the entity exercising overall administrative supervision of local authority acts, in accordance with Article 242 of the Constitution. It is not the expediency of the acts that is supervised, and this is in keeping with the principle of the Charter.
As pointed out by the rapporteurs, supervision is carried out through inspections, inquiries and investigations, gathering and analysing information and clarifications that are important for checking on the application of laws and regulations by local authority bodies and services. Inspections are carried out regularly, according to the annual plan approved by the competent entities. The inquiries
page 422 / 796 and investigations are decided on by the government where there are valid grounds. Unlawful acts committed while managing local affairs may result in two kinds of sanction: removal from office in the event of unlawful acts committed individually by members of local bodies or the dissolution of those bodies where unlawful acts are the result of a collective act or failure to act. Decisions to remove officials from office and dissolve local authority bodies lie within the remit of constituency administrative courts, under an emergency procedure, and mean that officials removed from office or previously members of dissolved local authority bodies are ineligible for the duration of the following mandate.
In the view of the rapporteurs, Article 8 paragraph 1 of the Charter is complied with.
Republic of Moldova [Article ratified - Report adopted on 4 April 2019 ]
In the Republic of Moldova, the oversight and supervision of local authorities are not regulated in the constitution, but by regular statutes and administrative regulations, that lay down the cases and the procedures under which this supervision can take place. At least on paper, the supervision of local authorities by the state ministries and departments is limited and strictly regulated by law.
To begin with, it should be noted that this supervision is not carried out by the districts (Raioane), or by any sub-state authority, since there are no regions in the country except in the case of Gagauzia. Therefore, the control and supervision of local authorities are exclusively carried out by the state authorities. From this perspective, supervision of local authorities is carried out by different governmental bodies and authorities, and there is no central Department on Public Administration or on Local Authorities, a situation that was identified by the previous Congress monitoring reports as a weakness in the Moldovan system. In Recommendation 322 (2012), the Congress recommended that the Moldovan authorities establish such a department (point 6.b), but this recommendation has not been followed. Moreover, the structure of the central government was recently streamlined and the number of central departments was dramatically reduced, so there is no prospect that in the short or middle term a Department on Public Administration or on Local Authorities will be established in the country. According to central government officials, the fact that local government issues are handled in the State Chancellery is a better option than having a specific ministry working on the subject.
At present, the key bodies for the supervision of local authorities are the State Chancellery and the Ministry of Finance. The State Chancellery is the body that concentrates the most important powers in the field of local government and decentralisation and it co-ordinates all issues dealing with local governments. The State Chancellery has the power to validate the legality of the acts and decisions of the local authorities, something it does through its regional offices.
The Ministry of Finance also plays an important role in administrative supervision, but it is limited to financial and fiscal issues. According to Article 78 paragraph (4) letter a) of the Law no.181 of 25.07.2014 on public finances and budget-fiscal responsibility, the financial inspection shall be initiated: a ) at the request of the Prime Minister; b) by the Minister of Finance, who, through the responsible administrative authority under the Ministry of Finance, plans financial inspections based on the assessed risks related to the activities of the budgetary process and the subjects mentioned. While the local authorities are free to approve their own annual budgets, they are required to send a copy of those budgets to the ministry. However, this body does not approve or amend the local budgets, it keeps them for information-gathering purposes and for the analysis of the evolution and trends of the public sector. A “financial inspectorate” of the Ministry of Finance may conduct inspections in any local authority in the country. This financial inspectorate may decide to audit any local authority according to their own discretion, plans and strategies. As a result of those inspections, the financial inspectorate may impose fines on a local authority. The prime minister may also order that such an inspection be carried out in any local authority, something that, in the
page 423 / 796 political context of the country, may be used as a tool to threaten or exert undue pressure on local bodies. Ministry of Finance officials conceded that the system is not efficient and does not work correctly, and they want to revamp it.
The Ministry of Agriculture, Regional Development and Environment plays a minor role in this respect, and its intervention is limited to the co-ordination and implementation of development projects, infrastructure and planning. Outside the executive branch, the Court of Accounts of the Republic of Moldova plays a fundamental role in the administrative oversight of local authorities. The Court of Accounts, regulated by Article 133 of the constitution, performs an important role in the control of local accounting and public expenditure, a role that has been reinforced by recent measures adopted in the wake of the economic crisis and the fight against corruption. The Court of Accounts is an independent agency that reports to the parliament. It has the legal power to audit any body or entity in the public sector, which gives it the power to audit local entities as well. In fact, there is a special division in the Court of Accounts dealing with local governments. In carrying out its functions, the Court of Accounts performs financial audits and issues recommendations. It may also refer to the prosecutor if mismanagement or misappropriation is unveiled as a consequence of the audit.
The most worrying part of this system is that the Court of Accounts unfortunately has insufficient human and administrative resources to audit all the Moldovan local authorities. In fact, the Court of Accounts audits only a small number of local authorities (usually the largest ones), in a selective or “strategic” manner and following their own policies and auditing strategies. The Court of Accounts has developed its own strategic programmes for auditing at local level and so far it has focused only on “systemic” issues. This means that a large part of Moldovan local authorities (especially the small ones) are not audited on a regular basis by the Court of Accounts. The Court of Accounts has no power to impose a course of action on the local authorities that have been audited, but it can address reports and recommendations to them (the representatives of the Court of Accounts reported that only 37% of their recommendations are followed and implemented by local authorities).
In many local authorities there is no system of internal control or audit mechanism (finance control, audit commission, control services, etc.), for the simple reason that, as mentioned above, the local authorities do not have the adequate staff to assume this task. Furthermore, they do not have the means to hire private sector sworn auditors to audit their accounts.
There are also extraordinary measures that can be adopted by state authorities in this respect. For instance, the control exercised by the public prosecutor and by criminal courts. As discussed in other parts of this report, a structural pattern in the Moldovan system of local government is the important and very frequent intervention of the prosecutors and the judiciary in the day-to-day activities of local authorities. Mayors and council members/presidents are often subject to investigation, indicted, and on this basis suspended from office by the court (or even subject to measures of restriction of freedom). This produces a fundamental disruption in the work of local authorities, although in strict terms this situation does not fall into the scope of Article 8.1.
In view of the above, the delegation considers that Article 8.1 is respected in the Republic of Moldova.
Romania [Article ratified - Report adopted on 3 March 2011 ]
Although Article 123(4) of the Romanian Constitution does not expressly say so, a combined reading of the provisions of the law on local public administration and the law on the prefect and the institution of the prefect indicates that administrative supervision of the local authorities is carried
page 424 / 796 out by the prefect.
In the exercise of the task for which he or she has been elected, the mayor issues legislative or individual provisions and takes unilateral administrative decisions. The secretary of the administrative-territorial unit communicates the provisions to the prefect within five days of their being signed. The prefect thus reviews the legality of acts and decisions (i.e., is responsible for administrative supervision). If necessary, he or she can call for the revision or revocation of the administrative act or measure considered partly or entirely illegal. If this is refused, the prefect can bring the matter before the administrative tribunals to call for the decision to be set aside.
In the exercise of their functions, the local council and the county council issue orders that are submitted to the prefect for a review of their legality. In the event of the council refusing to set aside decisions considered illegal by the prefect, the latter can bring the matter before the administrative tribunals. The regulation of the supervision by the prefect of administrative acts and decisions seems appropriate and proportionate, although some abuses can be reported as far as past practice is concerned.
Russian Federation [Article ratified - Report adopted on 30 October 2019 ]
A system of supervision of local authorities by other levels of government does not generally exist in Russia. One exception is the supervision of a local authority’s fulfilment of delegated powers. During the consultation procedure the Federation Council objected that this conclusion by the rapporteurs is not correct. It argued that some provisions of the Russian legislation on supervision concern also activities of municipalities, and provides, as an example, “Article 21 of Federal Law No. 2202-I of 17 January 1992 on the Prosecutor’s Office of the Constitution of the Russian Federation and laws in force in the territory of the Russian Federation, including activities of local authorities”.
However, the rapporteurs note that annulment of municipal legal acts and their suspension by the competent State authority of the Russian Federation or of a Russian Federation subject is possible only to the extent that the act in question deals with the exercise by local self- government bodies of individual State powers assigned to them by federal laws and the laws of Russian Federation subjects respectively.
For instance, according to Law No. 55 of the Chuvash Republic dated 30 November 2006, “On providing local self-government in the Chuvash Republic with separate governmental powers”, local self-governmental authorities of municipalities and city districts are provided for an indefinite period with the State powers of the Chuvash Republic aimed at creating and supporting administrative commissions in order to process the cases of administrative offences, and are provided with the State powers of the Russian Federation to officially register acts of civil status. In this case, one of the Ministry of Justice and Property Relations’ functions is the control of the creation of and support for administrative commissions in municipalities and city districts, as well as the control over the exercise by local authorities of delegated State powers in the field of registration of civil status acts.
The cancellation of normative acts and decisions of local self-government bodies can occur only through judicial procedure; with such a claim, the State authorities, and citizens, have the right to apply to the court if their rights and legitimate interests are violated.
The Ministry of Justice of the Russian Federation and its regional subdivisions[23] ensure that the legal system of the Russian Federation is uniform. For these purposes, a regional subdivision
page 425 / 796 carries out, in accordance with the established procedure, anti-corruption reviews of the charters of municipalities and municipal legislative instruments in relation to amendments to the charters of municipalities when they are registered with the government.
In pretrial procedures, the prosecutor’s office has the right to protest to the local self- government bodies against a normative legal act that contradicts, in the opinion of the prosecutor’s office, the law with the requirement of its abolition or the idea of eliminating violations of the law and the rights of citizens by the actions of bodies and officials of local self- government, which must be considered without fail within a certain period. If the requirements are not satisfied, the prosecutor’s office has the right to file a lawsuit.
During their various meetings with interlocutors, the rapporteurs received information that with the current practice, the rights of local self-government are limited a priori since the prosecutor’s office shall conduct an anti-corruption expertise of the local self-government bodies’ draft regulations in order to check their competence in the light of anti-corruption norms. At the same time, the prosecutor’s office often goes far beyond the issues of possible corruption, believing that local government can carry out only those actions that are imputed by law. The federal laws of 21 December 2013 (No. 370-FZ) and 18 July 2017 (No. 171-FZ) have amended Article 77 (“Control and supervision of the activities of the bodies of local self-government and local government officials”) of Federal Law No. 131-FZ and established the power of “the Procurator’s Office of the Russian Federation to oversee local self-government bodies and officials of local self- government”.
During the consultation process on the present report, the Russian National Congress of Municipalities stressed that “a preliminary anti-corruption expertise at the prosecutor’s office is more beneficial for municipalities than a restriction of their rights. The anti-corruption legislation in Russia is quite complicated; the legislation at federal, regional and local levels is changing constantly. Rural deputies are often not familiar with legal techniques and do not know all the legislation in force. Preliminary examination allows identifying and correcting possible errors in draft municipal acts before its adoption and avoiding administrative fines and time spent in courts”.
However, the delegation still considers that the Russian Federation lacks a comprehensive system of specialist State authorities responsible for administrative supervision. Today, there are several legal provisions about controls by State authorities and important tasks of supervision are given to the prosecutor’s office. Even though there are no clear indices of systematic expediency controls or of disproportionate measures, it is obvious the competence of the prosecutor’s office (who is used to acting according to penal law) for administrative supervision appears as a peculiarity and the rapporteurs would encourage the Russian authorities to consider the development of a comprehensive system of administrative supervision by State authorities that could include different versions in the different constituent entities of the Russian Federation.
The rapporteurs conclude that there is an obvious need for reform in order to establish a comprehensive transparent system of administrative supervision. As regards Article 8, paragraph 3, the current practice of preventing corruption by the prosecutor’s office when local authorities are obliged to send draft regulations for a priori control raises serious doubts about the compliance of this practice, especially with regard to paragraph 3 of Article 8. When this “anti- corruption expertise” steps beyond issues of corruption control then it is clear that Article 8, paragraph 3 (as well as paragraph 1), is violated. Therefore, the rapporteurs consider that it is
page 426 / 796 necessary to clarify per law the limits of this anti-corruption control in a way that will also ensure compliance with the principle of proportionality.
San Marino [Article ratified - Report adopted on 28 March 2018 ]
Up to now, no system of state administrative supervision has been developed in San Marino, except for financial auditing by the respective bodies. In view of this legal and administrative reality, the rapporteurs conclude that there are no problems concerning the compliance of San Marino with Article 8 of the Charter.
Serbia [Article ratified - Report adopted on 18 October 2017 ]
Paragraphs 1 and 2 both state that administrative supervision must comply with the law. The second paragraph also makes a distinction between ensuring compliance and expediency, with the latter only being possible in relation to delegated tasks. In Serbia, this corresponds to the distinction between original and delegated tasks.
Administrative supervision of local government is conducted by the Ministry of Public Administration and Local Self-Government, more specifically by the Administrative Inspectorate. This includes regular monitoring of the implementation of laws, regulations and administrative procedures. In special cases, the Law on Local Self-Government makes it possible for the government to suspend the execution of a general decision taken by any unit of local self-government if the government considers such an act to be incompatible with the Constitution or the law (Articles 81-84).
According to the same Law on Local Self-Government, the government can also dissolve a local government assembly (Articles 85-87). This is possible in three circumstances: 1) if the assembly holds no sessions for a period longer than three months; 2) if the assembly does not enact a statute or budget within the deadline stipulated by law; and 3) if the assembly fails to elect a president of the municipality and municipal council within one month from the day of its establishment or from the day of their dismissal/dissolution or resignation. If any of these criteria are met, and the assembly is dissolved, the government should appoint a temporary body in its place. However, the temporary body can only take decisions regarding “current and urgent affairs.” Between 2008 and 2014, 13 local government assemblies were dissolved; most of them at the beginning of the period.
Administrative supervision of local government in Serbia takes place according to law, as stipulated by Article 8 of the Charter. It is also an encouraging sign that the strict measure of dissolving local assemblies is now being used more sparely. Although Serbia has not ratified paragraph 3, Article 8, regarding the proportionality of administrative supervision, the act of dissolving an elected assembly would most likely be interpreted as a disproportionate response to a failure to act by the local authority. During the consultation process the Ministry of Public Administration and Local Self- government argued that this measure is foreseen by the Constitution, and conditions for its implementation set up in Law are very restricted, namely, it can only be introduced when citizen’s right to local self-government is compromised. Nevertheless, the rapporteurs are concerned about the unclear powers of the temporary bodies that replace such dissolved assemblies. There seem to have been cases where the temporary body has remained in power longer than permitted and has taken decisions that are neither current nor urgent. The Constitutional Court concluded that it was for the temporary body itself to define what was “urgent” and thus to determine the limits of its powers. These ambiguous conditions reflect a lack of regulation which, in the opinion of the rapporteurs, paves the way for an abuse of power. As this concerns local assemblies, it affects the very heart of local, democratic self-government. Therefore, the rapporteurs consider this to be an infringement and a sign of non-compliance with paragraph 1 of Article 8 of the Charter.
page 427 / 796 Slovak Republic [Article ratified - Report adopted on 24 March 2016 ]
The control of the State over local authorities is very limited, and strictly regulated in the Law. Three different aspects need to be addressed here: the system of inter-administrative appeals and the role played by the General Prosecutor´s Office (prokuratura), and, finally, the action of the National Accounting Office (NAO).
For what concerns the first issue, sectoral legislation foresees, in some fields of tasks delegated by the State, the possibility to appeal a measure or a decision adopted by a local authority before the local State administration (for instance, the corresponding district office). This happens in the domain of building, urban planning procedures, roads and transportation. The reason for these inter- administrative controls (which are foreseen in the Slovak Constitution, Art. 71.2) is that in those cases the municipalities do perform State administrative functions, and they do so with the monies that the State allocates to the local entities.
Apart from these relatively few cases of inter-administrative appeals, the most important role in the control or oversight of municipalities is played by the General Prosecutor´s Office (Prokuratura), who is an independent body established by the Constitution (arts. 149 to 151), and governed by the Act No. 153/2001, on Prosecution, as amended. The General Prosecutor´s Office ensures that the Law is observed by all individuals and all governmental and public bodies. According to this general and comprehensive competence, it may also supervise the legality of the decisions, measures and binding regulations adopted by local (and regional) authorities. The Prokuratura is a peculiar feature of the Slovak Republic, and follows apparently the German model of the Staatsanwalt. The Prosecutor acts either on request or on its own motion (ex officio). Thus, he may conduct inspections on local authorities in any matter. Inspections, though, are considered to be a preventive mechanism instead of “ex post” supervision.
The control exercised by the Prokuratura over local bodies is only a control of legality and “ex post facto”. The Prokuratura, for instance, cannot cancel or quash whatsoever the decision of the local authority. In no case can the Prosecutor order a local authority to do or to refrain from doing something. The prosecutor cannot suspend a local body decision, neither. In some cases, the Prokuratura may intervene at the drafting stage, when a local authority asks for its advice on a given legal matter.
Contrary to what happens in other countries, Slovak municipalities are not obliged to communicate to the State authorities the decision or measures that they adopt. Therefore, the Prosecution can only initiate a procedure if it receives a complaint from local politicians or from affected persons, or as a result of an investigation file. By either way, the Prokuratura may decide to have a closer look on any decision, measure or binding regulation adopted at municipal level. If the findings show that the activity of the local body is not in conformity with the Law, then the Prosecutor´s Office can issue “warnings” or protests, addressed to the local authority. The local body has the duty to answer in a time limit of 30 days, accepting or refusing the Prosecutor notice. If the local authority refuses to amend or modify its decision or measure, then the Prosecutor may lodge an appeal in court within two months, asking the annulment of the contested decision. Litigation in this field, however, is not very usual (it only happens three or four times a year). It seems that local decrees and decisions are usually drafted with care from the legal point of view, and sometimes the Prokuratura itself is consulted on a preliminary basis, as noted above.
According to the General Prosecutor´s Office statistics, there is a clear improvement in the way municipalities are applying the Law. In this field, each Slovak municipality is independent and may independently decide to recruit a legal official or not. Large towns may have a more or less large
page 428 / 796 legal department, but not small cities. If a municipality requires special legal advice on a precise manner, they may either hire a lawyer in the free market, or ask for an opinion or advice to the Prosecution Service. According to its annual reports, the number of allegedly unlawful local decisions has decreased over the years. The main areas of non-legal compliance, according to the Prokuratura, are the following ones: Building permits Land registry Administrative offences Taxes collection and management Local fees The legality of local binding ordinances can also been supervised, and there is also number of cases in this field. hey usually impose duties and obligations on the citizens that fall beyond what the Law authorizes (for instance, a local ordinance limiting the number of dogs per household was found illegal).
In general, the current system of inter-administrative control does not seem to raise concern or controversy on the part of local authorities, and they feel free to take the decisions they find more convenient. Most of the interlocutors said that they did not have experienced any real case of attempt of unlawful control from the State authorities, and that the control takes place at the legality stage. However, some local leaders made three different complaints in this area: a. Firstly, they complain that in recent years there has been an increase of State legal regulations that lay down detailed procedures addressed to municipalities, which allegedly limit the way how municipalities are supposed to execute their powers (in case of original competences). b. Secondly, they complain that the Prokuratura implements a too narrow interpretation of the principle of legality and that of conferral of powers. Therefore, in some cases, when a Municipality decides to implement a decision or initiative, this is challenged by the Prokuratura on the ground that the said initiative has no explicit basis in the legislation. The interpretation is that municipalities can only act in those cases where there is a clear conferral of competences by the Law. This interpretation of the Law leaves little (if any) room to “implicit” or residual powers on the part of municipalities, as noted supra. The principle according to which municipalities are entitled to take actions and initiatives for the benefit of the local residents, as long as these are not prohibited by the Law, is ignored in the country as is opposed by the Prokuratura. c. Finally, local leaders also complained about certain cases of inconsistency among the activity and proceedings followed by the different regional offices of the Prokuratura. Apparently, there have been cases where a given local initiative or decision has been considered to be legal by the corresponding regional office of the Prosecutor´s Office, while the same type of local decision, adopted by a municipality in a different Region, has been found illegal by the respective regional office. This causes uncertainty among local leaders.
As noted above, the National Accounting Office (NAO) performs a role in the control of local (and regional) accounting, budgeting and public expenditures, a role that has been reinforced by the recent Fiscal Responsibility Act (see, infra, para 69). This body is an independent agency, set up by Act No. 39/1993. The NAO supervises all financial and property operations of local governments. In doing so, it performs different types of audits, such as compliance audits, financial audits and performance audits. In this later case, the NAO controls the ability of municipalities to perform their original competences within their remit, as well as the competences transferred from the State. For each local authority that is surveyed, a NAO report is released and sent to the mayor and to the Council, as well as to the Ministry of Finance and to the National Council. Then, the Ministry of Finance may take additional measures, if needed. On the other hand, if the NAO finds a misdemeanour, they transfer the case to the criminal prosecutor. The NAO, though, has no power to paralyse or suspend a public expenditure by a local authority.
In the light of the above, the Slovak Republic fully complies with Art. 8 of the Charter.
Slovenia [Article ratified - Report adopted on 6 November 2018 ]
As mentioned earlier, in the opinion of the rapporteurs municipalities are autonomous in Slovenia and they operate relatively independently from the state.
page 429 / 796 Administrative supervision, especially regarding legality of work of local municipalities is prescribed by the Constitution. The Constitution states that: “State authorities supervise the legality of the work of local community authorities”. The Constitution includes also a clause regarding supervision in case of delegated tasks.
Chapter X of the Local Self-Government Act (Articles 88-90c) defines the scope of supervision by state authorities. By vigour of legislation, supervision shall be performed by the government and the ministries. Supervision concerns the legality of the work of municipal bodies, the legal implementation of general acts and individual municipal acts as well as supervision of delegated tasks and duties.
The rapporteurs therefore conclude that Article 8.1 of the Charter is complied with in Slovenia.
Spain [Article ratified - Report adopted on 20 March 2013 ]
According to Article 153 of the Spanish Constitution, ”control over the bodies of Self‑governing Communities shall be exercised by: a) The Constitutional Court, in matters pertaining to the constitutionality of their regulatory provisions having the force of law; b) The Government, after the handing down by the Council of State of its opinion, regarding the exercise of delegated functions referred to in Article 150.2; c) Jurisdictional bodies of administrative litigation with regard to autonomous administration and its regulations; d) The Court of Audit, with regard to economic and budgetary matters”.
Furthermore, since 1984, some autonomous communities have set up, within the framework of their autonomous powers, regional bodies responsible for external auditing (“OCEX”) answerable to their respective parliaments, and aim to develop external /auditing in their specific public sectors. So far, thirteen regions have established OCEX responsible for auditing the regional public accounts (Andalusia, Aragon, Asturias, Canaries, Castile-La Mancha, Castile and León, Catalonia, Community of Madrid, Community of Valencia, Galicia, the Balearic Islands, Navarre and the Basque Country). The situation of Spain is thus atypical when compared to other European countries, which have greater homogeneity among the different regions of the same State.
The auditing regime of local entities is enshrined in the Law 7/1985. The essential judicial supervision of local authorities is carried out by administrative courts (jurisdicción contencioso- administrativa). Furthermore, the national Court of Audit (Tribunal de Cuentas), reviews the legality and regularity of a local authority’s expenditure, with reference to the relevant regulations on budgeting and accountancy. Should irregularities or misdeeds be established, mayors, deputy- mayors and others can be held responsible and may incur possible damages.
The supervision of autonomous communities and local entities consists of supervising financial regularity, monitoring legality and checking on efficacy, efficiency and economy (the “three E’s”).
In Spain, a system of inter-administrative oversight is performed jointly by the regions and the State. In a system comparable to other European countries, Spain has developed specific instruments, through which the region or the State are in a position to supervise, oversee or merely gather information concerning the conduct of local authorities. The designation of local authorities as “autonomous” in the Spanish Constitution does not mean that they are independent administrative entities, or that it excludes intervention from either the national or regional sphere. Indeed, the core supervisory function exercised by both levels is meant to be an oversight of the actual legality of local authorities’ actions and not a control of expediency. Consequently, an administrative “tutelage”, which is prevalent in countries such as Belgium or Luxembourg, is conceived to be incompatible with the Spanish concept of local autonomy.
page 430 / 796 The State and the region can thus neither adjust nor invalidate local authorities’ plans, decisions or rules on expediency or opportunistic grounds as such an act would be incompatible with local autonomy. Accordingly, administrative supervision is primarily limited to questions of legality and secondly, submitted to the inquiry of administrative courts (which in practice, appears to be complex, as reflected in the vast amount of administrative jurisprudence).
Lastly, the Council of Ministers, being the top central government body, has the right to dissolve the governing body of a local authority, if the local body acts in violation of its constitutional duties (for example in the case of the dissolution of the City Council of Marbella in 2006, which came about as a result of massive corruption in the field of land use and housing construction practices).
Specific attention must be paid to supervision in financial matters. In many countries, the targets established in order to adopt policies of general spending review in order to avoid increased public debt could imply some new instruments, which, even if they could not explicitly be considered as “supervision”, could actually reduce the autonomy of local authorities.
The supervision of autonomous communities was reinforced on 1 May 2012 by the entry into force of the organic law (on budgetary stability) which enhances the transparency of the public accounts of autonomous communities and reinforces State resources in terms of monitoring and correcting lapses in regional accountancy, with possible sanctions or even compulsory supervision if necessary (in return for support with their cash flow difficulties). The rapporteurs consider this law as a positive step, especially in the current economic context.
In that perspective, it should be noted that the organic law primarily provides for a new system of supervising the regional and local authorities’ budgeting process, in which regional governments submit their approved expenditure ceilings to the CPFF (Council of fiscal and financial policy), and, along with local authorities, send these budgetary provisions to the Ministry, which decides whether the budgets comply with the targets of stability, debt and expenditure regulation for the following year’s budget and may make some possible recommendations to the administrations concerned.
Secondly, when one administration adopts measures that carry a risk of non-compliance, the central government adopts a measure to limit borrowing automatically, subject to a notification to the CPFF or CNAL (National Commission for local Administration).
Thirdly, the corrective mechanism is to be adopted by central government, always subject to a notification to the CPFF or CNAL.
The general provision of the present Spanish legislation on supervision by the upper levels of government on local authorities is in compliance with the Charter.
Sweden [Article ratified - Report adopted on 2 April 2014 ]
Consult reply indicated at article 7.1.
Switzerland [Article ratified - Report adopted on 20 October 2017 ]
The delegation reiterates that Article 8.2 of the Charter has not been ratified by Switzerland.
Decisions taken by the municipalities, irrespective of whether they are administrative decisions or financial decisions (budgets), are supervised by the cantons. The conditions under which this supervision is carried out are stipulated in the cantonal constitutions and laws; the conditions may
page 431 / 796 therefore vary considerably from one canton to the next. For example, Article 111 of the Constitution of the Jura stipulates that: “1 The municipalities are under Government supervision. 2 In particular the Government supervises their financial management and the execution of the responsibilities allocated to them by the Confederation and the Canton. 3 If the Government notices any irregularities, it takes the measures provided for by law. 4 In very serious cases, it may suspend the municipal bodies and replace them by extraordinary administrative arrangements. 5 In cases where it is impossible to constitute the municipal bodies, the Government establishes extraordinary administrative arrangements”. In all cantons, there are specialised supervisory services (Office for the Municipalities, for example, in the Canton of Zurich). Supervision may also be carried out by one or another of the departments of the cantonal government.
With regard to administrative decisions, the competent departments examine the lawfulness of the decisions adopted by the municipal councils. If a decision is taken in breach of the laws and regulations of the canton, the cantonal government (State Council) may declare the decision null and void. In principle, the expediency of administrative decisions taken by the municipalities is not subject to scrutiny if the municipality is taking action within its sphere of competence, in other words in matters which come within its sphere of autonomy.
This type of scrutiny can however be exercised with regard to the financial choices made by municipalities; the canton and the municipality concerned must then discuss the expediency of such decisions, which might, for example, exceed the fiscal capacity of the municipality. With regard to financial decisions, some cantons impose relatively strict obligations on municipalities, in particular the obligation to balance their budget. This is the case in the Canton of Geneva and in the Canton of Zurich. In the Canton of Geneva, the municipal budget must be balanced. It is possible to run a deficit equivalent to depreciation, provided that the excess is covered by net revenue. In this case, the municipality is obliged to draw up a financial plan to be implemented until the situation is redressed and which must be approved by the ministry. Other than this specific case, if a municipality refuses, without a valid reason, to balance its budget, the cantonal authorities deal with the situation either by reducing expenditure or by increasing surcharges (centimes additionnels), which seldom happens in practice.
Several cantons have placed restrictions on municipal indebtedness. Specific restrictions of this kind are under discussion in some towns and municipalities. Only two cantons (Geneva and Vaud) have set up a Court of Audit. In the other cantons, supervision of the effectiveness of public expenditure is limited, owing to the lack of adequate supervisory bodies. Supervision of expediency may also be carried out with regard to the decisions taken by the municipalities in performing the responsibilities delegated to them by the cantons. In practice there are seldom disputes as it is considered preferable to have recourse to negotiation and compromise.
The rapporteurs conclude that Switzerland is in compliance with Article 8, paragraphs 1 and 3 of the Charter.
Turkey [Article ratified - Report adopted on 1 March 2011 ]
The analysis article by article is currently unavailable
Ukraine [Article ratified - Report adopted on 31 October 2013 ]
Article 20 of the Law on local self-government in Ukraine states that “central government supervision of the activities of the bodies and staff of self-governing authorities may be exercised only on the basis, and within the limits, of the powers and procedures for which the Constitution and
page 432 / 796 the laws of Ukraine provide, and may not extend to interference by the bodies or staff of central government authorities in the exercise by self-governing authorities’ bodies of the exclusive powers delegated to those bodies”. Furthermore, Article 35 of the Law on state administration at local level lists several principles of co-operation between central government units and local authorities, which are also relevant to the execution of administrative supervision: interaction; assistance to local officials by central government staff; statutory limitation of the supervision exercised; the taking into consideration of the proposals of the bodies and officials of local units; the giving of advance notice to local authorities in the event that issues important to the local level are to be dealt with by central authorities; the power to participate in discussions on such issues; the power to participate in, and to speak at, meetings of local authorities’ bodies; prohibition of interference in local authorities’ affairs.
The rapporteurs believe that the law, in substance, safeguards compliance with the principles laid down in Article 8 of the Charter in respect of administrative supervision of local authorities. Where practice is concerned, the rapporteurs were informed of allegations related to over-control of local authorities, such as indirect pressure put on elected on local elected representatives by the local state administrations, resulting in the removal of Mayors (for example in Cherkassy). These allegations, if true, are serious cause for concern for the rapporteurs as to the extent of this supervision, which would in these cases not be considered to be proportionate as required by the Charter. .
United Kingdom [Article ratified - Report adopted on 26 March 2014 ]
England
In the UK system there is no direct equivalent to administrative supervision and control of local authorities by specific institutions or procedures. External controls include specific administrative controls by ministers or other bodies, financial control by external auditors, legal control by the courts and controls by ombudsmen on grounds of maladministration.
Legal control by the courts may be exercised, if a statute makes a direct provision for an appeal to a court against a decision of a local authority, such as licensing, school-choice and child protection decision-making. Much more common is the exercise by the courts of their inherent power of judicial review. It can be considered a supervisory jurisdiction over local authorities (and other public bodies) by means of which any person with locus standi can challenge the validity of a local authority act or decision being ultra vires. The grounds may be substantive (no powers for action), based on procedural error or on irrationality; also a breach of the ECHR can be used as the basic of challenge (according to the Human Rights Act). These options for judicial challenge guarantee the respect of the Rule of Law as well as for Human Rights in the activities of local authorities.
Ministers who retain an overarching responsibility for sectors, such as school education, social services and transport, still maintain some powers to influence and steer the activities of local authorities formally responsible. These forms, often framed (by Ministers) as “partnership”, lead to overlap and sharing of responsibilities. Central government has the authority to intervene in instances where there have been concerns over childcare, education or the management of any failing council. The Government underlines that intervention in a local authority is rare and only as a last resort; there have been only three interventions by the Secretary of State in the last 10 years on corporate management failings. There are regular central government inspections of schools, as well as children and adults social services, e.g. through the Care Quality Commission (CQC) as the regulating body for adult care services, the Office for Standards in Education. Children’s Services and Skills (Ofsted) is an independent body reporting to Parliament which carries out inspections on site in local authorities; their inspection frameworks are under revision and will be replaced by a single one for child protection and looked after children.
page 433 / 796 During these controls and inspections, both legal compliance and efficiency of local government are monitored. Various interlocutors expressed the feeling that these controls are aimed at reducing and controlling – and thus limiting – powers, but they also aim to ensure high quality of service to the community and safeguard vulnerable people. In 2007, 1100 performance indicators were counted for reporting to central government. Although the number of data returns which local authorities are required to submit was significantly reduced when the National Indicator set was replaced with the Single Data list in April 2011), this may still raise the question of whether accountability is foremost guaranteed by central authority or through democratic means by the local people.
Wales
In Wales, a case has been reported in which executive functions of a council have been taken over by commissioners appointed by the Welsh Government due to political in-fighting and a history of poor performance (Isle of Anglesey Council).
Section 2 of the Local Government (Wales) Measure 2009 requires Welsh local authorities to make arrangements to secure continuous improvement in the exercise of their functions. Section 28 of the Measure provides Ministers with powers of assistance, while section 29 permits Ministers to intervene in and direct a local authority which is failing, or is at risk of failing to comply with the Measure. They may also direct a local authority to collaborate with another. These powers go beyond the power of the Secretary of State in the Local Government Act 1999.
After decades of infighting and political instability in the Isle of Anglesey Council, the Welsh Government Minister for Local Government decided to suspend the executive functions of the Council in May 2011 and install five commissioners to run affairs. Despite being the most severe intervention into an individual local authority in the history of Welsh local government, the move was supported by the WLGA, who, in its capacity as an improvement body, worked with the Council in response to the recommendations of the Wales Audit Office’s Corporate Governance Inspection in 2009. Local Government Elections were suspended for one year with the election taking place in May 2013, along with the return of executive functions. Since then internal functions within the Council have improved.
In addition to the case of Anglesey, the Welsh Government has introduced ‘special measures’ and commissioners or ‘Ministerial intervention boards’ in six other Welsh local authorities to address what it perceives as serious shortcomings in education. While between 1999 and 2008 only one Local Education Authority in Wales was placed into special measures requiring intervention, between 2011 and 2013, some seven authorities have been in this category; out of these authorities five are some of the smallest in population terms which suggests that scale does appear to have a major impact on education performance.
Local government audit
The extent and purpose of top-down administrative supervision has been an issue for both English and Welsh local authorities for many years, and “the Audit Commission’s role in relation to ‘value for money’ is probably to be seen as a form of supervision, even though normally this leads to public reporting, rather than any legal action against the supervised authority”.
Recommendations (1998) regarding administrative supervision have expressed concern on the role of the Audit Commission in England and Wales and doubts about its independence from central Government; pointing to the dangers of combining auditing with judgments of effectiveness. This referred to the duty of the Audit Commission to report on the achievement of “Best Value” objectives by local authorities. In England there was also a system of overall monitoring (Comprehensive
page 434 / 796 Performance Assessment, since 2009: Comprehensive Area Assessment), which has been abolished by the coalition Government. Also the Audit Commission in England will be abolished by April 2015 and the Accounts Commission in Scotland is (to be) abolished in early 2014. Central responsibility will be shifted to local authorities which have to contract out to private accountants while continue with the monitoring of “Value for Money”.
Scotland
External audit is compulsory and is carried out by a range of audit and scrutiny bodies including the Accounts Commission for Scotland. All of the reports are available online, including the latest annual audit overview covering key local government issues. Performance improvement, self‑evaluation, and other improvement resources are facilitated by a specific agency: the Improvement Service, which has developed a new benchmarking framework allowing significant cost and performance comparison across the 32 Councils.
Wales
Since 2004, responsibility for the audit of Welsh local authorities has been transferred to the Auditor General for Wales. In Wales, the Local Government (Wales) Measure 2009 makes provision to ensure greater collaboration between local government auditors, regulators and inspectors so as to maximise value. It introduced significant changes to performance and inspection work in local government which requires the Auditor General for Wales to undertake an overall improvement assessment for each council. This assessment is undertaken in collaboration with Estyn and Care and Social Services Inspectorate Wales. The Inspection Wales Programme has established a Development Group which has tasks that include planning, leading and coordinating further developments in joint working under the Measure.
Public body decisions are also subject to judicial review which may also be interpreted as a kind of external supervision. In a UK context, judicial review is a type of court proceeding in which a judge reviews the lawfulness of a decision or action made by a public body. Relating exclusively to the legality of the decision or action, this kind of supervision does not seek to influence or reduce local authority powers. It shall guarantee that public bodies stay within their statutory powers, but keeping them (and the use of their resources) focused on these, it might also lead to more efficiency.
Accountability: complaints system and Local Government Ombudsman
In England, the Local Government Ombudsman investigates complaints from individuals regarding “injustice in consequence of maladministration” caused by acts and decisions of local authorities. Today, the mandate includes a duty to scrutinise “service failure” as well as the ability to initiate investigations themselves. Complaints regarding Council services can be addressed to the Ward Councillor or to the Mayor; complaints on other matters might be referred to the inspection bodies of central government, such as Ofsted. Residents can make a formal complaint to the Council about services that have either been provided or denied. The complaints process provides for three stages. If these are exhausted, and the complainant is still unsatisfied with the response, a complaint to the Local Government Ombudsman is possible. The latter will assess any complaint independently. In case of a complaint against the conduct of a Councillor, a complaint can be made to the Council’s Standards Committee for investigation. The Information Commissioner is responsible for queries under the Freedom of Information Act. Structurally, in Scotland and Wales the function has been integrated into the broader offices of the Scottish Public Services Ombudsman and the Public Services Ombudsman for Wales. Also the Northern Ireland Ombudsman is a broader office, dealing with complaints of maladministration by government and public bodies; however, he has no role in
page 435 / 796 investigating individual ethical conduct by councillors.
The “Partnership Approach”
The rapporteurs have the impression that a “partnership approach” regarding relations between local and devolved government is emphasised in Scotland and in Wales compared to a more prescriptive approach adopted in England.
The Local Government in Scotland Act 2003 gave a statutory basis to partnership working between all agencies (such as health boards, benefits agencies, further and higher education institutions) responsible for public service delivery in an area. This partnership approach is called Community Planning. To develop this, the Act creates a new statutory body alongside the Local Authority, the Community Planning Partnership (CPP), in each municipality. Scottish local authorities are responsible for initiating, facilitating and maintaining Community Planning.
In Wales, relations between the Welsh Government and local authorities are governed by the 2008 Local Government Partnership Scheme, as required by the Government of Wales Act 2006 and the November 2009 agreement, ‘A new understanding between the Welsh Assembly Government and Local Government in Wales’. The Partnership Scheme reaffirms the commitment of both levels of government to “working together in partnership, within an atmosphere of mutual trust and respect, recognising the value and legitimacy of the role both have to play in the governance of Wales”. In practice however, the WLGA underlines that the extent of compliance depends on the differing administrations and the attitude of Ministers. (Legal) certainty could be strengthened in order to use the full potential of such an approach and to avoid criticism of a top down-approach in disguise.
The ‘Simpson review’ of local government published by the Welsh Government made 21 recommendations on how local government services could best be delivered in Wales in the coming years, with a heavy focus on collaboration between councils. The report led to the “Compact for Change” between the Welsh Government and Welsh local government (December 2011) in order to formalise a partnership approach across a range of council services, and to standardise collaboration in order to improve delivery and outcomes.
The institutional instrument for consolidating the partnership approach was the “Statutory Partnership Council” for Wales, set up (as required by the Government of Wales Act 2006) in 2009. It is an advisory body to promote cooperation between the Welsh Government and local government, as well as for the governance of central-local relations. It meets around three times a year and includes Welsh Government Ministers, representatives for the 22 unitary authorities, community and town councils, National Park Authorities and Fire and Rescue Authorities. The Council may also establish committees and working groups. The WLGA considers the Council an effective forum for discussion and joint working, in particular in promoting cross-cutting themes such as equality of opportunity and sustainable development. However, in 2011 membership was expanded to include other public sector partners, while the Council’s focus moved to reform. At the same time the forum for discussing finances was disbanded, until reinstated in June 2013. These changes risk weakening the voice of local government.
Questions regarding the sustainability of such collaborative partnership approach have been raised with the recent intensification of the debate on local government reorganisation in Wales (following the establishment of the Williams Commission looking at Public Service Governance and Delivery). Governance and accountability of public services are inevitably affected by the complexity of local public services in Wales, in terms of performance management and planning regimes and the variety of local and regional collaborative and partnership arrangements. Agreement on a limited number of clear and focused priorities seems necessary with the overarching strategic direction determined by
page 436 / 796 the Welsh Government, leaving maximum flexibility and autonomy to local authorities in the determination of local priorities and delivery.
Modelled on the experience in Wales, a Partnership Panel is to be established in Northern Ireland for the coordination across various Departments and with local government. The Local Government Bill, which was introduced in the Assembly on 23 September 2013 and which is currently at Committee Stage, provides for the establishment of such a partnership panel in Clause 106. Its members will comprise Northern Ireland Ministers and council members. Before appointing council members, the Department will be required to consult appropriate bodies that are representative of local government (at this stage the NILGA might become involved). The panel’s functions will be to advise the Northern Ireland Ministers on matters affecting their functions; make representations on matters affecting, or of concern to, those involved in local government in Northern Ireland; and give advice to those who are involved in local government in Northern Ireland.
In the rapporteurs’ opinion, the situation is overall in compliance with Article 7. However, the work of executive councillors should be re-evaluated so that their status corresponds better to their responsibilities. While the status and conditions of elected representatives seem to have slightly improved compared to 1998, in particular regarding allowances, there are concerns that engagement in councils, in particular for the younger generation, is not attractive due to economic disadvantages for full-time councillors and an unequal distribution of workload. A part-time model might work for backbenchers, but definitively not as a general model.
As regards audit, the Standard Boards have been abolished and the Audit Commission in England will be abolished in 2015; independent external audit will be provided for at a local level by private audit firms and local authorities now adopt their own codes of conduct for councillors. There are clear rules on conflict of interests and the situation can be considered to be satisfactory.
In the UK, there is no general form of comprehensive and concentrated administrative supervision. However, Ministries and other bodies that oversee the activities of local authorities have inspection powers which, in some cases, considerably influence or limit the latter’s freedom and discretion in carrying out services. They do this through reporting duties and active intervention in details of local affairs. This being said, the system is generally in compliance regarding supervision. It also seems that the procedures and guarantees in case of intervention are in line with the Charter principles.
It will be interesting to see, whether and how the partnership approach and the co-operation experiences in Scotland, Wales and Northern Ireland will be considered in the current debate on the relations between central government and English local authorities.
Article 8.2 Administrative supervision of local authorities' activities
Any administrative supervision of the activities of the local authorities shall normally aim only at ensuring compliance with the law and with constitutional principles. Administrative supervision may however be exercised with regard to expediency by higher-level authorities in respect of tasks the execution of which is delegated to local authorities.
Albania [Article ratified - Report adopted on 31 October 2013 ]
page 437 / 796 Administrative supervision
Article 22 of Law No. 8652 establishes the general principle of control aimed at ensuring compliance with the legislation on finance and budgeting. The law on Prefects regulates the supervision of controls of legality for all local government acts.
Law No. 8927, dated 25 July 2002, “On the Prefect” as amended, establishes the Prefect’s right of supervision over the legitimacy of decisions and regulations issued by LGUs, which are implemented on the basis of Article 33(6) of the Organic Law. The examination of local government acts by the Prefect does not necessarily lead to suspension of execution of the acts under scrutiny.
Each LGU sends all normative acts to the Prefect for supervision within 7 days after adoption. The Prefect examines the legal act during 10 days and if the act corresponds to the legislation, an official notification is sent to the respective LGU. If the Prefect observes a legal inconsistency, the act is sent back to the respective LGU with recommendations to amend the act. A revised version is sent to the Perfect in 7 days and, if irregularities are observed again, the Prefect applies to court for a judicial review and sends notification thereof to the LGU. The law on Prefects stipulates that the Prefect can request a local government only once to revise their legal act. However, Article 14, para. 2, line “c” thereof gives the Prefect the right to send additional recommendations to LGUs on acts that are already before a court. Neither Law No. 8652 nor Law No. 8927 give local authorities the right to apply to the court against the Prefect’s decisions. Moreover, Law No. 8927 stipulates clearly that, based on the recommendation from the Prefect, “the local government organ revises the act” (Article 14, para. 2, line “b”). The Rapporteurs draw attention to the fact that this is an imperative statement which obliges LGUs to revise their act according to the recommendations provided by the Prefect.
Albanian legislation does not differentiate between regimes of supervision for own and delegated functions, the procedure being the same for both. In addition, the Prefect enjoys the right to examine citizens’ appeals on the legality of normative and individual acts by LGUs. The Prefect has the right to conduct audits on all normative and individual acts adopted by LGUs every 6 months. If a specific act has not been submitted for supervision by the LGU to the Prefect, the latter requests from the court the invalidation of that act, regardless of its compliance with the national legislation (Law No. 8927, Article 15, para.2).
The rapporteurs are of the opinion that, formally, the system of administrative supervision is in compliance with the requirements of the Charter. However, there are some key issues that need clarity and better regulation, namely:
It is difficult to understand what type of supervision (a priori or a posteriori) is used as regards the own functions of LGUs. The legislation stipulates that the examination of an act by a Prefect does not lead to suspension of its legal power. However, if the normative act has not been submitted to the Prefect (i.e. it is not registered with the Prefect’s chancellery), the Prefect has the right to request its annulment by the court. Taking into account that Article 14, para.2, line “b” of Law No. 8927 imperatively obliges LGUs “to revise the local act” according to the recommendation of the Prefect, the rapporteurs conclude that the Albanian system of administrative supervision is closer to an a priori than to posteriori supervision, To avoid such a wide interpretation, the Rapporteurs would recommend that Albania introduce, for local acts, the kind of provision the Constitution provides for national legislative acts (Article 117, para.1), when these acts enter into force after their publication in the official journal.
page 438 / 796 Albania uses the same regime of supervision for both delegated and own functions, while the Charter (Article 8, para.2) maintains that supervision over the expediency of decisions must be used for delegated functions. Albanian legislation does not specify a regime for supervision over expediency as it only recognises legal supervision over the decision of local governments. Taking into account that Albanian LGUs have a wide range of delegated and shared functions, it is clear for the Rapporteurs that the country needs to have a clear and applicable regime for supervision with regard to the expediency of decisions taken by communes and municipalities regarding delegated and shared functions.
Albanian legislation allows Prefects to examine citizens’ appeals on the illegality of LGU acts. This provision may be viewed as an impediment for local authorities, as it allows a higher administrative body to examine local acts that have already been supervised (as, inter alia, these acts are already in force). Normally, such appeals should be examined by a civil court and not by Prefects.
The rapporteurs would also draw attention to a translation issue: Law No. 8927 dated 25 July, 2002 "On the Prefect” as translated, states that the “… prefect checks the realisation of the functions and competences delegated by the central government and the use of the funds contemplated for them, both when they are contemplated by law and when they have been set by joint agreement between a central institution and an organ of local government.” The difficulty lies in the translation of the word ‘kontrol’ from Albanian. This may be rendered as “audit”, “check” or “control” which all signify different degrees of involvement and some of which may indeed involve a ‘control of opportunity” by the Prefect rather than a simple control of legality. This may indeed lead to a direct interference by the Prefect in the exercise of the local authority’s “functions and competences”. So, it would be important to use the proper terminology of the law in official translation.
Audit and financial control
Article 21 of the Law No. 8652 establishes the conditions for the internal control of LGUs. Each council sets up a finance committee for controlling the local budget during the mandate of the council. Local executives are obliged to report to the finance committee on the execution of the local budget and public expenditure. The committee has free and full access to all financial documents. In case of necessity finance, it may request an external audit.
Law No. 8652 stipulates that external audits in LGUs should be conducted by the Supreme State Control, which checks the legality of spending public funds. Additional financial control is carried out by relevant line ministries, such as the Ministry of the Interior and the Ministry of Finance. During the monitoring visit, the delegation has been informed by the representatives of communes and municipalities that the Ministry of Finance performs financial audits regularly according to an adopted calendar. Communes are audited once every two years while municipalities are checked on an annual basis. Municipalities and communes are also audited by the Ministry of the Interior. The 65 municipalities are divided into 6 groups (10 municipalities in each group) and each group is audited once every 2 years. Communes are divided into groups (20 or 25 communes in each group) and each group is audited according to the specific calendar adopted by the Ministry.
Andorra [Article ratified - Report adopted on 28 March 2018 ]
Consult reply indicated at article 8.1
Armenia [Article ratified - Report adopted on 15 June 2021 ]
Article 8.2
page 439 / 796 2 Any administrative supervision of the activities of the local authorities shall normally aim only at ensuring compliance with the law and with constitutional principles. Administrative supervision may however be exercised with regard to expediency by higher‑level authorities in respect of tasks the execution of which is delegated to local authorities.
195. Any administrative supervision of the activities of local authorities can only aim at ensuring compliance with the law and constitutional principles. Administrative supervision may, however, be exercised by higher-level authorities with regard to expediency in respect of the tasks delegated to local authorities. Another important requirement that can be inferred from the Charter provisions is that the law should precisely define the administrative authorities empowered to exercise legal supervision over municipalities, thus eliminating the uncertainty inherent in the current legislation.
196. As has been explained above (see section 3.1.8), the control exercised by regional governors goes far beyond the legal supervision of local government decisions, as far as mandatory local government tasks and functions are concerned.
197. As far as the rapporteurs have been informed, in particular in the field of financial management of local authorities, there are overlapping supervisory powers of the regional governors and the Audit Chamber. This situation may create uncertainty among municipalities and makes it difficult for communities to prepare properly for the supervisory investigations.
Austria [Non ratified - Report adopted on 28 September 2020 ]
In accordance with Article 12.2. of the Charter, Austria has not declared itself bound by this provision.
As indicated by the Explanatory Report, the Charter presents a general preference for checks of legality and not expediency; and although the latter are not prohibited, they are to be severely restricted to delegated competences.
Pursuant to Article 118.4, B-VG, the municipality performs the business for which it is responsible, within the framework of the laws and ordinances of the Federation and the Land, on its own responsibilities free from instructions and under exclusion of legal redress to administrative authorities outside the municipality.
The Federation and the Land exercise the right of supervision over the municipality to ensure that it does not infringe laws and ordinances when dealing with its own sphere of competence, in particular that it does not overstep its sphere of competence, and fulfils the duties legally devolved upon it (Article 119a.1).
However, the Länder have the right to examine the financial administration of a municipality with regard to its thrift, efficiency, and expediency (Article 119a.2, B-VG) which, in the opinion of the rapporteurs, may go beyond the control of legality.
Considering the above, in the rapporteurs’ view, the situation in Austria only partially complies with this provision.
Azerbaijan [Article ratified - Report adopted on 17 June 2021 ]
The practical operation of state supervision over municipalities is not entirely clear. On the one hand, the Law on the Administrative Supervision of Municipalities restricts this activity to the compliance
page 440 / 796 with the Constitution, the laws, decrees of the President and decisions of the Cabinet of Ministers, this way introducing a legality control within the framework of Article 8.2 of the Charter. On the other hand, a number of other provisions and reported practices prove evidence of the existence of a broader control and influence which include the merit and may change the import of local decisions for reasons of expediency or policy assessment.
The latter are for example the provisions that refer to the possible involvement of voters in the implementation of administrative control over the activities of municipalities; the reference in the Law on the Status of Municipalities to the “relevant executive body”, which might open space for the local or central executive authorities, which are in any case in charge of the supervision of delegated activities carried out by municipalities; the fact that the Centre for Work with Municipalities of the Ministry of Justice might issue (non-binding) recommendations to municipalities without specifying whether these are only on legality (in which case they should be binding, although municipalities should retain the right to challenge them in ordinary courts) or also on merit (which would explain why municipalities may decide not to follow them, safe the right of the Ministry of Justice to challenge in court the decision of a municipality not to comply with the recommendation). Not least, the provision of the obligation for municipalities to report to Parliament is inconsistent with a control on mere legality, as it is not for Parliament to check legality, nor to discuss the work of individual municipalities. Several sources report that, in practice, there are many interventions by the central government on the work of local self-government institutions.34 The rapporteurs refer to the Contemporary Commentary which reminds that “checks on expediency are not prohibited by the Charter but are severely restricted, for they are held to be in contradiction with the very meaning of local self- government” (Paragraph 134).
It follows that the commitments required by Article 8.2 of the Charter are not fulfilled according to the rapporteurs.
Belgium [Non ratified - Report adopted on 15 October 2014 ]
Flemish Region (Vlaanderen)
As far as paragraph 2 of Article 8 is concerned, this has not been ratified by Belgium. The principle of twofold supervision (legality and public interest) is enshrined in the Constitution. This practice enables the supervisory authorities to draw up a framework within which the local and provincial authorities have to work and enables any potential difficulties in the management of these local institutions to be anticipated.
The Flemish authorities believe there is no need to ratify Article 8.2 of the Charter for the following reasons: “Administrative supervision in Belgium is regulated by Article 162 of the Constitution, which states that the supervision of the local authorities cannot only be carried out on the legality of decisions but must also be directed at ensuring that decisions comply with the law or are compatible with the public interest.” This provision clashes with Article 8.2 of the Charter and is also the reason why Belgium has not signed this paragraph.
Consequently, an interpretation of Article 162.6 of the Belgian Constitution in the light of Article 8.2 of the Charter, could, however, confirm a certain degree of compatibility of the two sets of provisions with one another. It should be stressed that the Charter does not exclude supervision that extends beyond the strictly constitutional and legal sphere. On the contrary, it provides that the aim of the supervision must be to ensure compliance with the principle of legality and with constitutional principles. Furthermore, the Constitution does not provide for an absolute power of supervision of the local authorities. Rather, Article 162.6 clearly limits the supervision of the local authorities to two cases: firstly, breaches of the law and secondly the preservation and safeguarding of public
page 441 / 796 interests.
Consequently, the rapporteurs’ interpretation is that the principles adopted by the two sets of provisions could be considered compatible with one another.
Walloon Region and German-speaking Community
The purpose of ordinary supervision is both to carry out a review of legality, which involves ensuring that no local authority decision is contrary to a legislative standard. Furthermore, a check of compliance with public interest is also carried out.. This principle of twofold supervision is enshrined in the Constitution. Belgium has not ratified paragraph 2 of Article 8 owing to its desire to ensure that a check for compliance with public interest is carried out. The Walloon Region and the German- speaking Community therefore retain a key role with regard to administrative supervision, but when they exercise their supervisory powers they have to give reasons for their intervention based on the public-interest criterion. This system seems well-established and is now part and parcel of the institutional practices in Belgium. In the event of disagreement between the local authority and the supervisory authority, the Council of State or the Constitutional Court will adjudicate on the matter.
However, although limiting the supervisory power to compliance with the law is to be recommended in the context of local self-government it appears difficult to envisage this in the short term because the principle of twofold supervision is enshrined in the Constitution and is routine practice in the organisation by the Region of the administrative supervision of the activities of the local and provincial authorities.
Nonetheless, the UVCW believes that supervision concerning the approval of decisions based on their legality and expediency is fairly cumbersome not only in terms of time but also in terms of choices made, since the supervisory authority can impose penalties for budgets that it believes are against the public interest. Moreover, with regard to general supervision concerning the possible annulment of decisions that must be transmitted for approval, it needs to be pointed out that the danger that decisions taken, especially in connection with public procurement, will subsequently be set aside will lead to delays in processing documents and, consequently, investment delays since the local authorities prefer to await the end of the supervisory authority’s investigation.
Brussels-Capital Region
As already mentioned, paragraph 2 of Article 8 has not been ratified by Belgium. The provisions of paragraphs 1 and 3 of Article 8 of the Charter seem to be observed in the Brussels-Capital Region.
Bosnia and Herzegovina [Article ratified - Report adopted on 31 October 2019 ]
Consult reply indicated at article 8.1
Bulgaria [Article ratified - Report adopted on 21 January 2021 ]
Article 8.2
1. The general rule of the Charter is that supervision will (“normally”) aim only at ensuring compliance with the law and with constitutional principles. It thus proclaims a general preference for checks on legality over checks on expediency, the former being the only checks that in general comply with the Charter. Checks on expediency are not prohibited by the Charter but are severely restricted, for they are held to be in contradiction with the very
page 442 / 796 meaning of local self-government. Administrative supervision based on expediency should be limited to the tasks that higher-level authorities (the supervisory bodies) have delegated to local authorities. Therefore, the type of local power is highly relevant for determining the nature and scope of the administrative supervision that may be exercised by higher administrative bodies in conformity with the Charter48.
1. According to the Administration Act and the LSGLA, the regional governor exercises control only on legality, over the acts of the municipal council and the mayor. He or she may return an act of the municipal council deemed illegal for new discussion, which must be considered within 14 days of its receipt. It may be re-adopted by a majority provided by law, but not less than half of the total number of councillors. The regional governor may subsequently (or directly, without returning it) challenge the council’s act in court. The challenge suspends the implementation of the act, unless the court decides otherwise.
1. According to information provided by the MRDPW, the acts of the mayor of the municipality are disputed before the regional governor in accordance with the general administrative order. Illegal acts of the mayor may be revoked by the regional governor within 14 days of their receipt or referral. Accordingly, the mayor of the municipality may appeal to the administrative court against the repeal of their act by the regional governor. The financial control is carried out by the National Audit Office and the State Financial Inspection Agency. Municipalities have established systems for the first level of financial control.
Croatia [Article ratified - Report adopted on 20 October 2016 ]
As concerns the supervision of the performance of the transferred tasks of the State administration, this is regulated by the 2001 Law on Local and Regional Self-Government, Article 83 whereby the competent ministry may issue orders to the head of the municipality, mayor and county prefect. In essence this is a binding direction and instruction for implementation of delegated powers, the personal responsibility for enforcing which is assigned to the mayor/prefect. According to this procedure local self-government bodies simply enforce the decisions of the central government rather than making decisions within the scope of delegated powers. Therefore the direct control is exercised over enforcement rather than administrative supervision in the sphere of delegated powers in Croatia. The control over execution of delegated functions is thus directly delegated to the mayor/prefect, acting in this case as the central government’s representative.
The Croatian government shall dissolve a representative body on the proposal of the Ministry of Public Administration if the representative body of local self-government unit has taken a decision that endangers sovereignty and territorial integrity of Croatia or if the representative body: a. fails to adopt statute within 60 days, b. is regularly adopts acts that are in contradiction with the constitution and laws of the Republic of Croatia, c. the representative body loses the necessary quorum for adoption of decisions, d. fails to adopt local budget for the next financial year during a 3 month period.
The amendments to the Law on Local and Regional Self-Government of 2012 introduced simultaneous dissolution of a local deliberative body and dismissal of a directly elected mayor/prefect in case when a local authority fails to adopt the annual budget or act on temporary funding for the next financial year for the above-mentioned period of time. The head of a dissolved local deliberative body or/and dismissed mayor/prefect may apply to the High Administrative Court of the Republic of Croatia within 8 days from the adoption of decision of Government of Croatia on simultaneous dismissal of local self-government bodies. The High Administrative Court must take a decision on the matter no later than 30 days after the appeal is filed.
page 443 / 796 Although the authority delegating the powers is entitled to exercise some supervision in the way in which the delegated task is carried out, Article 8 paragraph 2 of the Charter still requires that the local authority should not be prevented from exercising a certain discretion as provided for in Article 4 paragraph 5 of the Charter1. As concerns the law, it is not clear whether Article 83 paragraph 2 of the Law on Local and Regional Self-Government allows for the exercise of such discretion. There is also common practice to consider. The delegation observed that in some cases the local authorities themselves are unaware of how intrusive central state intervention can be in affairs that should essentially be under their own responsibility - notions of self-government have no doubt been limited by past experience in a centralised state and in the more recent uneven decentralisation and they do not always make the necessary demands to uphold their rights. This is further developed under Article 8 paragraph 3 below. Big cities such as Zagreb are more active in defending their rights before the courts.
In conclusion, owing to the detailed legislation framing the supervision of delegated powers the rapporteurs’ conclude conformity with Article 8 paragraph 2 of the Charter but insist that this conclusion be read in the light of their remarks on Article 8 paragraph 3 below concerning the proportionality of administrative supervision.
Cyprus [Article ratified - Report adopted on 20 October 2016 ]
See answer at article 8.1
Czech Republic [Article ratified - Report adopted on 8 March 2012 ]
Consult reply indicated at article 8.1
Denmark [Article ratified - Report adopted on 31 October 2013 ]
Consult reply indicated at article 8.1
Estonia [Article ratified - Report adopted on 29 March 2017 ]
Consult reply indicated at article 8.1.
Finland [Article ratified - Report adopted on 28 March 2017 ]
Consult reply indicated at article 8.1.
France [Article ratified - Report adopted on 22 March 2016 ]
As already stated, France had a “traditional” tutelle system, including expediency control that was abolished during the major decentralisation reforms of the eighties. Nowadays, supervision concerns only compliance with the law (Article 8, paragraph 2).
Georgia [Article ratified - Report adopted on 7 November 2018 ]
According to Article 75, paragraph 5, of the constitution, “the State authorities shall exercise legal supervision over the activities of self-governing bodies. The activities of self-governing units may be supervised in order to ensure the appropriateness of decisions only with respect to decisions made on the basis of delegated powers. State supervision shall be exercised in accordance with
page 444 / 796 procedures established by the organic law, in compliance with the principle of proportionality”.
The Code of Local Self-Government (Article 129-1) refers to two types of supervision: legal supervision and sectoral supervision. According to this article, “State supervision is an activity carried out by executive authorities that is intended to ensure the lawfulness of the activities of municipal bodies, and proper exercise of delegated powers.”
In order to examine the expediency of activities carried out by local self-governing bodies (officials) within the sphere of their delegated competences, the State supervisory authority is entitled to request from the respective local self-governing body (official) submission of any official documents, including legal acts promulgated by the local self-governing body/official, minutes of meetings and sittings, materials relating to administrative proceedings and financial documents, etc.
A municipality may appeal the legality of a decision by the State supervising authority on annulment of an individual normative act due to its inappropriateness, as prescribed by law (Article 136 of the Code). The supervising authority may, after consulting with and notifying the officials of the appropriate self-governing bodies, decide to implement appropriate measures to suspend and/or annul the normative acts concerned. Such a decision on the implementation of measures to remove and prevent damage may be appealed to a court as prescribed by law.
In order to ensure maximum protection for self-governing units, the Code of Local Self-Government has introduced a legal consultation mechanism: each self-governing body may, on its own initiative, submit a request for legal consultation on a draft normative act to the supervisory authority if it is not sure whether this act fully complies with Georgian law (Article 137 of the Code). The supervisory authority is obliged to provide a legal opinion, which is only recommendatory, on the submitted draft. Thus, local authorities and officials can adopt their legal acts independently and on their own responsibility.
Provisions of the Code of Local Self-Government are in accordance with the Charter. Controls regarding legality and appropriateness are permitted only for decisions made on the basis of delegated powers. Georgia therefore complies with Article 8, paragraph 2, of the Charter.
Germany [Article ratified - Report adopted on 14 March 2012 ]
Consult reply indicated at article 7.1
Greece [Non ratified - Report adopted on 26 March 2015 ]
Hungary [Article ratified - Report adopted on 12 February 2021 ]
According to Article 8, paragraph 2, of the Charter, the supervision over local authorities can only aim at ensuring compliance with the law and constitutional principles. Expediency control can be used only in case of delegated tasks.
The 2013 report expresses some doubts about the lack of precision of Article 32.5 of the Fundamental Law, especially on the clear distinction should be established between, on the one hand, the local authorities’ own competences and those delegated by the central government and, on the other hand, between the control of the local authorities’ activities’ legality and supervision of their decisions’ expediency.79
page 445 / 796 The rapporteurs consider that those issues have been fixed by the legislation, which limits the State supervision to the legality control.
Therefore, Article 8.2 can be considered complied with in Hungary.
Iceland [Article ratified - Report adopted on 29 March 2017 ]
See answer at article 8.1
Ireland [Article ratified - Report adopted on 31 October 2013 ]
Consult reply indicated at article 8.1
Italy [Article ratified - Report adopted on 18 October 2017 ]
Consult reply indicated at article 8.1
Latvia [Article ratified - Report adopted on 27 March 2018 ]
Consult reply indicated at article 8.1
Liechtenstein [Article ratified - Report adopted on 28 March 2018 ]
Consult reply indicated at article 8.1
Lithuania [Article ratified - Report adopted on 6 November 2018 ]
Consult reply indicated at article 8.1
Luxembourg [Article ratified - Report adopted on 21 October 2015 ]
Consult reply indicated at article 8.1.
Malta [Article ratified - Report adopted on 29 March 2017 ]
Consult reply indicated at article 8.1
Monaco [Article ratified - Report adopted on 28 March 2018 ]
Article 8, paragraph 2, provides that any administrative supervision of the activities of the local authorities shall normally aim only at ensuring compliance with the law. Monaco must also be considered to be in conformity with this provision, as Law No. 959/1974 was significantly amended by Law No. 1316/2006 to eliminate full state supervision and restrict supervision to a review of the legality of measures.
Article 28 contains rules on the supervision of Municipal Council activities: “The deliberations of the Municipal Council shall be subject to a review of their legality by the Minister of State and shall be enforceable 15 days after the date on which they are communicated to the Minister of State, unless a reasoned objection is made in the form of a ministerial order”.
page 446 / 796 Orders of a regulatory nature adopted by the Mayor “shall be published and enforced ten days after the official copy has been communicated to the Minister of State, unless the Minister of State gives special authorisation when requested by the Mayor for urgent cases. After ten days, it shall be legal to publish and enforce these orders unless a reasoned objection is made in the form of a ministerial order if the Minister of State considers them unlawful” (Article 47 of Law No. 959/1974).
Montenegro [Non ratified - Report adopted on 21 October 2015 ]
See answer indicated at article 8.1
Netherlands [Non ratified - Report adopted on 26 March 2014 ]
Consult reply indicated at article 8.1
North Macedonia [Article ratified - Report adopted on 26 February 2013 ]
Consult reply indicated at article 7.1
Norway [Article ratified - Report adopted on 26 March 2015 ]
Consult reply indicated at article 8.1.
Poland [Article ratified - Report adopted on 2 April 2019 ]
Consult reply indicated at article 8.1
Portugal [Article ratified - Report adopted on 28 September 2020 ]
Another form of supervision of local authorities’ activities is exercised by the Court of Audit, which is competent not only to rule on their accounts but also to verify a priori the lawfulness and proper budgeting of expenditure incurring the financial liability of local authorities in the longer term. This is special supervision of local authorities made possible by Article 214 of the Constitution. The Court of Audit is authorised not only to examine the different accounts but also to carry out upstream checks on the lawfulness of spending entailing financial commitments in the medium or long term, as well as ensuring that it is covered by the budget. However, the Court’s supervision is strictly limited to the lawfulness of contracts and focuses on their legal basis and conformity with budget legislation. It is only the financial implications of a contract for a local authority’s indebtedness that are also subject to close expediency checking, in order to avoid any excesses.
As in 2012, a number of talking partners raised the issue of individual liability of local elected representatives, particularly mayors, during the visit. According to Article 22 of the Constitution, which clearly states that any elected office-holder and any local authority may be held “jointly” liable under civil law. This reference to solely civil liability in the Constitution may be supplemented by legislative mechanisms implementing criminal, civil, disciplinary and financial liability… but, even so, no form of political accountability, equivalent to that of members of government before the Assembly, exists.
Consequently, the rapporteurs conclude that Article 8 paragraph 2 of the Charter is complied with.
Republic of Moldova [Article ratified - Report adopted on 4 April 2019 ]
page 447 / 796 These two points will be considered jointly since they are strongly related. There are two key legal provisions in this field: on the one hand, Article 6.3 of the Law on Local Government establishes the principle of autonomy, legality and no subordination relationships between the central and local authorities. The controls exercised by the state must be only controls of legality, while controls of expediency can only concern delegated powers and competences. On the other hand, Article 7.2 of the Law on Administrative Decentralisation provides for the principle of no interference of central authorities in the activities of the local administrations. Beyond these legal provisions, the delegation could appreciate that the current system of interadministrative control by state ministries is a source of permanent concern or controversy on the part of local authorities. Most of the interlocutors told the rapporteurs that there are too many cases and circumstances of control, and that in many cases this is not just a control of legality. They claim that since a new act was passed in 2017 these controls have been reinforced, and that now they can consist of checks by the State Chancellery, inspections by the Financial Inspectorate of the Ministry, audits by the Court of Accounts and referrals to the public prosecutor.
In particular, they claim that the State Chancellery checks the legality of actions by local authorities in delegated tasks, but that they also perform in practice an assessment of the appropriateness or opportunity of the local measures when local authorities act in the field of their own competences. Furthermore, in doing so they allegedly implement a broad interpretation of the legal system, disregarding the local autonomy and the powers of the local authorities. For instance, the officers of the State Chancellery can examine the accuracy of a mayor’s decision to sell or not to sell an asset; to distribute bonuses or not, etc. Urban planning and urban management are apparently an area where this control is more severe. Local representatives told the delegation that in many local authorities the State Chancellery has modified the legal status of many local properties (even public parks) changing them and converting them into state properties (which are later privatised). They claimed also that the government unilaterally marks the limits of the municipal and state land properties, where those two types of real estate public property are not delimited.
During the consultation procedure, the government pointed out to the revision of the control and transparency mechanisms, based on the Law no.161 of 07.07.2016 on the amendment of some legislative acts (which will enter into force on 28.10.2018). It informed the rapporteurs that a series of regulations were introduced to publicize the activity of the local public administration authorities by using the information platform (the State Register of Local Acts). It would also publicize the activity of the territorial offices of the State Chancellery, which will control the administrative acts through the same Register. The government stressed that all interested persons will be able to view any local public administration act placed in the system at any stage of verification procedure.
However, in the rapporteurs’ view, this information does not bring anything new to the conclusions of the report.
Apparently the situation has not improved since the last monitoring report of 2012, where it was found that there was a lack of regulations for expediency checks carried out by the central government bodies and it was recommended that the supervision over local authorities should be reduced in order to satisfy the requirements of Article 8.3 of the Charter. The tendency of widespread administrative controls seems to have been reinforced during recent years.
In the light of the precedent, the rapporteurs find a violation of Article 8.2 and Article 8.3 of the Charter.
page 448 / 796 Romania [Article ratified - Report adopted on 3 March 2011 ]
Consult reply indicated at article 8.1
Russian Federation [Article ratified - Report adopted on 30 October 2019 ]
Consult reply indicated at article 8.1
San Marino [Article ratified - Report adopted on 28 March 2018 ]
Consult reply indicated at article 8.1
Serbia [Article ratified - Report adopted on 18 October 2017 ]
Consult reply indicated at article 8.1
Slovak Republic [Article ratified - Report adopted on 24 March 2016 ]
See answer indicated at article 8.1
Slovenia [Article ratified - Report adopted on 6 November 2018 ]
As explained in paragraph 124, there is certain scope of supervision exercised by the government and ministries in Slovenia. The following bodies are competent as regards the supervision over legality of municipal operations and actions: the National Assembly, the Ministry of Public Administration, the Government, the Administrative and the Constitutional Court, the Court of Audit and the Information Commissioner.
The main governmental body responsible for the development of the local self-government system in the country is the Ministry of Public Administration (hereafter, the Ministry) and its Local Self- Government Service. Now the Ministry, as a horizontal Ministry, covers several areas such as better regulations, administrative burden as well as local self-government.
The Ministry has several relevant tasks aimed at developing the system of local self-government. All tasks performed by the Ministry can be divided into a number of groups. a. systemic measures like to prepare regulations concerning the organisation, functioning and financing of municipalities or analyses; b. monitoring of financing of local municipalities together with the Ministry of Finance; c. coordination work with other public administration bodies in the field of local municipalities; d. advisory and assistance role for municipalities; e. implementation of the European Charter of Local Self-Government and all legal acts dealing with effective functioning of municipalities.
The core institution to supervise budget and finances of local municipalities is the Slovenian Court of Audit.
The Constitution states that “the Court of Audit is the highest authority for supervising state accounts, the state budget, and all public spending.” Its independent status is also secured by the Constitution.
The Court of Audit shall carry out a certain number of statutory audits annually. The Court of Audit
page 449 / 796 performs audits of the regularity of operations in municipalities in order to improve public funds. For the audits at municipal level, the Court of Audits applies several principles to select municipalities for audit such as potential risks, maturity of internal control systems in local municipalities, results of previous audits and/or the implementation of large scale investment projects.
In 2014, the Court of Audit implemented the first audit regarding the results-based budgeting at municipal level – in the municipality of Kranj. Already during the audit procedure, the municipality corrected some mistakes and inefficiencies identified. After the audit, the municipality implemented corrective measures and received recommendations regarding improvement of budgeting.
As the Court of Audit has also advisory role, it answers the questions regarding public finance which helps municipalities improve their operation before audits. In 2014, the Court of Audits replied to questions covering such areas of municipal functioning as work of municipality supervisory boards and borrowing.
According to the law, only the National Assembly can dissolve a municipal council and dismiss a mayor on a proposal from the Government. The Local Self-Government Act (Article 90b) specifies the conditions under which the National Assembly can interfere in local affairs. A municipal council may be subject to an early dissolution if it does not implement decisions of the Constitutional Court imposing on it to act in compliance with the Constitution or law; if during the year for which the budget has not been adopted the municipal council fails to adopt the budget submitted and drafted in compliance with the law for the following year too, and the budget could enter into force at the beginning of the year; or if despite convening the municipal council at least three times in a single calendar year, the municipal council fails to hold a quorate session.
A mayor may be subject to an early dismissal from office if he/she does not implement decisions of the Constitutional Court or final decisions of the court competent for administrative disputes imposing on it to act in compliance with the Constitution or law.
In the event of the dissolution of a municipal council, the National Assembly shall call early elections to the municipal council, and in the event of the dismissal of a mayor it shall call by-elections to fill the position of mayor.
In fact, before the National Assembly decides on such a “last resort” decision, it must warn the municipal council or the mayor of his/her unlawful conduct and propose how to eliminate it within a reasonable period of time. If the municipal council or mayor acts in accordance with the warning, the National Assembly shall stop the procedure of dissolution or dismissal by a decision.
In the light of the precedent, the rapporteurs conclude that Article 8.2 of the Charter is generally complied with in Slovenia.
Spain [Article ratified - Report adopted on 20 March 2013 ]
Consult reply indicated at article 8.1
Sweden [Article ratified - Report adopted on 2 April 2014 ]
Consult reply indicated at article 7.1.
Switzerland [Non ratified - Report adopted on 20 October 2017 ]
page 450 / 796 Consult reply indicated at article 8.1
Turkey [Article ratified - Report adopted on 1 March 2011 ]
The analysis article by article is currently unavailable
Ukraine [Article ratified - Report adopted on 31 October 2013 ]
Consult reply indicated at article 8.1
United Kingdom [Article ratified - Report adopted on 26 March 2014 ]
Consult reply indicated at article 8.1
Article 8.3 Administrative supervision of local authorities' activities
Administrative supervision of local authorities shall be exercised in such a way as to ensure that the intervention of the controlling authority is kept in proportion to the importance of the interests which it is intended to protect.
Albania [Article ratified - Report adopted on 31 October 2013 ]
Administrative supervision
Article 22 of Law No. 8652 establishes the general principle of control aimed at ensuring compliance with the legislation on finance and budgeting. The law on Prefects regulates the supervision of controls of legality for all local government acts.
Law No. 8927, dated 25 July 2002, “On the Prefect” as amended, establishes the Prefect’s right of supervision over the legitimacy of decisions and regulations issued by LGUs, which are implemented on the basis of Article 33(6) of the Organic Law. The examination of local government acts by the Prefect does not necessarily lead to suspension of execution of the acts under scrutiny.
Each LGU sends all normative acts to the Prefect for supervision within 7 days after adoption. The Prefect examines the legal act during 10 days and if the act corresponds to the legislation, an official notification is sent to the respective LGU. If the Prefect observes a legal inconsistency, the act is sent back to the respective LGU with recommendations to amend the act. A revised version is sent to the Perfect in 7 days and, if irregularities are observed again, the Prefect applies to court for a judicial review and sends notification thereof to the LGU. The law on Prefects stipulates that the Prefect can request a local government only once to revise their legal act. However, Article 14, para. 2, line “c” thereof gives the Prefect the right to send additional recommendations to LGUs on acts that are already before a court. Neither Law No. 8652 nor Law No. 8927 give local authorities the right to apply to the court against the Prefect’s decisions. Moreover, Law No. 8927 stipulates clearly that, based on the recommendation from the Prefect, “the local government organ revises the act” (Article 14, para. 2, line “b”). The Rapporteurs draw attention to the fact that this is an imperative
page 451 / 796 statement which obliges LGUs to revise their act according to the recommendations provided by the Prefect.
Albanian legislation does not differentiate between regimes of supervision for own and delegated functions, the procedure being the same for both. In addition, the Prefect enjoys the right to examine citizens’ appeals on the legality of normative and individual acts by LGUs. The Prefect has the right to conduct audits on all normative and individual acts adopted by LGUs every 6 months. If a specific act has not been submitted for supervision by the LGU to the Prefect, the latter requests from the court the invalidation of that act, regardless of its compliance with the national legislation (Law No. 8927, Article 15, para.2).
The rapporteurs are of the opinion that, formally, the system of administrative supervision is in compliance with the requirements of the Charter. However, there are some key issues that need clarity and better regulation, namely:
It is difficult to understand what type of supervision (a priori or a posteriori) is used as regards the own functions of LGUs. The legislation stipulates that the examination of an act by a Prefect does not lead to suspension of its legal power. However, if the normative act has not been submitted to the Prefect (i.e. it is not registered with the Prefect’s chancellery), the Prefect has the right to request its annulment by the court. Taking into account that Article 14, para.2, line “b” of Law No. 8927 imperatively obliges LGUs “to revise the local act” according to the recommendation of the Prefect, the rapporteurs conclude that the Albanian system of administrative supervision is closer to an a priori than to posteriori supervision, To avoid such a wide interpretation, the Rapporteurs would recommend that Albania introduce, for local acts, the kind of provision the Constitution provides for national legislative acts (Article 117, para.1), when these acts enter into force after their publication in the official journal.
Albania uses the same regime of supervision for both delegated and own functions, while the Charter (Article 8, para.2) maintains that supervision over the expediency of decisions must be used for delegated functions. Albanian legislation does not specify a regime for supervision over expediency as it only recognises legal supervision over the decision of local governments. Taking into account that Albanian LGUs have a wide range of delegated and shared functions, it is clear for the Rapporteurs that the country needs to have a clear and applicable regime for supervision with regard to the expediency of decisions taken by communes and municipalities regarding delegated and shared functions.
Albanian legislation allows Prefects to examine citizens’ appeals on the illegality of LGU acts. This provision may be viewed as an impediment for local authorities, as it allows a higher administrative body to examine local acts that have already been supervised (as, inter alia, these acts are already in force). Normally, such appeals should be examined by a civil court and not by Prefects.
The rapporteurs would also draw attention to a translation issue: Law No. 8927 dated 25 July, 2002 "On the Prefect” as translated, states that the “… prefect checks the realisation of the functions and competences delegated by the central government and the use of the funds contemplated for them, both when they are contemplated by law and when they have been set by joint agreement between a central institution and an organ of local government.” The difficulty lies in the translation of the word ‘kontrol’ from Albanian. This may be rendered as “audit”, “check” or “control” which all signify different degrees of involvement and some of which may indeed involve a ‘control of opportunity” by the Prefect rather than a simple control of legality. This may indeed lead to a direct interference by the Prefect in the exercise of the local authority’s “functions and competences”. So, it would be important to use the proper terminology of the law in official translation.
page 452 / 796 Audit and financial control
Article 21 of the Law No. 8652 establishes the conditions for the internal control of LGUs. Each council sets up a finance committee for controlling the local budget during the mandate of the council. Local executives are obliged to report to the finance committee on the execution of the local budget and public expenditure. The committee has free and full access to all financial documents. In case of necessity finance, it may request an external audit.
Law No. 8652 stipulates that external audits in LGUs should be conducted by the Supreme State Control, which checks the legality of spending public funds. Additional financial control is carried out by relevant line ministries, such as the Ministry of the Interior and the Ministry of Finance. During the monitoring visit, the delegation has been informed by the representatives of communes and municipalities that the Ministry of Finance performs financial audits regularly according to an adopted calendar. Communes are audited once every two years while municipalities are checked on an annual basis. Municipalities and communes are also audited by the Ministry of the Interior. The 65 municipalities are divided into 6 groups (10 municipalities in each group) and each group is audited once every 2 years. Communes are divided into groups (20 or 25 communes in each group) and each group is audited according to the specific calendar adopted by the Ministry.
Andorra [Article ratified - Report adopted on 28 March 2018 ]
Consult reply indicated at article 8.1
Armenia [Article ratified - Report adopted on 15 June 2021 ]
Article 8.3
3 Administrative supervision of local authorities shall be exercised in such a way as to ensure that the intervention of the controlling authority is kept in proportion to the importance of the interests which it is intended to protect.
199. As regards the proportionality of the intervention of the supervisory body, it must be emphasised that if the regional governors exercising legality control also exert financial control over the municipalities and, besides, exercise considerable administrative power in their own jurisdiction, there is a high risk that the influence of the centralised state administration will be decisive not only at regional but also at local level and that municipalities will inevitably become subordinate. There are signs that this risk may have materialised in Armenia.
200. Central government supervision is evidently stronger and more intensive in the case of delegated powers where the key aspect must be to allow some discretion for municipalities. Otherwise they function as an off-site agency of central government. Although the rapporteurs perceived that, in certain cases, communities have for the most part only a minor role in exercising delegated powers, during the monitoring visit no objection to the disproportionality of central government supervision was raised; therefore the rapporteurs can conclude that there is compliance with this provision of the Charter.
Austria [Article ratified - Report adopted on 28 September 2020 ]
The principle of proportionality is well enshrined in the Constitutional laws of Austria and its Länder.
During the monitoring visit, the rapporteurs heard no complaints from the elected representatives at
page 453 / 796 local and regional levels and their associations about the lack of respect of the principle of proportionality of supervision in practice.
It appears that, although less apparent than in the case of political representation, proportionality as understood by the Charter in this paragraph is observed.
Considering the above, it seems to the rapporteurs that Austria complies with the requirements of this paragraph.
Azerbaijan [Article ratified - Report adopted on 17 June 2021 ]
Article 8.3 of the Charter establishes the proportionality principle as far as supervisory activities are concerned, by providing that the intervention of the supervisory authority must be proportionate to the importance of the interests it intends to protect. Such proportionality shall be subject to judicial control.
Intervention by the supervisory authority should therefore be limited to the extent necessary, taking into account the relevance of the public interest at stake, or the seriousness of the legal violation allegedly committed by the local authority. As specified by the Contemporary Commentary, the supervisory authority “should first consider the possibility of “de minimis” action (warnings, requests, negotiations) before using more intrusive powers, such as annulling or suspending a decision, plan or project adopted at local level” (Paragraph 139).
According to the Venice Commission and the Directorate of Democratic Governance of the Council of Europe, the wide discretion given to the supervisory bodies, enabling these bodies to conduct a complete supervision over all the activities of the municipality, is in breach of the principle of proportionality guaranteed by Article 8.3 of the Charter. The Commission and the Directorate recommended that the principle of proportionality be adequately taken into account and clearly stated by the law, recalling the Committee of Ministers’ Recommendation R(98)12 on supervision of local authorities’ action, according to which administrative sanctions concerning local authorities representatives (including dissolution) should only exceptionally be allowed, and associated with effective guarantees to enable the free exercise of the local electoral mandate.35 The rapporteurs note that the principle of proportionality has not been introduced in the Law on the Status of Municipalities.
As reported by the interlocutors met by the delegation, litigation on state supervision is practically non existing. The Constitutional Court informed the delegation that between 2004 and 2020 only 17 constitutional complaints were lodged related to the verification of the constitutionality of acts by municipalities, despite the fact that also individual complaints can be submitted. The Court rejected them (in a Chamber composition) as the issues were not of constitutional relevance and were mainly concerned with the disputing of facts. In practice, although municipalities – like any other subject – can file a constitutional complaint with the Constitutional Court, they do not take advantage of this opportunity.
For the Constitutional Court there are objective and subjective reasons for this. The objective reason is that most disputes over municipalities are related to the fair allocation of land and are therefore considered in civil proceedings, where the parties are citizens and registry offices. The subjective reason is the alleged “lack of competition” between municipalities and local executive authorities. The rapporteurs are of the view that such a lack of litigation does not necessarily mean that supervision works well, but rather that the autonomy of municipalities is so restricted, that they are not in a factual position to challenge formal or informal, proportionate or disproportionate check carried out by state authorities over their activities.
page 454 / 796 Several interlocutors met by the delegation confirmed that legislative changes are in preparation which will clarify aspects such as the minimum number of residents in the concerned municipality in order to prompt control by state authorities.
Given the still incomplete legal framework regulating supervision and reporting, and the overall very limited position of municipalities, the rapporteurs consider the conditions of Article 8.3 to be met only in part in Azerbaijan.
Belgium [Article ratified - Report adopted on 15 October 2014 ]
Flemish Region (Vlaanderen)
The provisions of paragraphs 1 and 3 present certain difficulties in Flanders, especially as any action to set aside a decision taken leads to delays in processing documents and, consequently, delays in carrying out investments. Moreover, it appeared to the delegation that the authorities impose an excessive level of supervision.
Another concern relating to the application of Article 8.3 was raised during the 2008 visit and led to Recommendation 258 (2008). It concerned the Flemish Minister of the Interior’s refusal to appoint three burgomasters. The Congress held in 2008 that this situation was a breach of Article 8.3 of the Charter and recommended that the Minister appoint the burgomasters without delay. It also recommended the use of the two languages French and Dutch at local council meetings and the adoption of the direct election of burgomasters by the municipal council or the citizens.
In December 2013, the rapporteurs learned that the Flemish Minister of the Interior had appointed the burgomaster of Wezembeek-Oppem. For the first time since 2007, this municipality with special language arrangements on the outskirts of Brussels with a French-speaking majority has a burgomaster appointed by the Flemish government. Wezembeek-Oppem is one of the three municipalities with special language arrangements, the other two being Linkebeek and Kraainem, where the Flemish government has also refused to appoint a burgomaster since 2007. Successive ministers refused to carry out the appointments as the duly elected burgomasters had not complied with the circulars from Peeters and company on the language legislation, in particular when voting papers are sent out. However, since their visit, the Rapporteurs have been informed by the State Council that three judgments have been delivered on this subject.
In order to find a solution to this situation of the refusal to appoint burgomasters, a special act was passed on 19 July 2012. This maintains the Flemish government’s power to appoint burgomasters in the municipalities but enables the burgomaster in the event of a refusal to appoint him/her to lodge an appeal to the general assembly of the administrative disputes section of the Council of State, which can issue a final appointment decision. This law was endorsed by two judgments of the Constitutional Court on 3 April 2014. Moreover, the rapporteurs were also informed of the decision of 20 June 2014 rendered by the General Assembly of the Council of State which annulled the refusal of the Flemish government to appoint the burgomaster of Crainhem. Thus, the elected representative of the Brussels periphery has now been nominated to this post. The high administrative court has, however dismissed the appeal made by another non-appointed burgomaster in the town of Linkebeek upholding the Flemish Minister of the Interior’s refusal to nominate in that case.
Article 8.2 of the Charter cannot be ratified as long as the provision on supervision of compatibility with the public interest remains in the Belgian Constitution.
Walloon Region and German-speaking Community
page 455 / 796 The supervision of provincial budgets and accounts by the Walloon Region is carried out as follows:
- the budgets and accounts are subjected to special supervision concerning their approval (they cannot take effect until the Walloon Region has approved them);
- the other decisions of a budgetary nature (loan guarantees) are subject to general supervision concerning their possible annulment (their effect is immediate but may be set aside by the supervisory authority).
- When it was drawing up its budget for 2014, the Walloon Region introduced a new procedure, the main aim of which is to provide the European authorities with better information on the financial situation of the federated entities. The objective therefore is not, strictly speaking, to establish a new form of supervision of budgets and accounts.
It is also necessary to point out that the provincial accounts are subjected to the scrutiny of the (federal) Court of Auditors, a rule that does not apply to the municipalities.
It would appear that the administrative supervision of the activities of local authorities in the Walloon Region and the German-speaking Community is carried out in a proportionate manner. Each decision of the supervisory authority must be fully reasoned, and the autonomy and effectiveness of the local authorities are guaranteed by the legal instruments and by the relevant judicial institutions. The local authorities are entitled to appeal.
Article 8 of the Charter taken as a whole is complied with. With regard to paragraph 2 of this provision, it should be noted that, since the principle of twofold supervision (legality and the public interest) is enshrined in the Constitution, Article 8 para. 2 cannot be ratified as long as it is provided for in the Constitution. However, the authorities in Wallonia (including the German-speaking Community) are of the opinion that only supervision with regard to legality is justified in the light of the principles of local self-government. The Walloon provinces and municipalities accordingly endorse the recommendations issued in 2003 by the Council of Europe Congress of Local and Regional Authorities that Belgium adopt the narrow interpretation of supervision contained in the Charter, subject to the reservations already mentioned with regard to the difficulty in reforming the principle of twofold supervision in the near future.
Brussels-Capital Region
Consult reply indicated at article 8.1.
Bosnia and Herzegovina [Article ratified - Report adopted on 31 October 2019 ]
Regarding the way in which supervision is exercised in practice, and in particular with reference to the requirement of compliance with the principle of proportionality, not much information could be obtained from interlocutors; there were no complaints.
Article 47 of the Federation of Bosnia and Herzegovina Law on Principles of local self- government expressly provides for proportionality in the exercise of inspection powers. All final decisions regarding annulment or amendment of municipal acts, adopted within the scope of their own responsibilities, shall be rendered by a competent court (Article 47, the Federation of Bosnia and Herzegovina Law on Principles of Local Self-Government).
Under Republika Srpska legislation true sanctions do not seem to be applied; in severe cases, the Public Prosecutor may become active. Usually, the report is sent to the respective municipal
page 456 / 796 assembly which has to present a plan for remedies within 60 days, the implementation of which is examined with the next audit or in occasion of a special verification audit. The execution of budgets is under legality and compliance control. This is also the case in the Federation of Bosnia and Herzegovina.
In conclusion, the requirements of Article 8.3 regarding the proportionality of supervision appear to be satisfied.
Bulgaria [Article ratified - Report adopted on 21 January 2021 ]
Article 8.3
1. This provision enshrines the principle of proportionality in the administrative supervision of local authorities’ activities by higher-tier bodies. This principle stands here for the premise that the intervention of the supervisory authority should be proportionate to the importance of the interests it intends to protect. In this connection, in 2019, the Committee of Ministers recommended that the governments of member States adopt appropriate measures to “put in place an appropriate legal, institutional and regulatory framework for supervision of local authorities’ activities which is proportionate, in law and in practice, to the interests which it is intended to protect”49.
1. Apparently, this principle is applicable to any form of intergovernmental supervision, with either a priori or a posteriori checks on legality or expediency. It is a generally worded principle that can only be tested in the precise context of an actual dispute, but it could be explained in simple terms by pointing out that in ensuring compliance with the law, the regional/State body should not “use a sledgehammer to crack a nut”.
1. Consequently, under the principle of proportionality, the regional or State body should intervene only to the extent necessary, considering the relevance of the public interest at stake, or the seriousness of the legal violation allegedly committed by the local authority. A system under which local authorities must obtain prior approval from regional or State bodies for minor or even trivial decisions would not comply with the principle of proportionality.
1. According to the National Delegation of Bulgaria to the Congress, there is no remarkable change in pertinent legislation, but the cases of unjustified, politicised interference in the mayor's powers are significantly reduced. Pursuant to the Administration Act, the regional governor ensures the observance of the legality on the territory of the region and carries out administrative control over the implementation of the administrative acts. In this capacity, she/he may revoke an administrative act of the mayor, but only on the grounds of illegality. Accordingly, the mayor of the municipality may appeal the repeal before the regional administrative court.
1. The National Delegation of Bulgaria to the Congresshas stressed that the existing norms are applied precisely and there are no significant violations of the rights of local elected officials. The LSGLA exhaustively determines the cases in which a municipal council may be dismissed, and new elections may be held. Likewise, the cases in which the powers of a municipal councillor and the mayor are terminated prematurely are exhaustively determined and have not been changed in the period since the last monitoring. Temporary removal from office of a mayor is provided for as an option in the Criminal Procedure Code (Article 69) in the framework of pre-trial proceedings, when the person is charged with an intentional crime of a general nature, if there are grounds to believe that her/his official position will prevent the objective clarification of the circumstances of the case. A decision for the temporal
page 457 / 796 removal can be taken only by the court at the request of a prosecutor.
Croatia [Article ratified - Report adopted on 20 October 2016 ]
Article 8 paragraph 3 of the Charter draws on the principle of proportionality whereby the controlling authority, in exercising its prerogatives, is obliged to use the method which affects local autonomy the least whilst at the same time achieving the desired result. It has already been mentioned under Article 4 paragraph 5 supra that in Croatia self-government in the sphere of delegated powers often just carries out the directions of the central government channelled through the State Administration Office which, as the delegation heard during its visit, actively instructs self-government on such issues inter alia as education and planning and zoning. The education system belongs to the area of shared competence between counties and central government but the decision making power of counties in the area of education is nominal and the system is governed by decrees of the line ministries. As for urban planning and architecture, that belongs to the own competence of cities and municipalities but there are national regulations issued by the ministry of construction and physical planning that substitute for the decision-making role of municipalities when it comes to development of the land use plan and construction zoning of the territories of cities and municipalities. The delegation heard a further example during the visit concerned the decision by a local authority to change a one-way street in the town. Not only does it not have the authority to implement that decision under its own authority but the delegation was told that 40 decision-stages at central government level and under different ministries are required before the authorisation can be given. This is an extreme example which has probably come about as a result of piecemeal revision of sectorial laws but nevertheless it represents a real obstacle to local authorities trying to manage their own affairs.
Under Charter Article 8 paragraph 2 supra the delegation also observed during the visit that the remnants of a centralised culture concerning the relationship between central and sub-state entities still lingers in Croatia. This remark also extends to the State Administration Office at county level and its role in state supervision of local authority activities. The rapporteurs feel that the personnel of these offices also need to become aware of their more decentralised role and in this regard the current public administration reform provides an ideal opportunity to tackle these issues.1 The National Reform Programme of Croatia recognises that a rationalisation is required of regional units of state administration central bodies and aims to reduce their number by 20% (starting January 2016) so cutting out certain steps in decision-making so that the processes more efficient. The same Programme admits to an “excessive rigidity in organisational structures”.2
In relation to Article 8, paragraph 3 the rapporteurs conclude that the possibility of simultaneous dismissal of both the local elected body and the directly elected head of the executive as provided for in the 2012 amendments to the Law on Local and Regional Self-Government and as described under Charter Article 8, paragraph 1 above, may not be considered as proportional and reasonable and is therefore contrary to Article 8, paragraph 3 of the Charter. Secondly, the rapporteurs consider that there is a disproportionate state supervision, particularly through the State administration offices at county level, in relation to the importance of the interests it is intended to protect and is also therefore contrary to Article 8, paragraph 3 of the Charter.
The rapporteurs therefore conclude that Croatia is not in conformity with Article 8, paragraph 3 of the Charter.
In summary of Article 8 of the Charter, the rapporteurs conclude that Croatia complies with Article 8 paragraph 1, and Article 8 paragraph 2, but this last paragraph is to be read in the light of Article 8 paragraph 3 where the rapporteurs consider that Croatia is not in conformity with the Charter.
page 458 / 796 Cyprus [Article ratified - Report adopted on 20 October 2016 ]
See answer at article 8.1
Czech Republic [Article ratified - Report adopted on 8 March 2012 ]
Consult reply indicated at article 8.1
Denmark [Article ratified - Report adopted on 31 October 2013 ]
Consult reply indicated at article 8.1
Estonia [Article ratified - Report adopted on 29 March 2017 ]
Consult reply indicated at article 8.1.
Finland [Article ratified - Report adopted on 28 March 2017 ]
Consult reply indicated at article 8.1.
France [Article ratified - Report adopted on 22 March 2016 ]
The currently system appears satisfactory and during the monitoring visit no complaints were made to the rapporteurs, especially in relation to any disproportional exercise of supervison (Article 8.3). Therefore, relevant provisions of the present French legislation and practice of state supervision comply with the Charter.
Georgia [Article ratified - Report adopted on 7 November 2018 ]
According to Article 75, paragraph 5, of in the constitution, state supervision shall be exercised in accordance with the rule prescribed by the Organic law, in adherence to the principle of proportionality.
In principle, the Georgian central government has no substitutive power over local government, but it can introduce direct State rule in cases where the territorial integrity of the country is concerned, if a local council ceases to function due to the permanent absence of 50% of its members and if the local budget for the current financial year is not adopted during the first three months of the fiscal year. Moreover, according to Article 133, paragraph 2c), of the Code, a sectoral supervision authority may substitute the local self-government when performing state supervision over the exercise of delegated powers. The conditions for the exercise of substitutive power and other means and measures of supervision are described in law and local authorities also have the possibility to appeal decisions of the State supervisory authority to a court (Article 135, paragraph 8, of the Code).
Georgia therefore complies with Article 8, paragraph 3, of the Charter.
Germany [Article ratified - Report adopted on 14 March 2012 ]
Consult reply indicated at article 7.1
page 459 / 796 Greece [Article ratified - Report adopted on 26 March 2015 ]
Consult reply indicated at article 8.1
Hungary [Article ratified - Report adopted on 12 February 2021 ]
Article 8, paragraph 3, deals with the way in which the supervision is exercised in practice, and requires compliance with the principle of proportionality.
Recommendation 341 (2013) asked the Hungarian government “limiting central government supervision of the management of local finance so that it is “proportionate” within the meaning of Article 8 of the Charter”.80
The rapporteurs are fully aware of the importance of a proper financial management at local level and of the risk of a negative impact of local government debts on the general financial framework of the country. They also appreciate the introduction of an auditing approach and the activity developed by the State Audit Office. Nevertheless, they consider that the financial supervision is too pervasive, limiting the financial autonomy of local authorities beyond the proportionality principle.
In light of the preceding considerations, the requirements of Article 8.3 of the Charter are not complied with in Hungary.
Iceland [Article ratified - Report adopted on 29 March 2017 ]
See answer at article 8.1
Ireland [Article ratified - Report adopted on 31 October 2013 ]
Consult reply indicated at article 8.1
Italy [Article ratified - Report adopted on 18 October 2017 ]
Consult reply indicated at article 8.1
Latvia [Article ratified - Report adopted on 27 March 2018 ]
Consult reply indicated at article 8.1
Liechtenstein [Article ratified - Report adopted on 28 March 2018 ]
Consult reply indicated at article 8.1
Lithuania [Article ratified - Report adopted on 6 November 2018 ]
Consult answer indicated at article 8.1
Luxembourg [Article ratified - Report adopted on 21 October 2015 ]
page 460 / 796 Consult reply indicated at article 8.1.
Malta [Article ratified - Report adopted on 29 March 2017 ]
Consult reply indicated at article 8.1
Monaco [Non ratified - Report adopted on 28 March 2018 ]
Monaco has not ratified Article 8, paragraph 3, of the Charter on ensuring the proportionality of administrative supervision.
Montenegro [Non ratified - Report adopted on 21 October 2015 ]
Consult answer indicated at article 8.1
Netherlands [Article ratified - Report adopted on 26 March 2014 ]
Consult reply indicated at article 8.1
North Macedonia [Article ratified - Report adopted on 26 February 2013 ]
Consult reply indicated at article 7.1
Norway [Article ratified - Report adopted on 26 March 2015 ]
Consult reply indicated at article 8.1.
Poland [Article ratified - Report adopted on 2 April 2019 ]
Article 8, paragraph 3, deals with the way in which the supervision is exercised in practice, and requires compliance with the principle of proportionality.
During the visit, the Congress delegation was informed of several interferences carried out by the supervisory bodies. Whereas in the past most of the cases of disagreement between the local body and the voivode were resolved by informal cooperation, in the last 3 or 4 years the voivodes have shown the tendency to overuse their supervisory power well beyond the relevance of the interest to be protected.
Another aspect of the aforementioned confrontational attitude of the supervisory authorities is the misuse of the voivodal power to ensure the publication of the local decisions and regulations in the best delay, which led in some cases to the unjustified postponement of the publication.
During the consultation process, the government provided some statistics data from the Ministry of Home Affairs and Administration, according to which the percentage of local self –government resolutions found invalid by voivodes and those appealed against to the administrative courts has been maintained at a stable low level in relation to all the resolutions examined by the voivodes and even a certain downward trend could be observed in 2016-2017.
The rapporteurs do not consider those data could invalidate the findings of the monitoring visit.
page 461 / 796 Therefore, they consider that the requirements of Article 8, paragraphs 1 and 2, are complied with in Poland, whereas those of Article 8, paragraph 3, are not met.
Portugal [Article ratified - Report adopted on 28 September 2020 ]
The supervision exercised by national bodies of the actions of mayors when they take decisions resulting in budget overspends in their municipalities does raise questions where the Charter is concerned. It is not a problem, however, as the State cannot sanction the head of a local executive for poor management of the debt coming under their responsibility: in this case, the supervisory measures duly conform to the Charter, as no one disputes the obligation incumbent upon mayors to apply the legal and administrative rules on the implementation of budgets.
The rapporteurs may conclude, therefore, that Article 8 paragraph 3 of the Charter is complied with.
Republic of Moldova [Article ratified - Report adopted on 4 April 2019 ]
Consult reply indicated at article 8.1
Romania [Article ratified - Report adopted on 3 March 2011 ]
Consult reply indicated at article 8.1
Russian Federation [Article ratified - Report adopted on 30 October 2019 ]
Consult reply indicated at article 8.1
San Marino [Article ratified - Report adopted on 28 March 2018 ]
Consult reply indicated at article 8.1
Serbia [Non ratified - Report adopted on 18 October 2017 ]
The delegation recalls that paragraph 3 of Article 8 on the proportionality of supervision has not been ratified by Serbia (see supra, para. 3 of the present report). This article is concerned with the administrative supervision of local government that is carried out by other levels of government. The Explanatory Report to the Charter explicitly emphasizes that the article does not deal with supervision by ombudsmen or other official bodies of investigation. In the Serbian case, this means that this article is not relevant for the office of Ombudsman, nor the State Audit Institution, despite the important scrutinizing functions that both have in relation to local government. The Ombudsman, following complaints by citizens, oversees how local government units carry out delegated powers, while the State Audit Institution performs financial audits and the auditing of any irregularities within local government.
Slovak Republic [Article ratified - Report adopted on 24 March 2016 ]
See answer indicated at article 8.1
Slovenia [Article ratified - Report adopted on 6 November 2018 ]
The supervision of legality of municipalities’ decisions is based primarily on cooperation, mutual
page 462 / 796 exchange of information and professional assistance to municipalities. This includes also “early warning approach” where ministries warn municipalities, when they detect any inefficiency regarding the functioning and operation of municipalities.
In case a municipality does not follow the general legal act and/or the Constitution in the exercise of its own competences, the ministry should propose that the Government initiate proceedings before the Constitutional Court for the assessment of conformity of the general legal act of the municipality with the Constitution and law.
In case of delegated tasks, the state carries out supervision of lawfulness of operations of municipal bodies along with the control of expediency and professional performance of delegated tasks. If the Government considers that a municipal regulation related to delegated tasks is unlawful, it can request the Constitutional Court to review its legality. In supervision of expediency and legality of such operations of municipal bodies, the ministry may provide mandatory instructions for organisation of services.
In general during their visit, the rapporteurs have heard no concerns as regards the current system of inter-administrative control by the State.
The Delegation considers that state supervision of local authorities is not excessive and globally complies with the provisions of Article 8.3 of the Charter.
Spain [Article ratified - Report adopted on 20 March 2013 ]
Consult reply indicated at article 8.1
Sweden [Article ratified - Report adopted on 2 April 2014 ]
Consult reply indicated at article 7.1.
Switzerland [Article ratified - Report adopted on 20 October 2017 ]
Consult reply indicated at article 8.1
Turkey [Non ratified - Report adopted on 1 March 2011 ]
The analysis article by article is currently unavailable
Ukraine [Article ratified - Report adopted on 31 October 2013 ]
Consult reply indicated at article 8.1
United Kingdom [Article ratified - Report adopted on 26 March 2014 ]
Consult reply indicated at article 8.1
Article 9.1 Financial resources of local authorities
page 463 / 796 Local authorities shall be entitled, within national economic policy, to adequate financial resources of their own, of which they may dispose freely within the framework of their powers.
Albania [Article ratified - Report adopted on 31 October 2013 ]
Municipalities and communes have two main sources of local revenue: own revenues (local taxes and fees) and conditional and unconditional transfers from the central government. Based on Law no. 8652 (31 July 2000) “For the organisation and functioning of Local Government” and Law no. 9632 (30 October 2006) “On the system of local taxes”, and also on the annual budget laws, LGU income stems from the State budget (unconditional and conditional transfers), revenues from local taxes and fees and local borrowings and revenues from foreign financing and donors.
When local government was first established in Albania after the transition to democracy, its fiscal autonomy was almost non-existent. This can be seen from the fact that transfers from central government constituted almost the entire source of local government revenues (96.30% in 1999) and 86.6% of all revenues were in the form of conditional transfers, that is, where local government had little or no discretion in their use.
The share of own revenues in total local budgets has increased dramatically in recent years and constitutes more than 50% thereof. During the global financial crisis of 2008, 47% of local revenues came from the State budget and 53% from taxes and fees. In the 2012 budget, 54% came from local taxes and fees and 46% from the state budget (as an unconditional transfer).
Unconditional transfers are given to LGUs from the State budget in grant form, without destination, without interest and without the right to return. This grant is used by the decision of local councils to cover local expenditure for their functions. The conditional transfer is given under the conditional right to cover the costs for delegated functions and shared with the central government, as prescribed in Law No. 8652. These funds are to be used only for the purpose for which they are approved, for example those from the Ministry of Labour for social protection, those from the Ministry of Economy for current expenditure for employees of the National Licensing Centre etc.
The council of the municipality or the commune decides for the types of fees, their rate as well as the basic rules for their collection and administration, and determines whether the fees are collected by the municipality and commune structures or by the agent. If it is the agent, the council decides for the basic rules for the agent to use and the mayor or the chairman of the commune selects the agent and signs the contract.
A positive development to underline is that the “Regional Development Fund” has been instrumental for financing competitive grants in communes or municipalities to reduce the disparities between various LGUs. The system proved its stability during the world financial crisis. In spite of the fact that unconditional grants were reduced by 15% in 2010 and local government income went from 20.1 million Albanian Lek (ALL) down to 19.5 million ALL, local services were kept at a satisfactory level with only a 3% decrease.
In the rapporteurs’ opinion, this should be recognised as a success of the decentralisation policy in Albania. Also taking into account the diversity of local government revenues, it can be said that the financial situation of local authorities in Albania is in line with the requirements of paragraphs 1, 3 and 4 of Article 9 of the Charter.
page 464 / 796 During the visit to Albania, the rapporteurs heard numerous times that, although local authorities enjoy a wide range of own competences, these competences are not always accompanied with adequate financial resources. The share of LGU expenditure in the total public spending in Albania constituted only 7.2% thereof in 2011 and this is one of the lowest figures recorded in Europe. The same is true for the share of LGU expenditure in GDP that fell to 2.1% in 2011. Comparison of this data with the list of LGU functions makes it clear that many functions are unfunded or only partly funded. The substantial part of LGU spending goes to general public services; then come salaries and wages. Capital expenditure reached 42% in 2009 and dropped during the financial crisis.
The share of local government spending within total public expenditure remains relatively low and it can be argued (as indeed many local elected officials do) that local revenues are not commensurate with the own and shared functions of local authorities. Such disproportion between the scope of power and available financial resources is in contradiction with the requirements of paragraph 2 of Article 9.
Andorra [Article ratified - Report adopted on 28 March 2018 ]
Article 9 of the Charter is aimed at ensuring that local authorities are entitled to sufficient financial resources. The legal authority to perform certain functions is meaningless if local authorities are deprived of the financial resources to carry them out. Andorra has not ratified Article 9, paragraph 2; Article 9, paragraph 5 and Article 9, paragraph 8 of the Charter.
In Andorra, the financial resources of the municipalities are based on their own taxes, taxes shared with the government, and on transfer of funds from the General Budget. The principles on financial resources are established directly by the Constitution (Articles 80.2 and 81) and developed throughout several Qualified Laws and ordinary laws.
At the moment of the visit of the Congress delegation, a tripartite negotiation process on a reform, lasting three years and involving the parliament, the government and the municipalities, was about to be finalised. The purpose of the reform is to update the entire system of transfers, through adapting it to the competences of municipalities and the new framework of State taxation, in place since the introduction of a full system of direct taxes, such as the income tax and the tax on corporation. In addition, the criteria of distribution between municipalities are planned to be revised, taking into account new parameters and based on the principle of solidarity introduced in favour of the municipalities that have fewer revenues from local taxes. The less economically advantaged Parishes would be compensated, as they are less able to generate their own resources. To this purpose, some asymmetries, that have an impact on the budget, have been identified, linking the expenditures for competences to the transfer of funds from the State.
Article 9.1 seeks to ensure that local authorities are not deprived of the power to determine expenditure priorities. From 1993 to 2015 some limitations did exist on the use of financial transfers: only 20% was for general expenditures, while 80% had to be used for investments or debt relief. In 2015, this limitation was removed and as a result the autonomy of expenditure of the municipalities increased.
The rapporteurs consider that the requirements of Article 9 of the Charter are respected in Andorra. As for the non-ratified provisions, they consider that very little is required to enable ratification of paragraphs 2 and 5 of Article 9. Consequently, the rapporteurs encourage Andorran authorities, once the reform in process is finally approved, to ratify these provisions.
Armenia [Article ratified - Report adopted on 15 June 2021 ]
page 465 / 796 Article 9.1
1 Local authorities shall be entitled, within national economic policy, to adequate financial resources of their own, of which they may dispose freely within the framework of their powers.
201. According to Article 9, paragraph 1, of the Charter, local authorities should have adequate financial resources of their own, of which they may dispose freely within the framework of their powers. Financial autonomy is an essential component of the principle of local self-government and an important condition for the exercise of a wide range of responsibilities in the field of local public affairs. These elements are cumulative and not alternative, which means that all the conditions laid down in Article 9 of the Charter are mandatory.
202. Recognising that local authorities, through local taxes and duties, as well as some other resources, are entitled by the constitution and legislation to receive financial resources of their own, the rapporteurs however observed that in practice one of the major characteristics of the Armenian municipalities is the permanent lack of financial resources.
203. The total budget revenues of municipalities amounted to AMD 126 554 million in 2017, which was a little less than in the previous year (however, since 1996, when the local government system was established in Armenia, it is the only year when total revenues declined). Of the total amount of municipal revenues, the share of local or “own” revenues was only 30.4% in that year, which shows that municipalities are highly dependent on central grants and other budgetary transfers.
204. Although the 45% increase in the total revenues of the whole local government sector between 2011 and 2017 is spectacular, it should also be taken into account that the share of local government expenditures remains low both in total government spending (8.3%) and GDP (2.24%).20
Austria [Article ratified - Report adopted on 28 September 2020 ]
According to the Financial Constitutional Law73 (section I – Financial equalisation), unless specified otherwise, the federal government and the other regional authorities bear the effort that arises from carrying out their tasks. Land governments are entitled to levy a surcharge from the municipalities or, where applicable, from the municipal associations. A maximum of the Land levy can be set by federal law. Pursuant to section 7.1 of the Federal Budget Act,74 Land governors are heads of budget- managing bodies to the extent they act in the capacity of federal entities.
Legally, the taxes are divided into the following categories (Article 6, Financial Constitutional Law): i. Exclusive federal levies, the proceeds of which flow entirely to the federal government. ii. Levies shared between the federal government and the Länder (municipalities), in the income of which the federal government and the Länder (municipalities) participate; iii. Exclusive Land taxes, the proceeds of which flow entirely to the Länder; iv. Levies shared between Länder and municipalities, in the revenue of which Länder and municipalities participate v. Exclusive municipal taxes, the proceeds of which flow entirely to the municipalities.
According to KDZ75 the total income of the municipalities in 2017 (Figure 1 - Page 31 of the PDF file of the report) amounted to 20 billion Euro.
As presented by KDZ (2019), “almost a third of this is accounted for by income shares (share of municipalities in the total of taxes levied by the federal government, especially income tax, wage tax, sales tax, corporate tax)”.
page 466 / 796 In this regard, it should be noted that the income sharing system among the three levels of government is defined by the Intergovernmental Fiscal Relations Act which is periodically negotiated between the federal Minister of Finance, representatives of Länder and the local governments.
According to the KDZ “only around 10 percent of the funds are transfer revenues from the federal states or to a small extent from municipalities. These are, for example, investment grants or ongoing subsidies in the childcare sector. With almost 39 percent of the funds, the majority of the income comes directly from citizens and companies. The most important factors here are the local (municipal) tax (wages-based employer contribution), fees (especially for water, sewage and waste) and service fees (e.g. kindergarten contributions, income from renting and leasing). Land (property) tax is of comparatively little importance here”. According to the Association of Austrian Municipalities, the tax-base is outdated and does not reflect real-estate values. About 17% of revenues can be attributed to other sources. Examples include bank related sources, for instance loans, release of reserves and securities. Finally, there is the “Other” category, where one could include: withdrawals from outsourced businesses, sales revenues or transfers from non-local authorities (for example, businesses).
“In order to obtain an assessment of how the income situation of the municipalities has changed in recent years, the following focuses exclusively on the income of the federal government, the federal states, the municipalities and citizens. This is referred to below as "current income and capital transfer income". The majority of the above-mentioned income is current - therefore recurring - income. Only the capital transfer income from the federal states or other municipalities - for example for investment grants - is non-recurrent. If one only looks at the income mentioned here, the dynamics of the individual income categories are quite different (Figure 2). Current transfer income increased the most. This is due in 2010 to 2011 to additional transfer income from the federal states to cushion the financial and economic crisis and in 2017 to additional funds from the FAG 2017.Very stable developments in the area of dedicated taxes have been evident with + 29 percent since 2008, the fees and performance fees with + 28 percent and - since the financial crisis - with the share of earnings with + 23 percent. There were fluctuations in the capital transfer income - depending on the municipal investments made”.
Figure 2: Distribution and development of current income and capital transfer income by income category, 2008 to 201776 (Page 32 of the PDF file of the report)
Figure 3: Average current income and capital transfer income by federal state in Euro per capita, 201777 (Page 32 of the PDF file of the report)
In the explanatory report to the Charter, this paragraph seeks to ensure that local authorities are not deprived of their freedom to determine expenditure priorities. During the monitoring visit, especially small and medium-sized municipalities complained about the lack of sufficient resources necessary to deal with the demands of the local community (e.g. to start infrastructural works, to entertain larger police forces, etc.). Additionally, the data above show that more access to autonomous local taxes is still desired, despite the fact that a significant part of local income comes from income- sharing based on political agreement among all levels of government.
The rapporteurs wish to remind the authorities that the previous Report on Local and Regional Democracy in Austria (2011) also pointed out that municipalities have practically no discretion with regard to local taxes. This is worrying, as local democracy without adequate financial sustainability is at risk. During the consultation procedure, the Association of Austrian Municipalities pointed out that a long overdue reform of local property tax would allow to modernise the calculation method and strengthen the municipalities’ own tax base.
page 467 / 796 The rapporteurs note that despite the consensus-based revenue sharing system in Austria, subnational authorities lack their own taxes. Consequently, they conclude that Austria partially complies with this provision.
Azerbaijan [Article ratified - Report adopted on 17 June 2021 ]
Article 9.1 of the Charter lays down the two fundamental principles as far as financial arrangements for the local self-government are concerned: municipalities should have their own financial resources and they should be free to decide how to spend these resources.
Financial autonomy of municipalities is a constitutional principle in Azerbaijan. Article 144(I) of the Constitution establishes that municipal councils can impose local taxes and levies, approve local budgets and possess, use and dispose of municipal property. More detailed rules on municipal finances are laid down in the Law on the Status of Municipalities (Articles 32-46) as well as in a triad of laws: the Law on the Transfer of Assets to Municipalities, the Law on Municipal Finance and the Law on Municipal Territory and Lands. The Law on the Transfer of Assets establishes standards for determining municipal property and transferring it to municipal ownership. The Law on Municipal Finance defines principles of local finance, the basis for the local budget and the division of powers between the municipal council and local executive bodies. This law also regulates legal issues concerning the adoption, implementation and monitoring of local budgets. The Law on Municipal Territory and Lands impacts on the municipal revenues but as the issue of municipal demarcation is not entirely completed so far, it results in further diminishing the municipal own resources. A number of other laws are relevant, such as the Tax Code, the Law on Budget System, the Law on Advertising and others.
The Azerbaijani budget system is divided in three levels, formally separated from one another: the central government budget (state budget), the budget of the Nakhichevan Autonomous Republic and the local (municipal) budget. The share of municipal revenues amount to 0.15 percent of the consolidated state budget: 34.97 million AZN out of a state budget of 24.1 billion AZN in 2020. Therefore, while each level, including municipalities, has the right to determine income and expense in line with existing legislation and budget classification (Law on Budget System, Article 3), in practice taxing and spending autonomy for municipalities remains irrelevant, despite a slight increase in annual revenues of municipalities as compared to the last monitoring in 2012.
A chart on the annual budget of municipalities is available on the 41st page of the report.
The growth trend was initially much stronger as shown by the rate between 2012 and 2014 but has been severely slowed down by the devaluation that took place in 2015, which again penalized municipalities disproportionately as compared to other levels. Data for 2020 show that the annual budget for municipalities decreased due to the effect of the COVID-19 pandemic.
The municipal budget is formed by three sources of income: tax income, non-tax income and state transfers, in form of dotation or subvention. Projects implemented by municipalities on behalf of the government or submitted by municipalities to the approval of the government can be funded by the state on top of the ordinary budget.
According to the Tax Code, municipal taxes are the following: 1) land taxes on private individuals; 2) property taxes on private individuals; 3) mining tax on construction materials of local importance; 4) taxes on the profits of municipally owned enterprises and other bodies. The non-tax incomes are those produced by levies that municipalities can impose: levy on posting of street advertisements in the municipal owned territories, buildings and other premises; levy on disposal and letting of the municipal property; levy on fixed and mobile commerce, public catering and other services in the
page 468 / 796 territories under ownership of municipalities; levy on hotels, sanatoria and health resorts and persons providing tourist services in the territories under ownership of municipalities; levy on parked cars in parking lots owned by legal and physical persons in the municipal territories.
Additional transfers from the state budget in form of dotation (unconditional financial aid) and subvention (earmarked transfers) amount to 5.7 million AZN (4.7 million dotation, 1 million subventions) in 2019, which accounts for 0.02% of the total state budget expenditures. This is due to the 2014 amendments to the criteria for both unconditional and conditional financial aid in the Law on the Budget System, which now include the number of residents in the municipality, their fiscal capacity, the geographical location of municipalities, the living standards and the socio-economic projects being implemented in the area. Further amendments have facilitated subventions from the state budget to the municipalities for the implementation of projects in the fields of local social protection, environment and economic and social development programmes.
The slight growth of municipal tax incomes is mainly due to the changes introduced in 2014 to the tax base of property tax of individuals. Since then, the property tax is no longer collected on the inventory value of a house owned by individuals, but on the surface of estate property. This increased the taxation of property because the inventory value could be calculated only on houses and flats that had a registration certificate from the state, thus excluding a number of properties from taxation, especially in rural areas, which had no such certificate – in fact most of the revenue came from the biggest urban areas (Baku, Ganja, Sumgayit, Mingachevir and Shirvan) and very little from rural municipalities. According to information received by the delegation, the change is not yet entirely completed, but it has doubled the income from property taxes of individuals, from 3.7 million AZN in 2012 to 7.6 million AZN in 2019.
The positive effect of the new criteria for calculating the property tax was however negatively compensated by amendments introduced in the Tax Code in 2016 (Articles 206.1-1 and 206.3), which established that part of the revenues from the land tax of individuals be deducted from the state budget. This way, if farmlands owned by individuals are not used for their intended (agricultural) purpose, the taxes levied on those lands are directed to the state budget. The delegation was informed that this way municipal revenues decreased by 15.4% from 6.5 million AZN in 2012 to 5.5 million AZN in 2020.
As mentioned, there has been an overall increase of state transfers (dotation and subvention), to the municipalities, although this source also remains insufficient to cover the needs of municipalities. In 2019, for example, a total of 4.95 million AZN was subsidized to 1,606 municipalities operating in the country, which makes on average about 3,000 AZN per municipality. As to earmarked financial assistance, this has been provided over the last two years only. Until then, only the subsidy mechanism was used. By Decision of the Cabinet of Ministers of May 13, 2020, modular sewage treatment plants installed on the shores of the Caspian Sea on the balance of the Ministry of Ecology and Natural Resources together with their property have been transferred to 5 municipalities: Buzovna, Binagadi, Bilgah, Pirshagi and Sumgayit. A limited liability company was established to manage the modular wastewater treatment plants and other assets. For this purpose, the mentioned municipalities were allocated 3.8 million AZN from the 2020 state budget in coordination with the Ministry of Ecology and Natural Resources and Azersu Open Joint-Stock Company.
The increase of state transfers, while positive in terms of amount of money managed by municipalities, has an adverse effect on their financial autonomy, as it makes municipalities financially even more dependent on the state budget. The dependence of the budget of the Nakhchivan Autonomous Republic on the state is much bigger, as state transfers amount to 75-80% of the budget. The share of local and regional budgets in state budget spending is around 2%.
page 469 / 796 A chart on the central government transfers to local and regional budgets is available on the 42nd page of the report.
The extremely low level of municipal revenues is insufficient to fulfil even the very limited tasks and functions entrusted to municipalities by legislation. The lack of funds prevents municipalities from improving their work in certain areas formally open for them, such as undertaking local public initiatives in education, healthcare and culture or the maintenance and development of sanitary facilities and more broadly socio- economic activities. Municipalities are heavily dependent on financial transfers from the state, and also are factually subordinated to the local executive authorities, which have much greater capacities in terms of personnel, finance and formal powers. In fact, local executive authorities rely on much stronger financial guarantees, including by the provision that reserves 50% of the collected tax income for the use of local executive authorities: in 2019, the total amount of such income received by local executive authorities was 28 million AZN.36 As confirmed by financial authorities, local executive authorities can simply apply to the state budget to cover their expenses should their resources not suffice. The same can in principle be done by municipalities too, but this is not frequently happening due to the political irrelevance of municipalities, which rather solicit local executive authorities to intervene with the government, as confirmed by local representatives.
A chart on the state subsidies to municipalities is available on the 43rd page of the report.
Financial dependence from the state is in sum the main weakness of Azerbaijani municipalities. Their financial autonomy provided by the law is not sufficient to safeguard their capability to carry out their functions, as their own resources are minimal and force them to either underperform or to rely disproportionately on state money. This is the main obstacle to their becoming properly involved in local administration in Azerbaijan. In the absence of sufficient revenues, they are not able to play a more significant role in local democracy. At the same time, as long as they are irrelevant in the overall governance of the country, the pressure to increase their financial dotation and autonomy will remain weak.
From the above, the rapporteurs conclude that the commitments established by Article 9.1 of the Charter are not met in Azerbaijan.
Belgium [Article ratified - Report adopted on 15 October 2014 ]
Flemish Region (Vlaanderen)
As regards compliance with Article 9.1, the Flemish authorities emphasised during their meeting with the rapporteurs that the financial health of local government administrations was a permanent area of attention not only for the latter as such but also the Flemish government. The Flemish local authorities are able to finance their powers and responsibilities, especially by means of their own taxes and general subsidies from the higher authorities (the Federal Authority and the Flemish Region as well as the provinces as far as the municipalities are concerned). The provinces and regions also have their own tax-raising power in matters associated with their own areas of responsibility.
According to the Flemish authorities, all the Flemish towns and municipalities managed to present balanced multi-year budgets for the 2013 financial year. It is important to note that the local authorities have had to achieve a balanced budget since 1988. Moreover, since 2003 the Municipalities Fund has grown by 3.5% a year and amounted to over €2.247bn in 2014, which was equivalent to about 8% of the Flemish expenditure budget. The Flemish government has decided to
page 470 / 796 maintain the Fund’s annual growth rate at 3.5%.
In the new policy and management programme that Flanders has gradually been introducing since 2011 and is being extended to all local and provincial administrations (municipalities, CPAS, provinces, autonomous municipal and provincial companies and CPAS under public law which are not hospitals) from 2014, the requirement to remain in balance is maintained but has been redefined. Administrations will accordingly have to meet two balance criteria: situational cash-based balance and long-term structural balance. Budgets failing to meet the two balance criteria will be suspended or invalidated. The policy and management programme encompasses both rules for planning with respect to policy substance, execution and evaluation and for the policy’s financial aspects and is accordingly indispensable for the way in which the municipalities, social services centres and provinces draw up, cost, execute, monitor and evaluate their policy.
Walloon Region and German-speaking Community
Belgium has not ratified paragraphs 2, 6 and 7 of this article, so the application of these provisions will not be the subject of a recommendation.
With regard to paragraphs 1 and 3 of this article, Wallonia and the German-speaking Community and their local authorities have their own resources but these are not always sufficient in Wallonia, as the local authorities complain. On the one hand, there is the problem of financial resources, especially the transfer of functions from the other tiers of government to the municipalities without the commensurate funds.
A policy commitment to ensure the budgetary neutrality of decisions of the other tiers of government has only been made by the Walloon Region. This principle is not guaranteed either legally or constitutionally and, according to the Walloon authorities, is not respected by the Federal Government, which imposes reforms without allocating the necessary funds. The funding of the local police, the problem of the funding of rescue services (firefighters) and restrictions with respect to unemployment that affect the social services centres are three glaring examples of policies falling within the responsibility of the Federal Government with serious repercussions for local finances.
The local authorities in Wallonia informed the rapporteurs that in connection with transfers of responsibilities two important sources of funding for the municipalities and the social services centres have been regionalised: the employment promotion policy (20,000 staff in the Walloon municipalities are exempt from 25% of social security contributions) and the financing of rest homes/care homes. These policies, like all regionalised policies (there is also the Large Cities Policy, etc) are transferred with 90% of their budgets, and the municipalities fear that their funds for these policies will be reduced by 10%.
Like the municipalities, the Walloon provinces can levy taxes (Article170. 3 of the Constitution), which constitute one of their main sources of funding. Each province can impose various taxes and levies: taxes on banking institutions, hunting licence fees, taxes on scrap-yards, provincial action on the environment and on healthcare, property tax surcharge, etc. The additional property tax represents more than 97% of provincial tax revenues and contrary to the communes, the provinces do not have additional personal income taxes.
On 1 January 2014, the Walloon Government introduced a regional tax on telecommunication towers (of €8,000 per site). Walloon towns and municipalities are now prohibited from doing likewise but are authorised to levy a surcharge on the regional tax on GSM towers erected in their territory.
Brussels-Capital Region
page 471 / 796 Belgium has not ratified paragraphs 2, 6 and 7 of Article 9. At the time the non-ratification was a decision of the federal government. The rapporteurs note that today the institutional situation has changed in Belgium in favour of the jurisdiction granted to the regions as regards the organisation of municipalities. Therefore, these provisions not ratified by Belgium should be looked at in the light of this new situation.
The Brussels-Capital Region receives funding from the federal authority and has tax-raising and subsidiary powers providing it with the means to pursue its policies.
The Brussels Local Authorities (BLA) organisation funds local authorities and subsidises public investments. The BLA also supports special initiatives such as the prevention plans for Brussels and training for local-government officers. In addition, it is investing in the Brussels-Capital Region’s equal opportunities policy and provides funding for faiths. There are also many partnership contracts between local and regional authorities.
The municipalities are funded largely by grants from the Brussels-Capital Region. Each year the regional budget provides a general grant for every municipality and CPAS. This sum depends on criteria such as the number of residents, school-age children, jobless and social-security claimants in the municipality as well as population density, area and revenue from personal income tax and the withholding tax on investment income. The general grant is made by the BLA Finance Directorate with no specific conditions as to use.
Mention should also be made of federal government support for fairer financing of the Brussels institutions: €461m a year from 2015. However, this support is only partial compensation for the extra costs incurred by the Brussels-Capital Region in its triple role as regional capital, national capital and international capital and for the economic loss hitherto covered by the taxpayers of Brussels, where the average per capita income is now the lowest in the country. In this respect, the so-called ‘commuter grant’ of €44m from 2015 will do very little to offset the fact that income is taxed according to place of residence rather than workplace. A fair division of personal income tax between place of work and place of residence should therefore be a major concern for Brussels- Capital Region policymakers in their contacts and negotiations with the federal state and the federated entities.
However, the rapporteurs found during their visit that the Brussels municipalities had suffered a substantial loss of financial resources when the Municipalities Fund was regionalised after the 1976 reform. According to the Association of the City and Municipalities of the Brussels-Capital Region (AVCB): ‘Over the years the general grant has admittedly seen regular increases, but these have not been enough to offset the original substantial loss. In this respect, the Brussels municipalities come off badly in comparisons with the country’s other major cities. More than ever, funding of municipalities must in future be based on a larger general grant.’
Another point of concern is the relation between municipalities’ responsibilities and the resources allocated. Here one of the demands of the Brussels municipalities at the time of the May 2014 elections was for a balance between the tasks and resources allocated to each tier of authority. This implies the principle of budget neutrality for measures taken at the regional level, and at any other level, if these measures affect local authorities. It is thus necessary to assess the financial and administrative repercussions on local authorities of any proposed decisions. If there is a negative impact on local-government management and finances, the authority concerned must take the countervailing measures required. Compensation must also be provided for responsibilities transferred to the regions under the Sixth State Reform when, as an indirect result, some of these responsibilities have been added to the mass of municipal tasks. This principle of balance also entails considerations of fairness. Money flows to local authorities must be allocated fairly according
page 472 / 796 to objectively assessed requirements. If solidarity mechanisms have been established, they must be transparent and justifiable.
In the financial field, the AVCB is arguing for introduction of a permanent system of advances for payment to the municipalities of the personal income tax surcharge in the first half of the year, namely 90% of anticipated revenue over the first six months, a period corresponding to the normal assessment period. In view of the fact that property tax is paid to the municipalities in the second half of the year, granting advances on personal income tax in the first half would make it possible to balance revenue over the year as a whole. Provision of advances would not be an additional burden on the federal budget but would, however, afford the municipalities an appreciable degree of financial security in the unsettled financial climate that has prevailed over the past few months and will probably continue for quite a few more. This system would offset the advantage to the Treasury from collecting the share of the municipal property-tax surcharge.
Generally speaking, the federal refinancing of the Brussels-Capital Region arising out of the sixth institutional reform should see part of the support grant return to the municipalities, since they carry out some of the missions to be funded by it.
In its dealings with the regional authority, the AVCB has stressed that, in order to maintain vital mechanisms for municipal self-government with reference to the European Charter of Local Self- Government, the general grant must retain its multi-purpose, unconditional nature and, in particular, not be cut in favour of grants for specific purposes. The AVCB is also asking for maintenance of regional aid to stabilise municipal accounts, namely €30m a year. While the Region should increase its aid to the municipalities on top of the general grant, the AVCB believes that stabilisation of municipal accounts must remain a key objective. In this respect, the AVCB further emphasises that prompt payment of grants would help to ease municipal finances, especially for those municipalities in a particularly critical financial situation.
A number of recent studies and analyses show that the financial situation of Brussels municipalities remains worrying, despite the efforts of the Brussels-Capital Region to refinance the latter. Thus half the municipalities are following stabilisation plans. This means that no expenditure (even if planned and covered by allocations in the municipal budget approved by the Region) can be incurred without prior approval from a regional inspector. As a result, self-government in these municipalities has become extremely restricted.
The Brussels municipalities are suffering financial difficulties despite heavier local taxation than in Wallonia or Flanders and municipal spending that is in general proportionally lower than in the four major Belgian conurbations of Ghent, Antwerp, Liège and Charleroi. The residents of Brussels are on average the poorest citizens in the country, and they pay the highest local taxes. The steady impoverishment of the Brussels population over a number of years is weighing on the financial resources of the region and its municipalities. Brussels is becoming an increasingly wealthy Region with poor inhabitants. The 350,000 commuters who come to work every day in Brussels do not even pay part of their taxes there, since taxes in Belgium are collected solely on the basis of place of residence.
Moreover, the funding of pensions for regular staff of the Brussels municipalities (and their Flemish and Walloon counterparts) could create a problem in the long run. Theirs is the only pensions scheme not to have state involvement in its funding, which depends entirely on local authorities. By 2016, for Belgium as a whole and on the basis of the current contributions scheme, local authorities in general will have to find an estimated €2.25bn extra to fund pensions if the situation does not change. For this reason, the AVCB and its two sister organisations are calling for introduction of a mixed pension (years worked as a contract employee would count towards a private pension and
page 473 / 796 only the years worked as a regular employee would count towards a public pension) and incentives for staff to continue working until the age of 65.
At present, municipalities are prefinancing the federal state for quite a few months; the state collects their share of personal income tax (the surcharge) on their behalf, but they may receive it anything up to a year later. This is why the AVCB and its sister organisations, in keeping with a proposal from the High Council of Finance, have been calling for the federal state to establish a system for advancing payment to the municipalities of the surcharge that it collects for them. This would guarantee the municipalities genuine predictability and stability regarding their revenue from the personal income tax surcharge.
Paragraphs 1, 3 and 4 of Article 9 remain of concern for the Brussels-Capital Region. Representatives at both the regional and municipal levels believe that Belgium should ratify these paragraphs.
Bosnia and Herzegovina [Article ratified - Report adopted on 31 October 2019 ]
Adequate, commensurate and sufficiently diversified financial resources are analysed jointly, as they altogether shall guarantee financial means for local authorities appropriate for fulfilling their tasks.
Public finances in Bosnia and Herzegovina
There are four systems of public finances in Bosnia and Herzegovina, i.e. the budget of BiH institutions, the budget of Republika Srpska, the budget of the Federation of Bosnia and Herzegovina, and the budget of the Brčko District. Given the size of the country, the share of subnational government in overall government is unusually high: “the State institutions absorb just 15 percent of public revenue, while the Federation of Bosnia and Herzegovina and Republika Srpskaabsorb about 52 percent and 30 percent respectively (the District of Brčko makes up the rest)”.[17] A Global Framework of fiscal balance and policies in BiH provides for co-ordination of fiscal policies in Bosnia and Herzegovina for the next three years; it is adopted in the form of an agreement between the governments of the Federation of Bosnia and Herzegovina, Republika Srpska and BiH and issued by the Fiscal Council of BiH composed of the respective heads of government and the three ministers of finance (the governor of the Central bank and the mayor of the Brčko District have observer status).
While direct taxation is exclusively in the competence of the Entities and raised at Entity level, indirect tax revenues are raised by the State (Indirect Tax Authority) and devolved to the two Entities which distribute to local self-government units according to different methodologies after the following steps: after the commitment of resources to the reserve account, for the return on indirect income, pre-determined resources are allocated for financing the institutions of BiH, followed by the amount of 3.55 % or at least 124 million BAM annually for financing the Brčko District. The residual resources are shared between the Entities. Municipalities receive the smallest share in resources compared to the other levels of government. Municipalities (and Cantons) rely heavily on indirect taxes: “VAT revenues make up: 30 percent of municipal budgets in the Federation of Bosnia and Herzegovina; almost 65 percent of cantonal revenues; and 50 percent of municipal budgets in Republika Srpska”.[18]
Before the amount of indirect tax-resources within the Entities is divided between Entity-budget and municipalities (and Cantons, in the Federation of Bosnia and Herzegovina), each entity first pays its own external debts from the VAT revenues creating considerable variations in the revenues of municipalities (and Cantons, in the Federation of Bosnia and Herzegovina), due to the changing level of debt service every year.[19]
page 474 / 796 In accordance with the Republika Srpska Law on Budgetary System, from the indirect tax-resources belonging to Republika Srpska, after the commitment of resources for serving external debt, 72% belong to the Republika Srpskabudget, 24 % to the budgets of local self-government units, and 4% to the Public Enterprise ‘Putevi Republike Srpske’ (road infrastructure).
The share of municipalities in indirect tax revenues is then distributed according to the following formula: 75% for population size, 15% for surface area, 10% for students in secondary schools. This formula (from 2005) does not differentiate between Banja Luka, the cities and municipalities, which has given rise to complaints by municipalities situated on borders or the Inter-Entity Boundary Line due to higher costs through commuters.
Their share in indirect taxes makes up for about 30 percent of the revenue of Republika Srpska municipalities. The Republika SrpskaLaw determines how local self-governmentunits’ own revenues are structured: real property tax, fines (contraventions), administrative fees, utility tax, water supply tax, fortune games. Free expenditure of own revenues is guaranteed. The ratio between indirect and own revenues is 70% to 30%. Among the shared taxes are business tax (70% Republika Srpska – 25% municipalities), indirect VAT (72% Republika Srpska – 24% municipalities), tax on transformation of land (70% municipalities); concessions (75% municipalities), income from rental of land owned by Republika Srpska (50% Republika Srpska – 50% municipalities), water (surface and under-surface, 30% municipalities), hydroenergy (30% municipalities).
In Republika Srpska, the overall financial situation of local communities is considered satisfactory by the relevant Ministries (Finance, Local Self-Government). In 2017, the 64 local communities in Republika Srpska (57 municipalities, and 7 towns) achieved a surplus of 40.43 million BAM (ca. 20 mio. Euro), and the unallocated surplus (i.e. unspent assigned funds) amounts to 16.96 million BAM (ca. 8 mio Euro). For 2018, as of 30 September 2018, a surplus of 53.7 million BAM has been achieved, and the unallocated surplus, that is, unspent assigned funds amount to 44.78 million BAM.
However, Mayors in Republika Srpska comment that despite some improvements the consequences of the enormous suffering for local budgets due to the economic and financial crisis are only gradually and slowly overcome and that budgets still have not returned to pre-crisis levels. In addition, the Mayor of Banja Luka specified that two changes in the electoral year 2018 have created major reductions in the City budget: changes of the accise-policy at State level and changes regarding the income tax at Entity-level. This significant reduction in the local budget (2018: -1.4 mio BAM, 2019: - 1 mio BAM expected) will have negative effects on projects and procurement. Reportedly, those changes have been pushed through via the urgency procedure, thus not allowing for any consultation. Within the next four years, the promised Republika Srpska Law on funding of local self-governmentshall provide certain and stable structures.
3 categories of municipalities in Republika Srpska can be distinguished according to their budgetary situation:
Cities and large local self-governmentunits have stable budgets, but sometimes problems with over-investments;
Smaller local self-governmentunits have much smaller budgets and often problems on the revenue side. Generally, these secondary towns and cities are in decline and “perform worse than rural areas on almost every economic indicator”;[20]
Smaller local self-governmentunits (5.000-20.000 inh.) are not necessarily poor, in particular, if they have the possibility to exploit natural resources (mining, water, forest), which permits budgetary stability, together with other resources. A high share of population still resides in
page 475 / 796 these rural areas (around 60 percent).
Two examples illustrate the situation: Eastern Sarajevo as a – de facto – secondary city (despite being legally the capital of Republika Srpska) and the – de facto – the capital city of Republika Srpska, Banja Luka.
Eastern Sarajevo's budget is composed of 26% direct and indirect taxes and of 74% own revenue, i.e. generated in or by local self-government, e.g. licensing, sale of land. Most money (2/3) comes from indirect taxation, while local taxes and fees (on real estate, utilities and tourism) make up for ca. one third. The municipal budget is stable, with a current debt level of 8% (the maximum possible is 18%). A limited budget surplus every year is used for services. In 2004, the budget amounted to the total of 15 Mio BAM (7.5 mio Euro), in 2012 to 50 Mio BAM (25 mio Euro). However, according to the Mayor, almost three times as much were needed to fulfil all tasks.
The annual budget of Banja Luka amounts to 132 mio BAM (60 mio Euro), one third of which comes from indirect taxes (40 mio BAM / 20 mio Euro) and 50% from local taxes. Expenditure covers salaries (27%), the city administration, kindergardens, sport facilities, water supply and local enterprises; 1/3 (ca. 50 mio BAM) is spent for capital investments.
The structure of financial resources in the Federation of Bosnia and Herzegovina is complex, too. Revenue mainly comes from indirect taxation (around 60-70%), while direct taxes, most of them paid to Cantons and municipalities, only make up for a small portion of the Federation of Bosnia and Herzegovina budget. In addition, borrowing makes up for additional funds (see below). For municipalities in the Federation of Bosnia and Herzegovina, 30 percent of their budgets comes from indirect taxes, 9 percent (on average) from direct taxes, over 11 percent from property taxes, the rest are grants and transfers by the governments and other sources of income. A Federation of Bosnia and Herzegovina Law on financing of local self-governmentunits has been a demand by associations; in the meantime, a draft has already been prepared, but a working group needs to be established (after the Federation of Bosnia and Herzegovina government is formed).
The Brčko District raises local taxes (ca. 60 mio. Euro) and receives a share of VAT and indirect taxation (which is distributed on a monthly basis). It is considered a stable situation, in which 3,55% are guaranteed, for the first 5 years by legislation and an OHR decision, now through a gentlemen's agreement. Almost no credits or debts. 35 mio Euro (1/3 of budget) are spent on salaries, including judiciary and the education sector.
Budget procedures
The competences of the Republika Srpska Ministry of Finance are prescribed by the Law on Republic Administration (Articles 18 and 34) and Article 7 of Republika Srpska Law on Tax Procedure. The process of drawing up the Republika Srpska budget shall be based on the Document of Framework Budget presented by the Republika Srpska Government for a three-year period, which defines policies and priorities (regulated by Republika Srpska Law on Budget System). It represents a preliminary draft budget for the following year and contains mandatory expenditure ceilings for any budget user.
In recent years, the Republika Srpska has conducted a series of budget reforms in co-operation with international institutions, with the purpose of strengthening administration and planning in the field of public finance. Budgeting in Republika Srpska moved from a traditional budget planning process towards the principles of program planning based on programs defined according to policy goals and
page 476 / 796 intended results.
According to the Republika Srpska government, the Republika Srpska Minister of Finance does not provide local authorities with budgeting guidelines on prioritization, programs, policies etc. Instead, those guidelines are already determined by legislation: the Republika Srpska Law on Budget System (OG RS, numbers 121/12, 52/14, 103/15 and 15/16), the Document of Framework Budget, the Republika Srpska Law on Borrowing, Debt and Guarantees (OG RS, numbers 71/12, 52/14 and 114/17), the RS Law on Local Self-Government (OG RS, 97/16), the Law on Fiscal Responsibility (OG RS, numbers 94/15 and 62/18), and by the Decisions on Local Communities’ Budget Execution.
After preparation by the municipalities, the Republika Srpska Ministry of Finance (MoF) adopts recommendations on the draft budget, e.g. on the salary bill, on (shared) indirect revenues or on allocation of sufficient resources for debt-serving (if the ceiling for borrowing is exceeded). Municipalities are bound by these, but Councils adopt the budget and the accountability rests with the Mayor (who takes the final decision). Quarterly reports on the implementation of the budgets have to be submitted to the Ministry of Finance. Only 1% of the recommendations are not followed, according to the MoF; in those cases, the Ministry of Financeactivates the budgetary inspectorate to examine the reasons.
The budgetary procedure in the Federation of Bosnia and Herzegovina is similar: the Federation of Bosnia and Herzegovina Ministry of Finance has to give an opinion on the revenue-side of Cantons prior to the adoption of their respective budgets, the same is the procedure vis-à-vis local authorities. These opinions are not binding and comment on whether ministerial guidelines and projections have been respected by the local authority in adopting a draft-budget. A Fiscal Co- ordination Body, composed of the Federation of Bosnia and Herzegovina Ministries of Finance and of the Ministries of Finances from the 10 Cantons meets at least 2-3 times per year; it also includes a representative from the Association of local authorities of the Federation.
Municipal property
Each municipality has its own property. There have been problems with military property (formerly JNA) and surrounding territory, which was not registered in the land registry. Another problem is related to construction land, as urban planning is often a shared power between a local self-government unit, Canton and Entity, while in 2003, the High Representative has imposed a spatial plan on construction land at State level, for which the municipality is responsible. Cantons oppose this.
The land registry is an Entity institution; however, it is quite peculiar that a local self- government unit has to pay for information it needs for its own, public purposes (such as planning). A decentralisation of the registry might be considered.
Bosnia and Herzegovina is rich in natural resources, in particular water, forests, mining. In both Entities, property rights are vested with the Entities, whose ministries are tasked with the management of natural resources (in the Federation of Bosnia and Herzegovina also the cantonal ministries which are accused of strongly interfering and impeding the use of benefits). Municipalities benefit from a share of the revenues arising from the exploitation by public companies or concessions. The local self-government Associations argue that local self-governmentunits should be allowed to issue concessions in 14 areas.
In the opinion of the rapporteurs, natural resources should belong to municipalities. In 2002, the Federation of Bosnia and Herzegovina adopted a Law on Forestry transferring the managements of forests to the cantonal ministries (in Republika Srpska, there is a special Forestry Department
page 477 / 796 within the Ministry of Agriculture, Forestry and Water Management). However, in 2009, the Federation of Bosnia and Herzegovina Constitutional Court annulled the law because of violation of the Charter and of the Federation of Bosnia and Herzegovina Law on Principles of Local Self- Government. So far, no new law has been adopted at the Federation of Bosnia and Herzegovina level; thus, 8 Cantons have adopted their own legislation. In view of the rapporteurs, the legislation regarding Forestry should be adopted in order to implement the Constitutional Court decision.
In Republika Srpska, Ministries consider the financial resources at disposal of local authorities to be in accordance with the responsibilities the latter are obliged to fulfil. In case financial resources are not sufficient, the local authorities conduct a due-diligence, which aims to identify ways for overcoming the lack of financial resources. However, 70% of property is held by 6 cities, which explains that the latter are not indebted. Controversies regarding property are quite frequent. Municipalities are in conflict with schools and other institutions as well as with cooperatives (who managed huge areas of farmland) regarding the ownership of formerly public property.
The rapporteurs consider that the requirements of Article 9, paragraphs 1 and 2, are not respected. They are concerned about the lack of adequate financial resources which are commensurate to the tasks local authorities have to fulfil.
The rapporteurs further suggest following up the legislative situation in both Entities: while a Republika Srpska Law on funding of local self-government shall be adopted within the next years providing certain and stable structures, in the Federation of Bosnia and Herzegovina, a working group needs to be established to discuss the draft Federation of Bosnia and Herzegovina Law on financing of local self-government units. The rapporteurs call upon the competent authorities to provide for this necessary legislation as soon as possible to improve the financial situation of local self-government in both Entities and ensure compliance with Articles 9.1 and 9.2 of the Charter.
Besides, more diversification in the sources of revenue of local authorities in Bosnia and Herzegovina, in particular for smaller municipalities, appears fundamental to bring the situation in line with Article 9.4.
Bulgaria [Article ratified - Report adopted on 21 January 2021 ]
Article 9.1
1. This paragraph establishes two basic principles in the area of finance: first, local authorities should have their own financial resources; second, they should be free to decide how to spend those resources.
1. As far as the first dimension is concerned, local authorities should be “entitled” to their own resources. This is not just an expectation but a genuine “right” that is not absolute but has to be exercised “within national economic policy”. The wording “adequate financial resources” incorporates the requirement to ensure proportionality between mandatory functions of local authorities and the funding available.
1. The second dimension is the freedom of local authorities to dispose of (at least) their “own resources” within the framework of their powers. Any limits and restrictions imposed by higher authorities on local authorities should be specified and justified and aim at ensuring macroeconomic stability and sound financial management50.
1. Regarding the financial base of local self-government, the Constitution of Bulgaria makes the following statements:
page 478 / 796 - Article 140. A municipality shall be entitled to own municipal property, which it shall use in the interests of the territorial community.
- Art. 141icle (1) A municipality shall have its own budget.
(2) A municipality’s permanent sources of revenue shall be established by law.
(3) The municipal council shall determine the size of local taxes under conditions, by a procedure and within the frames, established by law.
(4) The municipal council shall determine the size of local charges by a procedure, established by law.
(5) The State shall ensure the normal work of the municipalities through budget appropriations and other means.
1. Paragraph 5 of Article 141 of the constitution introduces the obligation of the State to “ensure the normal work of the municipalities” without defining what is understood as “normal work” and whether it only includes the very basic municipal functions. In fact, local budgets are formed primarily from State transfers, whose share increased from 60% in 2010 to 64% in 2019. The lack of full powers of local authorities over the funds transferred from the budget for the State-delegated activities remains a tendency. Municipalities have full powers only over the general equalisation subsidy and partially over the targeted subsidy for capital expenditures. At the same time, the system for financing most of the State-delegated responsibilities through uniform expenditure standards currently applied, limits the powers of municipal councils to redistribute these resources according to local needs and priorities.
1. Since 2014, budgetary and fiscal rules in the Republic of Bulgaria have been consolidated in the PFA, which permanently regulates the procedure for preparing and adopting municipal budgets. The participation of the NAMRB as a representative of the municipalities in the budget procedure and in the negotiations on the State Budget Act for the upcoming year is also regulated in Article 77 of the PFA.
1. The deadlines for the preparation and submission of the draft State Budget Act to the National Assembly are clearly defined (to be submitted by 30 October). The amounts of all subsidies for municipalities and the applicable specific rules and conditions valid for the respective year are also determined by the State Budget Act of the Republic of Bulgaria. During the consultation procedure, the Ministry of Finance informed the Congress delegation that the State Budget of the Republic of Bulgaria Act provides information for the amount of each subsidy for a given municipality and for the relative part of general subsidy for each group of delegated activities (function), ex. art. 50 and 51 of 2021 SBRBA and that it issues guidelines for drawing up and execution of the municipal budgets and detailed information for the in-kind and value indicators used in the calculation of the subsidies for each municipality. The municipalities can independently adopt their budgets, while the PFA sets only the deadline for this (the mayor submits the draft budget to the municipal council within 20 working days of the promulgation of the State Budget Act for the respective year, and the municipal council adopts it within 15 working days of its submission). However, the rapporteurs heard from the representatives of local authorities they met remotely that the municipalities lack clarity about the specific figures set in the State budget and cannot plan their expenditures in the relevant areas precisely enough as municipal budgets are mainly formed by State subsidies (64% on average).
page 479 / 796 1. The challenges related to the insufficient financial autonomy of municipalities influence not only their economic performance and competitiveness, but also a number of subsectors, notably education, human resources development and the provision of quality healthcare and social services. Many other political implications are related to the taxation policy, effective functioning of institutions, administrative capacity, and good governance at local level.
1. With the adoption of the PFA, mandatory fiscal rules and indicators were introduced that the mayor and the municipal council must comply with when elaborating, adopting, and implementing the municipal budget. At the planning stage, the average growth rate of expenditures for local activities in the municipal budget for the projected medium-term period is monitored not to exceed the average growth rate of reported expenditures for local activities for the last four years.
1. With the decision of the municipal council for adoption of the budget the following fiscal restrictions are also observed and approved:
a maximum level for new liabilities for expenditures that can be accumulated during the year under the municipal budget - liabilities for expenditures at the end of the year may not exceed 15%of the average annual amount of reported expenditures for the last four years; a maximum amount of commitments for expenditures that can be made during the year within the municipal budget – the commitments for expenditures available at the end of the year may not exceed 50% of the average annual amount of reported expenditures for the last four years (the restriction does not apply to commitments for expenditure financed by grants and donations); According to the Ministry of Finance, from 2019, the restriction does not apply to the contracts concluded in 2019 for services provided by the municipality under Art. 62 of the Local Taxes and Fees Act and at the expense of the transfers from the central budget under Art. 52, para. 1, item 1, letter “d” of the PFА; a limit for assuming new municipal debt and the maximum amount of the municipal debt and municipal guarantees as at the end of the budget year - the maximum annual amount of payments on municipal debt should not exceed 15% of the average annual own revenue and the general equalization subsidy for the last three years and the nominal value of the issued municipal guarantees may not exceed 5% of the total amount of revenues and the general equalization subsidy in the latest annual report on the municipal budget implementation.
In the implementation of the budget, the municipalities are obliged not to allow:
incurring expenditures, accumulating new commitments for expenditures and/or undertaking commitments for expenditures, as well as starting programmes or projects that are not foreseen in the annual budget of the municipality; undertaking commitments for expenditures, if the municipality has not adjusted its indicators for undertaken commitments and liabilities for expenditures in accordance with the restrictions of the limitations of Article 94, paragraph 3, sub-paragraphs 1 and 2 of the PFA; accumulating new financial liabilities for capital expenditures and/or undertaking commitments for capital expenditures at the expense of revenues, if the revenues planned under the municipal budget are not fulfilled; increasing the overdue liabilities already available under the municipal budget at the end of the year compared to the reported overdue liabilities at the end of the previous year if the overdue liabilities available at the end of the previous year exceed 5% of the reported expenditures.
page 480 / 796 1. Bulgarian municipalities are extremely dependent on financial transfers from the State budget that also restrict their space of discretion. In addition, restrictive rules constrain the budgeting autonomy of local self‑government.
Croatia [Article ratified - Report adopted on 20 October 2016 ]
The principle behind Article 9 of the Charter is that the legal authority to perform certain functions is meaningless if local authorities are deprived of the financial resources to carry them out.1 Legal authority for own financial resources in Croatia is provided by the Constitution of Croatia under Article 138 which states that units of local and regional self-government are entitled to their own revenues, proportional to their powers, and to dispose of them freely in the performance of their tasks; the Law on Local and Regional Self-Government repeats this in Article 68; the Law on Financing of Local and Regional Self-Government Units of 2008 regulates local finances and budgets, and the Budget Act of 2008 which inter alia regulates the 3 year budget plan of adoption for one year and projection for the next two years, at both the state and local unit levels. The Act on the Amendments to the Budget Act then defines more precisely the goals and priorities of the development of local units.
Self-government responsibilities that have to be financed derive from Article 135 of the Constitution as well as from the Law of Croatia on Local and Regional Self-Government of 2001, of which Article 19 defines the following as competences of a town and municipality: Organisation of settlements and housing, Town and urban planning, Utility services, Child-care, Social welfare, Primary health protection, Education and primary-school education, Culture, physical culture and sports, Consumer protection, Protection and improvement of natural environment, Fire-protection and civil defence.
Article 19a (2005) prescribes that large towns in addition to town and municipality performs also: Maintenance of public roads Issuing construction and location permits and other acts related to construction and spatial planning
The following are competences of regional self-government bodies: Education, Medical care, Town and urban planning, Economic development, Traffic and traffic infrastructure, Planning and development of the network of educational, medical, social and cultural institutions Maintenance of public roads Issuing construction and location permits and other acts related to construction and spatial planning.
The sources of funding of local and regional self-government budgets include grants; shared taxes including personal income tax (PIT) and tax on real estate transactions; revenue from property sales and leases; own taxes, fees and other charges, borrowing receipts and other revenues. For the Charter these sources must not only be adequate for the tasks above, and in particular in relation to functions that have been specifically assigned to the local authority.
In relation to Article 9.3, the Law on Financing of Local and Regional Self-Government Units defines the following types of local revenues: local tax revenues and dues, shared taxes, central government grants and revenues operable by own property. The following are local tax revenues of the regional level: The inheritance and gifts tax The road motor vehicle tax
 The vessels tax
 The coin operated machines for games for amusement tax
Local tax revenues of municipalities and towns consist of the following taxes: Surtax on personal income tax
(PIT) Consumption tax Second [vacation] home tax Trade name tax Tax on usage of public land
The rates for the taxes are fixed by the organic Law on Financing of Local and Regional Self-
page 481 / 796 Government Units. Surtax on PIT is also ranked according to the size of a local authority. For municipalities it forms a maximum of 10 % and for the City of Zagreb it forms a maximum of 18 % (previously 30%).
In addition to taxes, municipalities and towns are authorized to collect duties, which include: Fines and confiscated pecuniary gains for offences prescribed by local regulations Administrative charges Sojourn charges (hotel tax) Municipal economy fees, contributions and other charges as defined by the domestic legislation Fees for the use of public, municipal or city land
The Croatian public finance system makes use of the institute of shared revenues, which consists of two segments – shared fees and charges and shared tax. Shared fees include: a. fee on the use of mineral and thermal water resources, one half of which is directed to the local budget and the other half to the central budget; b. fee on the use of drinking water resource, 30% of which goes to the local and 70% to the central budget.
Shared tax includes income tax and property transfer tax. 80% of the property transfer tax is retained at the first level of self-government (town, municipality) and 20 % goes to the central budget. As regards personal income tax (PIT), the following system of allocation is in operation: 60 % of personal income tax is retained at the first level of self-government (municipality and town) 16.5% is retained at the second level of self-government (county) 6% of which is designated for the delegated functions 16 % is used for the equalisation fund for delegation competences 1.5% is used for the EU project co-financing fund.
The redistribution of the 6 % earmarked for fulfilling the delegated functions is also clearly specified in the law and has to be spent on the following: Elementary education Secondary education Welfare centres Homes for the elderly and infirm Health care Fire services:
Public fire departments
Accordingly, the largest recipient of personal income tax, owing to its status both as a self-governing local unit and a county, is the City of Zagreb. The smallest recipients of income tax are counties however they gain a larger part from the fund financing the delegated functions, as the most of these functions are fulfilled by counties.
On Article 9 paragraph 1 it is clear that, within the national economic policy, self-government units (hereafter local authorities) do have financial resources of their own and these are enumerated above. The question then arises as to whether these financial resources may be considered adequate so that local authorities are free to determine their expenditure priorities.2
Cyprus [Article ratified - Report adopted on 20 October 2016 ]
Article 9 paragraph 1 of the Charter provides that local authorities must have adequate financial resources of their own, of which they may dispose freely within the framework of their powers. Financial autonomy is an essential component of the principle of local self-government and for the exercise of a wide range of responsibilities in the field of local public affairs. These elements are cumulative and not alternative, which means that all conditions laid down in this provision of the Charter are mandatory.
Another basic principle requires that local authorities must have sufficient financial resources in proportion to the responsibilities assigned to them by law. On the basis of the available data and information, it is particularly difficult to assess if and how this requirement is met in Cyprus. While some NGOs claim that the insufficient fund prevents a lot of small communities to provide appropriate public services, others may argue that the principle of adequate finance seems to be more or less met in Cyprus, but only because municipalities have only extremely limited functions.
page 482 / 796 As it was described, local authorities are obliged, according to the Municipalities, the Communities and the Fiscal Responsibility and Budget System (FRBSL) Laws, to submit their annual budget to the central government for approval. During the monitoring visit, the Congress delegation had some opportunities to discuss this issue with leaders and senior officials of two central ministries, other central agencies, and the representatives of the visited local authorities and local government unions. The dominant view of the central authorities is that the municipalities and the communities are parts of the state and they receive grants from the central government. They spend public money, and the state (central government) is the warrant of local government deficit and debt. All these circumstances justify the prior consent of the central government to the local budgets. However, Article 9 paragraph 1 of the Charter requires that local authorities must be entitled to dispose freely of their own resources. This requirement is hardly compatible with the compulsory central government consent to local budgets, where the central authorities may impose special conditions and expectations for local authorities to this approval. Since all council members of the municipalities and the communities are democratically elected in Cyprus, they have enough legitimacy to decide how they spend their revenues. Local authorities should be accountable to their own voters, rather than to the preferences of central government in local public affairs. As stated above, the Ministry of Interior has a different point of view on this issue, highlighting the fact that this control is confined to the sole lawfulness of the proposed budget and that the central government hence does not impose its own proposals upon local authorities. However, according to the rapporteurs, the practice of central approval of local government budget shows the picture of an overcentralized financial system, in which most important local decisions are influenced or tightly controlled by the central government.
According to the conclusions of the rapporteurs, in the absence of a predictable and transparent calculation method of central grants, local authorities cannot be sure for getting enough money for their compulsory tasks and functions. They are hardly able to plan their current expenditure if they can just hope that they will receive the usual amount of central subsidy. It is conspicuous in particular when the total amount of central grant has been significantly decreased in the past few years. 116. The presumed calculation method which is based on the previous year’s data of local budgets brings about certain risks for local authorities, because the decrease of local revenues as a consequence of the negative effects of world financial crisis and the drop of central grants as these took place in the last years, might become permanent, fixing local revenues steadily at a low level (see supra para 89. for more details).
As some representatives of local authorities said, the allocation of state subsidies is not preceded by an investigation or assessment of real financial needs of local authorities. In this system, it is doubtful whether local governments are able to produce public services at the same level in all towns and the rural areas. Moreover, if the central planning is not based on a careful assessment of local needs, the use of central grants is unlikely to be effective. This view has been opposed during the consultation procedure by the Ministry of Interior, which stated that the central government’s contribution to the local government projects of the poorest authorities reaches 100% of the local investment costs, in addition to the fact that the Ministry of Interior, as stated above, may distribute extra grants to those in need, at its own discretion and based on specific criteria.
There is a similar problem with the specific (or earmarked) grants, as most part of the local development projects is financed by central government. In the lack of sufficient local revenues for capital expenditure, local authorities are vulnerable to central encroachment upon local affairs. In fact, most development plans including the smallest local development, like road repairs or bicycle road construction are made at central government level. It seems to be an ineffective way of planning and implementing local development policies and projects. Once again though, the Ministry of Interior disapproved this statement during the consultation procedure, saying that all local authorities without any exception had the possibility to assume and implement on their own
page 483 / 796 development projects, provided they have the necessary financial resources.
The Charter requires that at least a part of local revenues should come from local taxes. Article 9 paragraph 3 comprises a definition of local taxes claiming that local authorities, within the limits of the law, must have the power to determine the rate of these taxes. Moreover, local taxes are really “proper” revenues only if the imposition of local taxes is a free decision of local government. In Cyprus, the share of local taxes in local budgets is relatively high, even if some of these revenues are not genuine local taxes (but rather, they are fees and charges paid by users of certain local public services). The only problem which has arisen in this area was the weak capacity of communities to collect local taxes. In this respect, the tax authorities of the central government could make invaluable contribution to the respective local authorities to collect local taxes.
Neither the Municipalities Law nor the Communities Law contain the principle of concomitant (adequate) finance, and the practice shows that central grants are not adjusted to the local needs. So, there is no guarantee for adequate local government finance proportionate to mandatory functions of the municipalities and communities.
As to the overall assessment of the compliance with Article 9, the rapporteurs concluded that paragraphs 4 and 5 of this Article are not implemented, while the prevalence of paragraphs 2 and 6 are not guaranteed, since the principle of adequate finance, as it is entrenched in paragraph 2 and the prior consultation with local authorities in an appropriate manner in financial issues as required by paragraph 6, do not have any legal safeguard in the relevant statutes.
Czech Republic [Article ratified - Report adopted on 8 March 2012 ]
As to the provisions enshrined in Article 9 para. 1, no clear failures to comply were signalled to the Congress delegation. To the contrary, the general impression is that Czech local and regional authorities, although affected by the crisis, have not been victims of the recent financial crisis in the way so often claimed by sub-national authorities in other European states. At least partly, this is confirmed by a Dexia report of 2011 (“Sub-national public finance in the European Union”), according to which the Czech Republic counts among the EU countries where the sub-national revenues in 2010 increased at least as much as the country’s GDP (pp. 3 and 7)9. However it has been brought to the delegation’s attention that, in 2009, there was a 12% decrease in the amount of shared taxes allocated to local authorities, followed by a slight improvement in 2010.
In the Czech Republic, municipalities are highly dependent on financial redistribution by the State (which is based on population numbers and not on a population’s wealth). This system of “shared taxation”, according to which approximately 9 % of state taxes are transferred to regional authorities and about 22 % of state taxes are transferred to local and regional authorities, leaves the latter considerable freedom in deciding how these resources should be used within the field of their proper responsibilities. However it is also a system which is beneficial to large cities and does not encourage local authorities to increase their own tax base. Municipalities have discretion over local fees (representing 2.3 % of municipal revenues in 2010) and some discretion over the property tax (representing about 3 % of municipal revenues). Municipalities share the air pollution fee, the levy on the withdrawal of land from agriculture and the levy on the withdrawal of land from forestry as well as the charges for waste deposition in landfills.
The non-tax revenues are composed mainly of rental incomes, incomes from municipalities’ own activities and income from interests. Capital revenues amount to about 4,5 municipal revenues and their majority comes from property sale.
On the other hand, transfers that represent 36 % of the income of municipalities (with
page 484 / 796 hugedisparities according to the size of their population) and 64 % of those of the regions are mainly destined at coping with expenses caused by the exercise of delegated powers which leave little or no room for local or regional freedom within the framework of those powers.
It has been argued that the transfers for the execution of delegated powers are not commensurate with the size and nature of these powers as stipulated by Article 9 para. 2 of the Charter and also para. 1 as regards the “adequacy” of financial resources. According to some local representatives, some municipalities or regions have to subsidise the accomplishment of these tasks by drawing on their share of taxes in a way detrimental to their possibilities to exercise their proper powers according to their own decisions about the nature and size of these activities.
The adequacy of the available resources compared with the expenditure necessitated by mandatory “delegated” tasks is a constant source of conflict in many European states, but on this point, the Czech Republic is far from appearing as a “worst case” among the parties to the Charter, particularly given that a reform instituting a two-party system of technical evaluation of the costs objectively incurred by the accomplishment of delegated powers seems to have been established (a pilot project is now under preparation). Such a reform would represent a valuable contribution to improving the Czech system of local and regional autonomy.
Denmark [Article ratified - Report adopted on 31 October 2013 ]
In the area of financial resources and budgets, Danish municipalities enjoy great freedom with regard to their revenues and financial management of their resources. The financial equalisation system in Denmark is based on the size of local authorities’ structural surplus/deficit, i.e. on the difference between the municipality’s revenues calculated on the basis of an average rate of taxation and its spending needs. In the case of the financially weakest municipalities, equalisation thus guarantees certain uniformity in the level and quality of services. Furthermore, the system for allocating the financial resources needed to carry out a public task is based on the “expanded total balance” principle (Det Udvidede Totalbalanceprincip (DUT)), which guarantees a balance between the tasks assigned to municipalities and their financial resources. The “DUT” balance principle means that the state allocates funds to municipalities and regions in line with trends in their expenditure. The operation of the principle is based on the total State grant, which may be increased or reduced depending on whether or not certain responsibilities are delegated to municipalities and regions. The “DUT” principle covers both expenditure and revenue.
Where budgets are concerned, Denmark has a budget guarantee system (Budgetgarantien) for local authorities under which the grants awarded to municipalities reflect the cyclical variations in their costs. The aim is to protect municipalities from cyclical expenditure. Hence, the total grant paid to local authorities is adjusted annually in line with the variation in total expenditure, less expenditure meaning a smaller grant. The budget guarantee covers the net expenditure of the worst affected municipalities, thus guaranteeing that the local authorities concerned continue to discharge their responsibilities.
The regions do not have financial resources of their own. Their revenues are derived to a large extent from the State and to a lesser extent from the local authorities, as the regions have the right neither to levy taxes nor to borrow from the national capital market. The association of regions regrets that the recently adopted budget law put an end to the debate on granting the regions the right to levy taxes.
The financial resources allocated to local authorities for the discharge of their responsibilities are governed by law LBK no. 797 of 27 June 2011 on local and regional finances (Bekendtgørelse af lov om regionernes finansiering). The financing of Denmark’s regions rests on three main pillars: the
page 485 / 796 health sector (which includes hospitals and health insurance), regional development and educational and social institutions. The health sector accounts for roughly 90% of the total budget of regional expenditure. As a matter of principle, the budget earmarked for one of these fields cannot be used in the other two.
Regional funding is derived from state grants and local authority contributions. The health sector, for example, is financed by State reimbursements (block grants), State grants and contributions subject to local authority activity.
Public deficits have increased (2.7% of GDP in 2009) after several years of surplus. Local authority finances in particular are in deficit. A third of municipalities have balanced their finances by drawing on their reserves, while in the other cases the State has sometimes had to take over financial responsibility and place the local authorities under supervision. After a major shortfall in financing in 2010, some 600 million DKK were reportedly needed to balance the books in 2011.
Local authority expenditure is particularly high. In 2010 it accounted for 38% of GDP and 65% of all public spending. The municipalities receive tax revenues (mainly from income, corporation and land tax), State grants and proceeds from services. Income tax is the main source of local authority revenue (over 70%).
According to the Ministry of the Economy and the Interior, the budgetary situation of local authorities has been reversed since 2011, going from deficit to surplus. In 2012, the cost of municipal services was 5.3 billion DKK less than the amount budgeted for that year. The 19.5 billion DKK of gross capital expenditure funded from taxation in 2012 was also lower than expected, although the level remains high.
The main state grant represents ¾ of the health sector’s expenditure, which totalled nearly 81.5 billion DKK in 2012. This grant is calculated, on the one hand, from a base amount linked to population size and, on the other, from a number of objective criteria taking account of each region’s spending needs, including the average age of the population and the socio-economic structure.
Municipal financing varies from one municipality to another, depending on the size of their population. There is a complex grant and equalisation system designed to offset disparities between municipalities and thus guarantee the discharge of their responsibilities and the delivery of services to citizens.
Local authority revenues are derived from taxation, and specifically from the following taxes: income tax; land tax; corporation tax; other taxes and charges.
Income tax and land tax are local taxes. Local income tax is collected by the State at the same time as national income tax, whereas land tax is collected directly by the local authorities. The local authorities are free to set the rate of income tax or the rate of tax levy. The local authorities assess land tax according to the value of the land. In municipalities, the municipal council sets the rate of land tax.
Tax rates are decided by the municipal councils themselves within the limits laid down by law and defined in the annual negotiations between the Ministry of Finance and the LGDK). The government has significantly tightened these limits several times in the last few years, following the economic crisis of 2008.
Some properties can be exempted from land tax, such as private schools, not-for-profit institutions, sports facilities and museums.
page 486 / 796 The system for allocating the financial resources needed to carry out a public task is based on the “expanded total balance” principle, which guarantees a balance between the tasks assigned to municipalities and their financial resources. This principle is known in Danish as Det Udvidede Totalbalanceprincip or DUT, as explained in para. 94. The cost of a new task is calculated initially by the relevant Ministry, and then submitted to the LGDK. If the association disagrees with the calculation, the matter is considered by a group of civil servants and, if necessary by the relevant Minister and the Chair of the LGDK. The sums allocated in this way are calculated on the basis of averages and, consequently, the sum awarded to a given municipality is not always commensurate with local needs. However, local authorities are free to use both the sums allocated via the DUT and their own tax revenues as they wish, which means that the system works properly in practice. The payments due to the regions/local authorities under the DUT, is effected as part of the payout of the grant from the State.
Any changes of rules both in form of laws, regulations and circulars and also recommendations and guides can modify the amount of the State’s grants to regions/local authorities. Also judgments from administrative courts or from the ordinary courts creating a new legal situation can modify the existing level of grants. It is thus not the formal basis of a change of regulation, but the real effect that is determinant.
A new financial equalisation system was introduced in 2007. Financial equalisation is based on the size of local authorities’ structural surplus/deficit, i.e. on the difference between the municipality’s revenue calculated on the basis of an average rate of taxation and its spending needs. One of the aims of the Danish grant and equalisation system is to reduce the variations in “tax value” observed from one municipality to another. This “tax value” (or tax/service ratio) is defined as the ratio between the volume of expenditure corresponding to the public services provided and the tax levied. The differences in tax/service ratios may be due to the fact that the per capita cost of a given service differs from one municipality to another. To make a concrete assessment of spending needs, several factors have to be taken into account, such as the number of children not yet of school age, the number of children attending school, the number of elderly persons etc. Tax variations may also be explained by differences in the tax base, which reflects the value and revenue potential of the municipality’s landed properties. Without equalisation, there would be very large differences in the tax/service ratio from one municipality to another, i.e. considerable differences in the standard of service, tax pressure or both of these parameters. Hence, a municipality with a broad tax base or low expenditure could set a low rate of taxation and nevertheless be able to offer a high standard of service, whereas a municipality with a narrower tax base or high expenditure would have to set a high rate of taxation in order to able to offer an acceptable standard of service.
Local authority budgets are negotiated each year between the association of municipalities and the central government and laid down in an agreement in which the government also takes account of the implications of the economic crisis for local authorities, such as unemployment, youth employment programmes etc. Except for investment in public services or in priority areas of their political programme, local authorities require prior authorisation from the Ministry of the Economy and the Interior to contract loans. If local authority expenditure exceeds the annual budget, the government can impose penalties, such as a reduction in the central government contribution for the following year.
The regions cannot make free use of their resources, which are divided into three sections corresponding to their three major areas of responsibility. The regional councils are obliged to respect that division. Because local authority budgets account for a large proportion of public spending, the State’s increasingly strict oversight of local budgets as a result of the crisis is generally well accepted, not only by the Parliament, but also by the population at large.
page 487 / 796 There are legal restrictions relating to investment, borrowings, tax and staff, introduced under agreements concluded freely between the central government and the LGDK and Danske Regioner (Danish Regions).
The grants awarded to local authorities are of two types: earmarked grants and block grants. The former are intended to finance specific items of expenditure, while the latter have no specific purpose. Local authorities may also receive grants awarded under the statutory financial equalisation arrangements.
One of the aims of the Danish grant and equalisation system is to reduce the variations in “tax value” (or the tax/service ratio). This is the ratio between the standard of service provided and the tax levied.
The other sources of revenue consist mainly of charges and duties. The most important of these are: - public services: local authorities provide public services (sewage disposal, waste disposal, gas, electricity, heating and water supply); - private and public nurseries: the cost to parents is laid down by law; - care for the elderly: elderly persons housed by the municipality are required to pay a rent, and also their electricity and heating.
Other revenue is derived from the return on capital and investments, and chiefly from the sale of property and net financial interest.
Local authorities have access to the capital market, but in this area they are subject to strict oversight by the State, which monitors local authority investments to ensure that local budgets are consistent with national needs and requirements.
The Danish public sector is heavily influenced by methods originating in the private sector (new public management). Local authorities and regions can set up local public enterprises; the State supports all kinds of public-private partnerships. However, there are many limits to be observed when setting up public enterprises: these include rules guaranteeing that local authority and regional tasks remain under the responsibility of local and regional councils and, furthermore, that the rules of competition are complied with.
The rapporteurs conclude that Article 9 of the Charter is partially complied with in Denmark. From the standpoint of Article 9 para.2, it would seem that responsibilities in respect of the health sector are prioritised in relation to other responsibilities, in terms of the allocation of resources. As regards Article 9 para.3 of the Charter, the regional level does not have the right to determine the rate of taxes, a fact which is criticised by the Association of Regions. Furthermore, the number of responsibilities assigned to the regions is very small, and their room for manoeuvre is even smaller since they do not have financial resources of their own. The financial equalisation system does not fully satisfy the needs of local authorities and warrants improvement. Lastly, with regard to Article 9 para.8, access by local authorities to the capital market is subject to sometimes strict state oversight.
Estonia [Article ratified - Report adopted on 29 March 2017 ]
Concerning conformity with Article 9 of the Charter, the rapporteurs consider that there is significant room to improve the overall local finances system, not only the total amount of financial revenues and expenditures allocated to local authorities, but also with respect to the autonomy of own resources and distribution procedures, including equalisation and the special support scheme. The rapporteurs refer to the Congress recommendation of 2010, where similar topics were already raised.
page 488 / 796 The rapporteurs acknowledge the important challenges that Estonia had to deal with following the international financial and economic crisis of 2008. These developments have certainly influenced the country’s budgetary policy to a large extent, as well as financial intergovernmental relations and may confer legal discretion to vary state financial transfers to local authorities. Although representatives from the state and the local levels may normally have a different perception of questions linked to the fair balancing of benefits and burdens, following external shocks to the economy and how to distribute the financial consequences between the levels of government, the rapporteurs consider that there has since been a significant economic and financial improvement at national level, which has certainly had positive effects on local finances but which, in addition, may have allowed room for a more expansive budgetary policy with particular relevance for local authorities’ finances.
Finland [Article ratified - Report adopted on 28 March 2017 ]
Municipalities have real control of their finances and they can control their revenue base (taxation and fees) and debts with considerable freedom. The state grant system guarantees each municipality a calculated share of the overall grant without subsequent state control, risk of reimbursement or earmarking.
The municipalities in Finland have the right to collect municipal tax. Each year, the municipal council sets the income tax rate, which, for instance, is 22% in the town of Raasepori at the moment. Furthermore, the municipality collects 0.37-1.35% of real property tax depending on the nature of the real property, and a share of the corporate tax mainly corresponding to the portion of the corporate tax paid by local corporate taxpayers. In the case of Raasepori, for instance, these taxes, taken altogether, constitute 57% of the municipality’s income. Moreover, the municipalities have the right to collect dog licence fees but a very few municipalities actually do so.
The Finnish Tax Administration deals with taxation on behalf of the municipalities. The municipalities pay a part of the government’s tax-related expenses. The municipality is not entitled to collect any separate local taxes.
The current legislation describes the financial equilibrium quite clearly. If the yearly municipal financial account registers a cumulative deficit, the municipality must prepare a balancing plan for 4 years to bring it back into surplus. Municipalities are also very well aware of the economic indicators that show the need for an assessment procedure and can adjust their activities to prevent it from happening. The accounts must be in balance or in surplus. A deficit in a municipality’s balance sheet must be eliminated within no more than four years from the start of the year following adoption of the financial statements. In its financial plan, the municipality must decide on specific measures to eliminate the deficit during the stated period.
Municipalities have the power to change tax rates, take out loans, add fees, and control cost development through benchmarking, etc. Municipal financial departments usually have considerable expertise and they regularly make use of externally developed cost-control techniques and services. In optimal circumstances, civil servants and local politicians have a good mutual understanding of their responsibility to keep expenditure on a well-balanced course. This is a challenging task in circumstances where the public demands more and better services and measures targeting quality levels and the range of services available are unpopular.
With regard to the upcoming reform, according to the parliamentary Green party group, the municipalities are mainly concerned about their funding, the details of which are still undecided. The municipalities could lose more than half their functions and funding. It remains to be seen whether the remaining funding will be adequate to cover the necessary services, building and maintaining
page 489 / 796 the infrastructure linked to them and managing debt already accrued. Municipalities are also concerned about the continuity of the chain of service when the municipality provides a certain part of a service and the region the rest. For example, employment services are linked to social services, etc. It is possible that regions will contract out some of their functions such as employment services to larger municipalities if these municipalities have established well-functioning practices. It is preferable to maintain flexibility in the division of labour. If the ongoing reform proceeds as planned, the self-government of regional bodies will be more restricted than that of the current municipalities, and their finances will be more tightly controlled.
The balance between responsibilities and finance (the commensurability principle, Article 9, para. 2, of the Charter) has been a much debated question in Finland for many years. The Constitutional Law Committee of the Parliament has stated: “When imposing legal obligations (on local authorities) it must be ensured that they have actual capacity to fulfil their duties” (25/1994). The Constitutional Committee often refers to this statement when evaluating the financial capability of local authorities to perform new functions. Furthermore, in Prime Minister Sipilä’s Government Programme of 2015 it is said that “The Government will not assign municipalities any new duties or obligations during the term of the government. If cuts are made in central government transfers to local government, the Government will reduce municipalities’ duties to the same extent”. During the visit, the Mayor of Raasepori pointed out that in the past it had happened that the State had delegated new tasks to municipalities but failed to compensate them adequately for carrying them out. During the consultation process, the Government expressed its intention to solve this problem. The current Government has promised to review and reduce municipal duties through the so called Reform 2: Cutting local government costs by removing tasks and obligations. A Rapid Response Query on the subject was also addressed to the Council of Europe Centre of Expertise for Local Government Reform in February 2016. Several of Finland’s national governments have made statements in government programmes at various times in which they attempted to make their stance on this issue as clear as possible, but it has sometimes been challenging to strike the right balance between the provision of funds to cover the costs of some new duties and the tendency for sectoral ministries to add substantial numbers of tasks while failing to investigate sufficiently what their impact will be on municipal finances. The AFLRA has made its opinion quite clear on this subject and has helped to establish clear guidelines on how funding of new duties should be arranged.
The government programme for local government finances contains a special section looking into the adequacy of funding in various municipalities. The analysis tool (Programme for Local Government Finances) has been developed over the last few years and is currently orientated towards various municipal size categories (by population) and the financial burden is expressed in terms of the need to raise local income taxes. The Ministry of the Environment and the Ministry of Transport and Communications are now involved in the preparation of this programme, in cooperation with the Ministry of Social and Health Care and the Ministry of Education and Culture, in order to provide a better guarantee that any legislation they prepare will take due account of local government and local financing. As the programme stands, there are obvious challenges concerning the balance between finances and duties. The programme highlights the groups of municipalities that must be especially careful over the next few years.
In the revised Local Government Act, financial issues are mainly dealt with in Part VI, from Sections 110 to 125. The emphasis in this part of the Act is on tighter control of local finance. Local councils are expected to assume a key role in managing municipalities and to exert greater control over the whole local authority as a corporate entity, including monitoring of municipal companies. The new legislation underlines the role of financial planning in striking a better economic balance, controlling debt and assessing the risks run by the municipality.
For municipalities facing particular economic challenges there has been a so-called assessment
page 490 / 796 procedure that entered into force in 2007 (see Section 118 from the LGA). This procedure has focused on operational matters and helped municipalities to balance their finances through concrete measures and good co-operation with the State. In this way, Finland has also followed Recommendation 311 (2011) when dealing with this problem. According to the Finnish Ministry of Finance during the consultation process, a municipality must begin the procedure with regard to indicators related to indebtedness, the municipal income rate, the balance of budget and accumulated deficit. Section 118 of the LGA provides that the procedure can be started in case of excessive municipal budget deficit for more than four years or in the event that two successive annual financial statements of a municipality show some indicators as a deficit per resident of a certain amount, a relatively high local rate for the income tax or an accumulated deficit of local authority corporations. All indicators are defined by the law, and the Finnish authorities stressed that the new legislation of 2015 introduced some minor simplifications in the indicators as well as taking account of indicators covering the whole local authority corporation. Another major change is that joint municipal authorities will be included in the procedure in addition to single municipalities (see Section 119). Joint municipal authorities are assessed by one designated auditor and his/her report is sent to all the municipalities in the joint body rather than to a special working group consisting of ministry and municipality members as is the case when a single municipality is being assessed.
The updated state grant system has been in use since the beginning of 2015. The new system has made financing more open and transparent by reducing the number of factors entering into the calculation and refining cost factors to better reflect actual changes in costs in municipalities. The new system brought in some changes in state grants in the remotest areas, helping them to fill some gaps in financing and thus better guaranteeing basic services for citizens.
Through the new Local Government Act, the new programme for local government finances was introduced (Section 12). The aim of the programme is to evaluate the current situation of local government finances and to calculate possible changes over the next few years. The programme is part of a Public Sector Finances programme (based on and introduced under EU legislation) and it is intended to provide a picture of local government finances as a whole and an indication of the level of development in different-sized municipalities. The programme is not aimed at a specific municipality, but it provides a general economic framework for them to assess their current situation and how their finances may evolve in the future. The programme is linked to the state budget and restricted by an expenditure limit set by the government. This is a fixed framework for the term of government, whose goal is to strike a better balance between services and finances (in local authorities). The government has set key goals to reduce the burden of municipalities’ duties while at the same time achieving cost savings in social and health care services.
According to the Left Alliance Party the new regional authorities should have the right to collect taxes and hence have the best possible control over the funding and management of their responsibilities. The SD (Social Democrat) parliamentarians have also argued that if the new regional level is not given the right to collect taxes or to take out loans for investments, it is questionable whether this kind of reform can be called “regional” because in practice it will function in practice as a part of state government and the only aspect of self-government will be the election of regional councils. However, according to the legal advisor at the AFLRA, there is an outstanding question as to whether the regions are allowed by the constitution to levy taxes. Article 9, para. 3, of the ECLSG provides for the right to levy taxes but this right is denied to regions based on the argument that the Constitution does expressly allow this only for municipalities. During the consultation process, the Finnish Government acknowledged that, according to the draft legislative proposal, “the new regional level will have a sound base for financing” It will receive state grants on a calculatory base […] The regions could also freely define and set the level of user fees and charges”. Therefore, “the taxation right of the new regions can only be analysed in the next phase of the reform”. However, the rapporteurs wish to draw the attention of the Finnish authorities to the need of tangible
page 491 / 796 guarantees in tax matters for genuine regional democracy. Both the Charter and the Reference Framework for Regional Democracy require that, in the implementation of their own competences, regional authorities shall be able to rely in particular on resources of their own of which they shall be able to dispose freely. These instruments also provide that the financial systems, on which resources available to regional authorities are based, shall be of a sufficiently diversified and buoyant nature.
From a public finance viewpoint, and in order to be successful, social welfare and health care reform requires clearer steering by the government. Above all, it requires all the stakeholders to take joint responsibility. This is the view of the rapporteurs appointed by the Ministry of Social Affairs and Health. While people's well-being and health need to be improved, it is also important to be aware of the limits of available financial resources. Proponents of the reform say that change is needed because of the growing need for services among the ageing population, the changing range of illnesses, wider possibilities for treatment and greater public expectations, which, when taken together, create strong pressure for mounting costs. Slow economic growth and a high total tax rate by international standards are an incentive to find new ways to curb rising costs. Lastly, there are major inequalities between different areas and groups.
The trend is towards an older age structure. Because of this, extra staff and infrastructure capacity is needed because of high retirement rates among staff, especially in many remote municipalities. Municipal services could be more efficiently set up in the larger areas, with tighter control on investments and duties, yet at the same time a better guarantee of public services for more vulnerable, risk-prone remote areas.
Because of tight public finances now and in the future, proper control must be exercised over cost development and investments in all parts of the country, preventing overlapping investments and channelling resources to the right measures. One of the key challenges is to find a capable workforce with essential economic and administrative skills and to prevent the unnecessary loss of good workers. Small municipalities are not always the likely winners – they are increasingly challenged by the shortage of capable staff, leading to increased workloads and compromises on the quality of the expertise provided in some cases. By curbing duties, improving organisation, developing planning and digitalising services, it is possible to make savings. The savings target for the healthcare and social welfare reform package is €3 billion by the year 2029. The projected annual growth in healthcare and social welfare costs has to be cut from 2.4% to 0.9% between 2019 and 2029. If the reform fails, it will leave many remote municipalities with the big challenge of balancing their budgets with limited means.
Moreover, the economic crisis has reduced the municipal tax base and increased unemployment and social security costs. The debt to GDP ratio has risen rapidly since 2008.
Finnish public finances have been running a deficit since the end of the last decade. The budgetary position is set to improve slowly in the years ahead, but still it threatens to remain in deficit. General government debt to GDP ratio has increased for several consecutive years, and there is no significant turnaround in sight. To achieve long-term sustainability in general government finances, the budgetary position would have to recover to show a surplus of around 2% of GDP by the end of the decade. The economic crisis has also had an impact on municipalities. High unemployment rates and structural unemployment have increased municipal expenditure and had an adverse effect on tax revenues. Central government has also cut its transfers to local government as part of the measures to strengthen central government finances. In addition to the economic crisis, the municipalities are burdened by the effects of the ageing population, which increases the demand for services. However, so far municipalities have been able to consolidate their finances and fulfil their tasks and services. The central government has also tried to limit the impact on municipalities by temporarily increasing local authorities’ share of corporate income tax. This temporary increase will
page 492 / 796 end in 2016, however. Furthermore, according to the current government programme, central government transfers to local government will not be cut further without enabling a similar cut in local government expenditures by reducing municipalities' duties and obligations.
With the upcoming regional reform, it is currently planned to introduce some legislative restrictions, especially on investments. This is mainly the result of municipalities’ current actions. They have generally kept their finances reasonably under control, but there have been some cases of excessive investments in the social and health care sectors (hospital projects). These restrictions are necessary to prevent legal measures which may undermine the whole basis of public finances.
On the whole, Finnish local authorities have shown good understanding of the effects of the economic crisis at state level, including the increased burden on the national debt. The municipal sector has also understood its important role in keeping local investments and the economy as a whole going. It has been able to invest a great deal in municipal infrastructure, roads, other transport networks and hospitals and some renovation of other buildings. Lower demand has allowed better investment deals to be negotiated in many cases and the price of loans has also been very reasonable. There have been some exceptions, but most investments have been controlled and cost- effective. In addition to controlling investments, the municipalities have taken a very cautious approach in recent years, aiming to exercise better control over their finances, with positive results in many cases. Because finances are tight, the State has made some cuts to state grants, but it has partly offset this by giving municipalities a temporarily larger share of corporate tax (increasing from 5 to 10% between 2009 and 2015).
The rapporteurs conclude that at present, Finland fully complies with Article 9 of the Charter. As in most countries, there are some concerns regarding the commensurability principle (paragraph 2 of Article 9) as additional tasks have been transferred to municipalities and complaints have been made about the lack of corresponding financial resources. However, it is obvious that considerable efforts have been made to introduce appropriate criteria and procedures to provide for financial resources that are commensurate with municipal responsibilities, and progress has been made in this respect. The Finnish authorities have also tried to deal with the problem of over-indebted municipalities, which was highlighted in the Congress’s previous monitoring report and in the related Recommendation. New rules and procedures have been introduced to tackle the problem of indebtedness. The current financial situation of Finnish municipalities appears satisfactory from the Charter standpoint. With respect to the SOTE-reform, the Finnish Government acknowledged during the consultation process that regions will be “free to set all sorts of charges and fees for services they provide, within the limits of legislation”. Moreover, it stated that regions will have “ free control to use resources and hire personnel to manage the services or resources”, that the state grants to the regions will not be calculated on a discretionary basis and that “there will be no earmarked transfers to regions”. Nevertheless, the ongoing regional reform has given rise to some concerns as, under government plans, the new autonomous regions will be denied tax-levying rights (at least during the initial stage of their existence) and this would unlikely satisfy the requirements of paragraphs 1 and 3 of Article 9, and of the Reference Framework for Local Democracy. Furthermore, the rapporteurs express their concerns with regard to the financial system for the new SOTE regions that may fail to be of a sufficiently diversified and buoyant nature, while state grants and financial transfers to the new regions would be mostly used for a limited number of specific services and projects, leaving a narrow margin of discretion to the regions’ elected councils. Insofar as the regional competences for funding would remain limited, this might contravene de facto paragraph 7 of Article 9 of the Charter.
France [Article ratified - Report adopted on 22 March 2016 ]
In France, the constitutional reform of the 28 March 2003 integrated important rules and principles in
page 493 / 796 Chapter XII of the Constitution that considerably strengthened the position of territorial communities in the French Republic.
The new constitutional norms have consolidated the status of local finance. There are also statements about the leading idea of a “pouvoir financier” local, which is the essence of the new Article 72-2 of the Constitution. This guiding principle allows territorial authorities to have enough financial resources so as to be sufficiently autonomous concerning their origin and their use.
As to the use of financial resources, even before the amendment of 2003, the Constitutional Council examined the question of the harmonisation of obligatory expenses provided by the law, with the constitutional principle of free administration. Such laws should have a general interest purpose which takes into account the own competence of collectivities.
The so-called principle of “own local fiscality” within the meaning of Article 72-2 paragraph 2 of the Constitution means the concrete capacity of the municipalities to receive taxes of which they can determine the base and the rate within the framework designed by the law. The imposition taxes remains an exclusive power of the state in France: According to Article 34 of the French constitution, the law determines the base, the rate and the collection modalities for taxes of all kinds” of taxation.
The French Constitution (Article 72-2) also enshrines the principle of a “determinant” level of “own resources”. The incorporation of this principle in the French Constitution after the amendment of 2003, was a response to previous negative developments concerning the ratio of own resources within total revenue of local government. In fact, since 1990, the ratio of own resources had constantly been suppressed while at the same time the portion of state grants grew constantly. While territorial collectivities could determine, within limits determined by law, the base and the ratio of their own taxes and could configure and mobilise these taxes according to their own priorities, they had little influence on state taxes and state grants. Between 1997 and 2002, the percentage of own resources in total revenue dropped from 58.2% to 54.7% for the municipal sector (municipalities and inter-municipal sector) from 58.3% to 52.2% for departments and from 57.8% to 36.5% for regions. The Constitutional Council had stated that the decrease of own resource should not reach the point where the principle of their free administration would be violated, however it did not go further and formulate operational criteria for assessment. Therefore, local politicians took advantage of the constitutional revision of 2003 and promoted the incorporation of the aforementioned principle of the “determinant” level of “own resources” in order to restrain tendencies of replacing own resources through state grants.
The organic law of the 29 July 2004 defined that the part of own resources within total revenue of territorial collectivities (sub-national governments) cannot be inferior to the corresponding level / percentage that was registered for 2003. The “ratio of financial autonomy” therefore has a reference of 60.8% for the municipal sector (municipalities and inter-municipal entities-EPCI), 58.6% for departments and 41.7% for regions. This rule meant no more than safeguarding the status-quo, nevertheless it caused serious difficulties to the legislator whenever new additional competences of territorial collectivities should be financed, just as it had during the functional reforms (transfer of competence to sub-national governments) in the period 2003-2004.
The national government is obliged by law to submit a special report each year to the Parliament about the evolution of this “ratio of fiscal autonomy”. If this minimum ratio of 2003is not maintained, the legislator should adopt appropriate measures, in the second year after this statement, at the latest (CGST, Article LO 1114-4). In reality, however, if the legislator restrains from taking measures necessary to restore the autonomy ration, there is no sanction, since possible violations of the Constitution by omission (failure to act), are not able to be checked under the French legal system. In practice however, the “ratio of fiscal autonomy” has been respected and even improved in recent
page 494 / 796 years (see tables on paragraph 226 of the report).
According to the figures presented in the tables, there is a constant improvement of the autonomy ratio for all 3 tiers of territorial collectivities in France. Municipalities and EPCI’s began with a ratio of 60.8% in 2003 that reached 65.5% in 2012. Departments improved even more, rising from 58.6% in 2003 up to 67.7% in 2012. Even the regions experienced remarkable progress, starting with a very low 41.7% ratio that reached 54.2% in 2012.
This picture, however, is not entirely accurate, owing to extensive interpretation of the notion of “own resources” in previous years. This was the case with the transfer to the departments of a part of the interior tax on petroleum products, as a type of compensation for the additional fiscal burden caused to departments through the social assistance competence. In reality, it was a form of endowment since the amount is attributed by the state to each department according to fixed local needs, which means that the department may not define the rate or the tax base. But the law considers taxes as “local” and part of “own resources” where the rate or/and the local part of the tax base is especially determined for each territorial collectivity because it can be “localised”, although the fiscal performance of this tax cannot be influenced in any way by the local authority itself.
The Constitutional Council has accepted this extensive interpretation of the notion of “own resources” for several years. More recently, in a case also concerning the contribution to added value of businesses which it considered as part of own resources, although the territorial collectivities cannot determine the rate, because the part of the tax base received by the respective collectivity is locally determined, it is defined by the territory where the business can be “localised” (considerations sub-paragraphs 60-65). The Constitutional Council further decided (in the same decision that also concerned the reform/abolition of the professional tax and replacement with new taxes) (see Chapter 3), that there is no fiscal autonomy for territorial collectivities in the French Constitution (sub-paragraph 64). The judges stated that this reform did not violate the principle of "financial autonomy" of communities, according to the rule introduced in the constitutional amendment of 2003 because it did not violate the autonomy ratio of that year (see supra). The Constitutional Council has noted that the substitution of resources guaranteed by the state in the year 2010, in the form of additional allocations or new taxes remain "above the 2003 reference year". In this decision, however, the Council did not rule on the question of a possible violation of the Constitution (Article. 72-2) when territorial communities are increasingly becoming financially dependent on the state.
The French Constitution also addresses the question of financial equalisation (Article 72-2). In France equalisation is defined as a redistribution mechanism for the purpose of reducing inequalities in financial resources between rich and poor territorial collectivities. Legally, this is seen as a conciliation between the principle of liberty and the principle of solidarity and it is not considered to be a subjective right of each collectivity that could give rise to lawsuits and constitutional complaints. In fact the French equalisation system has, in the first place, a horizontal component through the respective funds (fonds) that exist for the municipal sector (“fonds national des recettes fiscales intercommunales et communales”, since 2010), and the departments (“fonds national de perequation des droits de mutation à titre onéreux”, since 2011). It is also worth mentioning the special fund for the Ile-de-France region, where extreme inequalities prevail, created in 1991 (“Fonds de solidarite entre les communes de la region Ile-de-France” – FSRIF). Secondly, there is also a vertical component of the equalisation system, through the distribution of state grants, especially through the most important one, the DGF (“Dotation globale de fonctionnement”). There are also the “Fonds national de perequation des recettes de cotisation sur la valeur ajoutee des enterprises” (CVAE), the “Dotation de solidarite urbaine” (DSU, for “urban solidarity”) and the “Fonds nationaux de garantie individuelle des resources” (FNGIR) that, since 2011, aims to compensate for losses of fiscal resources. Finally, equalisation measures are often provided on an ad hoc basis when
page 495 / 796 competence is transferred (“dispositifs punctuels”), under the respective provision of the French Constitution (Article 72-2). The fact that vertical mechanisms are the most important for equalisation in France, means that equalisation is particularly sensitive to switches and variations of the state budget, while it currently reflects the decrease of state grants.
An institution that is particularly important is the Committee of Local Finance (“Comité des finances locales”- CFL) which was established by law in 1979 with the mission to defend the financial interest of local collectivities and to harmonise their position with that of the state. The composition of the CFL is defined by Article L. 1211-2 CGCT (“code général des collectivités territoriales”) and it comprises 32 incumbent elected members (representatives of parliamentary assemblies and elected representatives of regions, departments and municipalities or EPCI’s) and 11 incumbent representatives of the state whose list is defined by decree. Among the different tiers of territorial collectivities, it appears that the municipal sector has the strongest influence in the CFL, as different interlocutors from local government associations, the Cour des Comptes and the Ministry of Finance stated to the rapporteurs during the monitoring visit.
CFL meetings take place four to five times per year. According to Article L. 1211-3 (CGCT), the Committee controls the distribution of the DGF (the main state grant). The government may also request consultation on every legal measure of financial character affecting the local authorities. This consultation is obligatory when it comes to the issue of decrees. The Committee also has the mission to provide to the government and the parliament with every necessary analysis for the elaboration of projects concerning local finances. The CFL made an important contribution to the elaboration of equalisation mechanisms. The Decree no 2008-994 of 22 September 2008 established a special consultative committee within the CFL for the evaluation of norms (“commission consultative d'évaluation des norms”) with 22 members having the - very important – duty to assess the financial impact of new norms or techniques, whether of national or local/regional origin. The very existence of the CFL means that, in principle, the standards set by Article 9 paragraph 6 of the Charter, are met in the case of France.
In view of the aforementioned characteristics of the financial status of local and regional authorities in France, the rapporteurs consider, concerning Article 9 paragraph 1 of the Charter, that French “territorial collectivities” do indeed have the ability to set spending priorities, although a large part of their spending is pre-defined through tasks and responsibilities to be fulfilled according to the law, particularly in the field of social policies (and more especially the departments).
Further the Charter provides for “adequate own resources (Article 9 paragraph 1) and that a “part at least of the financial resources” should “derive from local taxes and charges” (Article 9 paragraph 3). According to the Charter, local authorities should also (but “within the limits of statute”) have the power to “determine the rate” (Article 9 paragraph 3) of these local taxes and charges. It is clear, that the “financial autonomy ratio” (with the year 2003 as a fixed minimum) of the French law (see above) is certainly a positive framework in order to ensure that this part of “own resources” remains important and prioritisation of revenue through local political decisions on local taxation remains, therefore, possible. Extensive interpretation of the notion of “own resources” (see above) gives reason for scepticism, since the tax rate is sometimes defined by national decision but the corresponding revenue is considered to be “own revenue” because this rate is defined separately for each collectivity (is “localised”). In such cases, it should be made clear that this “extensive interpretation” is not compatible with the provisions of Article 9 paragraphs 1 and 3 and the logic of the Charter about own financial resources and local power to determine the rate of local taxes in order to achieve accountability for weighting the benefit of services against the cost to the taxpayer. During the meetings held by the rapporteurs in France it was unfortunately, clear to the delegation that the prevailing tendency is to recentralise decision-making on tax rates and bases.
page 496 / 796 French territorial collectivities have received a number of new additional responsibilities. During the meetings of the rapporteurs with representatives of local government associations and single local governments, many interlocutors complained that their financial resources are not commensurate with new additional responsibilities delegated to local government (especially to departments). An important shortcoming is that the cost of the respective services is estimated at the moment of competence transfer and the dynamic character of cost development in time is not sufficiently taken into consideration, although the French Constitution also incorporates the principle of commensurate resources. This problem that is emerging in many countries experiencing decentralisation reforms and functional re-scaling but where the provisions of Article 9 paragraph 2 of the Charter are not accordingly respected. A possible solution for France may be to further enhance the role of the Committee for Local Finance (CLF), where know-how about cost burdens of different tasks exists and can further be developed, possibly through the commission consultative d'évaluation des norms (see above).
The Congress information report in 2000 raised the issue of consolidation of territorial authorities’ financial resources from taxation. Up to now, little progress has been made and financial resources derive from a wide variety of different taxes and contributions. One could claim that this variety meets the provision of the Charter (Article 9 paragraph 4) for “sufficiently diversified” resources that can “keep pace as far as practically possible with the real cost of carrying out their tasks”. In fact, however, the large number of different taxes (especially the many dozens of “small” taxes) is creating a “fiscal illusion” for citizens (where it is not clear who is paying for what service) and frustrates accountability, while it drastically increases managing costs. The Ministry of Finance is willing to simplify and consolidate this fragmented structure of financial resources, as was said during the visit of the rapporteurs.
Allocation of redistributed resources to local authorities should be made after consultation with them according to Article 9 paragraph 6 of the Charter). In France, the institution of the CLF (Committee of Local Finance) seems to fulfill this requirement of the Charter. It should be noted, however, that the financial equalisation schemes adopted in France (see supra) could be further elaborated and sophisticated. Up to now, these equalisation schemes are mainly vertical or competence-oriented, thus depending on the overall financial situation of the state and fiscal priorities of central government. Horizontal equalisation acts within each tier of territorial governance (municipal sector, departments, regions) and does not cross-cut different tiers, which would however be strongly recommended, since there are major inequalities between municipalities within the same department and/or region. Representatives of the Cour des Comptes, made clear that such an equalisation cross-cutting different tiers would be welcome as well as mobilisation of the global DGF for equalisation. It should be noted that the Ministry of Finance is also preparing the reform of DGF).
Georgia [Article ratified - Report adopted on 7 November 2018 ]
According to the legislation, local government revenue includes own receipts and transferred funds. Own receipts include local taxes and duties, an equalisation grant and other revenues provided to the local self-governing unit. The transferred funds include capital transfers, special transfers and targeted transfers, loans and the grants obtained according to the Law of Georgia on Grants. The legislation provides the right of self-governing units within their powers, to use their own receipts at their discretion.
There has been an increase in municipalities’ budgetary revenues since 2013, which is a positive development.
However, a large part of these revenues continues to come from the central authorities by means of transfers. Between 2013 and 2017, the share of grants received from the central budget made up
page 497 / 796 49.7-47.7% of total revenues. Today, the main legal debate concerns the Budget Code of Georgia. Since 2016, the Government of Georgia has begun the decentralisation of property income tax (PIT). At the initial stage of the reform, the PIT paid by individual entrepreneurs was assigned to local budgets. Moreover, according to a new reform strategy announced in March 2018 by the prime minister and the speaker of the parliament, local budgets should amount to at least 7% of gross domestic product (GDP) (considered to be a minimum threshold based on practice in other European countries) before the end of the upcoming reform period 2018-25. According to local interlocutors, this strategy requires changes to the Budget Code of Georgia and to sectoral legislation.
In 2017, municipalities received total tax revenues amounting to GEL 559.5 million, which is GEL 269 million more than in 2015. The increase was caused by amendments made to the Georgian Budgetary Code. In particular, since 1 January 2016, the following taxes provide revenue for the budgets of local authorities: income tax paid by private individual entrepreneurs; income tax paid by non-residents (income from property sales); income tax paid by natural persons on the surplus from the sale of material assets; income tax payable by natural persons on gifted property; income tax paid by natural persons on inherited property; and income tax paid by natural persons on rented property. Municipalities’ revenues from the various types of income tax described above amounted to GEL 245.4 million in 2016 and decreased to GEL 162.3 million in 2017. Because revenue from these taxes was passed on to municipalities, local authorities have received smaller equalisation transfers from the State central budget as a result. In 2015, equalisation transfers from the central State budget amounted to GEL 834.6 million, while this figure decreased by GEL 234.9 million in 2016 and by GEL 179.5 million in 2017.
Among the existing tax revenues of municipalities, property tax has played an important role as it has brought increased revenue for local budgets. The amount of property tax revenues amounted to GEL 397.2 million in 2017, which is GEL 33.8 million more than in 2016 and GEL 107.6 million more than in 2015. Besides this growing trend, there is room for increasing tax revenues even further. There are, however, significant obstacles that would first have to be removed, such as existing tax privileges for certain categories (for example, owners of agricultural land who owned their land prior to 2015 and natural persons whose income is less than GEL 40 000 per year are exempt from paying property tax) and other problematic regulations (for example, the value of real estate on which property tax is paid is determined by the taxpayers themselves, while local authorities are given no information on property and income taxes paid by legal entities and natural persons).
As for non-tax revenues (consisting primarily of property-related income and fees), their share in the revenues of local authorities’ budgets is considerable: 17% in 2015, 15% in 2016 and 19% in 2017. It has to be pointed out, however, that in the case of community municipalities, both tax revenues and non-tax revenues are meagre; only large towns achieve a meaningful level of revenues.
Fiscal decentralisation remains one of the most important concerns in relation to the local self- governance system in Georgia. The ratio between the revenues of municipalities and those of the State decreased between 2015 and 2017: from 23.4% in 2015, to 22% in 2016 and 20.1% in 2017. The share of municipal budget revenues (except for Tbilisi) in relation to Georgia’s GDP is still low, amounting to 3.16% in 2015, 3.21% in 2016 and 3.06% in 2017.
Municipal property (Article 104 of the Code) also constitutes an important asset for the financial autonomy of municipalities. According to the National Agency of State Property, 1 335 real estate objects were transferred into the ownership of municipalities in 2016 and 1 038 in 2017. In general, proper evaluation of property transferred to local self-governments presents a significant difficulty because its market value is not being established. The ministry of economy and sustainable development does not have this information, even though it is directly responsible for the process of transferring property to local authorities. Moreover, central authorities have not yet fully
page 498 / 796 implemented the decentralisation of land, water, forest and natural resources, although according to Article 107 of the Code, such property existing in the territory of a municipality shall be assigned to the municipality. Until now, the central authorities have not managed to fulfil their obligation under Article 165 of the Code of Local Self-Government to develop, by 1 January 2016, a bill defining local natural resources, including water and land.
Municipal expenditure amounted to a total of GEL 1 813 million in 2017, which is GEL 24 million less than in 2016 and GEL 66 million less than in 2015. In recent years (including in 2017), municipal expenditure mostly related to the areas of economic activity (23%), housing and utilities (19%), education (14%) and other general services.
“State services of general purpose” includes administrative costs and costs for the maintenance and operation of self-governing bodies; the total cost amounted to GEL 245.9 million in 2017, which is GEL 23 million less than in the previous year and only GEL 4.3 million less than in 2015. It should be pointed out that this figure is relatively high in small municipalities.
The budgetary system in Georgia is based on the principle of independence. Municipalities enjoy independence in formulating their budgets and in redistributing and allocating resources. According to Georgia’s Budgetary Code, local authorities should have been drawing up their budgets using the “programme budgeting” format since 2012. Budget performance is managed through electronic public finance management systems. All accounts relating to the municipalities’ budgets appear in the State treasury system of accounts, and central government has real-time information on the status of local authorities’ budgets. Procurements are also managed through a centralised e- procurement system.
However, information on objectives, tasks and expected outcome indicators are still not clearly defined or are simply missing from municipal budgets, although these data should serve as a basis for local self-governments to make decisions on how to distribute their financial resources. According to critical comments made during the monitoring visit, this situation also creates problems for financial reporting and transparency and discourages citizen involvement in the budgeting process.
Concerning compliance with Article 9, paragraph 1, there is no doubt that impressive progress has been made in recent years. A system of local revenue has been developed and municipalities can freely dispose of the biggest part of this revenue. Georgia therefore complies with Article 9, paragraph 1, of the Charter; however, the rapporteurs encourage the Georgian authorities to move forward with further financial decentralisation.
Germany [Article ratified - Report adopted on 14 March 2012 ]
As a longstanding effect of the world economic and financial crisis, it is usual nowadays almost in every member state that financing is the most crucial part of the local government system. And so it is in Germany too. During the visit, the current system of local finance was heavily criticized by some mayors and councillors. As one of them claimed, the existing system undermines the financial stability of municipalities. Some of them held that the current tendencies in local government finance are unsustainable.
The Congress delegation has become aware of the danger the indebtedness of a number of municipalities represents. Although the total deficit of the whole local government sector has been below of that of the other levels of government, it seems vital to stop the trend towards debt accumulation. The world economic and financial crisis contributed naturally to this process, narrowing not only the local tax revenue base, but also reducing the capital resources of local authorities. The social cost of the economic depression has also increased the financial burdens of
page 499 / 796 local governments, as the rising costs of unemployment and social services have burdened local budgets. Although these problems, because of the significant regional disparities, have affected local authorities in different ways, a growing number of municipalities are now in a serious fiscal situation.
The 1999 report of the Congress had taken note of similar problems and difficulties. It might therefore be interesting to see what kinds of recommendations were adopted on the basis of that report and how those proposals were followed and implemented.
In relation to Article 9 para. 1 of the Charter, the Congress recommended that the federal authorities consider reforming local taxation with two aims: firstly, to restore strong local taxation in application of Article 28 (2) of the Constitution, particularly bolstering those local taxes the rate of which can still be set by local authorities, and, secondly, to revise the arrangements for the transfer of resources for compulsory spending linked to the implementation of federal and Land legislation. In addition, the Congress encouraged an extended financial contribution from the federal government to strengthen local finances. It was suggested to examine the possibility of introducing the principle of concomitance at federal level, as well as a mechanism to evaluate the actual costs incurred through implementation of federal legislation at local level. The German authorities were invited to consider the possibility of federal financial participation in those welfare services which require nation-wide harmonisation, with local authorities and the Länder taking responsibility only for supplementary local or regional services.
As to the reform of local taxation, the German authorities chose another way to strengthen the financial capacity of local governments, through two reforms of federal−Land relations, in 2006 and 2009. These changes did not establish new local taxes in a strict sense, the rate of which the local councils could decide themselves. Rather, the major direction of these measures was to stabilise or raise the share of local authorities in tax revenues, imposed both at federal or Land levels. In fact, this progress is not in contrast with the particular Congress recommendation, since in the case of business and land taxes, local authorities have, within the limits set by federal law, the power to set the rate of the tax (Hebesatzrecht). Similarly, the direct role of the Federation in local government finance has not been strengthened; to the contrary, it has been weakened. As we saw above, the Federation is no longer empowered to transfer mandatory tasks directly to local authorities or to finance them, since the constitutional amendment of 2006.
The Congress also recommended the setting-up of an Institutional Committee which brings together the representatives of the Bundestag and the Bundesrat and the representatives of municipalities, towns and Landkreise to review local authorities’ financial situation, to propose new ways of improving it and to assess the situation on a permanent basis. An additional proposal was that the Committee examine the possibility of the introduction of the principle of concomitance at federal level as well as a mechanism for the evaluation of the actual costs incurred through implementation of federal legislation at local level.
In line with the former recommendation, in 2010, the federal government set up the Municipality Finance Commission to elaborate proposals to restructure local government finance. The Commission was composed of the representatives of the federal and Land governments and of the national local government associations. The key areas of the Commission’s activity were the rationalisation of the tasks and powers of local authorities, reconsideration of the relevant “standards”, the review of the role and position of local government interests in the legislative process, and the replacement of the business tax in local budgets. While the Commission was able to make proposals in the first two issues, no agreement had been reached on business tax revenues when it ended its work in June 2011.
The proposal to abolish the business tax was initiated by the federal government. The major
page 500 / 796 argument for this idea was the need to provide incentives for the economy in order to promote economic recovery. Moreover, the business tax revenue was said to be too susceptible to short-term economic trends, which, during an economic recession, might endanger the financial balance of local authorities. The Congress delegation found that, in contrast to the leading representatives of the Federation, all local politicians and officials the rapporteurs met with during the visit rejected the federal government plan to abolish the business tax. They argued that any other proposed tax would yield less revenue for municipalities than the business tax, and would shift the burden from the economic sector to the local citizens. Business tax is an important link between the municipalities and local enterprises, providing means and instruments for local authorities to encourage local investments. This means that until 2014, which is during the current mandate of the federal parliament, no change should be expected in this field.
The Congress recommendation relating to the recognition of the principle of concomitant financing of transferred tasks has not been followed; the opposite has prevailed. Since the federal reform of 2006, the federal government has not been allowed to confer tasks directly on local authorities. Nevertheless, the principle of adequacy in local government finance is one of the guidelines of the financial equalisation in the whole country.
In relation to Article 9 para. 2, it was recommended that all Länder introduce in their constitutions provisions relating to the principle of concomitance, which was entrenched in only some Land constitutions. The expectation was that provisions for compensation which is “corresponding” or “appropriate” to the new tasks delegated to local authorities would be made explicit. At the same time, the Congress emphasised that the introduction of the principle of concomitance should not lead to a decrease in financial equalisation transfers to weaker municipalities.
This recommendation has been fully accepted and implemented, as the principle of concomitant financing for covering costs of tasks delegated by Land governments to local authorities. The relevant Land constitutions now guarantee local governments to obtain adequate financial means “at the same time” or “without delay” with the delegation of the tasks and functions. Nevertheless, the practice of the implementation of this principle was criticised by some interlocutors the delegation met, who claimed that, despite this constitutional guarantee, “additional statutory tasks are consistently transferred to municipalities without sufficient financing”. Recent examples of this shortcoming is the financing of the maintenance of kindergartens for children under the age of three, or the North Rhine Westphalia Land government’s project to provide “social tickets” for public transport to people in need, where the continuation of the programme is financially uncertain. The rapporteurs are of the opinion that while the concommittance principle has really been transplanted into Land constitutions, as recommended by the Congress in 1999, further guarantees to ensure the effective implementation of the principle – apart from some sporadic statutory regulations in some Länder − have not been established by the Länder. Under such circumstances, there is a risk for this achievement to become a dead letter without any real effect to secure the financial balance of local authorities. Thus, the principle cannot prevent the central government from transferring national financial burdens to local authorities.
With reference to Article 9 para. 3, the Congress recommended that federal and Land authorities consolidate the financial independence of local authorities and proposed some particular ways to do so: Firstly, to avoid any infringements of municipalities’ right to set the rates of their own taxes, especially in the context of the proposed reform of business tax, which might be replaced by proportions of VAT. Secondly, to restore minor local excise taxes, where they were greatly reduced in number. Then, to introduce, as allowed under Article 106 (5) of the federal Constitution, the provision that local authorities may take a higher proportion of income tax, and, finally, to amend the federal Constitution to make it possible for a local tax for the benefit of Landkreise to be introduced, so as to remove the relevant reservation expressed by Germany at the time of the
page 501 / 796 ratification in relation to Article 9 para. 3 of the Charter.
All these recommendations were set to strengthen local governments’ financial capacity and autonomy. The redistribution of tax revenues between the levels of government has only slightly changed in the recent years.
According to the Charter, local resources must be sufficiently diversified to enable local authorities to keep pace (as far as practically possible) with the real evolution of the cost of carrying out their tasks. The self-evident intention of this principle is not only to enable local authorities to cover the rising costs of public service delivery, but also to secure some room to manoeuvre for them. Needless to say that the world economic and financial crisis beginning in 2008 has affected the financial strength of local authorities in a negative way. It was one of the reasons for setting up a committee for preparing proposals on the restructuring of local government finance with the participation of the federal government and all interested parties.
As to Article 9 para. 6, Recommendation 64 proposed that the Länder, which pursue the policy of special funds in excessive numbers, convert at least some of these into general investment grants for local authorities. This recommendation has not been followed; the total share of general (block) grants has not changed significantly. Conversely, an opposite trend has more chance to prevail, because nowadays Länder governments seem to be more willing to provide additional resources as special or subject-specific grants for municipalities.
In relation to Article 9 para. 8 of the Charter, Recommendation 64 suggested that the federal authorities and the Länder ease borrowing limits, especially at the time when numerous German local authorities were facing a local financing crisis. Paradoxically, as the overall financial situation has worsened in recent years, the significance of curtailing and limiting borrowing and establishing a debt ceiling (Schuldenbremse) in order to break and reduce indebtedness, has grown. The emergence of debt management funds in some Länder can provide effective financial assistance for local authorities, and is a step in the right direction in so far as it does not endanger the ultimate financial autonomy of the local authorities.
Greece [Article ratified - Report adopted on 26 March 2015 ]
The legal authority to perform certain functions is meaningless if local authorities are deprived of the financial resources to carry them out. The financial resources of local authorities are a sensitive topic and an important source of controversy in many countries, but this issue is especially delicate in Greece.
It was already addressed by Recommendation 247 (2008), according to which “the financing of the municipalities and communities remains most inadequate; it is based almost exclusively on transfers from the state”. It was recommended that the Greek authorities responsible for local and regional self-government: “c. guide the evolution of the financial system towards more extensive diversification of sources of local government revenue, as directed in Article 9, paragraph 4 of the charter, by developing the foundations of greater financial autonomy through levying of local revenue (dues and charges, borrowings and direct taxation); d. reinforce the system of local financing, in accordance with Article 9 (paragraphs 1 and 2) of the Charter, in the framework of devolution and transfer of powers to local authorities, looking to a larger proportion of local govern- ment funding in the GDP (gross domestic product) and in overall public spending”.
Local government revenues and expenditures are very low in Greece, as a percentage of GDP. The taxation autonomy of both tiers remains limited. Their total share of public expenditure is one of the lowest in Europe. More specifically, the two tiers of local government expenditure amounted to 2.8%
page 502 / 796 of GDP in 2011 and 5.6% of total public expenditure. Local government revenue reached 2.6% of GDP and 5.6% of total public sector revenue in 2011.
The already existing difficulties increased in the recent years. From one hand, Kallikratis reform improved the competences of local authorities that subsequently would need more financial resources; from the other hand, the unprecedented financial crisis and the related Memoranda of Understanding imposed severe austerity measures and important budgetary cuts throughout the public sector.
The economic crisis had very heavy repercussions on the situation of local government in Greece. Rapporteurs were told that local and regional authorities have to “offer much more with much less”. General grants (CAF) decreased no less than 60% within 5 years. At the same time, municipalities faced increased claims for childcare, elderly care and especially for social assistance to jobless and poor people. Many municipalities proved to be very innovative, initiating “time banks” (service offers in exchange for other services), “social supermarkets”, “social drugstores” etc. At the same time, there were obvious efforts of the State and especially of the Ministry of Finance to control and coordinate financial management in municipalities, as showed above (sub art. 8).
In the written answer to the rapporteurs’ questions, the Ministry of Finance pointed out that the local government balance has improved significantly in recent years. This improvement is illustrated in fiscal outturn figures published by the ELSTAT. The high surpluses should be considered sustainable as also projected in the Medium Term Fiscal Strategy (MTFS) 2015-2018. It pointed out that due to the economic adjustment program, several measures were taken place in order to improve the financial situation of local authorities. Some of the measures aimed at improving own revenue such as increase in local tax compliance through the introduction of local tax clearance certificate requirement and increase other revenue due to economies of scale and better organization of collection mechanism while others targeted at the rationalization of expenses (e.g. introduction of electronic public procurement system, reduction in the cost of land expropriations, reduction in the number of fixed term contracts, cuts in public sector seasonal bonus, reduction in the number of advisors' positions of elected officials, flat rate for Chairmen and Managing Directors of Municipal Enterprises etc).
Moreover, despite the austerity measures which resulted in the reduction of Central Autonomous Funds (CAF), local authorities managed to successfully implement the aforementioned interventions and, therefore, contribute to the financial effort of the country mainly through the maintenance of own revenue (fees and royalties, income taxes, other fees and services, etc.) to high levels despite the economic recession and further rationalisation of operating costs. It should be noted that a key factor in achieving a positive balance for 2013 was the financing from the state budget to pay off outstanding obligations from the special appropriation of arrears clearance program.
The MTFS 2015-2018 points out that “The financial result improved in 2013 compared to 2012 and the most significant reasons are the maintenance of their own revenues at high levels despite the economic downturn, and the further rationalisation of their operating costs, which were decreased by approximately 12% compared to 2012. A crucial factor in achieving a positive balance in 2013 was the funding (about 933 million € cumulatively for 2012-2013) from the special allocation, of the State budget, to clear pre 2011 arrears”.
Notwithstanding, the rapporteurs cannot consider art. 9, para. 1 of the Charter respected in Greece: presently, local authorities do not dispose of “adequate financial resources of their own, of which they may dispose freely”. In practice, decision-making and especially implementation of policies often depend on resources controlled by the State and not by local authorities.
page 503 / 796 As for Article 9, para. 2 of the Charter, the principle of commensurability (according to which there should be an adequate relationship between the financial resources available to a local authority and the tasks it performs) has been violated since several additional responsibilities have been transferred to municipalities without the corresponding resources, as highest administrative court already acknowledged in more cases.
Paragraph 3 of Article 9 of the Charter requires that a proportion of local revenues should come from local taxes, and local governments must be able to determine the rate applicable. Paragraph 4 establishes the principle of diversification of financial resources of local authorities, while paragraph 5 establishes the principle of financial equalisation. Paragraph 6 provides for the necessity of proper consultation, paragraph 7 limits the special grants to local authorities and paragraph 8 disposes the access to the national capital market for local authorities.
On those issues, rapporteurs point out that, according to the data provided by the written answer of the Ministry of Finance, (quoting the fiscal outturn figures published by the ELSTAT for 2013), local government revenues’ structure is as follows: Grants from Ordinary Budget : 45% of total revenues Grants from Program Investment Budget: 11% of total revenues Other Revenues: 34% of total revenues (of which (a) revenues from reciprocal duties and rights: 15%, (b) tax revenues, duties, rights & services 7%, (c) other own revenues 6%, (d) revenues related to previous years 6%) Revenues collected on behalf of third parties : 10% of total revenues
The Local Government expenditure structure is described below: Personnel Remuneration: 25% of total expenditures Welfare benefits: 12% of total expenditures Interest Expenditure: 1% of total expenditures Program Investment Budget Expenditures: 17% of total expenditures Other Expenditures: 33% of total expenditures (of which (a) Payments related to previous years: 5%, (b) Transfers to third parties 10%, (c) Other operating expenditure 18% ) Expenditures on behalf of third parties:12% of total expenditures.
As described before, local authorities’ other revenues (e.g. excluding grants from State Budget & PIB) which represent approximately the 34% of total revenues are divided in 4 main categories: a. Revenues from reciprocal duties and rights: 47% of own revenues in 2013 b. Tax revenues, duties, rights & services: 22% of own revenues in 2013 c. Other own revenues: 13% of own revenues in 2013 d. Revenues related to previous years: 18% of own revenues in 2013 It must be noted that the share of the first three categories (a+b+c) is higher if we take into account amounts that refer to taxes, duties, rights, etc. but are related to previous years and are depicted in the fourth category.
Regarding the ability of Local Authorities to independently determine the burden of local taxes, the Ministry of Finance pointed out the following: Reciprocal duties are determined according to the cost of the offered service. The amount is approved by the City Council and the Secretary General of the Deconcentrated Administration The burden of other local taxes is provided by law and is not at the discretion of each Local Authority to alter.
Finally, the Ministry of Finance determines the total amount of statutory funds (Central Autonomous Funds (CAF)) as well as special grants given to Local Authorities taking into account the performance of specific taxes (e.g. VAT, CIT, ENFIA) and specific needs and events (e.g. economic recession, growing number of responsibilities). The redistribution and allocation of the aforementioned amounts are Ministry of Interior’s responsibility and are decided based on quantitative and qualitative criteria such as population, unemployment, growth, etc.
Other information on local financial resources has been provided, from a completely different point of view, by the Greek Ombudsman. According to Greek Ombudsman’s data the most common complaints concerning to the department of State-citizens relations and related to the first tier of
page 504 / 796 local administration are the financial problems arising from the imposition of the local taxation. In addition the inefficient tax collecting affects the economic self-sufficiency of local government and their ability to fulfil their contractual or other obligations.
According to its experience the Ombudsman has come to the conclusion that local authorities are not sufficiently prepared to impose local taxation or, to be more specific, unable to implement the complex and -in many cases- outdated legislation.
Another serious problem is the inability of local government authorities to honour their financial obligations. The citizens often submit complaints because municipal authorities do not recognize their predecessors’ debts. Generally, local authorities refuse to fulfil their economic obligations arising either from the conditions of contracts or the rules of the relevant laws. Payment on time of the compensation for the expropriation of private property for urban planning processes is rare and many citizens ask for the Greek Ombudsman’s mediation.
Against this background, rapporteurs are fully aware of the unprecedented financial crisis and of the international constraints Greek authorities have to comply with. As important actors of the country, local authorities need to contribute to the consolidation process.
Nevertheless, rapporteurs believe that the economic and financial emergency cannot determine a suspension of the binding nature of the Charter. Thus, they should reaffirm, taking into consideration Recommendation 247 (2008), that the financing of the local authorities remains inadequate, as is based almost exclusively on transfers from the State.
The evolution of the financial system towards more extensive diversification of sources of local government revenue, as directed in Article 9, para. 4 of the Charter, by developing the foundations of greater financial autonomy through levying of local revenue (dues and charges, borrowings and direct taxation) is still missing.
The need to reinforce the system of local financing, in accordance with Article 9 (paragraphs 1 and 2) of the Charter, in the framework of devolution and transfer of powers to local authorities, looking to a larger proportion of local government funding in the GDP (gross domestic product) and in overall public spending is still current.
The rapporteurs believe that a real local democracy needs strong local and regional government disposing of more own resources and discretion to decide upon them. During the monitoring visit, rapporteurs found a vast consensus on the possibility that revenue from real estate taxation would be transferred to municipalities and regions, which would thus become less dependent on State grants, improving the level of tax collection and increasing their accountability to the citizens. Thus, rapporteurs invite the Greek authorities to seriously consider this possibility, already in place in many countries of the Council of Europe having a long and well-rooted history of strong and effective local self-government.
Hungary [Article ratified - Report adopted on 12 February 2021 ]
According to Article 9, paragraph 1 of the Charter, local authorities should have adequate financial resources of their own, of which they may dispose freely within the framework of their powers. Financial autonomy is an essential component of the principle of local self-government and an important condition for the exercise of a wide range of responsibilities in the field of local public affairs. These elements are cumulative and not alternative, which means that all the conditions laid down in Article 9, paragraph 1 of the Charter are mandatory.
page 505 / 796 In Hungary, local authorities manage a small part of financial resources, which account for up to 15.1% of public expenditures. Their revenues correspond to 10% of the GDP (2.3% of the tax revenues, 6.7% of grants and subsidies; 1% of other revenues).81 The true question, however, is whether they are allowed to dispose freely of those resources and whether these are proportional to the level of local responsibilities.
It should also be mentioned that according to the OECD82 in 2016 only 27.3% of total public investment was carried out by subnational governments in Hungary, compared to an OECD average of 56.9%. The share of public investment carried out by subnational governments in Hungary is among the lowest among OECD countries. The issue was already raised in the 2013 monitoring report. Recommendation 341 (2013) asked the Hungarian government to “grant local authorities financial autonomy to enable them to exercise their powers properly, in particular by adjusting the level of grants allocated by the central government to local authorities so that their resources remain commensurate with their powers”.
Although the local finances improved as a consequence of the consolidation of the debts (operation which reduced the debt of the local authorities from 1 344 billion of HUF to 100 billion of HUF), the transfer of competencies from the subnational to the national level has gone hand in hand with an even stronger reduction in subnational governments’ revenue sources. As a result, the latter have fewer resources for the remaining tasks than before.83 In addition, rapporteurs were informed that most small municipalities have to apply annually to the central government for covering their operating costs or getting some capital revenue.
Special attention deserves the so-called ‘solidarity contribution’, introduced in 2017.84 This contribution is a new payment obligation on the municipalities with large local taxes incomes. The Act specifically exempted the capital city of Budapest from this obligation. The additional government revenue for the year 2017 was of HUF 21.3 billion. The contribution had a strong impact on the finances of the municipalities with important local taxes incomes. For example, the municipality of Budaörs, a small city situated next to Budapest, with a population of 30,000, had to pay a solidarity contribution of HUF 2.1 billion in 2017.
During the monitoring visit, the delegation was informed that the introduction of the solidarity contribution has resulted in a position whereby the State does not contribute to mandatory duties that are conducted by the richer municipalities, indeed, it deducts an important proportion of local own revenues.
In light of the preceding considerations, the requirements of Article 9.1 of the Charter are not complied with in Hungary.
Iceland [Article ratified - Report adopted on 29 March 2017 ]
During the visit, two main points of concern emerged, related to the fulfilment of Article 9, para. 1 and 2 of the Charter.
Those concerns are not related to the financial crisis that hit the country (local authorities included) in 2008: by now, the crisis is completely over and Iceland is experiencing not only a recovery, but also a brisk economic growth. Recommendation 283(2010) lett. g) invited the Icelandic authorities to “set up a support fund for local authorities particularly hard hit by the crisis so that they are able to continue delivering certain public social services”. According to the Association of Local Authorities, this recommendation is “no longer relevant in the current situation”, although there are still some municipalities that are facing serious problems (Reykjanesbær).
page 506 / 796 As for Article 9, para. 1, local authorities dispose freely of their financial resources, within the framework of their powers, as stated in Article 78, para. 2 of the Constitution, according to which “The income sources of the municipalities, and the right of the municipalities to decide whether and how to use their sources of income, shall be regulated by law”. Nevertheless, as the resources they dispose of are limited, some local authorities are unable to do anything except what is stated in the law. This could be a threat to the self-governing capacity, since if the local authorities can only do what is stated by the law then their role is de facto akin to that of a service delivery agency for the central government.
Ireland [Article ratified - Report adopted on 31 October 2013 ]
In the rapporteurs’ opinion, it is difficult to claim that these provisions are fully respected. The system of calculating real costs for all “own” and “delegated” local government functions are not operational and the disputes concerning the appropriate or non-appropriate level of funding are not evidence-based. Rather surprisingly, local governments and their associations do not regularly complain against possible underfunding and limited financial management discretion.
The revenues of local governments significantly decreased during the period of the economic crisis after 2008. Apparently, for the time being, these cuts have not had a dramatic impact on the quality of local public services, although several local governments claim that their financial situation is not sustainable from a medium or longer term perspective.
The DECLG’s point of view concerning the relation between responsibilities and resources of local governments is that, by adopting an appropriate budget to meet identified needs, local authorities have a good level of ability to provide themselves with the financial resources that they need to discharge their functions.
Several local authorities are currently in a very difficult financial situation. Some sources of revenue have effectively disappeared such as development levies; central government grants have been cut, and local authorities have been told to freeze local rates on commercial properties. The impression the rapporteurs had during the visit is that public sector savings are not proportional between central and local level, with heavier impact locally. The Government, in their written replies to the rapporteurs, maintained another point of view, according to which local authorities have had an adequate level of funding in 2012 to provide a reasonable level of local services to their communities.
The public finance system in Ireland cannot be said to constitute a sufficiently diversified and buoyant system, keeping pace with the evolution of local tasks. Local governments manage one local tax, commercial rates and can collect fees for local services. Especially smaller and economically weaker municipalities are too dependent on central grants.
The new property tax to be introduced is slightly changing the situation in local finance. Because it is expected that local governments will have the right to modify the rates within a given interval, this tax is expected to establish a better link between local revenue and expenditure (although the tax will be centrally administered). The Government’s plan is to return 80 % of the revenues back to the local authorities where the tax was collected and use only 20 % of revenues for equalisation purposes. On the other hand, this tax will not mean extra revenues for local governments – this is almost impossible given the current economic situation in Ireland.
Local financial managers indicated that the level of discretion as to how to use revenues is strictly limited – about 90 % of revenues need to be used to cover “fixed” costs. And as said earlier, the equalisation system remains a mystery to practically everyone in the local government system.
page 507 / 796 Concerning borrowing by local authorities, the LGA (Article 106) states that a local authority may borrow money in any manner which it considers suitable for the effective performance of its functions. However, borrowing by a local authority under this section can only be with the sanction of the appropriate Minister.
Ireland recorded a General Government Deficit in 2002 and with further deficits forecast, the Government, in the context of Budget 2004, set a limit of 200 million euros for the contribution of the local government sector to the deterioration in the General Government Balance (GGB) in any one year. This 200 million euro limit was reaffirmed in 2009 when the DECLG reiterated the importance of controlling the local government sector's GGB contribution and put in place a range of specific measures to ensure that the annual outturn remained within the 200 million euro deficit limit.
Italy [Article ratified - Report adopted on 18 October 2017 ]
As in other European countries, the financial aspects of local autonomy are perceived by local politicians as one of the most controversial aspects of the current situation. As a matter of fact, most of the attention and remarks made during the visit had to do with this topic. Three main ideas should be here presented as the general framework of local finances in Italy: the constitutional context, the economic-political scenario and the key legal framework governing this matter.
For what concerns the first point, local finances are regulated by different constitutional provisions and principles, which form the so-called “Fiscal Federalism” (federalismo fiscale). On the one hand, and from the perspective of the allocation of powers between the State and the regions, it should be underlined that, after the constitutional reform of 2001, local finances are characterized as a concurrent competence. The regions have legislative powers in this area, but the State keeps control of the fundamental principles. As a consequence: (a) the regions can establish local taxes, “as long as they do not hit elements already taxed by the State”. Regional Laws may also determine variable tax rates and establish other schemes for co-participation for local authorities in the regional taxes; (b) the financial situation of local authorities may present differences around the country, especially in the regions having a special status, since they manage almost entirely their own resources and have increased competences in the field of local government.
Moreover, the Constitution provides substantive principles in the domain of local finances (Article 119). To begin with, local authorities shall have revenue and expenditure autonomy, “subject to the obligation to balance their budgets”. Moreover, they will have “independent financial resources. They set and levy taxes and collect revenues of their own”. They have also the right to have a share in the State revenues. On the other hand, it is established that “State legislation shall provide for an equalisation fund”. As for the principle of commensurability, it is explicitly guaranteed at Article 119. 4th indent: Revenues raised from the above-mentioned sources shall enable local authorities “to fully finance the public functions attributed to them”. Finally it is provided that the State shall allocate supplementary resources and adopt special measures in favour of specific local authorities “to promote economic development along with social cohesion and solidarity”. These constitutional principles have been further elaborated by a bunch of rulings of the Constitutional Court (i.a., Rulings No 37/2004 and 425/2004).
Therefore, the basic requirements of Article 9 of the Charter seem to be enshrined in the domestic constitution.
For what concerns the economic-political scenario, the whole situation is pervaded by the governmental policies and laws approved by the government and Parliament to fight the economic crisis, to control the public deficit, and to comply with the Stability plans and other strategies
page 508 / 796 required by European Union. This framework has prompted the adoption of different measures, the most important ones being the Stability Plans, approved every year since 1999. These plans involve numerous measures and objectives, such as linear budget cuts, reinforced budgetary balance obligations and even financial penalties, which have hit in a dramatic manner the local finances, and has led to a limitation in their spending autonomy. The situation seems to be critical in the case of provinces. This picture was already underlined by the previous monitoring visit carried out by the Congress in Italy, back in 2012. Unfortunately, this panorama is likely to remain the same at least in the short future, since the Italian economy, according to our interlocutors, is not recovering at the desired pace. Fiscal decentralisation has not been deepened since the last monitoring visit, just the reverse. The overall picture may present variations and nuances in some regions having a special status.
Finally, the key legal framework is represented by a set of laws and regulations, whose backbone is the Fiscal Federalism Act of 2009 (Act No 42, of 5 May 2009), as amended. This key statute enables the approval of further regulatory measures, and enumerates general and specific guiding principles. Among those principle stands that of coordination of public expenditures, consistency, financial discipline, rationalization and budget balance. The continuous amendments and readjustments to this statute make the picture difficult to depict as stable. In any case, the current situation and trends may be summarily described as follows:
Municipalities
Main sources of municipal income
Local taxes
Traditionally, municipal taxes included the tax on real estate, a housing tax (ICI), a tax on the collection and disposal of waste; a supplementary (local) income tax; a publicity tax and a tax on the occupation of public spaces. There have been several changes in this picture: some taxes have been eliminated, while others have been renamed and new acronym introduced, which sometimes makes the matter hard to understand. The main changes are:
The single municipal tax (imposta unica comunale, IUC), established by the Act No 147 of 2013. The details and operative elements of such tax may change from year to year, which makes difficult to present a “stable” situation.
In reality, this tax embraces or unifies three other local taxes:
The IMU (imposta municipale propria), which is a real estate tax. It hits owners of real estate that is registered in the cadastre (buildings, farms, urban and farm land) and other real estate rights. This tax does not hit the personal, main housing (except if it is a luxury housing), but only secondary residences. The taxable base is determined in connection with the value of the property according to the cadastre. The regular tax rate is 0,76% of the taxable base, but municipalities may increase or reduce such rate, with a maximum of 0,3%. There are specific tax exemptions, which change from one year to another.
The TASI, or tax for indivisible services. This is a supplementary real estate tax, which hits among other things the main residences if they are considered luxury housing. It is supposed to meet the expenses for the delivery of lighting, street cleaning, green areas and services that are provided equitably by municipalities to all citizens;
The TARI (tassa sui rifiuti, a tax on waste). Formerly “TARES” and other denominations such as
page 509 / 796 “TARSU”. The amount is determined by the municipality, within the guidelines that have been determined by State regulations and which, in any case, must ensure the integral covering of the cost of the service of collection and treatment of waste).
The ADDIRPEF, a municipal surtax on the personal income tax. Municipalities may decide to establish such surtax (addizionale), with a maximum of 0,8% (for Roma Capitale, 0,9%).
The ICPDPA, a municipal tax on external publicity and billposting.
Other taxes, such as the touristic tax (imposta di soggiorno) and the contribution (contributo) on disembarkation. The first one can be collected by some municipalities such as the capital of the province (capoluogo), the unions of municipalities and other touristic spots. The latter can be collected by municipalities in some minor islands, as an alternative as the touristic tax.
Charges and fees
Italian municipalities may collect several fees and charges. Among them:
The CIMP. This is a fee for the installation of publicity, which may replace the ICPDPA (tax on publicity), if the municipality finds it appropriate;
The TOSAP, a fee for the occupation of public spaces (such as streets, boulevards and parks) by economic activities, such as bars, stores, etc.
The COSAP, another fee for the occupation and use of public areas and spaces, which may substitute the TOSAP.
The ISCOP: a charge that may be collected to cover the cost of some public works by the municipality.
Non-fiscal income
Italian municipalities may get income of no fiscal nature, such as the revenue from business, commercial activities and revenue from the ownership of property (sale of movable and immovable property); interests from deposits or other financial products; collection of traffic and parking fines and other administrative offences; financial operations: the municipalities can ask for loans from the private sector and they can issue bonds. However, this source of income has been subject to many restrictions, in the framework of the struggle against excessive public deficit. According to Article 119 of the Constitution, local authorities can only have recourse to indebtedness in order to finance investment expenses, not their running costs.
Transfers and equalisation schemes
Italian municipalities may receive different types of transfers:
Transfers from equalisation mechanisms: the lack of meaningful equalisation mechanisms has been a traditional feature of the Italian system of local finances, and the 2012-13 Congress Monitoring still reported that “there is no general scheme in operation and this continues, therefore, to be a huge gap in the implementation of fiscal federalism”. The present 2017 visit, however, has revealed that significant progress has been achieved, although the situation was still assessed as unsatisfactory by
page 510 / 796 the interlocutors met during the visit. Currently, the fund of local solidarity (fondo di solidarietà comunale, FSC) is the most important tool for equalisation. This equalisation Fund was created by the Law No. 228/2012, and replaced the preexisting “Fondo Sperimentale di Riequilibrio”. This Fund, and the respective allocations received by the municipalities in the regions of ordinary status (plus Sicily and Sardinia) is managed by the Central Direction of Local Finance, in the Ministry of the interior. The amounts to be received by the municipalities are calculated according to a complex set of variables. The Solidarity Fund envelope for 2016 was 6,442 million €.
Ad hoc Transfers and subsidies from the State budget: municipalities may receive transfers for the performance of joint projects or public works.
EU Funds: municipalities may benefit from the several EU funds established in the domain of urban development, rural development and other fields related to the municipal life. Italy has also received extraordinary funds to remedy the situation caused by emergencies like earthquakes in the L´Aquila area.
The current overall situation of municipal finances was diagnosed in a contradictory way by the interlocutors of the delegation. Local leaders consider the situation as unsatisfactory in general, as far as the flexibility and sufficiency of financial resources is concerned. Their main claims may be summarized as follows: while the biggest part of the public deficit is on the shoulders of the central government (48,4 billion € in 2015, against a surplus of 1,5 billion€ on the part of municipalities) local finances have been hit in disproportionately severe way. The budget cuts (tagli lineari) imposed on the municipalities do sum up more than 9 billion€ between 2011 and 2015.
Since 2012, the State transfers to municipalities have been continuously reduced: from roughly 10 billion € in 2012, to 1,4 billion € in 2015.
Since 2015, the fund for municipal solidarity (FSC) is provisioned solely by the IMU local tax.
In 2015 the State net contribution to the municipality finances was even negative: the municipalities have done a net contribution of 628 million€ to the State budget.
In a nutshell, they claim that the system of local taxes is not satisfactory and that the total amount of disposable resources is not enough. Moreover, some local leaders are not satisfied with the manner how funds are calculated, and according to them there is not enough equalisation. They also allege that the budget cuts (tagli lineari) were decided unilaterally by the Government and imposed in a rather executive way. In this sense, mention should be made to several reports and opinions performed by the Court of Auditors (Corte dei Conti) in recent years. In these reports (namely in one released shortly before the visit of the delegation) the said Court found that municipalities are not adequately funded to discharge their statutory services and responsibilities.
A different viewpoint is that of the central government. The relevant ministry contends that the current system is fair for the country, taking into account the current economic crisis. Government official assert that the current financing has been established according to the “standard costs” (fabbisogni standard) for the fundamental functions of municipalities. The current system ensures, at least, the adequate delivery of such fundamental functions. They also understand that the principle of commensurability of local finances (as proclaimed by the Constitution) is respected. Moreover, in order to counterbalance the negative fiscal effects on the municipalities of the abolition of the TASI for main residences, the central Government has allegedly increased the FSC by 3,5 billion€ for compensatory transfers.
page 511 / 796 Independently from the official position of the Government, it is clear from tables and data provided by municipal associations and leaders that the own revenues of municipalities have decreased in recent years, and so have the state transfers.
Provinces
The main sources of own revenues for the provinces (taxes and charges) are the following:
IPT, imposta provinciale di trascrizione. This is a tax that hits the inscription of cars and other vehicles in the transit register, and other modification in the said register. The tax rate depends on the fiscal power of the car. The provinces may increase the said rate up to 30%;
RC-Auto; this is a tax that hits the insurances of civil responsibility derived from transit accidents. The provinces may also increase or reduce the tax rate;
TEFA: this is an environmental tax, that is supposed to finance the provincial services in the domain of protection and restoring of the environment. This is a derivative provincial tax, and is complementary to the local TARI (waste tax);
TOSAP: this tassa functions like the equivalent one in the case of municipalities.
From the perspective of the Charter, the assessment of the financial situation of provinces is, according to the delegation, rather negative.
To begin with, the financial legislation of the period 2013-16, together with the institutional review under Law No. 56 of 7 April 2014 and the reduction of tax revenues, has provided for a reduction of resources amounting to 4,25 billion€, with a severe repercussion on their capacity to perform their functions. Second, the Stability Act of 2015 established that provinces and metropolitan cities would contribute to the containment of public expenditures by means of a reduction of running costs (linear cost or tagli lineari) of one billion € (900 million € for the provinces of the regions of ordinary status and 100 for the provinces of Sicily and Sardinia). This reduction should be in the amount of 2 billion in 2016 and 3 billion in 2017.
The government representatives declared that they are aware of this situation and that in 2016 (Act No. 208 of 28 December 2015, Stability Act of 2016) some measures were adopted in favour of metropolitan cities and provinces. In particular, 495 million€ of complementary contributions were granted to the provinces for roads and school buildings, 100 million€ for extraordinary road maintenance works, 20,4 million for staff expenditure and 39,6 for the maintenance of balanced budgets. The total amount of those complementary contributions for the incoming years are supposed to be 470 million€ for the years 2017-2020.
In any case, the representatives of the provinces (at least those placed in the regions having an ordinary status) do evaluate their financial situation as clearly insufficient. They claim that the own revenue is far to cover the expenses for the fundamental functions of the provinces. In addition, and under the “spending review” strategy embodied in the Act No. 190/2014, the provinces must transfer to the State a significant amount of the fiscal effort obtained in the provinces. This would go clearly against Article 119 of the Constitution. According to the provincial leaders, in 2017 the provinces of the regions having an ordinary status will have to “reimburse” or repay to the State more than 1,6 billion €, a sum which is close to the amount of the total collection of the provincial own taxes: according to the UPI, the tax revenues for the provinces in 2014 accounted for a total of 2,095 million€ (660 million for the tax on transcriptions; 1,250 million for the insurance tax, and 185million for the environmental protection tax). Consequently, the net amount of the tax collection
page 512 / 796 that will stay at the disposal of the province will only be 446 million € (2,095 billion minus 1,6 billion in transfers to the State). However, the discharge of the three fundamental functions for the 76 provinces placed in the regions having an ordinary status (roads, schools and environmental protection) would need at least 1,305 million €. The imbalance is, thus, quite clear.
Finally, they remind that they manage today more than 130,000 kilometers of provincial roads and 5,100 schools, hosting in total more than 2,5 million students ad claim that they do not have the resources to manage and conserve appropriately those facilities and infrastructures. This is not only a problem of sufficiency of means to provide good quality services, but a source of personal concern among the provincial leaders. In the case of an accident in a provincial road or in a school, the Law does not only provide of course for the civil and administrative responsibility of the province, but also in some extreme cases the criminal liability of the provincial leaders, as long as the accident was caused by a bad maintenance or conservation of the facility. Therefore, provincial leaders feel that, on the one hand, they could be prosecuted in the criminal courts, but on the other they do not have the financial means to avoid the risky situation.
The UPI pointed out that, as a result of these different financial measures, there is an imbalance in the budgets of the provinces which allegedly amounts to 650 million€, as certified by the public company “SOSE”. The overall situation can be singled out in certain provinces. In this sense, the delegation was briefed about the extremely difficult financial situation of the province of Belluno, in the Veneto region. The rulers of this province informed the delegation that there is an acute imbalance in the provincial budget for 2017. The total expenses for the discharge of the “fundamental functions” have been budgeted in 29,200 million€ and they have estimated tax revenues in the amount of 23,800 million€. However, they are obliged to transfer or repay (riversamento) to the State funds in the amount of 22,915 million€. Therefore, there is an imbalance of some 28,315 million€. The data are quite illustrative and show a dramatic situation.
The Court of Auditors has also made its voice heard in this area. In an important report released shortly before the visit of the delegation, the Corte dei Conti has affirmed that provinces do not have the adequate financial resources to accomplish their tasks; that the provinces should no longer suffer from the effects of the “programmed suppression” of these bodies; and that they must have the necessary personnel, financial and instrumental resources to carry out their fundamental functions and to guarantee the essential services for the citizens and for the territory.
Additional aspects
In the domain of budgeting, all municipalities are free to draft and to approve their own budgets, but in recent years the budgetary discipline of the State (mainly by the Corte dei Conti) has been sharply increased. “Budgetary discipline” is now the golden rule.
Although the Law sets some specific limits and clear on the public debt and on the deficit of local authorities, the indebtedness of local authorities is still a hot issue. The precise rules governing the extreme cases of insolvency are laid down at Articles 244 and ff. of the Testo Unico. According to information facilitated by the Ministry of the Interior, in recent times 102 local authorities have resorted to financial failure, including large-size municipalities like Alessandria or Potenza. The peaks are in Sicily, Campania and Calabria. Cases of financial instability did affect some provinces, too (Biella, Caserta).
Finally, and as far as municipal property is concerned, Italian local authorities have their own property, goods and assets. This is specifically guaranteed by Article 119, last indent, of the Constitution. The situation on this issue seems to be quite satisfactory. The right to own land and real estate property is fully recognised to local authorities, and they manage their assets in a free
page 513 / 796 way. In the case of the provinces, thought, a specific information should be underlined: As a consequence of the Delrio Act, the provinces were partly dismantled in several ways; their “non fundamental” functions were transferred to the regions, and part of their personnel and assets were alto transferred, according to some criteria that were negotiated in the Joint Conference.
In view of the foregoing, it appears to the rapporteurs that Article 9 of the Charter is not respected in Italy, especially in the case of provinces.
Latvia [Article ratified - Report adopted on 27 March 2018 ]
From the outset, it should be noted that the Latvian system of local government finances is homogeneous around the country. Therefore, there are no specificities or differences between regular municipalities and “cities”. Apart from the Law on Local Government, the key pieces of legislation in this field are the Act on the Budgets and Financial Management of 1994, Act on Local Governments Budgets of 1995, as amended, the Act on Local Government finance equalisation of 2015, and the Act on Taxes and fees of 1995, as amended.
The main sources of local income are formed by tax revenues, non-fiscal income and transfers. From a technical point of view, there are no “true” local taxes in Latvia, but apportionments in the collection of some State taxes. The structure of local governments revenues (2017 data) is the following: (a) tax revenue: 63.5%; (b) transfers, 29.4%; (c) self-earned revenue: 5.2%; (d) non-tax revenues: 1.8%; (e) donations: 0.1%; and (f) foreign financial assistance: 0.1%. According to the Ministry of Finance, these sources of revenue are sufficiently diverse. During the consultation procedure, the Latvian Association of Local and Regional Authorities stressed that only 40% of these 63.5% goes directly to the local government, whose residents create these taxes (pure own revenue from taxes are 25.4% of all). Other part is redistributed through equalisation system. Therefore the Association considered that fiscal autonomy is not satisfactory.
The different sources of financing for Latvian local governments may be presented as follows: i. Tax revenue
This is the most important source of revenue for local authorities. In quantitative terms, the total amount of tax revenue for local authorities was 1,174.4 M € in 2012; 1,256.2 M € in 2013; 1,316.4 M € in 2014; 1,362.8 M € in 2015; 1,469 M € in 2016 and 1,548 M € in 2017 (expected). As noted supra, there are no local taxes in the technical sense of the meaning. Local authorities receive a percentage (share) of some State taxes, which in the case of the real estate tax is 100%. That is, each local authority receives a percentage of the total tax collected in its territory. These shared taxes are:
The personal income tax: this is a State tax, regulated and collected at State level. Since 2015, the State Revenue Service is responsible for collecting personal income tax in Latvia. The total collection of this tax in a given local entity is later partially redistributed to that local authority, based on residence criteria (number of “de iure” inhabitants). In 2017, each local authority will receive 80% of the tax collected in its territory (expected). As a consequence, a local authority with wealthy residents will receive more money than a similar authority with the same number of inhabitants but having less economic capacity. Therefore, it could be argued whether this type of revenue is in reality true “tax revenue” in the technical meaning of the word, or rather “transfers” from the State. In any case, this is the most important source of “tax revenue” for local authorities, in quantitative terms. This receipt represents 84.8% of the total tax revenue in the local governments budgets.
Real estate tax: this State tax hits all land slots and buildings, either used for commercial or housing
page 514 / 796 purpose (since 2010). The limits for tax rate is determined by State laws and regulations on the basis of the cadastral value of the slot or construction. Municipalities collect the real estate tax, and they have a limited power to determine the tax rate. For instance, they may decide to reduce the general tax rate up to a certain amount, something that is used by some local entities to revitalise business activities or to attract new local residents. Local authorities receive 100% of the tax collection. Consequently, this is probably the only tax that is the closest to the notion of “local tax”. In 2017, this receipt represents roughly 13.8% of the total tax revenue in the local governments budget.
Taxes on lotteries and gambling: Local authorities receive a share of 25% of this tax. In 2017, this source of tax revenue represents 0.5% of the total tax revenue in the local governments budget.
Natural resources tax: Local authorities have a share on different taxes, such as the tax on pollution (60%), the tax on radioactive waste (30%) and 100% from the tax on incineration of dangerous waste. In 2017, this source of tax revenue represents 0.9% of the total tax revenue in the local governments budget.
Apart from true “tax revenue”, municipalities and cities (under the Taxes and Fees Act), can collect revenue of fiscal nature such as different fees and charges, of which they can determine the rate. Charges or fees may be imposed on different activities, such as: services rendered by the local administration; the issuance of official documents and certificates; conducting trade in public places; the ownership of animals; the placement of advertisements, the delivery of construction permits or of other licenses, etc. ii. Transfers
Transfers and subsidies from the State budget:
In Latvia, most of the State grants received by local authorities are earmarked, that is, they are granted for specific purposes. In general, these “specific” purposes are functions that the local authorities are obliged to deliver on the basis of legal mandates. Those transfers include, in particular, grants for the remunerations of teachers, for school transportation, for road maintenance and construction and for the co-financing projects under EU funds. The only non-earmarked grant is the State contribution to the Local Government Finance Equalisation Fund, which is presented infra.
In recent years, the share of transfers in the total structure of local financing has been above 20% (29.4% in 2017, expected). In 2014, State budget transfers to local governments’ budgets (including funding for the EU policy instruments and other external financial assistance projects) were in the amount of 605 million €. This means 2.6% of the GDP. In 2015, this figure was 603 million €, which meant 2.5% of the GDP.
EU Funds
Local authorities may benefit from the several EU funds established in the domain of urban development, rural development and other fields related to the municipal life. However, these revenues are in no way stable or periodic and depend on a large series of factor which mainly stand outside the municipalities reach. Moreover, some local representatives told the delegation that in most of the cases they don’t apply to EU funding for projects because they are required to co-finance a percentage of the project, something which is out of their financial means. iii. Non-tax revenue
Latvian local authorities may obtain and collect revenues that do not have taxing nature. Among
page 515 / 796 those sources of income (that are per se variable) stand the following ones:
Revenue from commercial activities of local companies and revenue from the ownership of property (sale of movable and immovable property).
Revenue from property (rents).
Donations received.
Collection of traffic fines and other administrative offences due to the violation of local binding regulations. For instance, in the case of Riga this revenue represents roughly 5 M € (2016 figures).
Financial operations: local authorities may ask for loans from the public banking sector (see below).
Once the different sources or revenues have been presented, it should be assessed whether the principles of sufficiency and commensurability of the local finances are recognised in domestic legislation. Apparently, those principles are not proclaimed explicitly neither by the Constitution nor by regular legislation. However, the Law on Local Governments includes different important provisions in this sense. For instance, this statute provides that whenever a new “autonomous” competence is transferred to the local authorities, “the law which determines the performance of such functions shall concurrently determine the new source of revenue for the local governments” (art. 7). It is difficult to ascertain whether this provision is properly followed in every case of assignment of new competences. According to a Latvian scholar: “in practice, however, these procedures are not always followed, thus not allowing the local governments to fulfill all compulsory tasks”.
Another example is the provision regulating “delegated functions”. In this case, the Law provides that the resources that were so far are provided for in the State budget for the performance of such functions shall be transferred to local governments concurrently (art. 9). Therefore, there is a mild and partial recognition of those principles.
According to the Ministry of Finance, local governments are provided with stable tax revenue in the long term period and the central government tries to ensure the sufficiency of local finances by different means, apart from the equalisation mechanism. For instance, the Minister of Finance told the Delegation that in the next years it is expected that the tax revenues of local governments (especially those stemming from the Personal Income Tax) will decrease due to tax relief reforms aiming at boosting the economy. Thus, in order to compensate for this loss of revenue the Government is going to establish a “special compensatory transfer” for the local governments, with a planned budgetary allocation of 13.3 M € in 2018, 135.9 M € in 2019 and 224.7 M € in 2020.
In order to appraise the sufficiency of local government finances, several indicators may be used. To begin with, we can identify the share of local government tax revenue in the general government tax revenue. This indicator is pretty favourable to Latvian local authorities, for this percentage was calculated (by Eurostat) in 19.4% for the year 2015, while the average for the EU was 10.4%.This is the fourth bigger in the EU (only surpassed by Finland, Denmark and Sweden). The Minister of Finance told the Delegation that with the adoption of the “compensatory” measure mentioned supra, the local government will keep the percentage around 19.5%, even in a scenario or decrease in tax collection.
Another indicator is the share of the local government total revenue in the general revenue of the public sector. In this sense, this proportion in 2015 was 26.7%, while the average in the EU was 24.5% (Eurostat data). Here, the indicator is the ninth higher in the EU, although the same caveat
page 516 / 796 should be made here (absence of other territorial levels in the country). That indicator was identified at 23% by the 2011 monitoring report on Latvia. Therefore, a certain progress is visible.
For what concerns the position of the local leader on the matter of financing, most of them stated that in general terms they were satisfied with the present arrangements, although the system has some negative aspects and perspectives: first, they complain that in too many cases, the law attributes new competences to local authorities, without providing for adequate and “fresh” new financial resources. Second, sometimes the law attributes new competences but does not clarify what “type” of competence is the new one (among the different types regulated in the Law). This apparently has a negative financial impact because some competences are financed in one way and others are financed differently.
Third, local representatives expected a reduction of income due to the tax relief measures that have been adopted by the Government. Since the tax rates for the personal income tax have been reduced (from 23% to 20%), the national tax collection will be lower and they fear that their revenue will be reduced accordingly. It remain to be seen whether the “compensatory” measures that the Minister of Finance presented to the Delegation are finally adopted and they compensate “adequately” for this loss of income. Fourth, the LPS also expressed dissatisfaction about the current equalisation mechanism, because they understand that it is not fair and that the State should contribute with more monies. In the present situation, the equalisation Fund is mostly financed by the local authorities themselves and this does not help reducing the strong disparities among rich and poor local entities in the country. Fifth, LPS complained that the present system of local government financing is too dependent on governmental annual decisions and on periodic negotiations. This means that the total resources, the different percentages and elements of the revenue may change from year to year. This situation, according to LPS does not allow the local governments to conduct long-term planning, because they cannot be sure of what resources they will have during the following years. Consequently, they ask that all these different variables be laid down into a legal rule.
In the domain of budgeting and expenditures, municipalities and cities are free to draft and to approve their own budgets, but they must respect the budget structure established by the Law. The local council is the competent authority to approve the budget. Local authorities are in theory autonomous in deciding their spending priorities, and the central government or other State authorities cannot in principle interfere with the municipalities budgetary autonomy. In this sense, the Ministry of Finance respects the autonomy of local authorities and does not address binding instructions or guidelines in the domain of budgeting. State institutions are not allowed to interfere with the drafting and execution of the local budgets. However, in practice many of their expenditures aim at paying obligatory functions. Thus, in the year 2014 the total expenditure of local governments was 2,192.4 million €. The major expenses (40.8 % of the total expenses) were for education: 894.6 million €. Expenses for some other fields were: economic activities: 374.7 million € (17.1%); social protection: 204.1 million € (9.3%); recreation and culture: 194 million € (8.8%); general public services: 182.2 million € (8.3%); environmental protection: 46.2 million € (2.1%).
According to the Law on Local Governments, the local council must call at least once a year a private sworn auditor or auditing company, for the revision of the budget implementation and the preparation of the annual report. Besides it, local authorities may set up their own internal auditing commissions. Based on the report of the auditor (which has to be published) the State Audit Office issues an annual statement on the reports on the local government budget what is the part of report on state budget and local government budgets (see point 4.7, supra).
Finally, and as far as municipal property is concerned, Latvian local authorities have their own property, goods and assets. The right to own land and real estate property is fully recognised to local
page 517 / 796 authorities, and they freely manage their own assets and properties. For instance, they own the local streets, roads, parks, cemeteries, administrative buildings and facilities, schools, kindergartens, culture clubs, libraries, sport halls etc. The key piece of legislation in this field is again the Law on Local Governments, which lays down general guidelines at arts. 77 and 78.
Consequently, the Delegation concludes that article 9, paragraphs 1 to 4 and 7 of the Charter are respected in Latvia.
Liechtenstein [Article ratified - Report adopted on 28 March 2018 ]
According to Article 9 paragraph 1 of the Charter local authorities should have adequate financial resources of their own, of which they may dispose freely within the framework of their powers. Financial autonomy is an essential component of the principle of local self-government and an important condition for the exercise of a wide range of responsibilities in the field of local public affairs. These elements are cumulative and not alternative, which means that all the conditions laid down in Article 9 of the Charter are mandatory. Another basic principle requires that local authorities should have sufficient financial resources in proportion to the responsibilities assigned to them by law.
The financial situation of local authorities in Liechtenstein is such that their share of public expenditure is one of the highest in Europe. This means that a considerable proportion of public spending is carried out by local authorities.
Compared to other European countries, the municipalities of Liechtenstein have continued to enjoy a good financial situation despite the world economic and financial crisis. While state revenues significantly decreased during the crisis, municipal revenues remained more or less stable. In fact, the municipalities’ share in total government revenues increased from 24.2% in 2011 to 30.4% in 2015. It is worth noting that this proportion has been steadily increasing since 2012. As a consequence, some of the persons to whom the Congress delegation spoke claimed that the Liechtenstein municipalities are generally in a better financial situation than the central government, which might be a unique situation in Europe.
Local authorities have revenues from central grants, local and shared taxes and other own resources.
Based on the data available to the rapporteurs, less than a quarter of local government revenues is derived from central grants. There are no precise data about either their percentage or structure (block versus specific grants). The method of allocation of block grants is determined by the Financial Equalisation Act of 2007, whereby municipalities whose taxation capacity and financial resources do not enable them to fulfil their mandatory tasks and functions are entitled to a state subsidy. In other words, general or block grants are allocated only to those municipalities whose financial needs exceed their resources. Financial needs are calculated on the basis of the per capita costs of mandatory functions, taking the average of the previous four years, while taxation capacity is based on the tax revenue per inhabitant. The fact that fewer municipalities receive financial equalisation grants today than was the case some years ago demonstrates the favourable financial situation of local authorities.
It is important to note, however, that the ratio between local revenues and central grants varies according to the municipality. In Triesenberg, for example, almost half of total revenue comes from the financial equalisation system, and the proportion of tax revenues is much lower than the national average.
page 518 / 796 In addition, some earmarked grants can be allocated to local authorities for specific goals (e.g. for projects with nationwide interest or for environmental remediation). During the consultation procedure the government informed the rapporteurs that many earmarked grants were compensated with the Financial Equalisation Act (Finanzausgleichsgesetz) of 2007.
Nevertheless, it is certain that the bulk of local government revenues (more than 60%) comes from taxes. Municipalities receive a share of business tax, as the Tax Act of 2010 states that a municipality in which a company is domiciled is entitled to 35% of the respective tax on profits. Furthermore, each municipality is entitled to levy a surcharge tax on the state tax on personal assets and income.
Local authorities may also obtain revenues from charges and fees paid for local public services delivered by the municipalities, such as waste disposal. Municipalities may use their assets as financial resources by selling municipal real estate and other property.
Owing to the significant proportion of local revenues in total financial resources, local authorities can freely dispose of their funds provided that their budgets have been approved by the central government.
The well-balanced local government budgets show that the financial resources available to the municipalities are adequate and proportionate to their mandatory tasks and functions. The high proportion of tax revenues in local resources and the budgetary surpluses that are frequent in most local budgets provide sufficient evidence for the rapporteurs to conclude that the relevant requirements of the Charter (i.e., paragraphs 1 and 2 of Article 9) are fully implemented in Liechtenstein.
Lithuania [Article ratified - Report adopted on 6 November 2018 ]
According to Article 9 paragraph 1 of the Charter, local authorities should have adequate financial resources of their own, of which they may dispose freely within the framework of their powers. Financial autonomy is an essential component of the principle of local self-government and an important condition for the exercise of a wide range of responsibilities in the field of local public affairs. These elements are cumulative and not alternative, which means that all the conditions laid down in Article 9 paragraph 1 of the Charter are mandatory. Another basic principle, established in Article 9, paragraph 2, requires that local authorities should have sufficient financial resources in proportion to the responsibilities assigned to them by law.
In Lithuania, municipalities dispose of a relevant part of the financial resources. The law provides for municipalities the right to freely use over 60 percent of the financial resources accumulated in municipal budgets for the exercise of independent functions assigned to them by law. Up to 40% of the financial resources are made up of special targeted subsidies, which are allocated either for state delegated functions (e.g. in 2018, 780 million euros allocated) or for municipal investment projects financed according to the State Investment Program (e.g. in 2018, 160 million euros allocated). In addition, both the total amount of financial resources of municipal budgets and the financial resources, which municipalities of Lithuania have the right to freely use at their discretion, have experienced a growth tendency as of 2013.
The ALAL pointed out some achievements in the last few years. 168. From 2015 at the request of the ALAL the central government restored the procedure for the calculation of the percentage of Personal Income Tax allocated to the municipalities in force till 2011, so that the estimated increase of revenue from Personal Income Tax due to natural economic growth is once again divided to the state and the municipal budgets. From 2016 the estimated growth of independent revenue of
page 519 / 796 municipal budgets above 21 per cent is not deducted to the state budget revenue or limited.
For the first time after the economic crisis, the budgets of 38 municipalities experienced a real growth in 2018 under comparable conditions due to the implementation of a decision requested by the ALAL multiple times: an innovation was introduced in the amendment to the Law on the Methodology of Determination of Municipal Budgetary Revenues of 5 December of 2017 adopted by the Seimas by abandoning the general subsidy from the state budget and allocating the same amount of founds as the general subsidy which was planned for the 38 municipalities in 2017 to Personal Income Tax of these municipalities as a regular source of revenue. Until this point, the general subsidy of the municipalities receiving the general subsidy was reduced by the expected amount of tax revenue growth, i.e. the budgets of the majority of the municipalities were actually “frozen” in the 2009 level and they did not have a possibility to increase revenues. During the consultation procedure, the Minister of Finance argued that the municipal budget income projected for independent functions in 2018 is higher by 18.3 per cent or by EUR 256.6 million than in 2017. The demand for appropriations to perform government functions which, following the laws, the government transfers to municipalities, is calculated according to the methodologies for calculation of funds approved by public authorities and bodies. The appropriations to perform government (transferred by the government to municipalities) functions are allocated from approved general appropriations of relative public authorities and bodies (i.e. the amount to be allocated for the performance of functions is decided by public authorities and bodies themselves). The appropriations allocated to finance the government (transferred by the government to municipalities) functions should comply with the methodologies for calculation of funds approved by public authorities and bodies. It should be noted that in 2018 the amount approved for delegated functions is higher by 6.7 per cent or by EUR 9.3 million than in 2017. If the Seimas or the Government during the budget year adopts or plans to adopt the decisions in the upcoming year, due to which occur changes in municipal budget revenue and expenditure, both revenue and expenditure changes are compensated. This is provided for by both the Law on Local Self-Government and the Law on the Methodology for Determination of Municipal Budget Revenue.
Nevertheless, the ALAL expressed many concerns that the financing from the State to the major part of the functions allocated by the state to the municipalities (special targeted grants) is lower than required according to the funding needed for the implementation of these functions. During the monitoring visit, this concern was expressed by all the elected local representatives the delegation met. The limited resources, coupled with the limitations in loans due to the constitutional law on the fiscal treaty, imply that municipalities do not have the possibility to act as independent and to develop investment projects.
Recommendation 321 (2012) drew attention on the fact that “municipalities do not have sufficient resources to deliver the services under their responsibility (a situation exacerbated by the economic crisis but also by the fact that the termination of the county administration put the burden of additional tasks on local authorities) and their borrowing limits are restrictive”, inviting Lithuanian authorities to “ensure the allocation of sufficient resources to local authorities, respecting the principle that resources should match functions and duties which are vested in local government”;
The rapporteurs consider that, notwithstanding the improvement of municipal revenues in the recent years, the financial resources can be considered neither adequate (Article 9, paragraph 1) nor sufficient in proportion to the responsibilities assigned to municipalities (Article 9, paragraph 2).
Luxembourg [Article ratified - Report adopted on 21 October 2015 ]
When discussing communal finances, a distinction needs to be made between communes’ ordinary revenues which are designed to cover current expenditure and extraordinary revenues which are
page 520 / 796 designed to cover capital expenditure.
Communes’ ordinary revenues are intended to cover their operating costs and may be subdivided as follows: a. Local taxes:
- communal trade tax
- land tax b. State grants:
- the Communal Financial Grant Fund c. Local charges:
- for drinking water supplies
- for the removal and treatment of wastewater
- for waste disposal
- for the sale of various goods and services (electricity, gas, etc.) d. State subsidies:
- state contributions towards the cost of operating childcare facilities (maisons relais)
- subsidies for public transport provided by the communes and groupings of communes
- subsidies for music teaching, etc.
Local taxes and state grants awarded through the Communal Financial Grant Fund constitute “non- earmarked” income for the communes, whereas local charges and state subsidies are “earmarked” income, to the extent that they are intended to pay for specific services provided by the communes and to finance clearly defined activities respectively.
Since the last monitoring exercise, local authorities in Luxembourg are still awaiting a communal finance reform promised by the national authorities. As a result, the mechanisms of local- government finance have remained almost unchanged, with the communes increasingly unhappy with a system of financing that takes no account of communes’ changing tasks or income inequality between communes. Indeed, for years now, the state’s ordinary revenues have been growing at a faster pace than those of the communes and the gap is becoming ever wider.
Some differences can nevertheless be observed in the way the various sources of non-earmarked communal revenue, i.e. the Communal Financial Grant Fund, the communal trade tax and the land tax, have evolved.
The Communal Financial Grant Fund was instituted under Article 38 of the Law of 22 December 1987 on the state budget for 1988. It is through this fund that non-earmarked grants are channelled from central to local government. The annual grant awarded via the fund is made up as follows:
page 521 / 796 - 18% of receipts derived from personal income tax determined on an assessment basis and from the withholding tax on wages and salaries
- 10% of VAT receipts, less any sums due to the European Communities by way of own resources derived from this tax
- 20% of motor vehicle tax receipts
- a flat-rate amount which is calculated schematically and the rules governing it which are, where necessary, adjusted annually to reflect changes in the legislation.
This tax has grown steadily in recent years. Two main factors account for this upward trend: an expanding job market in Luxembourg, which has helped boost personal income tax receipts, and substantial VAT receipts thanks to e-commerce. Under a European directive incorporated into Luxembourg law in 2014, however, as from 2015, VAT is to be applied in the consumer’s country, rather than the provider’s. The move to the new system of taxation will be spread over four years, which means that VAT receipts from e-commerce will have disappeared entirely by 2019. It is estimated that, as from 2015, the Luxembourg government stands to lose some EUR 800 million per year in VAT receipts, possibly more. Since the communes have traditionally received 10% of these receipts via the Communal Financial Grant Fund, the impact on local government finances will be considerable. During the consultation procedure, the Ministry of the Interior made it clear “that it is not the current government’s intention to alter the mechanisms of the Communal Financial Grant Fund to the detriment of communes’ interests.”
The communal trade tax was instituted by the Law of 1 December 1936, amended by the Law of 11 December 1967. Under this legislation, communes are entitled to levy a communal trade tax based on company profits. The communal trade tax is a means of involving communes in local business activities, by compensating them, as it were, for the costs and nuisance generated by these activities. Communal trade tax rates are determined annually by each commune. This tax is generally perceived as favouring communes where there are one or more companies making significant profits. The communal trade tax has been steadily losing ground to the Communal Financial Grant Fund. Under the state budget for 2015, communal trade tax receipts are projected to rise by a further 5.8% in relation to the amount budgeted for 2014. Compared to the actual amount for 2014, the forecasts are down slightly, by 0.6%. Given the “fiscal optimisation” efforts made by many companies, SYVICOL fears that communal trade tax receipts will continue to stagnate over the next few years.
It is important to note that receipts from the Communal Financial Grant Fund are the healthiest part of local government revenues, whereas communal trade tax is increasingly proving to be an unpredictable and unstable source of income for individual communes.
Lastly, under the amended law of 1 December 1936, communes are permitted to levy a local land tax. As with the communal trade tax, land tax rates are set annually by each commune. The local land tax would account for a significant share of communes’ overall revenues if the unit values used to calculate it were reviewed. However, the unit values have not been reviewed since 1941, resulting in persistent disparities in the value of some buildings because of their locations, which are now difficult to justify. SYVICOL has spoken out in favour of reforming the land tax to reflect actual property prices. An interministerial working group, which SYVICOL had been invited to join, had begun to discuss revising the land tax base under the previous government. This working group has not met, however, since the new government took office in December 2013, the latter having announced that it wished to deal with the matter as part of a wider fiscal reform.
page 522 / 796 Revising the unit values on which the land tax is based would help not only to reduce the disparities that currently exist in terms of the value of certain buildings but also to restore communes’ revenues, probably significantly.
Communes’ ordinary expenditure naturally depends on available revenue and the tasks they choose to undertake: a distinction needs to be made between mandatory tasks (original, constitutional and statutory) and optional tasks, i.e. ones that are freely chosen by the communes with or without financial help from the State.
Examples of tasks which communes are required to perform include:
- maintaining law and order within the commune;
- communal spatial planning;
- drinking water supplies;
- wastewater treatment;
- waste management;
- burials and upkeep of graveyards;
- firefighting;
- road building and maintenance;
- social assistance;
- primary education – care;
- registering births, deaths and marriages.
Examples of tasks which communes can choose to perform include the setting-up and operation of sports, cultural and tourism infrastructure; youth facilities (care, day centres, etc.); facilities for the elderly (retirement homes, day centres, etc.), gas and electricity supplies (these tasks had tended to disappear from the local budget because of outsourcing to private entities).
As regards taxes, under Article 107 of the Constitution and Article 105 of the amended Communal Law of 13 December 1988, communal regulations introducing charges must be approved by the Grand Duke if the charges in question are in the nature of taxes proper designed to cover general expenditure from the communal budget, such as charges intended to contribute to the financing of collective facilities. During the consultation procedure, SYVICOL stressed that the fiscal autonomy of the communes provided for in Article 107, paragraph 3, is subject to the restriction that the taxes raised must cover a financial need. The association believes that it is hard for communal authorities to prove the relevant need, as demonstrated by the supervisory authorities’ refusal to approve numerous tax regulations. The Administrative Court has held the following: “While the communes are fiscally autonomous and can take the initiative of establishing levies and taxes and determining their base, their amount and the arrangements for application and exemption, such fiscal autonomy is not absolute, as the communes may exercise it solely under the supervision of the higher authority, which must ensure that the communes act in accordance with the restrictions provided for by law and demanded by the general interest, including the restriction that their power is exercised
page 523 / 796 to the extent – and hence within the limit – of their needs.
This is not the case with communal regulations introducing charges designed to pay for a service provided by the communal authority, i.e. to cover the costs of that service, which is used specifically by the individuals who pay for it. These compensatory charges are subject to approval by the Ministry of the Interior under Article 106,7 of the amended Communal Law of 13 December 1988 and include notably charges for services such as water, gas and electricity supplies, waste disposal, parking and any other charges for services provided by the commune.
Such decisions must be approved by the Ministry of the Interior. Following approval, the decisions must be duly published in the commune by displaying them according to the procedure laid down in Article 82 of the Communal Law and then placing a notice in the official gazette.
Where the Ministry of the Interior finds that a tax regulation passed by a communal council is not in keeping with the law or is not in the general interest, it will return the decision to the relevant communal authorities, explaining the reasons why it cannot approve the proposed provisions and will invite the communal council to reconsider the regulation in the light of the comments made.
When drawing up the state budget for 2015, the government adopted several measures which SYVICOL believes will have an adverse impact on local finances and which it has condemned as detrimental to communes’ financial autonomy. These measures concern the following three points:
- the decision not to allow the communes to share in the extra income generated by the increase in VAT
- abolition of the state contribution towards financing the two-yearly salary increments
- the capping of communal trade tax receipts at three times the national average per capita revenue from Communal Trade Tax.
The Minister of the Interior has presented this package of measures as an initial step towards reforming local finances, to be followed by more extensive reform in the coming years. SYVICOL believes that, rather than carrying out genuine reform, the government is engaged in an exploratory process that is giving rise to an array of disparate measures aimed at reducing state financial transfers to the communes in order to shore up the state budget.
Given the current situation in the communes, which have long been calling for local finance reform, the rapporteurs feel that any such reform should seek to achieve the following goals:
- provide the communes with predictable and stable income;
- introduce a system to ensure that receipts are allocated between communes in a fair manner and are commensurate with their tasks.
The rapporteurs also feel that the mechanisms for financial equalisation could stand to be developed further. In this regard, representatives of SYVICOL have called for discussions on setting up an independent equalisation mechanism, including by dividing communes into categories (e.g. small, medium-sized and large).
As regards consulting local authorities according to the criteria laid down in Article 9, paragraph 6 of the Charter, the rapporteurs are of the opinion that genuine consultation does in fact occur in practice. The Ministry of the Interior sends draft legislation to SYVICOL and holds meetings with
page 524 / 796 mayors. Local elected representatives, moreover, have confirmed the existence of such co-operation between central and local government, although they believe it is too ad hoc and wish it to be more regular. There is, however, no legal framework that would make it compulsory to consult the communes via SYVICOL, the main discussion partner representing local elected officials in Luxembourg, in all matters which concern them directly.
As regards borrowing, it is important to note that communes are permitted to take out loans only in order to fund extraordinary expenditure, if other methods of financing are neither feasible nor economical and if the commune is in a position to make regular repayments. Any loans in excess of EUR 50,000 must be approved by the Minister of the Interior.
Under the law of 23 February 2001 on groupings of communes, furthermore, certain groupings are entitled to borrow in order to pre-finance communes’ capital investments. Accordingly, local government groupings set up for the purpose of ensuring drinking water supplies, wastewater treatment, waste management or the construction and running of crematoria, may borrow in order to obtain the funds needed to finance capital expenditure connected with these tasks. At the request of the grouping, communes must make a contribution equal to at least 30% of the total capital required, meaning that the maximum loan that can be awarded by the grouping is 65% of the amount requested by the commune. As the contributions are gradually released, the grouping uses the funds to repay the loan. The debt interest is payable by the commune concerned.
Borrowing may be used only to obtain the funds needed to balance the extraordinary budget and only then if all the funds carried over from previous years have already been used up and provided the ordinary budget can support the capital and interest repayments.
With the increase in repayment capacity, local government debt had increased in 2009 and 2010, before levelling off at EUR 826.4 million at the end of 2013. At the same time, the total value of newly contracted loans declined sharply between 2010 and 2013, mainly because of the increase in revenues in recent years. For 2014, the available figures indicate a similar pattern to that observed in previous years.
As regards access to the national capital market, under Article 173ter of the amended Communal Law of 13 December 1988, communes and groupings of communes may, without prejudice to the legislation on public procurement, conclude among themselves and with public and private legal entities and individuals, agreements on matters of communal interest. These agreements must be approved by the Minister of the Interior if the amounts involved exceed EUR 100,000. In addition, the ministerial circular of 24 January 2014 has set new thresholds for public procurement contracts covered by European directives as from 1 January 2014. For example, for public works contracts concluded by local authorities, the threshold is EUR 5,186,000, whereas for supply and service contracts, it is EUR 207,000.
The rapporteurs conclude that Article 9 of the Charter is being partly complied with. The issue of free disposal of sufficient own resources seems to pose a problem. It is worth noting that Article 119, paragraph 3, of the draft revised Constitution currently being debated in Luxembourg provides that “The communes are entitled to the financial resources for performing the tasks assigned to them by law”. This provision is an innovation compared with the current text. If it were adopted, the rapporteurs believe that it would clearly be a very positive development, provided that it was implemented in practice. Local authorities are having to contend with the difficulties of introducing a system of financing which does not always take account of changes in their core tasks and income disparities between communes. The rapporteurs also feel that the equalisation formula and the criteria on which this formula is based could stand to be reviewed. Speaking to the delegation, the Minister of the Interior confirmed that he intended to revise the formula, just as,
page 525 / 796 under the fiscal reform, he is planning to review the unit values for the land tax which have remained unchanged since 1941, resulting in lost earnings for local authorities. The rapporteurs therefore wish to underline that while paragraphs 1 to 5 of Article 9 are not being fully observed by Luxembourg, they received an assurance from the government that these provisions were currently receiving close attention from the authorities. The rapporteurs will follow any developments that occur in this area.
As regards conformity with paragraphs 6 to 8 of Article 9, the rapporteurs are of the opinion that these provisions are being observed. The government’s procedure for consulting local authorities is followed in practice. The rapporteurs’ view is that it would be a good idea to place this regular consultation on a more formal footing, with the government providing co-ordination, so as to ensure that this becomes a permanent practice in future.
Malta [Article ratified - Report adopted on 29 March 2017 ]
According to Article 55(1) of the Local Councils Act, each year the Minister of Finance allocates a provision under the Appropriation Act which serves for the exercise of the functions of the Councils. The amount appropriated has to be allocated by the Minister responsible for Local Government to each Council on the basis of the formula determined in the Eighth Schedule to the Local Councils Act. These allocations are made available to the local councils by the Minister after a written request by the executive secretary.
According to the Eighth Schedule of the Local Councils Act, the financial allocation to local councils covers landscaping and maintenance of parks and gardens, roads maintenance and roads fixtures, waste management and administration. A grant is allocated to each of the aforesaid categories and then it is distributed to local councils on the basis of the formula provided under the Eighth Schedule of the Local Councils Act. The amount of the grant allocated to each local council constitutes a proportion of the total grant allocated to all local councils for the said category, which is equal to the area in the said locality covered by the establishments for which the grant is given, divided by the total area of such establishments in Malta.
For example, the grant given to each local council for landscaping and maintenance of parks and gardens equals to the area covered by parks, gardens, soft areas and verges in each locality in proportion to the total area of parks, gardens, soft areas and verges of all the localities in Malta, multiplied by the total apportionment allocated by government for the maintenance of parks, gardens, soft areas and verges.
Apart from the annual grant, the central government may allocate or provide for additional grants by way of special funds, schemes to raise additional funds and supplementary funds.
According to Article 58 of the Local Councils Act, the Minister responsible for Local Government may, after the approval of the Minister of Finance, establish special funds and make such funds available to local councils. These funds are distributed by means of regulations made by the Minister.
Furthermore, according to Article 60 of the Local Councils Act, each local council has the power to raise funds by means of any scheme designed to provide additional funds to those allocated to it under Article 55 of the same Act.
During the consultation process, the Ministry of Justice, Culture and Local Government highlighted a total increase in €3.956 million in financial allocation to local councils in 2017 compared to the previous year (€2 million in direct funds to be distributed in terms of the Funding Formula in the Eighth Schedule of Local Councils Act and €1.956 million for special initiatives).
page 526 / 796 Nevertheless, by virtue of Article 61, the Local Councils Act expressly prohibits the local councils from authorising any works, the value of which exceeds the annual provision allotted to it for that financial year taking into consideration the amount forecast for payment of acts of ordinary administration, except upon obtaining the approval of the Minister responsible for Local Government and the Minister of Finance after a written request by the executive secretary indicating the amount of net surplus funds resulting from previous years. If the amount appropriated by the local council under the Appropriation Act is deemed insufficient, the Minister of Finance and the Minister responsible for Local Government may approve the grant of a supplementary sum to the local council.
Moreover, the local councils do not have the power to hold or invest in commercial undertakings any money received by way of grant by the central government without the written approval of the Minister responsible for Local Government.
According to Article 55(3) of the Local Councils Act, in allocating the appropriate amount to a Local Council, the Minister may retain any portion of such amount if he/she deems it to be necessary to either ensure redress of any negative balance, the production of copies of minutes of the Local Council and the Finance Committee within 3 (three) working days after their approval, the production of copies of any financial statement or document the submission of which is determined by the Act and the production at all times of the documents that may be demanded under the Act, or the payment by the local councils of any penalties imposed for failure to submit the financial declarations or other documents to the central government promptly. Such an amount may not exceed 1% of the financial allocation at any given year.
Furthermore, under Article 55(3) of the Local Councils Act the Ministry of Finance may allocate a fund each year to compensate for the co-financing of European Union projects.
The expenditure of each local council is monitored and controlled by the central government through the provision of annual budgets. According to Article 56(1) of the Local Councils Act, each local council shall no later than 2 (two) months after its first election and, subsequently once during the month of January in each financial year or within 15 days from the date the council is notified of its allocation whichever is the later cause to be submitted to it estimates of the income and expenditure of the council during the following financial year. Prior to their transmission to the central government, these estimates are approved by each local council and then they are forwarded to the Minister responsible for Local Government within the time limits specified under the Act.
Donations of any kind to local councils are prohibited by the Act under Article 63A of the Local Councils Act.
For the purposes of acquiring additional funding, the ability of local councils to borrow capital from non-governmental actors is limited. According to Article 3(2)(a) of the Local Councils Act, local councils do not have the power to borrow or lend any monies except with the authority of the Minister responsible for Local Government in writing, with the concurrence of the Minister of Finance. In the event that the loan proposed to be undertaken for the finance of a project is repayable within a period longer than 8 (eight) years, such a proposal has to be submitted to the residents of the locality for approval in a referendum pursuant to Article 3, paragraph 6 of the Charter. Article 63 of the Local Councils Act prohibits local councils from investing in any commercial undertakings unless authorized to do so in writing by the Minister responsible for Local Government and according to Article 61 of the same Act, the local councils cannot authorize any works the value of which exceeds the annual provision allocated to it for that financial year taking into consideration the amount forecast for payment of acts of ordinary administration.
page 527 / 796 As it is evident from the above, the provisions of the Local Councils Act dealing with the allocation of government grants to local councils are extensive and quite restrictive to local councils. The local councils are entirely financially dependent on the central government grants allocated to them annually and any supplementary or special funds are only provided to the local councils upon the written authorisation and approval of the central government through the Minister responsible for Local Government and the Minister of Finance.
During the consultation process, the Ombudsman stressed to the rapporteurs that the funds allocated by the central government to the local councils were inadequate and as a consequence the councils experienced financial difficulties preventing them from effectively performing and accomplishing their functions under the Local Councils Act. For instance, the Office of Ombudsman repeatedly received complaints against local councils from individuals seeking to recover the costs of repairing damage caused to vehicles as a result of bad maintenance of the roads which falls within the responsibility of the local councils. According to Ombudsman maintenance of the roads, streets, pavements and passageways in proper conditions can only be achieved if the councils, that are not economically independent and depend on the grant annually allocated to them by the central government, receive sufficient funds to, inter alia, implement roadwork projects for the benefit of the residents and visitors.
It is worth noting that there is no provision in the Act allowing local councils to raise money through taxes, contrary to Article 9, paragraph 3 of the Charter, which has not yet been ratified by the Republic of Malta. This maintains the financial dependence of local councils on the central government and prevents the local councils from regulating their affairs independently, contrary to the pursuit of the Charter for the creation of self-governed local authorities. Without financial independence to determine their expenditure and raise revenues through local taxes, Local Councils may not be considered entirely self-governed.
Furthermore, the grants allocated to local councils are provided to them for specific purposes only, as the categories mentioned above indicate, being in this way earmarked for specific purposes. This is inter-connected with the restrictive but detailed list of functions provided to the local councils under the Article 33 of the Local Councils Act. Consequently, it may be argued that the local councils are not able to dispose of their financial resources freely. Instead, the grants provided to them are directed towards covering specific categories of expenditure and the local councils do not have the ability or financial capacity to engage in the execution of non-mandatory tasks.
As to the adequacy of the grants allocated to them, one has to examine the size of the sums provided to local councils. The statistics mentioned above indicate that the size of the local councils’ resources have been kept at the same level for years and the expenditure on local councils as a proportion of the total annual government expenditure is miniscule, being approximately 1%. Nevertheless, this may be incidental and inter-connected with the fact that the Legislature has not provided a wide array of functions and responsibilities to the local councils. Since the functions of the local councils are limited and the expenditure of the local councils are pre-estimated through the annual budgets, approved by the House of Representatives and executed by the central government by way of allocation of grants, the maintenance of the said grants in low levels does not seem to come as a surprise.
In the event that local councils wish to embark in new projects or extend their expenditure in ways which are inconsistent within the narrow ambit of the Local Councils Act, they have to request additional funding, either by the central government directly or by obtaining a loan upon securing the consent of the central government. Such a task is reserved for the central government. Furthermore, during the monitoring visit the delegation was informed that obtaining additional funds for the execution of tasks not included under the Local Councils Act or the execution of infrastructure
page 528 / 796 projects or even for the more effective performance of the local councils’ responsibilities is by no means an easy task and such a process is time consuming. Furthermore, the restrictive list of functions provided under the Local Councils Act does not leave much room to local councils to engage in larger and costlier projects for the benefit of the citizens.
The delegation was informed that local councils experience financial difficulties which prevent them from performing their functions fully and effectively. It was emphasized to the delegation that the amount of the grant allocated to local councils every year is inadequate. Taking into consideration that local councils have no tax-collecting capacity and that their remaining income and monetary resources are severely limited, it is evident that the local councils experience considerable difficulty in executing their functions.
Apart from the above, consideration has to be given to the fact that part of the financial resources allocated to some local councils are used by Communities, established and operating within some of the localities, hence limiting the available sum of the grant allocated to each of these local councils.
In light of the above, the Republic of Malta is in violation of Article 9, paragraph 1 of the Charter, since the grants allocated to local councils for the execution of their functions are inadequate and they are unable to perform their functions effectively or at all, by reason of lack of economic resources.
Monaco [Non ratified - Report adopted on 28 March 2018 ]
The question of compliance with Article 9 of the Charter on financial resources appears complicated in the case of Monaco, particularly as it has not ratified paragraphs 1-4 and 8. Here it is important to check whether Monaco does not already comply with these paragraphs in practice.
The right of local authorities to have adequate financial resources of their own, stated in paragraph 1, does not seem compatible with the special tax arrangements in the Principality.
Montenegro [Article ratified - Report adopted on 21 October 2015 ]
According to Article 116 paragraph 3 of the Constitution of Montenegro, the municipality “shall be financed from its own resources and the assets of the stat”. The article also calls for municipalities to have their own property and their own budget.
The Municipality acquires funds from: its own resources; revenues transferred by the law; the equalization fund; and the state budget. According to Article 5 of the Law on Local Self-Government financing (which came into force in 2011), the municipality’s own resources are: real estate tax, surtax on personal income tax; local administrative charges; local communal charges; fees for utility equipment; fees for the use of municipal roads; fees for environmental protection and improvement; resources from sale and rent of municipal property; capital income; fines from misdemeanour proceedings and confiscated gain from these proceedings; concession fees for performing communal affairs, revenues from activities of municipal bodies, services and organizations and revenues from grants and subsidies. The article also refers to other laws which may provide additional revenues.
The municipality has its own budget. The municipal budget is adopted for a fiscal year starting from 1 January until 31 December of a calendar year. The municipal budget includes all revenues that belong to a municipality and all the expenditures from its jurisdiction. The municipal budget includes revenue by source and expenditure as well as by functional and economic classifications.
page 529 / 796 The process of fiscal decentralisation in Montenegro is closely related to the precise definition of municipal tasks or competences in the terms of the paragraphs 1 and 2 of Article 9. The Law on Local Self-Government prescribes that municipalities are responsible for: the passing of development plans and programmes; spatial-urban and other plans; multiannual investment plans; budgets; organisation and ensuring of carrying out and development of utilities, maintenance and protection of local and uncategorised roads and management, disposal of and protection of its property, etc. Local self-governments in Montenegro currently have no competences in education and healthcare, although the Law on Local Self-Government lays down that a municipality, in accordance with its abilities, participates in ensuring the conditions for and improvement of the following activities: healthcare; education; social and child protection; employment, and other fields of interest for the local population, and exercises the rights and obligations as founder of the institutions it establishes in these fields Whilst the above law concerns only primary healthcare, the Draft Healthcare Act introduces obligations for municipalities at secondary and tertiary healthcare levels as well, without defining, at the same time, the revenues which would be used to finance them. Further, the Act on Emergency Medical Assistance states that local self-government will use its own funds to finance the operation of temporary emergency assistance subunits, with their additionally hired staff, in areas where the number of healthcare users is increased due to the transit and accommodation of tourists. This constitutes a transfer of affairs from the state to local self-government, i.e. a "decentralisation of affairs", which should be supported by appropriate financial decentralisation requiring new, additional sources of revenues for performing the new activities. In the existing financial situation of municipalities, characterised by limited sources of funds for implementing activities assigned to its jurisdiction under applicable regulations, it is unlikely that municipalities will be able to perform additional work as proposed by the said legal provision, unless new sources of funds are established.
Further acts, mostly of an administrative nature (such as issuing approvals, keeping records etc.) have also been transferred to local government (via regulation) without establishing additional sources of financing – although they imply employing additional staff. These include the Rafting Act, the Act on Alcohol and Liquor, the Wine Act, etc.
In other examples the transfer of responsibility is accompanied by the transfer of finance: Over a period of 7 years (2008-2014) the capital city was entrusted by decree to inspect supervision of space protection (that is, to prevent illegal construction) for which funds were transferred from the state budget to the budget of the capital city, taking account of the salaries of inspectors recruited for these tasks.
Netherlands [Article ratified - Report adopted on 26 March 2014 ]
The financial resources of local authorities are a hot topic and an important source of controversy in the Netherlands. It is important to note that the Netherlands made a declaration in their instrument of acceptance (1991) that “it shall not consider itself bound by the provisions of Article 9 paragraph 5 of the Charter”.
In purely legal terms, Article 132 para.2 of the Dutch Constitution provides that: “the taxes which may be levied by the administrative organs of provinces and municipalities and their financial relationships with the central government shall be regulated by Act of Parliament”, and the Municipalities Act include extensive provisions on municipal finances (Articles 186- 266). Furthermore, the Financiële Verhoudingswet regulates the intergovernmental financial relations.
As noted supra, this aspect of the Dutch system of local government was analysed in extenso on the occasion of the last Congress monitoring report on the Netherlands (2005). Recommendation 180 (2005) on the state of local finances in the Netherlands Congress mainly discussed the situation of local finances in the Netherlands, based also on
page 530 / 796 Recommendation 79 (2000) on the financial resources of local authorities. In that document, the Congress noted that the local taxation system of the Netherlands was characterised by the fact that 83% of the local fiscal revenue derived from the real estate tax, that the part of the fiscal local income covered only 8.8% of the municipal revenue and that the local taxes covered only 1.1% of the GDP of the country. In the prospect of – by that time – announced amendments on the financial scheme for local authorities in the Netherlands, the Congress recommended the Dutch authorities that they change the provisions of the draft law so as to grant the municipalities an alternative possibility of levying local taxes; furthermore, it called on competent Dutch authorities to consider not following up on the proposals, which would infringe upon Article 9 of the Charter. It also recommended that the Dutch government continue to seek, in co-operation with the Association of the Netherlands Municipalities, ways and means to grant the municipalities by law, as from 2007, an alternative source of local fiscal revenue (simultaneously with the reform of the real estate tax) at least of the same volume as the current real estate tax of which they will have the freedom to determine the rate.
In a nutshell, the present situation of local finances (both municipalities and provinces) in the Netherlands may be presented as follows:
Sources of funding
Local bodies receive budget from different sources: a) Local taxes and other income (for example from land development), b) Lump-sum payment from the Government funds (algemene uitkering, Municipality fund and Provincial fund), c) Allocated payments from the Government funds (integratie- and decentralisatieuitkering), d) Specific transfers from line departments (specifieke uitkering), e) The sale of property and assets.
They see fit, where part of that will be used to execute tasks that are set by law. The Government does not formulate binding instructions or guidelines for decentralised governments for setting priorities, programmes or policies, nor does any other Cabinet member. The local democratic process is responsible for the planning and the budget. The Ministry of Interior guides the local governments executing their tasks. In the case of specific transfers (letter “d”, above) local authorities have the obligation to provide ex-post information on the allocation of those payments, to make sure that the money was spent on the goal as described by the competent State department. If not, the money is claimed back from the local authority.
Municipalities also get some subsidies from Provinces: for example, subsidies for special initiatives that are also in the province´s interest. Those are for investment in roads and public transport stops, or making plans for touristic places. On the other hand, local authorities can ask for loans from the private sector and form public debt, and the prior approval of the Ministry of Finance is not required.
At least twice a year, there is a formal meeting (called “Bofv”) between the Government and the representatives of local authorities on financial issues. The allocation of financial resources by municipalities is not part of these meetings, since decentralised governments are free to spend most of their resources, as long as the local democratic process supports it.
Articles 189 and 193 of the Municipalities Law and the Provincial Law respectively state that the municipal and provincial boards need to make sure there is a balanced budget, but that the board can deviate from this when it can make a case that a balanced budget will be achieved within the next three years. In law, there is no limit to the deficit that can occur under these rules. It is up to the financial supervisor of the municipality or of the province to determine what is an acceptable deficit, given the situation. If it is not plausible to assume that a balanced budget will be achieved within the following years, the supervisor will intensify its control.
page 531 / 796 Some fresh data on the financial situation of local authorities
Proportion of transfers granted to municipalities by the State which are free and “earmarked” (pattern of evolution for these figures in the last five years).
Official position of the Ministry of Finance on the subject of local authorities finance
The fact that the main source of funding for Dutch local authorities comes from central government transfers is not new. A major source of income is the lump sum payment that municipalities receive from the Municipality Fund. Local authorities have complete autonomy as to how they spent this income this income as well as income generated by local taxes. This situation is seen as satisfactory by the present Cabinet. On the other hand, there are no measures taken to increase the tax base or the taxing power of local authorities.
The Dutch government supports the view that it has to fulfil the pledge, made in 2005, to increase the Municipal Fund, in order to compensate municipalities for the loss of income produced by the reform of the real estate local tax. As a matter of fact, in 2006 an amount of approximately 1 billion euros was added to the Municipality fund to compensate the loss of income.
The law that describes intergovernmental financial relations (‘Financiële Verhoudingswet’) provides for a safety net for municipalities that have an unbalanced budget (Article 12 of that statute).
The State’s contribution to the funds is linked to the development of central government’s spending. Because of the economic crisis, there have been budget cuts in the central government budget. Therefore, the State’s contribution to the Funds has been cut as well.
For 2012, the volume of debt of local governments amounted to 53.8 billion euros. One of the measures that are being taken is that local government will be obliged to keep their deposits at an account at the Ministry of Finance (treasury banking).
During the consultation process, the Minister of the Interior and Kingdom Relations informed the Rapporteurs that a letter had been sent in October 2013 to the House of Representatives on the subject of the “Design of the Constituent Fund for the Social Domain”, concerning the sub-fund for the financial compensation of the future decentralised responsibilities of municipalities in the social area. For this new responsibility, a specific budget without separate divisions, aimed at inceasing participation in society, was considered appropriate. With this “design”, the Cabinet sought for a balance between, on the one hand, the policy freedom for municipalities to provide local services and on the other, the measures necessary for its successful implementation during the first transitional years.
Conclusions
Although the Congress Recommendation 180 (2005) did not have the desired impact on national authorities and the situation remained unchanged. Its findings and general assessment of the insufficiency of the “own resources” of municipalities are still valid today. In the last years, the legal context has not been amended in order to increase the local taxes or “own resources” in general. Although Dutch municipalities do levy some taxes, they are mainly funded by a central government- run program, called “Municipalities Fund”, which transfers the amount granted to every municipality according to a complex set of criteria, data and coefficients (more than fifty).
Local leaders concurred on this view, and they claim that their own income remains limited; that they are not fully compensated for the execution of central government tasks in the framework of
page 532 / 796 joint authority; that, if the sustainable government finance white paper is approved, local governments will be hindered in making investments and using their reserves. Since they will no longer be able to place their assets with a bank of their choice, but only with the central government (treasury) banks, they will get reduced returns because the interest rate paid by central government is considerably lower than that offered by the banks. Therefore, and according to local representatives, the Law on the Public Finance (Hof) and the ‘Schatkistbankieren’ (financing by the Treasury) have shown so far examples of what should be avoided. Furthermore, in the Council of State’s publication ”Inter-administrative Relations Re-evaluated” (page 32), it is stated that “the Department has also evaluated two legislative proposals (the Sustainable Public Finances Act and Treasury Banking) which, according to the IPO, VNG and UvW, are being considered jointly as an attempt to limit the powers of decentralised authorities to manage and allocate their general resources for themselves”.
All the local politicians met by the Congress delegation stressed the view that the local taxation reform has limited the income of municipalities, since tenants of houses do not pay the general property tax. Furthermore, municipalities also complain about the fact that the Municipalities Fund has suffered subsequent reductions over the years. The Minister of the Interior and Kingdom Relations refers to the report of Staat van Bestuur 2012 (Administration report) that stipulates that the size of the Municipalities Fund has increased in recent years. Municipalities in the Netherlands claim that their tasks have increased which mean a relative loss of fund. As regard the next decentralisation processes, concerning social programs, will be performed by the central government, but the State is not going to give the municipalities the same amount of money that is spent by State agencies on those programs. In the government’s understanding, because municipalities will be responsible for implementing those programs, the fact that they are the administration closest to the citizens will produce in itself some savings and “efficiency gains. Therefore, it is expected that municipalities will be able to implement those programs at a lesser cost. These efficiency gains and savings have been calculated unilaterally by the central government, without sufficient analysis and municipalities complain about the fact that they cannot provide these programs, at the same quality level, with far less money than before.
North Macedonia [Article ratified - Report adopted on 26 February 2013 ]
Municipal property contains land, facilities, financial resources (money) and rights. With the exception of possible delegated functions (in future), all municipalities have the same expenditure responsibilities; only the City of Skopje has special legal provisions for sharing the competencies with its 10 constituent municipalities.
Legislation determines how municipalities may dispose and manage their assets. The Law on Financing Units of Local Self-Government of 2004 (hereafter the “Finance Law”) has re-opened the process of fiscal decentralisation.
In 2005, in accordance with the above Law, municipalities received the authority to fully administer and collect property tax and the tax on sale of property as well as certain local fees. The level of taxes and fees is determined by a lower and upper limit allowed by laws and the Municipal Councils are responsible for determining the exact percentage of these charges. For example, the Law on property taxes determines that property taxes can range from 0.1 to 0.2% of the estimated value of the property of a citizen. Each Municipal Council can decide what the amount applied in the respective municipality will be. Only one municipality (GjorÄe Petrov) has actually determined the maximum amount of 0.2%, while all other municipalities apply the minimum amount.
Local resources and taxes
page 533 / 796 Municipal sources of revenues and their comparative size are (Article 4 of Finance Law): Local taxes established by law and administered by local bodies are the property tax, the inheritance and donation tax, the real estate transaction tax, and 100% of the personal income tax of individual craftsmen. Local fees which the local authorities determine and are entitled to collect are communal fees and administrative fees. Local charges, in particular construction land arrangement charge, charges for urban and spatial plans and communal services utilisation charges. Property revenues: revenues from property sale or rent and interest rate revenues. Penalty revenues which are determined and collected as sanctions for the violations of municipalities’ regulations. Donations (currently foreign donations are relevant). Loans (upon authorization by the central government). Subsidies from various funds, e.g. fund for economically underdeveloped areas, fund for communal activities and roads, fund for water pipes and sewages. Grants: purpose grants, non-purpose grants, block grants for expenditure, grants for capital investments, grants for delegated competencies.
Shared revenues, in particular share in national taxes
Shared revenues are coming from the personal income tax and the Value Added Tax (VAT): municipalities receive a share of 3% from both. By 2013, the VAT share is to be increased to 4.5% (in practice, by the end of 2011, the quota had already reached 3.7%).
VAT grants are general grants which are not subject to any conditions and which can be fully used in line with the needs of a municipality. Their distribution is in line with the criteria determined in the Decree on Methodology for Distribution of VAT Revenues by Municipality. Total VAT revenues, collected in the previous fiscal year, are to be distributed both by a fixed amount (3,000,000 Denars, approximately 48,580 Euros) to all municipalities (including Skopje and its municipalities), and as a variable portion (12% goes to Skopje and its municipalities and 88% to all the others). The latter portion is distributed according to the following criteria: 65% according to the number of inhabitants, 27% according to the area of the municipality and 8% according to the number of settlements.
The average share of tax revenues in the local authority budgets has been around 30%. In 2007, they participated with 37.8%; in 2008, they accounted for 21.2% of the total and, in 2010, they amounted to 24.6%, as a result of the increase of transfers from the central budget in the form of block grants to the municipalities which had moved to the second stage of fiscal decentralisation.
Provisions in special laws have further increased the revenue of municipalities, in particular by sharing the income from concessions for exploitation of mineral resources (22% State – 78% municipalities) and for the sale of construction land (20% State – 80% municipalities) which is transferred from the Ministry for Transportation and Communication to those municipalities which fulfil certain administrative criteria. Currently 14 municipalities are entitled to manage land.
Grants
Grants from the State budget and the budgets of various funds provide additional revenues. Capital grants are used to finance investment projects on the basis of a program determined by the Government and their use are monitored by line Ministries and the Agency for State Roads. Earmarked grants are used for financing specific activities of municipalities that are in the first stage of fiscal decentralisation for education, culture, social policy and child protection as well as fire- fighting. Line Ministries propose and monitor the distribution of earmarked grants by municipality, project, institution and/or program.
Municipalities argue that this financial instrument should be transferred to them so that they themselves can decide which investments will be financed (instead of a decision by central authorities). In fact, cases have been reported where central government decided to build a school in
page 534 / 796 a municipality without prior consultation, although the municipality had other priorities.
In the second stage of the fiscal decentralisation process, municipalities finance the transferred competences with block grants which include expenditure related to salaries and costs pertaining to maintenance of buildings, goods and services. Line Ministries propose the methodology for determining the criteria for the distribution of block grants. Each year the central government adopts a Decree on Methodology and Criteria for Distribution of Block Grants, the total amount of which may not be less than the amount of funds from the central budget used for the same purpose in the year before the transfer of a certain competence.
Fiscal decentralisation
Fiscal decentralisation is an important part of the whole decentralisation process as budget and fund transfers to municipalities must accompany the transfer of (new) competences.
The Finance Law provides for the implementation of fiscal decentralisation in two phases (starting on 1 July 2005). In the first phase the fulfilment of two conditions is required (Article 46) according to which, municipal administrations should have at least two employees qualified to work on financial management, budget preparation, budget execution, accounting and financial reporting, and three employees qualified to work on determination and collection of taxes.
In order to access the second phase (which was supposed to start in July 2007, but had been postponed to January 2008), municipalities have to meet the following criteria: a) fulfilment of the two conditions of the first phase; b) good financial results in the previous 24 months; c) adequate staff capacity for financial management; d) timely and regular notification to the Ministry of Finance regarding good results and verification by the same Ministry; e) no outstanding liabilities vis-à-vis suppliers or other creditors that overcome the usual payment condition.
For monitoring and assessing compliance with these conditions, a Commission has been established in January 2007 which meets four or five times a year. It consists of a President, nine members and a secretary. Among the members there are the President and Vice-President of ZELS, Mayors, representatives of line Ministries, academics and international experts. There is also an inter- ministerial working group meeting regularly, every two months.
According to the information provided to delegation during the visit, by the end of 2011, 79 out of 85 municipalities had entered the second phase of decentralisation, and only six (all from the Western part of the country) remained in the first phase. However, four of these six municipalities have sizeable debts, and two of them lack financial management capacity. Additional efforts are needed in order to prepare them for moving to the second phase.
Municipal debts, borrowing and financial equalisation
Before the adoption of the Finance Law, there was no instrument envisaged for the purposes of equalising the financial situation of local governments set in the legislation on local self-government. However, there were transfers and funds. Although not originally designed for this purpose, in practice they were used for equalisation purposes. Under the new law, the only defined equalisation instrument is the revenue that will be transferred from the yield of the value added tax. Although not explicitly mentioned, block grants are also considered as instruments the government can use to equalise the financial situation of local authorities. In the City of Skopje and its municipalities, a joint fund has been established for the purposes of equalisation (in accordance with a specific methodology for distribution of the funds).
page 535 / 796 In order to overcome the liquidity problems of the municipalities, a new instrument has been introduced in the form of short- and long-term loans (up to ten years) from the central budget. The Government has approved 23 such loans, 13 out of which are short-term and 10 are long-term (with a repayment period of up to five years). By approving long-term loans, a positive effect has been achieved, overcoming liquidity problems.
Pursuant to the Law on Local Government, municipalities cannot go bankrupt, but the Finance Law has provisions for declaring a state of financial distress. In the latter case, the Mayor adopts a decision to declare financial distress and informs the Municipal Council, the Ministry of Finance, the Ministry of Local Government and ZELS thereof within three days. A Coordinating Body consisting of five members monitors the coordination of the process to overcome financial distress. The Mayor then submits a draft plan of measures, which are implemented through the supplementary budget or the budget of the municipality for the respective fiscal year. The Mayor decides when to declare the situation of distress over.
In order to take loans, municipalities must consult with the Ministry of Finance, which controls the level of borrowings and loans, as well as deficits of local budgets. The criticism made of the restrictions created by a case-by-case authorisation system which goes contrary to the Charter’s Article 9 para. 8 has been met with the adoption of new Law on Public Debt and the Law on Local Financing. In June 2011, the Ministry of Finance adopted two Rulebooks (published in the Official Gazette, no. 83/2011) on the form and content of borrowing by the public institutions and public enterprises owned by public institutions, respectively.
The Parliament is also involved in this situation because indebted municipalities are considered to be part of the general public debt and therefore, all municipal borrowing has to be approved by the Parliament. The latest example is of a loan from the European Bank for Reconstruction and Development (EBRD) to the City of Skopje approved by the Parliament. In cases where municipalities are charged by commercial banks, only the opinion from the Ministry of Finance is required, i.e. the Parliament does not get involved.
Municipalities borrow on a long-term basis for financing capital projects and investments, for re- financing debts incurred to finance capital projects and investments, for liabilities incurred under “sovereign guarantees” or on the basis of loans from the central budget and protection and elimination of consequences caused by natural disasters or environmental disasters. Borrowing is limited: annual instalments must not be higher than one third of the budget of the previous year.
Municipalities have access to the capital market in order to realise capital projects for the improvement of infrastructure and utility services. They can also issue municipal bonds to be used for planned development projects. A “Guide for Issuance of Municipal Bonds” has been prepared for the purpose of informing the municipalities as regards the manner, procedure and the advantages of issuance of municipal bonds.
Evaluation of the financial situation
Although local self-government spending results in 17.2% of the total budget, municipal revenue does not seem sufficient for addressing the assigned tasks efficiently. Most municipalities, therefore, are still struggling to harvest their own income and the State still finances most of them.
This is illustrated by the example of the city of Zhelino: 25 Euros per capita (compared to 100 Euros in the City of Skopje) are simply not enough for fulfilling the municipality’s competences. The municipal administration does not employ an architect for urbanism, an internal inspector (or auditing unit), or an environmental inspector. Maintaining infrastructure for services is problematic:
page 536 / 796 there are still private homes and settlements without electricity; only 2 out of 18 settlements have water-pipelines and the school building which was destroyed by a fire will only be replaced next year when the replacement is included in the budget of the Ministry of Education.
Among the main causes of the insufficiency of financial resources figure the – still – centralised management of State-owned land, the inadequately monitored or insufficiently implemented property tax collection and tax-payer databases which are not updated. The administrative capacity of some municipalities, in particular the smaller ones, remains low in the areas of financial management, tax administration and financial control. Transparency and accountability of local government administrations is still inadequate.
The Rapporteurs have noted that, in order to improve the situation of small and rural municipalities, the application of the new formula for a “guaranteed minimum-income” appears to be a promising step in the right direction: a minimum of 3 million Denars is guaranteed for each municipality. Further resources are added according to the VAT and income-tax quotas (criteria: 50% per capita, size of the area and the number of settlements). With this new method of calculation and allocation, no municipality should have an income of less than 4 million Denars.
ZELS position paper for 2011 requests an increasing share in VAT for municipalities from the current 3% to 6% (against the 4,5% actually envisaged as objective for 2013) as well as an increase in the amount of personal income tax-share from the current 3% to 15%.
Despite the achievement of some important results in the decentralisation process, several problems remain, such as the great disparities among the municipalities and in their capacity to perform specific functions. As a consequence of their budgetary problems it is difficult for local authorities to participate in EU funded projects which necessitate co-financing of resources. Consequently, rural municipalities in particular are dependent on grants, since they cannot rely on taxes from buildings or resources from land. Although criteria for grants for capital investment (infrastructure) are well- defined by international donors (IMF, World Bank), this does not always seem to be so in the case of State grants.
In the opinion of the Rapporteurs, more central coordination, support and supervision is necessary in the area of transferred competences. This is illustrated by the frequently mentioned example of education-related competences: once secondary education became mandatory, the problem of covering the additional costs for pupils’ transport has emerged everywhere, but the Ministry of Finance seems to ignore it, referring to block grants for these functions, which are not earmarked. The Ministry’s message seems to be: “Just organize procurement better and save!”.
The Rapporteurs are of the opinion that local authorities should be duly consulted in respect of Government investments in their localities whilst the grants afforded to them should not impinge on the fiscal autonomy as provided under the Charter.
The Rapporteurs also note that the planning of expenses regarding education seems to be inadequate and prone to coordination problems. While the Ministry of Finance transfers earmarked funds to municipalities for maintenance and heating expenses of school buildings, the salaries of employees and transportation of pupils and priorities of capital investment for schools are defined in the annual program prepared by the Ministry of Education which transfers funds directly to the schools, depriving municipalities of the financial means to invest in the schools.
To overcome these problems, ZELS has suggested the establishment of criteria for the allocation of funds for capital investments in schools as well as its own involvement in the planning process of the central authorities regarding these funds.
page 537 / 796 Norway [Article ratified - Report adopted on 26 March 2015 ]
Norwegian local authorities have their own resources thanks to local taxes, central government transfers and charges levied on users of public services (water supply, waste collection, child care, etc.). The central government transfers are made up partly of general grants (36% of total revenues) and partly of earmarked grants (5% of total revenue in 2014). Resources derived from taxation and general grants awarded by central government may be disposed of freely. Municipalities (and counties) may spend these funds as they see fit provided that they duly perform the tasks assigned to them by law. In total, it appears that some 75% of all local authority resources may be freely disposed of.
It appears from the information received from Norwegian local authorities that the resources available to them are generally sufficient to enable them to carry out their tasks. Central government transfers can be increased if municipalities have to meet particular needs. The four biggest municipalities (Oslo, Bergen, Trondheim and Stavanger) receive a special “urban grant” to offset the costs entailed in being an urban centre.
Local taxes and levies account for approximately 40% of local authorities’ total resources. Fees and charges levied on users of public services make up roughly 15% of this amount. Local authorities are free to set the rate of local tax, within the limits of a statutory ceiling, but it seems that, because of financial needs, it has been nearly 35 years that any local authority has set the local tax rate lower than the highest level permitted by law. As a result, all municipalities apply the same level of taxation.
Local authorities’ main source of tax revenue is income tax, of which they receive a share. The amount of income yielded by this source does in fact evolve, therefore, depending on economic growth. There is also a wealth tax which is levied at both municipal and central government level. Municipalities can also choose to levy a property tax under the Property Tax Act. Between 2005 and 2013, local authority revenues rose by 2.5% per year, 0.3% up on the previous 15 years, due to regulations of property tax creating a larger base for taxation.
One of the main aims of the system of funding local authorities is to equalise their resources so that they can offer the same standard of service anywhere in the country. There is therefore a significant degree of redistribution of resources by central government, based on several criteria. When distributing general grants, which are allocated in the first instance according to the number of inhabitants in the municipality (a per capita grant totalling NOK 218,00), central government takes account of both structural cost differences between municipalities (expenditure equalisation) and differences in tax revenues (income equalisation). The expenditure equalisation component is based on a set of objective criteria designed to equalise resources across the country. They include the age structure of the population, the number of married, single and divorced people, the number of jobless, the number of immigrants and the number of people with disabilities. The income equalisation component, on the other hand, is based on the income tax and wealth tax paid by individuals and the natural resources tax paid by companies operating in the energy sector. Local authority resources also include central government transfers to enable authorities to pursue regional policy goals (e.g.: Northern Norway and Namdalen grants, district grants to Southern Norway). A special grant is available, furthermore, for small municipalities (fewer than 3,200 inhabitants) whose tax revenues have been below 120% of the national average over the past three years. Municipalities which are experiencing unusually rapid population growth receive a special grant. In addition, “discretionary” grants can be awarded to local authorities to compensate for specific circumstances which are not compensated by the general grant scheme. All in all, it appears that the system of distributing resources between Norwegian local authorities fully satisfies the
page 538 / 796 requirements of the Charter.
Norwegian local authorities represented by their association (KS) are regularly consulted by the Norwegian government about the distribution of resources between local authorities. In the course of these meetings, the cost of reforms and the compensation payable by central government to local authorities are also discussed, due to the general principle that new tasks for local government should be fully compensated by the central government – while full compensation may often be a matter of negotiation.
The share of earmarked grants in total central government transfers to local authorities is significantly smaller than that of general grants and has tended to diminish in recent decades. In 2014, (unconditional) general grants accounted for 36% of local governments’ total resources, whereas (specialised) earmarked grants made up only 5%. In this context, KS remarked that there is continuous pressure from interest groups and their political spokesmen to introduce and increase earmarked grants.
Since 2001, Norwegian local authorities have been able to borrow without the prior approval of central government, but only for the purpose of financing capital investment. While there is no limit on the amount that may be borrowed, restrictions apply to municipalities whose budget is found, in the course of the governor’s review of local government budgets, to be in deficit, and also to municipalities which have failed to eliminate their deficits within two years after the deficit has been presented. These municipalities are then entered in a register (the ROBEK, Register for Governmental Approval of Financial Obligations) and may borrow only with the prior approval of central government. As of 1st September 2014, 54 municipalities were listed in this register (roughly 12% of the total number). After rising sharply in 2005 (to approximately 120), the number of municipalities listed in the Register has levelled off since 2007.
In the light of the above, the rapporteurs conclude that Norway is in conformity with Article 9 of the Charter.
Poland [Article ratified - Report adopted on 2 April 2019 ]
According to Article 9, paragraph 1 of the Charter, local authorities should have adequate financial resources of their own, of which they may dispose freely within the framework of their powers. Financial autonomy is an essential component of the principle of local self-government and an important condition for the exercise of a wide range of responsibilities in the field of local public affairs. These elements are cumulative and not alternative, which means that all the conditions laid down in Article 9, paragraph 1 of the Charter are mandatory. Another basic principle, established in Article 9, paragraph 2, requires that local authorities should have sufficient financial resources in proportion to the responsibilities assigned to them by law.
In Poland, local authorities manage a substantial part of financial resources, which account for up to 31.3% of public expenditures. Their revenues correspond to 13% of the GDP (4.1% of the tax revenues, 7.5% of grants and subsidies; 1.3% of other revenues). The true question, however, is whether they are allowed to dispose freely of those resources and whether these are proportional to the level of local responsibilities.
The issue was already raised during the 2014 monitoring visit. Recommendation 373 (2015), which reiterated the previous Recommendation 120 (2002), invited Polish authorities to assist the devolution of powers with the transfer of adequate financial resources and to find a new compromise for concomitant financing.
page 539 / 796 It should also be mentioned that according to the OECD, in 2016 only 35.7% of total public investment was carried out by subnational governments in Poland compared to an OECD average of 56.9%. The share of public investment carried out by subnational governments in Poland is among the lowest among OECD countries.
Notwithstanding the fact that Poland has experienced in the last few years a remarkable economic growth, the issue concerning the availability of adequate financial resources, that are commensurate with the responsibilities of local authorities, remains unchanged. During the visit, the delegation heard complaints raised by the Association of Polish Cities and by many local authorities’ representatives.
The Ministry of Finance pointed out that the financial resources of local authorities experienced a steady growth over the last years, including their own income.
The local authorities’ representatives raised three main complaints. Firstly, the resources are considered to be insufficient. Since the amendments to the Law on the Personal Income Tax of 2005-2006, the financial soundness of municipalities have been weakened without any compensation and without any decrease in the scope of local tasks. Secondly, the State is establishing higher standards for local services without transferring extra resources, thereby asking local authorities to make up for the difference in expenditures. Thirdly, the State is transferring new competences to local authorities, without adequate financial resources.
The powiat seems to be the weakest level of government. The powiaty’ representatives pointed out the financial difficulties that they are experiencing, which, in turn, generate an excessive debt. The improvement in standards in social assistance, retirement homes, orphanages, centres for troubled youth, safe houses for disadvantages people generate additional expenses that are not covered by the State through transfers of resources and must therefore be payed for with their own resources.
Education is a problem for both municipalities and powiaty. The negotiation on teachers’ salaries is carried out at national level, but the salaries must be payed by the local authorities. Subsidies for education increased by 1%, compared to a 5% of increase in education expenditures.
During the consultation procedure, the government expressed totally opposite views and underlined that the local self-government incomes had been growing, in particular as a result of the recently adopted legislation and recovery actions. The government presented the detailed data from the Ministry of Finance on the financial situation of self-governments in the period 2014-2017 to further underline a generally positive financial standing of local self-government, despite a small deficit in 2017. It also argued that the financial resources available to subnational government are adequate since, according to the data it presented, the level of asset-related expenditure of local self- government units is high and the high number of self-governments has operational surplus in the period of 2014-2017. The government also argued that the subsidies for education have always constituted one of the sources of financing the education and that there were no significant changes from 2014 to 2016 in the ratio between the local government current expenditures on education and the state budget current transfers (educational part of general subsidy and special grants for education tasks).
Notwithstanding the growth in financial resources of local authorities pointed out by the government, the rapporteurs are especially concerned by the fact that the cost of the improvement in the quality of services and salaries - that is part of a policy carried out at national level - is de facto charged to local authorities. In addition, data elaborated by independent academic research teams suggests that the growth in 2016-2017 is misleading, in the sense that it is to a huge extent a result of the
page 540 / 796 new social protection programme (so called 500+ programme) which is implemented by local governments, acting as agent of central government, whereas there was a slight decrease of powiat revenues and sharp drop of regional revenues.
Therefore, the rapporteurs consider that the requirements of Article 9, paragraphs 1 and 2, are only partially respected in Poland.
Portugal [Article ratified - Report adopted on 28 September 2020 ]
The basic rules of the system of local authority finance are guaranteed by Article 238 of the Constitution. This article contains at least five guarantees: autonomy of local authorities in terms of their own assets and finances; the principle of fair sharing of public resources between the State and local authorities; the need for equalisation to correct inequalities between local authorities of the same category; the allocation of income derived from local assets and charges for local services, and the power to levy taxes in accordance with the law.
On a formal level, the rapporteurs conclude, therefore, that Article 9 paragraph 1 of the Charter is complied with.
Republic of Moldova [Article ratified - Report adopted on 4 April 2019 ]
These three indents of the Charter should be analysed jointly since they are interrelated and in summary they require the sufficiency of financial resources for local authorities. Before analysing these provisions, it is important to stress two important points. On the one hand, it should be underlined that the Moldovan Constitution, although it devotes several provisions to local government, does not include any paragraph or indent on the issue of the financing of local authorities. The only reference to local finances is to be found in Article 131.5, which states that “the district, town and village budgets shall be drafted, approved and carried out in accordance with law”, which is basically an empty provision. The same is true for Article 132.1, which provides that, “all taxes, duties, other revenues of the state budget and of the social insurance budget, as well as of the district, town, village budgets are established under the law by the competent representative bodies”. Therefore, the principles of sufficiency and commensurability of local finances, as well as the buoyancy and variation of those resources, are not recognised in the constitution. Moreover, the Constitutional Court has not issued any ruling on the issue of local financial autonomy.
Consequently, the regulation and structure of local financing is left totally in the hands of the legislature and of the government. In this field, the most important pieces of legislation on this matter are the Law No. 397-XV on Local Public Finance of 16 October 2003; the Tax Code of the Republic of Moldova No. 1163 of 24 April 1997, the Law No. 847-XIII on the Budget System and Budgetary Process and the Local Public Administration Act of 2006.
In the area of budgeting and expenditures, villages and towns are free to draft and to approve their own budgets, a process that is governed by the Public Finances Act. The local council is the competent authority to approve the budget. Local authorities are in theory autonomous in deciding their spending priorities (at least with their “own revenue”), and in principle the central government or other state authority cannot interfere with municipalities’ budgetary autonomy. In this sense, state institutions are not allowed to interfere with the drafting and execution of local budgets. As noted above, once the local annual budget is approved it must be forwarded to the Ministry of Finance, but this body does not carry out any formal approval or amendment of the budget.
The general situation of local finances in Moldova has recurrently been evaluated as poor by the
page 541 / 796 Congress. Thus, in Recommendation 179 (2005) on local democracy in Moldova, the Congress introduced several recommendation and points in this field, and went on to note, among other things, “the very limited extent of local financial autonomy in Moldova and the almost total lack of freedom on the part of local authorities to decide on financial matters” (point 8.c.i). And in Recommendation 322 (2012), the Congress also observed several unsatisfactory aspects in this respect (point 5, c-e). The rapporteurs did not see any substantial improvement during their visit. Moreover, in a report made in 2017, the Court of Auditors of the Republic of Moldova concluded that local authorities are totally dependent on the central government.
In the Republic of Moldova, the main sources of local revenue are the following: own revenue (local taxes and fees). Local taxes will be addressed in more detail below; shared taxes and fees; special means (special funds); transfers (from the state budget). In the Republic of Moldova, most of the revenue of local authorities comes from transfers granted by the central government. These transfers will be analysed at point 4.8.7, below; borrowing. This will be address in more detail below; revenues from property sales, rent and privatisation; revenues from commercial activities.
According to figures provided for the Ministry of Finance for the last three years, the revenue structure of local authorities can be broken down as follows: in 2015, the total revenue for local budgets was 11 039 million lei, of which “own revenue” represented 981.7 million lei (8.9% of revenues); the share in state taxes was 1 901 million lei (17.2%) and the total transfers were 7 504 million lei (68% of total revenue), including “general purposes transfers” to the amount of 852.9 million lei (7.7%). In 2016, the total revenue for local budgets was 12 053 million lei, of which “own revenue” represented 1 022 million lei (8.5% of revenue); the share in state taxes was 2 272.1 million lei (18.9%) and total transfers were 8 263.7 million lei (68.6% of total revenue), including “general purposes transfers” to the amount of 1 082.6 million lei (9%). In 2017, the total revenue for local budgets was 13 461 million lei, of which “own revenue” represented 1 280.4 million lei (9.5% of revenues); the share in state taxes was 2 171.2 million lei (16.1%) and the total transfers were 9 552.5 million lei (71% of total revenue), including a “general purposes transfers” to the amount of 1 211.1 million lei (9%).
Two preliminary conclusions can be drawn from these figures. First, that the proportion of “own revenue” in the budgets of local authorities is very low. Second, that local authorities are primarily funded through transfers granted by the state. The major part of local revenue in Moldova is represented by intergovernmental transfers and shared taxes and none of these sources are under the control of local authorities. These preliminary findings clearly go against the requirements of Articles 9.1 and 9.3 of the Charter.
The most important budget expenditures of local authorities in 2015 were as follows: first-level local authorities: a. education: 37%; b. general purpose state services: 12%; c. environmental protection: 12%; d. transport, roads and streets: 12%; e. culture, arts and sports: 12%;
page 542 / 796 second-level local authorities (Districts-Raioane): a. education: 52%; b. general purpose state services: 16%; c. social assistance: 8%; d. communal households: 7%. A clear picture emerges from these figures: education is the greatest expense of local authorities, but they have no power over the salaries of their employees (including teachers), since they are determined by the central government. They have little over social policies, too. Consequently, public finances are still centralised to a large extent.
Several indicators make it possible to assess the degree of fiscal decentralisation in the country. To begin with, the weight and importance of local budgets. In this area, the budgets of Moldovan local authorities are very low in comparison with European standards, according to experts and international organisations, and even the Ministry of Finance. For instance, the delegation was told that the total budget for expenses in the City of ChiÈ™inău is roughly €50 million, which is a small amount for such a big and important capital city. Another indicator is the share of local government expenditure in the total public sector expenditure. According to the data provided by the Ministry of Finance, this percentage was 24.8% in 2015, 23.2% in 2016 and 24.3% in 2017. These data may seem to be positive in the European context, but it should be remembered that there are no regions in the country (except the ATU of Gagauzia), therefore, the roughly 75% of public expenditure is still made at central level.
The fact that the system of local financing is insufficient and unsatisfactory is not only a recurrent claim of the CALM and local representatives; but it was also admitted by government officials during the meetings that the delegation had in Chișinău. According to the Ministry of Finance, the sources of revenue are not sufficiently diverse. Local finances are hit by different structural problems, such as the lack of resources for capital investment and the low level of collection of own revenue. Most of the Moldovan local authorities are underfunded, and the vast majority does not collect own resources to cover even its operational costs.
Officials from the Ministry of Finance also informed the delegation that in the last couple of years the government has adopted several initiatives to improve the situation of local finances. For instance, Law No. 281 of 16 December 2016 increased the maximum tax rate for housing real estate from 0.3% to 0.4%. And Law No. 288 of 15 December 2017 granted local authorities the right to determine the degree of completion of the construction for tax purposes based on the method established by the central specialised body, and the right of local authorities to decide whether to exempt certain individuals from the tax on real estate. They added that local authorities do enjoy discretion in the use of their own resources. The prioritisation and use of the available financial resources rests exclusively with local public authorities. The existence of local entities with low financial potential is the consequence of the underdeveloped economic base (potential taxpayers), which is due mainly to the existence of too many local authorities with a small population.
During the visit, the Ministry of Finance conceded that the situation is unsatisfactory, but pointed out that the economic situation of the country is also bad; that there is a high rate of tax evasion and corruption, and that the taxable basis of many local authorities (especially the small and medium- sized ones, and those located in rural areas) is very limited because of the poor economic structure in the country. Consequently, changing the regulatory framework to reinforce the fiscal autonomy of local government would not make a real change, because there is not very much to be taxed at local level. Therefore, the economic situation of local authorities seems to be a vicious circle: it is closely linked with the overall economic situation of the country, and will not change until the economic situation of the country improves significantly.
During the consultation procedure, the government pointed out that in the context of the National Decentralization Strategy a new system of local public finances was introduced in the Republic of Moldova, which radically changed the way of financing local self-government, the budgetary
page 543 / 796 relations between the national budget and local budgets of all levels. The government evaluates this new financial system as transparent, predictable and offering greater autonomy to local budgets and some incentives for local revenue growth.
Regarding local elected representatives’ position on the matter of finances, they unanimously stated that in general terms they were highly unsatisfied with the present arrangements. First, they complain that local authorities are clearly underfunded and they depend on transfers granted by the state. For instance, only 10 towns in Moldova collect enough resources to pay the salaries of their staff. All the rest have recourse to state transfers to pay its human resources and operational expenses. Second, they complained that the current system of transfers is also unsatisfactory, for the reasons that will be stated below. Finally, in too many cases, the law attributes new competences to local authorities without providing for new and adequate financial resources.
Finally, concerning municipal property, Moldovan local authorities have their own property, goods and assets. Their right to own land and real estate property is fully recognised, and they are free to manage their own assets and properties. For instance, they own the local streets, roads, parks, cemeteries, administrative buildings and facilities, schools, kindergartens, culture clubs, libraries, sport facilities, etc. One of the main problems in this regard, however, is that in many places the municipal land is not delimitated appropriately from private or state property. Consequently, the land units cannot be evaluated for tax purposes and the local authorities thus lose an important source of potential own resources.
In view of all these considerations, the rapporteurs conclude that Article 9, paragraphs 1, 2 and 4 of the Charter are violated in the Republic of Moldova.
Romania [Article ratified - Report adopted on 3 March 2011 ]
Article 9(1) and (2) of the Charter was adopted when Law no. 215/2001 was last revised.
Russian Federation [Article ratified - Report adopted on 30 October 2019 ]
According to the Constitution of the Russian Federation, local self-government bodies independently manage municipal property, draw up, approve and execute the local budget, and establish local taxes and fees. According to Article 52 of Federal Law 131-FZ, each municipal entity has its own budget (local budget). Preparation and consideration of the draft local budget, approval and execution of the local budget, and control over its execution, preparation and approval of the report on the execution of the local budget are carried out by local self- government bodies in compliance with the requirements established by the Budget Code of the Russian Federation (Part 2, Article 52 of Federal Law 131-FZ).
The Budget Code enshrines, inter alia, principles like the principle of balanced budget, the principle of total (aggregate) coverage of budget expenditures, the principle of transparency (openness), and the principle of budget reliability. Budgetary authorities of municipal entities are established by the Budget Code of the Russian Federation (hereinafter referred to as the Budget Code). Articles 61 and 611 to 615 of the Budget Code regulate in detail the issues of revenues of budgets of urban settlements, municipal areas, urban districts, urban districts with intra-city division, intra-city districts and rural settlements.
In accordance with Article 55 of Federal Act No. 131-FZ, local budget revenues are generated in accordance with the budget legislation of the Russian Federation, legislation on taxes and fees and legislation on other mandatory payments. The revenue base of local budgets is made up of
page 544 / 796 local taxes and levies, as well as of shares from federal and regional taxes and levies assigned to municipal entities on a permanent basis. At the same time, local taxes include the land tax and the individual property tax, since the tax base of these revenue sources is relatively evenly distributed across the country, and local authorities have a real opportunity to exercise effective control over the relevant objects of taxation. In addition, these tax sources are less subject to volatility as a result of fluctuations in the international economy.
Articles 387 to 418 of the Tax Code of the Russian Federation include general provisions for and limits on local taxes and duties (in particular, these provisions determine the taxpayers, objects of taxation, tax base, tax period, limits of tax rates and benefits). Local taxes comprise the land tax, the tax on the property of individuals and the trade tax. The law also provides for mandatory federal budget transfers to local budgets from the revenue of the following federal taxes: individual income tax, excise taxes on petroleum products, special tax regimes for small and medium-sized businesses, the single tax on imputed earnings and the single agricultural tax. According to the Russian legislation, the trade fee can only be set on the territory of federal cities, but for this purpose they need to adopt the relevant law in advance. As of 2019, the legal act (Law No. 62 of 17 December 2014) establishing the trade fee was approved only by the Moscow City authorities and came into force on 1 July 2015. There is no trade tax throughout Russia, except in Moscow.
Constituent entities of the Russian Federation also contribute to tax legislation. In the Chuvash Republic, which the rapporteurs visited, and elsewhere, municipal assemblies are empowered to determine, within the limits provided by the Russian Federation Tax Code, the tax rates and the order and terms of tax payments; moreover, they can introduce tax benefits and/or non-taxable amounts for certain categories of taxpayers. In the same republic, the system of ”initiative budgeting” exists, when the population and business are involved in a decision-making process in the field of spending budget funds to finance a specific project. The total cost of the project is made up of funds from the regional and local budgets (82%), funds of individuals and companies (18%). Projects are estimated according to the degree of citizens` participation. During the consultation procedure the representatives of the Republic of Chuvashia stressed to the delegation that in the neighbouring Republic of Tatarstan another variable of “self-taxation” so- called “initiative self-budgeting”, was successfully introduced. It provides for the allocation of additional funds from the budget of the republic to the budgets of municipalities in which initiative self-budgeting of citizens is introduced: the republic adds four more to each ruble collected by the residents of the settlements. The collection rate of citizens' funds on the basis of referendums on initiative self-budgeting in 2018 was 79.8% (217 million rubles). On 18 November 2018 in the Republic of Tatarstan in 844 settlements in 43 municipal districts, local referendums were held on initiative self-budgeting of citizens for 2019. In the structure of activities carried out with the attraction of initiative self-budgeting funds, taking into account co- financing from the republican budget, 47% are road works (including the maintenance of bridges), settlements are improved with initiative self-budgeting funds, cemeteries are repaired and maintained, fire safety is ensured, etc.
An independent expert met by the delegation highlighted during the consultation procedure that authorities of the constituent entities of the Russian Federation understand the interest of local authorities in introducing self-taxation. However, the residents themselves, who formally submit initiatives, are not interested in additional fees and do not make timely established payments. Funds from self-taxation, which are to be replenished by municipal budgets, do not come in full. For example, in Tatarstan, at the end of 2016, it was possible to collect from 17 to 62% of the planned amount in different municipal entities. The authorities are working on mechanisms of
page 545 / 796 administrative responsibility for non-payers. Similar experience exists in a number of constituent entities of the Russian Federation when fines are applied. Thus, failure to implement the decisions of the referendum is considered as an administrative offense in Ingushetia, Komi, Mari El, Khakassia, Volgograd, Kirov, Nizhny Novgorod, Orenburg, Pskov, Sakhalin, Tver, Orel, Chelyabinsk Regions and Krasnoyarsk Territory. It should be taken into account that the decision on self-taxation does not mean unanimous support from the population. However, in case of introduction of fines, there is a discrediting of the mechanisms of manifestation of initiative.
The Chuvash Republic also offers an interesting example of the financial system applied in a big city, more precisely in the capital city of Cheboksary. The city budget of Cheboksary amounts to 12 billion roubles. Out of the total revenue, 40% is tax and non-tax revenue collected in the city, while the rest is in the form of funds transfers provided by the republic. Local tax rates are set by the city assembly in accordance with the Budget Code and the Tax Code of the Russian Federation. Federal legislation leaves a margin of discretion of between 0 and 2% for the property tax and Cheboksary has decided to set a rate of 1%. The main source of revenue is the income tax. The Republic establishes an additional standard in order to transfer 15% of these tax revenues from the consolidated budget of the Chuvash Republic. Another additional standard 7% of those tax revenues are set in favour of the city to local budgets.
In a country as diverse as the Russian Federation, it is obvious that revenues of local authorities can be very different in the various territories and/or authorities. In the Republic of Tatarstan, for instance, where total municipal revenue reaches 20% of total public revenue, local revenues made up more than half of all revenues (50.6%) in the budgets of municipalities in 2018, while 10% of all municipalities can cover 100% of their expenditure through their own revenue. Individual income tax yields 62% of total tax revenue of local budgets in Tatarstan and between 60 and 90% of revenue in the different municipalities. When the laws of the republic delegate certain State powers to local authorities, the latter are given subsidies with the aim of compensating additional expenses. The amount of these subsidies is defined through a corresponding methodology that should provide a consistent approach to distribution of given funds. The Accounts Chamber of the Republic carries out a financial assessment of draft laws on delegating State powers to municipalities including the funding methodologies to be approved.
The funds allocated to local authorities for implementation of delegated State powers are shown in the budget of the Republic of Tatarstan every fiscal year separately for each delegated task. In 2018, 25 billion roubles were allocated for delegated tasks. The Accounts Chamber carries out audits of the completeness and timeliness of the allocations. The results of these audits are included in the reports of the Accounts Chamber, which are submitted to the parliament of the Republic of Tatarstan every three months.
Taking into account the size of the country, measures are being taken to equalise the financial capabilities of local authorities. At present, such equalisation is being carried out through the provision, from higher budgets, of non-repayable and irrevocable grants, which do not have a specific purpose. Based on the presence of two levels of local self-government entities, subsidies are received through three channels:
rural/ urban settlements, urban districts without internal division and intra-city districts receive donations from the regional budget in proportion to the size of the population;
municipal areas and urban districts, and constituent entities of the Russian Federation distribute subsidies, taking into account the potential revenue base and the volume of
page 546 / 796 necessary expenditures to solve local problems;
municipal areas provide donations to their constituent rural/urban settlements, also taking into account potential revenues and costs of budgets of these rural/urban settlements.
Among others, the Republic of Tatarstan has its own statutory methodology of calculating the equalisation transfer. Local authorities independently define what these transfers will be used for. Other subsidies are allocated from the budget of the republic to co-finance expenditure arising from tasks concerning local affairs. These funds are allocated on the basis of agreements with local authorities.
In general, according to data provided by the Federation Council, over the past six years (2012-2017), the revenues of local budgets of the Russian Federation show a steady growth rate: from 3.14 trillion roubles in 2012 to 3.85 trillion roubles in 2017. Thus, the growth amounted to 22%. At the same time, two thirds of the revenue comes from the municipalities’ own revenue sources: tax and non-tax revenues.
According to the data provided by the Federation Council, the Russian Federation complies with paragraph 3 (part of revenue deriving from local taxes and charges) and paragraph 4 (financial system of a diversified and buoyant nature).
This being said, people interviewed during these visits stressed that the financial situation of local government has been deteriorating and the number of subsidised local governments has increased (their number rose from 96% to 98% of all municipalities). Settlements today, as before, receive the revenue for their budgets from two local taxes – a property tax and a land tax. But they have not become the primary source of the local budget. Thus, in 2017, according to the enactment of all local budgets, the share of the property tax was 3%, and the share of the land tax 14.5%. As a whole, the budget revenues derived from taxes (even together with an income tax, which is transferred to the local budget on the basis of a specific rate) make up less than half of local budget revenues. An increase in taxes would not be commensurate with the local governments’ powers and responsibilities.
So, the local budget situation remains very complex. The introduction of a differentiation approach designed to determine the revenue sources of town and rural settlements has been prompted by a change in local government legislation. It implied a significant cutback in the volume of public affairs under local governments’ responsibility. Today such a cutback in the revenue sources of rural local governments cannot be considered reasonable. Especially painful for rural authorities has been a cutback in levies from the income tax (it dropped from 10% to 2%). That brought about a drop in the share of tax revenues in local budgets, tipping their balance, and an increase in dependence on the transfers from the raion and, especially, regional budgets.
In 2017, rural local governments’ budgets – the number of which in Russia exceeds 18 500 out of 22 000 municipalities – received only 6.7% of the tax revenues out of the aggregate volume of tax levies (75.3 billion roubles). Thus, the changes in the legal basis for distribution of revenue and expenditure powers between different levels of government, introduced in 2014, have added to an acute level of demographic problems, a lack of working places and a relatively low level of wages in the country.
page 547 / 796 Concerning the commensurability principle, Article 83, paragraph 1, of the Russian Federation Budget Code provides that whenever a law or other regulatory legal act is adopted, causing an increase in expenditure commitments, or new types of expenditure commitments are introduced, which, prior to the adoption of the act, were not being met by any public-law entity, the said regulatory legal act must contain provisions determining the sources of and procedures for executing the new types of expenditure commitments, including, if necessary, the procedure for transferring funds for the new types of expenditure commitments to the relevant Russian Federation budgets. It has not been possible, however, to confirm whether the aforementioned provisions that are following the commensurability principle are effectively implemented in practice.
Federal and regional budgets actively subsidise local authorities to solve problems within the framework of national projects. For example, in recent years, significant funds have been allocated for the construction and reconstruction of schools, kindergartens and sports facilities, as well as for the improvement of courtyards and public spaces. According to critical experts locally, however, there was a negative change in the structure of interbudgetary transfers (a sharp increase in the share of “earmarked” transfers in the form of subsidies and subventions and a drop in the general grant share).
More specifically, the period between 2010 and 2017 saw a significant increase in the volume of earmarked transfers to local budgets. A great increase in particular has been characteristic of subventions (more than doubled), i.e. the resources are earmarked for the fulfilment of powers transferred to local governments, which cannot be regarded as a positive trend. The grant volumes for the same period have not changed, which means that the real volume of subsidies has dropped, taking account of a high inflation rate. The share of subsidies in the whole volume of transfers to local governments in 2017 dropped from 23% to 15%. This cannot be positively assessed from the point of view of the European Charter which stipulates (Article 9, paragraph 7) that “As far as possible, grants to local authorities shall not be earmarked for the financing of specific projects. The provision of grants shall not remove the basic freedom of local authorities to exercise policy discretion within their own jurisdiction”.
Municipal borrowing is understood to be municipal loans, which are carried out by issuing securities on behalf of the municipality, placed in the domestic market in the currency of the Russian Federation, and loans to the local budget from other budgets of the budgetary system of the Russian Federation and from credit organisations, which incur municipal debt obligations. Municipal borrowing in Russian currency abroad is not allowed under the Budget Code of the Russian Federation. The power to carry out municipal borrowing on behalf of the municipality in accordance with the Budget Code of the Russian Federation and the charter of the municipal entity belongs to the local government assembly.
In order to prevent over-indebtedness of local authorities’ budgets, the restrictions established by the Budget Code of the Russian Federation are applied. According to Article 921 of the budgetary code the local budget deficit should not exceed 10% of the confirmed total annual revenue (without taking into account the confirmed volume of gratuitous receipts). The maximum volume of municipal debt shall not exceed the approved total annual volume of local budget revenue.
In accordance with Article 111 of the Budget Code of the Russian Federation, the volume of expenditure on servicing the public debt should not exceed 15% of the volume of total expenditure. If during the execution of the budget of the subject of the Russian Federation, the
page 548 / 796 local budget violates the limit values specified in the Budget Code, the local government has no right to accept new debt obligations, except for the adoption of the relevant debt obligations for the purpose of restructuring the municipal debt (Article 112 of the Budget Code of the Russian Federation).
Concerning the transfer of State property to regional and local authorities, as suggested by Recommendation 297 (2010), the Accounts Chamber of the Russian Federation informed the delegation that during the first three quarters of 2017, the territorial bodies of the Federal Property Management Agency transferred ownership of 4 755 objects of federal property to federal subjects and municipal ownership within the framework of delimitation of powers between public entities. In 2017, the Federal Property Management Agency also transferred, within the framework of special programmes, 327 land plots with a total area of 1 271 hectares to municipal ownership and 320 land plots with a total area of 2 751 hectares to federal subjects of the Russian Federation.
Even though the financial situation of local self-government can vary considerably across the different constituent entities of the Russian Federation, the general impression of the interlocutors is that the Russian Federation partly complies with Article 9 of the Charter. The issue of adequate financial resources leads to some scepticism, especially concerning some types of local authorities, like the municipalities in the city of Moscow that obviously do not have adequate resources.
In such cases, Article 9, paragraph 1, is being violated.
Concerning the principle of commensurability, it seems that there are several pertinent provisions and mechanisms, but it is not clear whether they are reliable. Other sources of information criticise the tendency to centralise powers which are then transferred to some local authorities as delegated tasks without commensurate funding. Therefore, the rapporteurs conclude that there is a partial compliance with regard to Article 9, paragraph 2.
The Russian Federation complies with paragraph 3 since a considerable share of revenue derives from local taxes and charges for which the local authorities can determine the rate.
The financial system seems to be sufficiently diversified as required by paragraph 4.
Equalisation procedures exist in the Russian Federation and its constituent entities and the Russian Federation complies in principle with Article 9, paragraph 5, even though it is not clear whether these different equalisation mechanisms in the constituent entities are fair and transparent.
Apart from some earmarked grants, the majority of allocated funds seems to come from general grants, even though it is not clear how far this is the case in the different constituent entities of the Russian Federation, which, in principle, appears to comply with Article 9, paragraph 7.
The same holds true for Article 9, paragraph 8. According to information provided by local interlocutors, it seems that local authorities have access to the national capital market according to the legal framework.
Finally, some there is some scepticism concerning the appropriate consultation about the allocation of redistributed resources and consequently the compliance of the Russian Federation
page 549 / 796 with Article 9, paragraph 6. According to information provided by interlocutors to the rapporteurs during the visits, this seems not to be the case in several constituent entities.
San Marino [Article ratified - Report adopted on 28 March 2018 ]
As already mentioned in previous parts of this report, the Republic of San Marino declared that it was not bound by Article 9, paragraphs 3 and 8 of the Charter. Furthermore, San Marino made an interpretative declaration that: “….Article 9 of the Charter must be interpreted as an Article establishing a general principle of financial autonomy, according to which local authorities are entitled to freely dispose, in the framework of the national economic policy, of the resources allocated to them for the exercise of their powers”.
This “interpretative declaration” gives rise to the question whether parties to the Charter can make such declarations with regard to any matter of interpretation. The rapporteurs are of the opinion that Article 13 offers the possibility to specify the categories of local authorities to which it intends to confine the scope of the Charter or which it intends to exclude from its scope. Furthermore Article 16 of the Charter offers the opportunity of a territorial clause for states who wish to specify the territory or territories to which this Chapter shall apply. A possibility of such “interpretative declarations” is not explicitly provided for in the Charter, but it is not unusual in international practice, even though such interpretative declarations are neither explicitly foreseen as such by the Vienna Convention (1969, Art. 2). In effect, this interpretative declaration is almost a reservation, since the kind of “general principle of financial autonomy” it implies would simply mean that the authorities are free to dispose of the resources “given to them”.
In San Marino, the resources given to the municipalities are barely worth mentioning. For instance, the annual budget for one of the biggest townships does not exceed 14,000 euros. However, Art.9 paragraphs 3 and 8 are not ratified and taking into consideration the interpretative declaration of San Marino, the authorities of San Marino are not committed by these provisions.
Serbia [Article ratified - Report adopted on 18 October 2017 ]
Article 9 of the Charter consists of eight paragraphs which deal with various aspects of local government finances. It is essential for local democracy and self-government that local government has financial resources so that it can carry out its functions. The paragraphs of the article will be handled thematically, beginning with autonomy and access to independent and adequate resources, including taxes (paragraphs 1, 2, 3 and 4); continuing with grants and equalisation (paragraphs 5, 6 and 7); and borrowings (paragraph 8); following which the rapporteurs’ conclusions will be summarised.
Provincial and local government in Serbia is financed mainly by local taxes, shared taxes, transfers and grants. In 2015, 39% of local government income came from shared personal income taxes, 16% from local property taxes and 5% from other taxes. Transfers and grants represented 17% of this income, with 22% coming from other sources. The Autonomous Province of Vojvodina has a constitutional right to receive “at least 7% in relation to the budget of the Republic of Serbia” (Constitution, Article 184). Hence, transfers and grants are the main sources of revenue, representing 64% of income (2015). In addition, the autonomous province receives 9% of its income from shared personal income taxes, 10% from local property taxes and 17% from other sources.
The first four paragraphs of the article provide that local authorities should have adequate resources of their own and that these should be sufficient for the functions that local authorities are obliged to carry out. They should be able to set the rates of local taxes and charges. Resources should also be
page 550 / 796 neutral with regard to economic fluctuations, such as changes in the rate of inflation.
Income tax is the largest source of revenue for local government in Serbia and is shared between local government and the State. The Law on Local Government Finance specifies the shares received by each level of government. The agreement between Serbia and the International Monetary Fund, aimed at stabilising public finances – partly by reducing local government spending ï€ has led to changes in the law and has reduced the shares allocated to local government. Hence, as of 2016, towns receive 77% (previously 80%), municipalities 74% (also previously 80%) and the city of Belgrade 66 % (previously70%) of the revenue. These reductions represent a yearly loss of income of 4.8 billion RSD, corresponding to 40 million EUR.
Another major source of income for local government is local property tax. This is entirely local so each local assembly can decide on the amount of the tax, but only up to a certain level, as set by the law. Hence, in practice, the room for manoeuvre is very limited.
The Autonomous Province of Vojvodina receives almost two-thirds of its revenue on the basis of the constitutional provision stating that the province should receive at least 7% of the state budget. However, the exact method of calculating this percentage is interpreted differently by the province and by the government and is also subject to interpretation by the Constitutional Court. According to the representatives of the province that the delegation met during the monitoring visit, the method that the government uses does not provide sufficient resources for the province. However, a settlement between the Province and the Government seems to be under way, and is to be codified in a Law on Financing the Autonomous Province of Vojvodina.
In addition to being unable to adequately finance provincial and local government tasks, many of the interlocutors stressed that reductions in funding had made it more difficult for them to pay competitive wages and to keep or recruit specialised administrative personnel (when permitted to do so). Low wages may also pave the way for corrupt behaviour.
Central government funding for local government is the subject of paragraphs 5, 6 and 7 of Article 9 of the Charter. They require transparency of the financial equalisation process and in the way central government funding is calculated, stipulating that local government needs to be consulted on these matters and emphasizing that not all grants should be ear-marked. The grants are regulated in the Law on Local Government Finance. Grants consist of non-categorical transfers (the equalisation transfer, compensation transfer, general transfer and solidarity transfer) and category grants, which are ear-marked for funding certain tasks or expenses.
Financial equalisation is achieved through several types of grants. The equalisation transfer is allocated to local government units in which the population's average income per capita is below a certain level. In addition, the least developed local authorities receive a comparatively larger share of the general transfer. In its written reply to the rapporteurs, the Standing Conference of Towns and Municipalities stated that it regards this system as insufficiently transparent. It was claimed that no municipality in Serbia would be able to calculate by itself the amount of transfer funds that it should rightly receive.
Most of the grants for local government are general, although the Law on Local Government Finance (Article 45) recognises category grants for special purposes or projects. Several of the interlocutors highlighted transparency problems with the category grants provided by the government. In the very tense economic situation currently experienced by local government, a last resort would be to turn to the Ministry of Finance to apply for support from its reserve fund. However, the criteria for allocating money from this fund seem to be less than clear-cut. This practice has thus been criticised as being arbitrary and non-transparent, and some sources raised concerns that it has been misused
page 551 / 796 for political purposes.
On the other hand, consultation mechanisms in connection with central government funding of local government seem to be quite well developed. The Intergovernmental Finance Commission plays an important role in this consultation process.
Serbian local government has the right to borrow money on the market within the limits of the law, as stipulated in paragraph 8 of the Charter. However, this is not unrestricted and the government has set ceilings for local debt, meaning that local government units need approval from the Ministry of Finance before increasing their debt.
It may be understandable that local government should shoulder its share of responsibility in Serbia’s attempt to achieve economic stability. However, austerity measures and significant budgetary cuts throughout the whole public sector, whilst the functions of local government remain the same, cause difficulties in ensuring commensurate financial resources for local authorities as required in paragraph 2 of Article 9 of the Charter. In addition, until the new law on financing the Autonomous Province of Vojvodina is adopted, the province remains underfinanced in relation to its responsibilities. Local government units collect their own taxes but have limited powers to determine the rates. The rapporteurs also identified several problems relating to the transparency of how state grants are distributed, notably a lack of clear criteria for allocating resources from the reserve fund and a lack of transparency in the system of equalisation.
To summarise, the rapporteurs are of the opinion that Serbia generally complies with paragraphs 3, 4, 6 and 8 of Article 9. However, it only partly complies with paragraphs 5 and 7 and demonstrates non-compliance with paragraphs 1 and 2.
Slovak Republic [Article ratified - Report adopted on 24 March 2016 ]
As in many other European countries, finances are perceived by local politicians as one of the most controversial aspects of the current situation. It should be stressed that the local finances system is homogeneous across the country. Therefore, there are no specificities or differences between regular municipalities and “cities”, or between small towns and large cities. The key piece of legislation in this field is the Act No. 564/2004 Coll., on budget determination of income tax yields to territorial self-government, the Act No. 582/2004, on local taxes and fees, amended several times, and the Act No. 583/2004, on budgetary rules of the local self-government. Fiscal decentralisation was deepened in 2005 and 2008. The main sources of local income are formed by exclusive local taxes and shared taxes, non-fiscal income and transfers. The main ideas underlying the system is that the original competencies of municipalities should be financed through “own revenue” (tax and non-tax revenue) while the tasks delegated by the State should be financed through transfers from the State budget.
In the domain of taxation, local authorities are entitled to the following taxes: a. Personal Income tax (PIT): this is the main source of funding for municipalities. According to data provided by the Ministry of Finance in 2014, the personal income tax amounts for 72.3% of total tax incomes; the real estate tax is accountable for 17.9% of said incomes and 9.8% comes from other own tax incomes. This State tax, regulated and collected at State level, but the national collection of this tax is mainly allocated to the regional and local governments. According to two memoranda of co-operation signed by the Government with ZMOS and SK8, the local and regional authorities receive the following percentages of the income tax collection: a. local authorities: 66-67% in 2014; 68.5% in 2015, and 70% in 2016; b. regions: 21.9 in 2014, 29.2% in 2015 and 30% in 2016. Therefore, in 2016 the whole national collection of the personal income tax will be granted to the regions and to local authorities. In addition, the system incorporates a formula allowing a certain degree of equalisation,
page 552 / 796 because the actual amount of money that each municipality receives for this category is determined according to a complex formula that takes into account several variables and coefficients, such as the number of children under 15; the number of inhabitants of the municipality, the number senior residents who are older than 65, the altitude of the municipality, etc. b. Real estate tax: municipalities also collect the real estate tax and are entitled to 100% of the collection thereof. Tax rates are approved by the city council in the form of general binding bylaws, with due respect to applicable State tax legislation. c. Other local taxes are the lottery tax, the local tax on dogs, the tax on vending machines. d. Charges and fees: municipalities collect a number of different charges, such as the one for the municipal collection of waste, or for the use of municipal property.
Amongst the non-tax revenue: revenue from business, commercial activities, revenue from the ownership of property (sale of movable and immovable property); donations received; interests from deposits or other financial products; collection of traffic fines and other administrative offences; financial operations – the municipalities (like the self-governing regions) can ask for loans from the private sector and they can issue bonds. The prior approval of the Ministry of Finance is not required. However, municipalities and regions can only enter into these financial operations if they respect some ceilings or limits (see below).
Municipalities do receive transfers for the performance of delegated, State administration tasks. These transfers are earmarked transfers and are calculated by State agencies so as to cover, theoretically, the cost of discharging these delegated tasks. However, the rapporteurs received many complaints that the funds transferred do not cover adequately the provision of those services, especially in the domain of primary schools.
Municipalities may also benefit from the several EU funds established in the domain of urban development, rural development and other fields related to the municipal life. However, these revenues are in no way stable or periodic and depend on a large series of factor which mainly stand outside the municipalities reach.
The current overall situation of local finances was diagnosed in a contradictory way by the interlocutors met by the rapporteurs. For what concerns the local leaders, the situation was diagnosed as unsatisfactory in general, as far as the flexibility and sufficiency of financial resources is concerned. They claim that a great part of the money still comes from the State; that the system of local taxes is not satisfactory; that the total amount of disposable resources is not enough; and that the spending power of local authorities is still small as compared to the State. Small municipalities allegedly receive the minimum money for the functioning of their administrative apparatus, but Bratislava also complains. This aspect seems to be a permanent discussion in the Slovak political landscape. Some local leaders are not satisfied with the manner how funds are calculated, the system is considered not to be fair, and according to them there is not enough equalisation. According to the UMS, the formula of fiscal decentralisation should be changed because it is disadvantageous for small cities and towns.
In this sense, mention should be made to a study performed by the National Accounting Office in 2005. The NAO conducted audits in 100 municipalities, chosen according to previously established statistical selection criteria. At the end of this comprehensive survey, the NAO found that municipalities under 5,000 inhabitants could not really discharge their competencies and statutory responsibilities.
A different viewpoint is that of the central government. The relevant ministries claim that the current arrangement is fair and adequate for the country, which is suffering from the economic crisis. The Ministry of Finance considers that the level of financial autonomy of local authorities is satisfactory and that the principle of commensurability of local finances (as proclaimed by the Charter on local
page 553 / 796 self-government and by art. 71 of the Slovak Constitution) is fully respected. Furthermore, the Ministry claims also that the amounts of transfers (to finance delegated tasks) have been sufficient over the last years. As an evidence of this assertion, it seems that in 2012-2014 the territorial self- governments showed a budget surplus or balanced budget. The crisis in 2008-2010 resulted in the decrease funds from the personal income tax and for that reason the Government granted an additional transfer to the municipalities of €100M in 2009 and €72.5M in 2010.
For what concerns the actual figures, the structure of revenues for municipalities can be broken down as follows for the years 2012, 2013 and 2014.
Independently from the official position of the Government, it is clear from the above table that, at least, the own revenues of municipalities have increased, while the state transfers have decreased. On the other hand, the fiscal decentralization has been deepened in the last years, something that can be understood to be right: during the last Congress monitoring visit on local democracy in 2001, local authorities spent some 7% of total government expenditures, while currently both local authorities and regions account for 18% of total government expenditures. However, it is true that the setting up of the regions has established a certain “cap” on the potential increase of financial autonomy of local authorities. Moreover, the said figure of 18% can be still considered to be low in the light of common practices in Europe.
In the domain of budgeting, all municipalities are free to draft and to approve their own budgets, but they must respect the budget structure established by the Law, which sets a unified legally binding system of budgetary classification. The local council is the competent authority to approve the budget. Local authorities are free to decide on what they spend their own revenues, and the Central government or other State authority cannot interfere with the municipalities budgetary autarchy. The Ministry of Finance respects the autonomy of municipalities and does not address binding instructions or guidelines to municipalities or to self-governing regions in the domain of budgeting.
However, the Law sets some specific limits or rules on the local public debt, such as: (a) loans which can only be used for capital purposes; (b) the total debt stock which cannot exceed 60% of the budget of the previous year; and (c) the annual debt payments which may not exceed 25% of the budget of the previous year. In the aftermath of the economic crisis, and in view to reduce the public deficit of local and regional authorities, some extraordinary measures and controls have been implemented on local/regional bodies as a consequence of the economic crisis: in accordance with the Constitutional Act No. 493/2011 Coll. on fiscal responsibility (Fiscal Responsibility Constitutional Act) and with the Law on Budgetary Responsibility of 1 March 2013, since 2016 these obligations or limits have been stringed, since the Act establishes a fine to the municipalities and self-governing regions in the event of exceeding the limit of debt (in December 31th 2015). During the consultation process, the Ministry of Finance informed the delegation that: “The government made an agreement (“Memorandum of Understanding") with local and regional authorities (ZMOS, SK8). The basic goal of memorandum was “consolidating public finances in order to bring the general government deficit below three per cent of GDP in 2013. Following the successful fulfilment of the Memorandum have been further discussions with territorial government authorities. The local and regional authorities negotiated an increasing their in the income of share from PIT as explained under para 76 (a, b, c) above.
Finally, and as far as municipal property is concerned, Slovak municipalities have their own property, goods and assets. The key piece of legislation in this field is the Act No. 138/1991, on the municipal property. In addition, the right to own land and real estate property is fully recognised to local authorities, and they manage them in a freeway.
In the light of the above, the Slovak Republic meets the basic standards enshrined in Art. 9 of the
page 554 / 796 Charter.
Slovenia [Article ratified - Report adopted on 6 November 2018 ]
The principle of adequacy of local finances is rather explicitly mentioned in the Constitution. The Constitution (Article 142) states that “A municipality is financed from its own sources. Municipalities that are unable to completely provide for the performance of their duties due to insufficient economic development are assured additional funding by the state, in accordance with principles and criteria provided for by law”.
Regarding municipal incomes, the Constitution stipulates that: “The state and local communities raise funds for the performance of their duties by means of taxes and other compulsory charges as well as from revenue from their own assets”. As enshrined in the Constitution: “Local communities impose taxes and other charges under conditions provided for by the Constitution and Law”. However, during interviews, the delegation was told that in practice municipalities are facing increasing amount of tasks and decreasing revenues transferred from the state that poses problems to municipalities. During the consultation procedure the Ministry of Finance and the Ministry of Public Administration, however, did not share this point of view on decreasing revenues. They claimed that after reaching the bottom of financial crisis in 2015 and 2016 the revenues of municipalities were constantly growing from 2017 and afterward. According to the data of the Ministry of Finance concerning the lump sum expenditure per capita: 2012: 1st half 554.50€, 2nd half 543.00 € 2013: 536.00 € 2014: 536.00 € 2015: 1st half 525.00€, 2nd half 519.00 € 2016: 522.00 € 2017: 533.50 € 2018: 551.00 € 2019: 558.00 €
In general, the system of local government financing in Slovenia is based on: own resources, additional state funds distributed as financial equalisation for economic weaker municipalities and borrowing.
Local finance is regulated by several laws: the Local Self-government Act, the Financing of Municipalities Act and the Public Finance Act. According to a Local Self-government Act (Article 52), the exercise of local matters of public interest is to be financed by the municipality's own resources, state budget and loans.
Municipalities’ own resources include taxes and other contributions, and revenue from its assets, in accordance with Article 52 of the Local Self-Government Act. The principles of financing of municipalities are specified in Article 3 of the currently applicable Financing of Municipalities Act (ZFO 1): “Municipality financing shall be based on the principles of local self-government, mainly on the principle of proportionality of sources of financing with the municipality tasks and on the principle of independence of municipalities in financing municipality tasks.”
Thus, the municipality’s own sources shall be: 1. taxes and other obligatory contributions; 2. revenue from the assets of the municipality.
Up to date, personal income tax revenue is the most important local government revenue source and municipalities receive 54% of this tax according to the criteria of adequate absorption of municipalities defined by the Financing of Municipalities Act. Meanwhile, local authorities’ income may also come from other taxes (e.g. property tax, corporate tax etc.).
Tax revenues are specified in Article 6 of the currently applicable ZFO-1: “(1) Sources of municipality financing shall consist of municipality budget revenues from: – property tax; – vessel tax; – tax on real property transactions; – inheritance and gift tax; – tax on winnings from conventional games of chance, and – any other tax where so provided by the Act governing taxes.
page 555 / 796 The total tax revenues in local government budgets amounted to 64% of total municipal revenues in 2009. In 2013 municipal tax revenues amounted to 69.45% of total municipal revenues. In 2015, municipal tax revenues amounted to 58.76% of total municipal revenues, coming in majority from personal income tax and property tax. Revenues from other taxes are very small, e.g. inheritance and gift taxes ensure only 0.36% of all tax revenues. Finally, in 2017, tax revenues accounted for 71% of total municipal revenues.
Municipalities are entitled to 70% of 54% of personal income tax collected by the government, while 30% are allocated as the solidarity compensation. In case 70% (of 54% of income tax) is less than calculated appropriate expenditure, the municipality receives the difference form the solidarity compensation. If 70% (of 54% income tax) represents more or the same amount as the amount of calculated appropriate compensation, the municipalities do not receive any additional funding from the solidarity compensation.
The tax on property is double-faced. On the one hand, the property tax is settled by the state while the tax rate can be changed by a municipal decision. On the other hand, the compensation for the use of building land is the only real municipal own tax source as all the tax base, the tax rate and possible exemptions are defined by municipality.
Among the municipal tax revenues only taxes on immovable property can be treated as municipal own taxes in the meaning of Article 9.3. of the Charter. Other own sources of financing of municipalities are specified in Article 7 of the currently applicable ZFO-1: “Sources of financing shall also comprise revenues from self-imposed contributions, dues, fines, concession fees, payments for local public services, etc., if so provided by the Act governing individual fees or by a regulation issued on its basis”. For example, in 2015, municipal non-tax revenues amounted to 14.21% of total municipal revenues, where majority comes from rents and leases. For comparison, in 2013, municipal non-tax revenues amounted to 14.53% of total municipal revenues. During the consultation procedure, the Ministry of Finance informed the rapporteurs that this share increased to 16.83 % in 2016 and 17.15 % in 2017.
Municipalities also receive transfers. The main categories of transfers come from the state budget, from other institutions and the EU funds. In 2015, municipal transfers reached 24.59% out of total municipal revenues, the majority of which coming from the EU funds. The transfers comprised 13.79% out of total municipal revenues in 2013. According to the information of the Association of Municipalities and Towns of Slovenia provided during the consultation procedure, in 2016 the transfers form the State and EU dropped to 8,54% and in 2017 to 7,97%. This information slightly differs from the data provided by the Ministry of Finance during the consultation procedure about the share of 8.88 % and 8.25 % in 2016 and 2017 respectively.
The Government claims that personal income tax fulfils the conditions to be treated as “own resource” of municipalities in terms of the Charter. Such a position of the Government is based upon the decision of the Constitutional Court No. U-I-150/15 (10 November 2016). In that particular decision the Constitutional Court explained that own resources of municipalities are in direct relationship with the municipality. Thus, municipalities are to be recognised as direct beneficiaries of a personal income tax, even though the tax technically is collected by the state. In fact, similar situation with personal income tax is observed in Latvia where technically personal income tax is collected by the state, but this tax comprises substantial part of municipal income.
In its decision of 10 June 2015 (U-I-164/13), the Constitutional Court argued that the system of financing municipalities in the phase defining the lump sum allocation entails the determination of an aggregated amount of public funds intended for financing the tasks of municipalities determined by laws and of amount of funds for the appropriate expenditure of individual municipalities.
page 556 / 796 The revenue from the state or the lump sum (e.g. per capita amount required to finance the municipalities’ statutory functions) is calculated according to the formula where several indicators are taken into account: number of inhabitants (with permanent residence), size of municipality, length of municipal roads and public paths, ratio of inhabitants under 6 years, ratio of inhabitants between 6 to 15 years, ratio of inhabitants older than 65, as well as ratio of inhabitants older than 75 years. Although these criteria are rather broad, they separate the criteria relating to the number of children of kindergarten age (up to 6 years) and the number of children of school age (7 - 18) as well as they separate elderly inhabitants in two groups up to 65 and up to 75. Thus, the criteria for calculating the lump sum include demographic challenges and aging society.
Thus, in the opinion of the rapporteurs, so-called appropriate expenditure representing the sum of resources each municipality should be assured by law, and the provision of calculated revenues needed for funding reflect the global respect of the principle of commensurability. For calculating the appropriate expenditure (or lump sum), the average costs of the statutory tasks are estimated each year for all municipalities. The calculation is based on mathematical formula including real costs of municipalities for four previous years, and on objective criteria, set by law (e.g. number and age structure of the population etc. see para 159). The Ministry of Finance provides calculations and it is expected that calculations are submitted to municipalities before starting the preparation of the annual budget.
During the consultation procedure the Association of Municipalities and Towns of Slovenia argued that the formula on appropriate expenditure did not reflect the real cost from the municipalities, linked for instance to the provision of the winter service, or the social status of the inhabitants and that despite the mathematical formula of the appropriate expenditure the municipalities have to negotiate the final lump sum which makes their financial stability of municipalities dependant on the government. The SOS also underlined that local authorities face the situation of increasing expenses of the provision of services, for instance in pre-school education, without relevant increase in their incomes.
The associations of municipalities claimed that so called “lump-sum” in relation to 2011 has decreased. Thus, lump sum in amount of 554.50 EUR was calculated in 2011, 536.00 EUR – in 2013, 522.00 EUR – assigned in 2015 (in 2015 and 2016 there was no agreement reached), 533.50 EUR – in 2017. During the consultation procedure, the Ministry of Finances underlined that in 2018 the amount is 551.00 € and in 2019 – 558.00 €.
In the opinion of the Association of Municipalities and Towns of Slovenia expressed during the consultation procedure the lump-sum according to the Law on Local Self-Government should have amounted in 2011 to 570.70 EUR, 601.58 EUR in 2012, 645.98 EUR in 2013, 669.90 EUR in 2014, 662.68 EUR in 2015 and 652.60 EUR in 2016. Therefore, the Association expressed concerns in respect of the financial autonomy of Slovenian municipalities in view of rising calculated costs and decreasing lump sums.
Some interlocutors have claimed that in certain cases the Government does not grant specific, earmarked or any additional funding or other resources for performing the transferred tasks.
At the same time, the Ministry of Finance has also provided analysis of municipal tasks from the budgetary perspective by separating tasks that a municipality has to perform from the tasks that can be performed by a municipality, as well as by other stakeholders. After having heard the arguments from both sides, the rapporteurs conclude, that there is a room for debates between the government and municipalities to reach a common understanding of the notion 'tasks' and a mutually acceptable financing model.
page 557 / 796 The institutional dialogue on financial matters where associations of local municipalities and the government signs an agreement can be considered as an instrument for ensuring commensurability.
According to the Fiscal Rule Act (2015), local municipalities are a part of the general government sector. Each year the Ministry of Finance prepares fiscal framework for the coming three years as a part of European Semester in order to balance public expenditures.
To conclude, total revenues of local government budgets in Slovenia, in 2017, were EUR 1,975.13 million, and, in 2015 - EUR 2,226.37 million. In the period 2009-2015 the total revenues of local municipalities were above 2,000 million, while in 2016 and 2017 it fell below. In general, local governments across Europe faced decreasing revenues and expenditures as a direct consequence of the economic crisis already within few sequencing years after 2009. For Slovenia, revenues of local municipalities were rather stable even after the economic meltdown of 2009.
The situation regarding the expenditures can be described as rather stable. In 2008, the total expenditure amounted to EUR 2,047.95 million and in 2009, EUR 2,192.46 million, but in 2014 – EUR 2,285.68 million, while in 2016-EUR 1,851.87 million. The Ministry of finances further informed that the expenditure amounted to EUR 1,950.13 million in 2017. In the period of 2008-2014 (including) municipalities tended to spend more than received as revenues. Since 2015, total expenditures of municipalities are lower than revenues, thus having surplus instead of deficit.
In terms of GDP, the municipal expenditures are above 5% since 2013, achieving even 6.12% in 2014.
The financial data available to the rapporteurs point out that local authorities have been affected by the negative consequences of the economic crisis later than the central government. According to the data provided by the Ministry of Finance local authorities faced a decrease of actual revenues also affecting expenditures only in 2016.
Investment capacity of municipalities differs. So, in 2016, around 75% of municipalities invested over 20% of their budget, and half of these municipalities were capable to invest over 30%. In addition, 22 municipalities allocated between 40% and 60% of the municipal budget for investments. In general, subnational or municipal share of public investments was around 52% in 2014. During the consultation procedure the Association of Municipalities and Towns of Slovenia informed the delegation that in 2016 the investment capacity fell to 24%.
On 17 April 2018 the Local Self-Government Act was amended (the amending act ZLS-S). The amendments include the idea to introduce a participatory budgeting as a form of public participation in decision making on local expenditures. In Slovenia all new draft laws shall include impact assessment of the cost of their implementation for municipal budgets. This is also aimed at providing more understanding among stakeholders on financing of local self-government. However, the delegation has heard from several local interlocutors that some bills on new tasks have been passed without adequate assessment of the financial impact of their implementation on local authorities or the costs have been underestimated.
The rapporteurs conclude that article 9, paragraphs 1 to 4 and 7 of the Charter are globally respected in Slovenia. However, if the cost of the provision of services that local authorities have to provide continues to rise and their revenues will not increase respectively there will be a significant risk of non-compliance with paragraphs 1, 2 and 4 of Article 9 of the Charter.
Spain [Article ratified - Report adopted on 20 March 2013 ]
page 558 / 796 The domain of financial resources holds a place of high importance in Spanish legislation, as illustrated in Act 2/2004 and Section 142 of the Constitution, which specifically state that “Local treasuries must have sufficient funds available in order to perform the tasks assigned by law to the respective Corporations, and shall mainly be financed by their own taxation as well as by their share of State taxes and those of Self-governing Communities”.
The autonomous communities’ funding system distinguishes two regimes. Due to their “historical rights”, which are recognised by the Constitution, Navarra and the Basque Country have a special regime that gives them significant autonomy in financial and tax issues. All other autonomous communities fall under the general regime. They obtain their resources mainly from totally or partially devolved State taxes; their own taxes; transfers from the Inter-territorial Compensation Fund; returns from their own patrimony; and credit transactions. The Inter-territorial Compensation Fund was created to soften economic unbalances across the regions and to give effect to the principle of solidarity among autonomous communities.
Generally, local authorities decide and, consequently approve their respective budgets by an affirmative vote of the municipal council. Thus, annual budget decisions are taken without prior approval or intervention from regional or national authorities. Decisions regarding the expenditure of local authorities are also taken autonomously. Certain budgetary decisions, such as taking up loans above a given ceiling do, however, require the approval of a higher administrative authority.
Municipalities rely on their own specific taxes from which they can determine rate, a participation in State taxes, specific subsidies for public transport, the creation of infrastructures, services and equipment, public payment for activities under their own competence, and public or private credit. For their part, provinces do not have “taxes” but they may establish a surcharge (recargo) on the municipal tax on economic activities, and may collect charges and fees and special contributions in addition.
The own revenues (recursos propios) of local authorities comprise the total of fiscal incomes (taxes, charges and fees) and additional non-fiscal revenues. Contrary to municipalities, provinces can not levy taxes, but may merely establish surcharges (recargos) on the municipal tax on economic activities. In addition to that, provinces may collect fees, charges and special contributions. While municipalities may only collect taxes on basis of legislation enacted by the state or regional parliament, they are not in the position to freely create or establish such taxes (impuestos).
The Spanish Local Finances Act divides municipal taxes into mandatory and operational ones. The former comprises, among other, the tax on real estate, and the tax on motor vehicles and economic activities. Optional local taxes include the tax on real estate capital gains in urban areas as well as taxes on construction and installations.
Furthermore, local authorities are entitled to establish several charges or fees (tasas, precios públicos) for usage of municipal or provincial properties (sidewalks, square etc.) or the delivery of certain services such as the collection of waste, use of local sports facilities or depuration of residual waters etc. Ultimately, special contributions (contribuciones especiales) may be collected by the local authority in order to finance public works (renovation or improvement of sidewalks, streets etc.).
Other sources of own revenue can result from economic activities, the sale of property and assets or the collection of sanctions and fines.
Economic activities: Through public or local companies, local authorities may carry out economic activities which lead to an additional non-fiscal income.
page 559 / 796 Sanctions and fines: As in most European countries, Spanish municipalities enjoy the right to impose different administrative sanctions on natural and legal persons alike. A breach of local regulations and ordinances usually leads to the collection of monetary fines, which are particularly relevant in big cities (i.e. transit and parking fines, environmental fines etc.).
An additional key income for municipalities, which are located in areas that experienced a housing boom during the last decades, is generated by urban activities. In particular, cities located at the seaside and the urban conglomerations of Barcelona and Madrid profited from two major sources of income: Firstly, these municipalities have participated in the process of transformation of the rural land in to urban areas which has generated significant income from mandatory disbursements (either in land or money) that private property owners should make for such transformation. Secondly, the aforementioned building and development activities generated additional different sources of income by means of taxes, charges and fees. The explosion of the housing bubble in 2008-2009 instantly stopped the fast development of the building sector and thus resulted in a drastic drop in income for municipalities.
One means used to reduce the amount of expenditure at local level is the establishment of limits at the central level, which consist largely of a comprehensive ceiling established for the total amount of expenditure. While such a measure, related to the economic situation, is only temporary, it is very difficult to establish whether the restrictions will affect standards in the exercise of public responsibilities or public services. Conversely, if the objective is structural and permanent reduction, changes can be envisaged regarding the standard costs of public functions and services with, however a risk to the standards hitherto maintained in the delivery of services. This second case could lead to a violation of the principle of to dispose freely of financial resources (Article 9, paragraph 1).
As regards the provisions of paragraphs 1, 2 and 3 of the Charter, it should be noted that the major form of revenue for municipalities still comes from transfers, awarded by the regions and most importantly by the State, which in fact grants 63.5% of all transfers. This is not in line with the Charter’s provisions. Above all, specific and non-earmarked transfers, awarded by national authorities according to a specific formula, allow municipalities to participate in the tax revenues of the State (participación en los tributos del estado). Additionally, municipalities that meet certain requirements, may receive a share of State tax revenues (cesión de recaudación de impuestos del Estado). A similar “noncompliance with the Charter” situation would follow from a general adoption of strict limits to the financial autonomy of local authorities.
In February 2012, the Ministry of Finance and Public Administration stated, at a meeting of the Senate’s Local Authorities Commission, that the government planned to support local administration: proper funding of “the administration closest to the citizens” was to be ensured through initiatives such as boosting the fiscal autonomy of local councils. In addition, the ministry set out the key measures that the government planned to take in order to support local authorities, and also stated that three important decisions had already been made in less than one month to provide financial support for local administrations: the increase in the municipal property tax (IBI), an advance of 50% of the definitive payment of local authorities’ share and an increase in the balance repayment period from 60 to 120 monthly instalments for 2008-2009. The Ministry also explained that the mechanism for providing funding to local authorities would be in place throughout 2012. These measures will be applied only if local government approves an adjustment plan according to the Organic Law on budgetary stability and financial sustainability of public administration. The aim of this mechanism is to ensure the sustainability of the financial situation of local authorities.
In this context, according to the information provided by FEMP, local authorities will receive a total of around 16 000 million euros in 2013, amounting to a surplus of 7.1%, compared to the previous
page 560 / 796 year. The Rapporteurs consider this national decision as a positive step, even though it does not imply a structural change in the financing of local authorities: the increase of the 2013 local budgets is based on the anticipation of liquidity transferred from the central government to the local authorities, with an expected return within ten years.
An important subject discussed during the visit concerns the imbalance between the distribution of powers and the distribution of potential income between central, intermediate and local governments. This imbalance has become more marked of late because of (among other reasons) the fall in fiscal capacity (many of the taxes levied by the municipalities depend on the property sector) and the increase in municipal costs resulting from municipalities having to provide services that correspond to other levels of government. According to several financial experts the solution to this imbalance involves an increase in the resources that the State should be injecting into the municipal finance model. A further proposal made by the experts is that the local finance model should distinguish more clearly between small and large municipalities. The rapporteurs also stress the need to establish more equitable distributive formulae, based on indicators of need (population with weightings) and capacity (index based on IBI). The aim of such a reform would be to link resources to capacities.
Given the decentralised nature of Spain’s public finances, a strong institutional framework is essential. The medium-term budgetary framework has a good track record overall, but the crisis put Spain’s fiscal institutions under strain and exposed a need to tighten the control over regional and local authorities’ budgets and to take better account of cyclical developments when setting budgetary targets.
As mentioned in paragraph 84, the Government took a significant step forward to improve the fiscal framework with the adoption of the organic law. This law develops the constitutional balanced budget rule adopted in 2011 and sets out new financial mechanisms for budgetary coordination and control vis-à-vis regional governments. It introduces a set of fiscal rules which are binding for all levels of Government, including public-sector companies (structural balanced budget rule, debt rule and expenditure rule). It also gives a mandate for a medium-term budgetary strategy, introduces an early warning mechanism for budget deviations, provides for corrective mechanisms and sanctions, and strengthens reporting requirements for all levels of Government. The law is a positive step, as it compels not only the national parliament, but also regional parliaments, to comply with budgetary stability. The definition of the rule in terms of a structural deficit should allow for better reflecting cyclical developments in future budget Laws. Under the original proposal made by the Ministry, two bodies are required to prepare a report on fiscal targets: the Council of Fiscal and Financial Policy (Consejo de politica fiscal y financiera, CPFF); the National Commission for Local Government (Comisiòn Nacional de Administracion Local, CNAL). During 2012, there were three meetings of the National Commission for Local Government on the issues such as the funding mechanism for payment to providers, budgetary stability in local government and the approval of a new Basic Law on Local Government as well as one on Local Finance.
Despite the Government’s measures, some of the delegation’s interlocutors complained that no specific measures have been agreed on in order to guarantee municipal governments a similar level of fiscal income.
Another subject raised during the visit with the delegation concerns measures required in order to avoid local government debt. As a general rule, local authorities may have recourse to the private sector for loans and credit from the banking system, as well as issuing bonds. According to Act 17/2012 of 27th December on the 2013 State Budget, local governments who achieved a positive balance in the previous (financial) period may enter into new long-term credit operations to finance investment when:
page 561 / 796 a) the total volume of outstanding debt does not exceed 75% of current revenues or accrued income; b) the debt represents between 75% and 110%, in which case they may conclude debt transactions following authorisation by the competent authority to which financial supervision of local authorities has been attributed.
If local entities present a negative net savings or a debt volume greater than 110% of current revenues or accrued income they may not enter into long-term credit operations. "
In contrast to the aforementioned rules, a major concern regarding current local authorities’ finances is represented by the accumulated debt they are carrying. In fact, local authorities have been increasing their debt with private contractors and banks (short and long-term loans) over the last decades in response to the expansive budgetary policies linked to electoralism, excessive borrowing and the previously mentioned housing bubble that dominated the Spanish economy over the last twenty years. In the light of the current economic and financial crisis, the figures have become a matter of national political concern, particularly, since the end of 2009, when the total amount of Spanish local authorities’ accumulated debt amounted to 34 594 million euros. This amount represented 3.3% of Spain’s GDP. While more than 80% of the debt (28 770 million euros) corresponded to municipalities and municipal associations, the remaining 5 825 million euros corresponded to provinces and island councils. Furthermore, municipal companies accumulated a debt of 7 885 million euros. In the first quarter of 2011, the total accumulated debt of Spanish local authorities amounted to 35 420 million euros representing an increase of 3.2% with respect to the 2009 figures.
Specific attention must be paid to evaluating participation mechanisms where financial measures are concerned. On the one hand, the mechanisms provided are based on the participation of representatives from the general categories of regional and local authorities, and are unsuited to the needs of participation where general national decisions are concerned (laws, administrative acts of general relevance to financial policy). On the other, a different system governs the rights of participation when the national government adopts a measure directed in detail at a single local authority (or a specific group of them). In these cases, the participation rights provided for by the Charter should be secured to the particular local authorities concerned.
The Foundation for Democracy and Local Government highlighted the fact that local governments had not been included in the decision-making process in relation with the recent reforms as required by Article 9 paragraph 6. For example, the increase of the Properties Tax by the Central Government was done without prior consultation, constituting a breach of Article 9.6 of the Charter, in so far as the discretional powers of the city council to determine the applicable rates within the limits established in the Local Finances and Tax Act were eliminated.
In general, the provisions of Article 9 are formally respected but, in respect of paragraphs 1, 2, 3 and 5, the Rapporteurs would underline that the major form of revenue for municipalities still comes from transfers, awarded by the regions and, most importantly, by the State, which in fact grants 63.5% of all transfers, a situation that is not in line with the Charter’s provisions.
Sweden [Article ratified - Report adopted on 2 April 2014 ]
What was already guaranteed in the Swedish Constitution (Chapter 1, Section 7/2) before 2011 has now been shifted to the new Chapter 14 in the Instrument of Government which stipulates in its Article 4 that local authorities may levy taxes for the management of their affairs.
page 562 / 796 The majority of local revenues (about 70 %) are derived from local taxes. Municipalities and county councils have the same tax base, namely taxable incomes from salaries, wages and taxable transfer payments (for example pensions, payments from health insurances and unemployment benefits). Each local authority currently decides independently its own tax rate. However, the national Parliament has the power to decide the level of local taxation (tax capping), a provision which is not in operation now but could be activated at any point in future.
SALAR has informed the rapporteurs that the Congress recommendation inviting the authorities to clarify the local authority’s power of taxation has not been met but SALAR does not find it necessary to bring the question back to the table. In the 1990s and during the financial crisis, the Parliament decided to make temporary restrictions on the right of municipalities to raise their rate. The Council of Legislation criticized the then government's proposal and questioned whether it was compatible with the Constitution. The introduction of the principle of proportionality in 2011 might pave the way in favour of local autonomy in this field.
State grants constitute about 16 % of the revenues, are nominally fixed and decrease in real terms through inflation. They are also not linked to demographic changes. In 2012 general government grants amounted to approximately 82 billion SEK and grants for specific purposes to approximately 49 billion SEK (Govt. communication 2012/13:102 p.11). In 2012 earmarked grants corresponded to an average 6% of revenue for the municipalities and 9 % for the county councils. Further revenues are fees charged for some of the services provided at local level.
The so-called “funding principle” is applied since 1993 in relation to new compulsory state regulations concerning the municipal sector. Financial compensation for mandatory tasks entails an impact assessment ex ante, is calculated as a lump sum and is allocated through general or earmarked grants to the municipal sector on a per capita basis. In the Budget Bill for 2014, the Government recognised the problem that regulations by independent government bodies that do not entail new legislation are not covered by the funding principle and that there is a need for guidelines on how to apply this principle.
Local authorities in Sweden are currently not affected by the economic crisis and the global budgetary situation was described as rather good which is due to temporary circumstances. Net income in municipalities and county councils has reached the record level of 18 billion SEK in 2012, largely due to non-recurring revenue items. When AFA Försäkring insurance company returns the premiums (for health insurance) paid in 2005 and 2006 in December 2013. Net income will fall back to approximately 10 billion SEK in 2013 and it is expected to remain at that level until 2016, given the successive rises in government grants and an increase of 0.40 SEK in local government taxes compared to their present level.
The financial equalisation procedure is now based in the Constitution through Article 5 in the new Chapter 14 which stipulates that “according to law, local authorities may be obliged to contribute to costs incurred by other local authorities if necessary to achieve an equal financial base”. Changes were made, as of 1 January 2005 based on a 2003 report, combining the equalisation system and the government grants system into a mainly state-funded equalisation system. The system consists of five parts: 1) income equalisation, 2) cost equalisation, 3) a structural grant, 4) a transitional grant and 5) an adjustment grant/charge. The changes meant that significantly fewer municipalities and county councils became net contributors to the system. In 2013, eight municipalities are paying a charge of a total of 1.6 billion SEK and one county is paying a charge of 0.2 billion SEK. The State grants amounts to approximately 86 billion SEK. The Swedish Agency for Public Management is mandated to investigate and to follow up local government financial equalisation systems and to continuously propose updates.
page 563 / 796 A special cost equalisation system was introduced for municipalities under the Act concerning Support and Services for Persons with Certain Functional Impairments in 2004 and changed with effect from 2009. The reason given for setting up an equalisation system was that there are major cost differences between municipalities and equalisation is needed to put all municipalities on an equal financial footing to provide services under the Act. Similarly, a special government grant provides for cost equalisation separate from the regular equalisation system for county councils for paying for pharmaceutical benefits.
The rapporteurs would like to mention here the situation in Flen, where costs have gone up in social welfare particularly due to the arrival of a proportionally high number of refugees increasing integration costs (2000 refugees in a town of 16 000 inhabitants). They heard from the councillors and the Mayor that the financial equalisation system does not take into account the issue of refugee influx sufficiently. They claimed that Flen, which has a decreasing population and high unemployment rate (among youth and migrants), suffers from the lack of centrally coordinated planning of refugee integration which creates problems for a small town the size of Flen, with increased social security, education and housing costs, without adequate and rapid compensation from the State.
The local government tax base is to some extent sensible to fluctuations in employment and economic growth. A bill on local government balancing funds, applicable as of 1 January 2013, strengthens the possibilities for municipalities and county councils to create municipal equalization reserves. They can now accumulate profit equalisation reserves within the framework of their own capital to cover deficits that may arise as effects of cyclical variations or regression. The rule applies retroactively, so profits can be set aside from 2010 onwards, although the actual decision cannot be made until the end of the 2013 fiscal year.
Sweden is a rare case among European countries in that the majority of local revenues are derived from local taxes and that with a ratio of 70%. It is also a rare case in that local authorities have not been affected by the economic and financial crisis at all. The financial equalisation system is enshrined in the law and works well.
The rapporteurs are of the opinion that, all in all, Sweden complies with the provisions of Article 9 of the Charter.
Switzerland [Article ratified - Report adopted on 20 October 2017 ]
Swiss municipalities have genuine tax-raising powers and this means that they have a generally satisfactory level of own resources. Some 70% of the revenue of the municipalities is constituted by own resources, which is one of the highest levels in Europe. They are free to use these resources as they wish, provided that the cost of mandatory responsibilities is covered. 99. Where large municipalities are concerned, the financial resources appear, on the whole, to be proportionate to their responsibilities under the cantonal constitutions and laws. On the other hand, the financial resources of small municipalities sometimes prove to be insufficient, with the result that they have to set up intermunicipal co-operation structures or consider merging. Another difficulty encountered by the municipalities is that they are sometimes given an increased number of responsibilities without a corresponding increase in resources.
Although the cantons appear to have complete fiscal sovereignty, the municipalities’ autonomy is restricted insofar as they can only raise taxes within the limits of the authorisation given to them by the Constitution or the laws of the canton. They therefore have only delegated fiscal sovereignty. The municipalities may either freely determine the rate of their own taxes, or add a surcharge to the basic cantonal tax rates (the system of centimes additionnels). The main taxes that exist at the level
page 564 / 796 of the municipalities are income tax and wealth tax, taxes on profits and capital, inheritance and gift taxes, real estate taxes, property taxes, property transfer taxes, business tax and dog licences.
The federal law on the harmonisation of the direct taxation of the municipalities and cantons (LHID) adopted on the basis of Article 129 of the Constitution, which came into force on 1 January 1993, gives instructions to the cantonal and municipal lawmakers concerning the principles they should apply in fixing the rules and regulations governing tax liability, the tax-bearing object and the relevant tax periods, as well as the rules of procedure and of criminal law on taxation. The federal law does not contain any provisions concerning tax rates, scales or amounts, as responsibility for fixing these lies with the cantons and the municipalities (Art. 1.3, LHID). The LHID therefore only harmonises the form but not the level of taxation.
The tax resources of the municipalities appear to be sufficiently diversified and buoyant to allow the municipalities to fulfil all of their responsibilities. The financial situation of the municipalities is generally satisfactory. The level of indebtedness of the municipalities remains stable and is relatively low. There are very few municipalities in financial difficulties. However, it seems that over the last few years several municipalities or towns have reached their limits of their margin of manoeuvre in financial policy matters and that they have had to introduce cost-saving measures.
The cantons can also introduce a system of financial equalisation among the municipalities. Financial equalisation concerns financial transfers between the canton and the municipalities as well as between the municipalities themselves. The majority of the cantons have reorganised their intermunicipal financial equalisation along the lines of the new federal model of financial equalisation, while still taking their own specific needs into account.
In the Canton of Geneva, there is a system of horizontal financial equalisation with regard to the income tax applied to natural persons between the municipalities where they work and those where they live. Moreover, the weaker the latter are in financial terms, the larger the share of cantonal taxes they receive. Where the taxation of legal entities is concerned, the municipalities only receive the centimes additionnels they have voted in respect of 80% of cantonal taxes, the remaining 20% being subject to taxation at the average municipal rate, the proceeds of which are distributed every year among all of the municipalities, in light of their financial capacity. The latter also serves to allocate a number of cantonal grants (vertical financial equalisation). For example, only the financially weak municipalities receive grants for the construction of school buildings and in some cases sports facilities.
The cantonal authorities and the municipalities agree on the arrangements for the equalisation and redistribution of resources. The latter are consulted not only on the establishment of the financial equalisation system but also on its evolution according to procedures which may vary between cantons.
Unlike the share of their revenue which the municipalities are free to use as they wish, grants are allocated for a precise objective: operating assistance for a specific body, or financial assistance in building a particular facility. The same applies to compensatory payments paid to a local public authority for a service of benefit to the entire region: For example, the Canton of Geneva pays the City of Geneva an annual sum of 13 million Swiss francs to maintain its roads. The grants received by the municipalities in the Canton of Geneva concern annual operational responsibilities: civil protection instruction and equipment, the fire and rescue services of the City of Geneva, sports events and equipment, and notably land improvements, without forgetting the cantonal share of some 15 million Swiss francs granted to the joint municipal out-of-school activities service; payment of sums due for services provided on behalf of the confederation (civil protection) or from other municipalities (the state transfers to the City of Geneva the sums paid by the other municipalities for
page 565 / 796 the fire and rescue service); investments such as schools, sports facilities and public civil protection shelters; financial assistance with investments, federal grants from the State of Geneva, for public civil protection shelters for example.
Civil protection provides an example of a mechanism of multiple transfers in respect of both operational and investment budgets. Federal legislation makes cantonal assistance a condition for payments to the municipalities; this explains why the money is first paid into the cantonal budgets and then transferred to the municipalities. The latter may therefore receive operational grants and investment grants from both the Confederation and the canton at the same time, and sometimes even compensatory payments for a particular service. On the other hand, while they receive these five categories of grants for civil protection activities, they must also participate in the financing of mandatory private shelters built by private individuals.
In principle, authorisation to borrow, which is decided by a vote of the municipal council, must first be approved by the cantonal government. Loans must be used only to part finance investments, since the municipality must ensure sufficient self-financing of its amenities. As for sources of borrowings, the municipalities apply for bank loans. In the Canton of Geneva, for example, the municipalities can borrow from the Banque Cantonale de Genève, of which they and the Canton of Geneva are majority shareholders. Large municipalities may issue public debt. Others get together with the local authorities of other cantons to issue such debt. Given the positive conditions of the Swiss capital market, the Swiss municipalities do not in principle borrow from other countries.
The rapporteurs consider that Switzerland complies with Article 9, paragraphs 1, 2, 3, 4, 6 and 8 of the Charter.
Turkey [Article ratified - Report adopted on 1 March 2011 ]
The analysis article by article is currently unavailable
Ukraine [Article ratified - Report adopted on 31 October 2013 ]
Representatives of local and regional authorities presented a number of structural problems which, they believe, characterise the financial architecture of local and regional authorities in Ukraine: lack of progress in the consolidation of the local financial system since 2001; complicated budgetary programming at central government level, showing no respect for local and regional authorities’ interests; structural weakness in local and regional authorities’ financial powers; lack of proportion between own resources and the powers assigned; central government levies adversely affecting total revenue from local taxation; under-financing of the powers delegated by central government; absence of clear and comprehensible criteria on inter-budgetary relations; absence of appropriate equalisation at the level of regions (oblasts);
page 566 / 796 need for stronger interaction/co-operation with the Ministry of Finance.
General situation
Ukrainian local authorities’ budgetary situation very much depends on the general economic and financial situation of the country. In economic terms, local authorities’ budgets are very large: approximately 7.2% of the country’s GDP is generated at local level (excluding inter-budgetary transfers). The Ministry of Finance estimates the total amount of local authorities’ budgets for 2013 to be UAH 220 billion. Total expenditure in the 2013 national budget is UAH 410.66 billion, with a maximum deficit of UAH 50 billion (including Naftogas with UAH 82 billion). In the first six months of 2013, expenditure totalled UAH 112.1 billion, i.e. 13.2% higher than in the same period of 2012.
Nevertheless, two preliminary factors are important: the level of per capita GDP, compared to that of emerging countries (as an indicator of the success or failure of an economic development policy and, therefore, of the need for reforms at every tier of government).
The chances of maintaining or striking a national budgetary balance in the medium term (as an indicator of the need to conduct a policy of budgetary discipline for the years to come in accordance with IMF declarations).
An analysis of the situation in Ukraine in 2011 (in terms of purchasing power), as compared to other countries of eastern Europe on the basis of IMF data, is explicit enough: with a per capita GDP below EUR 10,000, Ukraine ranks below Serbia (approx. EUR 15,000), Croatia (approx. EUR 25,000) and Slovenia (approx. EUR 38,000), and lags far behind the countries of the Eurozone (approx. EUR 45,000). The country’s backwardness in terms of competitiveness and potential growth in productivity, and in terms of the modernisation of administrative structures, is fairly clear to see. We need to know whether there are any signs of a positive development in GDP growth.
The general prospects of economic growth for Ukraine are not very promising, although the government is placing a particular emphasis on reviving industry in the sectors with high technical and scientific potential, and hopes that this policy will have positive effects on the labour market. International observers expect growth to decline in 2013, whereas the national budget for this year is based on GDP growth estimated at 3.4%.
Furthermore, another revealing statistic is the growth in total public debt between 2003 and 2013. Although the cumulative public debt fell slightly in 2011-2012 (around 40% of GDP), the situation is still tense, because the projections in the “stand-by arrangement” with the IMF are not being achieved, making it likely that the government will persist with its current policy, either by increasing revenue or by cutting expenditure, or by doing both. The leeway for a less tight budgetary policy vis- à-vis local and regional authorities is very limited.
The table which appears in Appendix III, based on data from the national statistics office, shows considerable discrepancies between Ukrainian regions in terms of annual income. The figures also show how important equalisation policy will be, if Ukraine decides to take action for regional development and to introduce vertical and horizontal financial equalisation. In this context, the Law on the stimulation of regional development, which was amended in 2011, should be mentioned: according to the Ministry for Regional Development, the purpose of this law is to support the economic, social and ecological development of the regions, drawing on the EU’s regional policy. It is based on a “regions in crisis” concept and lists a number of assistance measures from which these regions may benefit for a period of seven years (with a possible extension for a maximum of another five years). According to the Ministry, no such measures are being implemented in the regions which are in crisis. The figures in this table will therefore need to be checked to gauge the success or
page 567 / 796 failure of the measures intended to balance the country’s economic development.
A draft law on “the foundations of regional policy” is currently being prepared, with the associations’ participation, with a view to implementing the decision taken by the Council of Regions in March 2013. This draft law is to define the main legal, economic, social, ecological, humanitarian and organisational aspects of Ukraine’s regional policy.
Legal foundations
Article 142 of the Constitution defines the material and financial foundations of local self- government. Article 142 (3) states that “The State participates in the formation of revenues of the budget of local self-government and financially supports local self-government. Expenditures of bodies of local self-government, that arise from the decisions of bodies of state power, are compensated by the state.” The arrangements are detailed in Section III of the 1997 Law on local self-government in Ukraine. Article 62 of that law, in particular, contains provisions on the State’s obligation to support local authorities financially, on the system of financial supervision, guarantees of a basic income and the criteria to be met, and on the conditions for State levies and the criteria applicable to local authorities’ “minimum” budgets. In 2011, several amendments came into force. According to Article 66 (1), “local budgets must be sufficient to enable local authorities’ bodies to exercise their statutory powers and to supply services to the public which guarantee a minimum level of social services”. Article 7 (3) of the Budget Code sets down “the principle of the independence of the state budget and local budgets”, while other fundamental provisions are in Section IV, “Inter-budgetary relations”. The Fiscal Code and various other specific laws also contain some relevant provisions.
Revenue
As to revenue, under the 2011 Tax Code, taxes and other national revenue (Article 9) include corporate taxes, income tax, value added tax (VAT), taxes on public enterprises and the initial registration of vehicles, environmental tax, taxes on the transport of petroleum products and the transit of natural gas and ammonia through Ukraine, petroleum taxes, customs duties and taxes for the exceptional use of water and forestry and agricultural resources.
Under Article 10 of the Code, local taxes and other local revenue include property tax (other than land tax) and unified taxes. Local charges include administrative fees for special commercial activities, parking fees and tourist taxes. A new property tax was due to be introduced on 1 July 2012, which should have improved municipalities’ tax situations. But it is doubtful whether the positive effects expected by the government will materialise. This tax affects only 1% of the buildings and will bring only 100 million UAH into the local budgets, which is not very significant. Moreover, local authorities cannot influence neither the administration nor the rates of the tax. Charges for administrative services are another important source of income. A draft law on the “list of administrative services and the related payments (administrative fees) for their provision” is currently being discussed by the associations and the relevant ministry.
Local budgets are made up therefore of own resources, quotas of related national taxes and state transfers. Own resources also include taxes on the profits of local enterprises, payments by enterprises to local land-owners and income generated by the privatisation of local enterprises or by property management. The most important tax is the income tax (the advertising tax has been abolished recently). With the reforms of 2011, Ukraine is working towards increased tax competition between municipalities, a simplification of the tax system and, in principle, an increase in the size of local authority budgets. Apparently, these measures have not (yet) brought about an increase in local authorities’ own resources although there has been a major change in Kyiv, where the city’s
page 568 / 796 revenues rose by 15.4% between 2011 and 2012. The Ministry of Finance states that local government revenue was stabilised in 2012 through a series of government measures including an expansion in the sources of revenue, which produced a total of UAH 11.3 billion in tax revenues.
Municipalities encounter some difficulties where it comes to managing taxes, as the Ukrainian tax system as a whole is overly complicated. Experts from the World Bank reported that there were 135 different types of tax in Ukraine. During the visit, government representatives repeatedly emphasised the importance of the local authorities’ economic commitment and the rapporteurs are convinced therefore that the state, which has powers in the tax sphere, also has a particular responsibility for establishing a simple, transparent and efficient financial system.
Simplifying the organisation of local taxes and fees would also form part of this new system. Existing structures are so complex that tax collection is scarcely profitable. In response to this problem, in 2011, the state amended the Tax Code. It replaced 12 low-revenue taxes with only five (taxes in the transport, tourism and business sectors and a value added tax on business purchases). However, some local authorities complain that the situation has deteriorated: ten local taxes have been abolished or transferred to the state, including taxes in the transport and procurement sector. According to officials from the city of Ivano-Frankivsk, the new Tax Code, which came into force on 1 January 2011, has caused a loss of revenue of UAH 20 million out of a total of UAH 670 million in budgetary revenue. In addition, subsidies for the education and public health sectors have been reduced by UAH 20 million. At the same time, the single tax was not part of the taxes included in the calculation of transfers (i.e. from the so-called “basket of profits”) and transferred to the development budget. Moreover, payment for land currently goes into the budgets of towns, villages and rural settlements. (Previously 60% went to the towns of local importance, villages and rural settlements and 75% to the towns of regional importance.) Consequently, the loss from market change has been almost compensated, although, for a number of towns, for example for Khmelnytsky, the market change was very significant.
The example of property tax illustrates some of the typical features and problems of local taxation:
The tax base was restricted by a wide range of exceptions and exemptions (according to the Ministry of Finance, in 2003, these exemptions amounted to 66.7% of fiscal capacity).
There is no competition between local authorities owing to the upper limits that are placed on charges.
The administrative costs of tax collection are very high.
The entry into force of the new property tax was put back from 1 January to 1 July 2012. The calculation processes are complex and the entry into force could be deferred still further. Several amendments enhancing local authorities’ tax capacity were introduced through the reform of the Budget Code in 2011.
The association therefore asks for the tax base to be broadened and for there to be fewer exceptions and exemptions so that local authority revenues can be increased.
As to the profits of local enterprises, because the state has consistently limited charges for housing or public services at local level, most local enterprises are in debt and cannot make the profits that would enable them to make the necessary investments.
The local authorities receive revenue from personal income tax. The rate of this tax is, however, limited to 15% and has not changed, so that the revenue it creates for authorities depends on
page 569 / 796 economic activity and, in particular, on wage increases and the employment situation, in other words the number of people liable for tax. Furthermore, a vast network of exemptions limits the base of this tax. Lastly, this tax causes inequality between local authorities because it is collected according to the person’s workplace. It favours “rich” cities, reduces the scope of the tax in rural zones and makes a system of financial equalisation necessary. Rural authorities depend largely on state subsidies because their revenues from this tax are low.
To strengthen the economic base of local communities in the medium term, the rapporteurs propose to increase the production of clean, renewable energy but this possibility has largely been overlooked in Ukraine until now. Geothermal, solar and wind energies, together with biofuels and waste burning, accounted for 0.71% of primary energy production in 2008 whereas nuclear power (28.8%), coal (41.4%), natural gas (22.1%) and oil (5.3%) provided a large share of the country's energy. However, the potential for the incomes of municipalities to be increased by an increase in the production of renewable energies is considerable. It would result among other things in a growth in the direct profits of local energy production companies (which are not subject to financial equalisation), an increase in the incomes of the employees of production plants, the management of resources at local level instead of buying energy from abroad and stabilised incomes for renewable energy producers.
The “underground economy" reflects an undeniable reality in Ukraine and implies a considerable reduction of tax revenues, the government is currently considering the possibility of lowering personal income tax (from 15 to 10%). Such a measure would also have an impact on local authorities, but without a reform of the legislation on pensions, it will have no impact on wages in terms of bringing them closer to those of the "shadow economy”.
The budgetary system
The Ukrainian budgetary system is divided into two levels: the state budget and the local authority budgets (12 086 in total). A vertical inter-budgetary transfer is made between the two levels and the state has inter-budgetary links with 692 budgetary systems at local and regional level.
The main aim of inter-budgetary transfers is to balance local and regional authority budgets. They are calculated according to general criteria on the basis of Cabinet Decree No. 1149 of 8 December 2010. For the calculation, the key indicator is the balancing coefficient which is used to calculate the amount of tax revenue left over for use by regions and communes with surpluses. The previous system did not include any incentive measures, whether aimed at regions in debt, to encourage them to increase their own tax resources (as debts were covered more or less by state transfers) or at regions with surpluses, to encourage them to increase their tax revenues, as surpluses were capped by the state. Despite a few amendments made to the method to calculate tax capacity (Articles 64 and 66 of the 2011 Budget Code), there has been no change in the coefficient system or the high degree of centralisation of inter-budgetary relations.
The total value of inter-budgetary transfers comes to 44% of the state budget, 42% of which goes into the general fund. Special transfers are made with the specific goal of guaranteeing comparable levels of social protection and fostering local and regional economic and social development (particularly in the building and construction sector). Amounts of equalisation are calculated on the basis of individual inhabitants (and consumers of local services) and while attempting to strike a balance between the revenue and expenditure of local and regional authorities. The Budget Code establishes which local revenues are to be included in the inter-budgetary transfer system (Articles 64 and 66 (AR of Crimea)) and which must not be included (Article 69). Through this mechanism the state can increase or reduce the fiscal importance of these revenues for the local authorities which impacts their autonomy within the meaning of Article 9, paragraph 1 of the Charter, by including
page 570 / 796 particular types of local authority revenue in the inter-budgetary relations system or excluding them from it. As a result the system lacks transparency and is relatively complex and unstable, making the local tax system somewhat unpredictable. Furthermore, there is little interest for an authority in setting up a "financially advantageous" tax in the medium term if it must fear that this source of revenue will ultimately be incorporated into the state’s inter-budgetary system.
Some local authorities complain about the criteria for the distribution of transfers, which give the state wide-ranging discretionary powers, or object to the total lack of equalisation criteria. As to the regional development fund (Article 24(1) of the Budget Code), it comprises funds equivalent to 1% of the national budget, which amounted to about UAH 400 billion in 2013. Of this amount, 1% (UAH 4 billion) is earmarked for the fund. Seventy per cent of the fund is allocated according to the number of inhabitants in each region while the other 30% takes account of criteria linked to their economic strength. UAH three billion is allocated for economic and social development. Added to this are various grants (such as UAH 3 billion for national roads). UAH 1.4 billion is reserved to finance projects of national importance. These funds were allocated by the Verhovna Rada’s Budget Committee as follows: 50% was assigned to the regions but eight regions received nothing, three regions received 70% of the allocation and the others shared the remainder. Despite the criteria that were set for the allocation of the funds (Cabinet Decision No. 6565 of 4 July 2012) decisions were taken for political motives. When the funds were allocated to the regional development fund, the allocation criteria were modified in parliament.
The example of the regional development fund illustrates another structural problem with Ukraine’s budget programming. Although the introduction of budget planning based on specific programmes theoretically allows for more accurate allocation of funding, it is necessary to frame the goals to be achieved as precisely as possible. Yet, firstly, there is a very large number of specific programmes – the City of Kyiv alone is supposed to be implementing around thirty – and, secondly, goals are often set according to quantitative not qualitative indicators. There is therefore a risk both that programmes will overlap (for example, in rural areas, forty different programmes, whose timeframes have sometimes partly overlapped, have been adopted since 1991) and that the programmes are not suited to the aims that have been set or, worse still, that there was no justification for the funds to be allocated in the first place.
It is also problematic that the majority of oblasts do not have Strategic Development plans, and therefore cannot define priorities for using the financing from the Fund. As a result, the projects which are submitted for government approval are not the projects designed for resolution of the issues of local development, but for construction of facilities intended for social needs (schools, hospitals).
Another problem has to do with the application of budgetary rules to small local entities. They are also subject to the Budget Code but their situation is very different as they have small populations, a high number of retired inhabitants and, generally, a low tax capacity. Consequently, the authorities in these villages or settlements, particularly those in rural areas, ask for the regulations to be adjusted to their special circumstances. It is to be hoped that the 2011-2015 Programme for the Development of Small Villages (Cabinet Decision No. 1090 of 29 November 2011) will provide a means of strengthening the economic and budgetary situation of this type of authority, knowing that 75% of village councils cannot carry out their responsibilities provided by this law.
Local and regional authority budgets are divided into two components (Article 13 of the Budget Code). The first is a “general” fund, which is used to finance general compulsory spending (basket 1, Articles 88 to 90 and 64 to 66 of the Budget Code) and the second a “special” fund, used to finance specific projects (basket 2, Articles 91, 69 and 71 of the Budget Code).
page 571 / 796 According to the Ministry of Finance, taken as a whole, 40% of local and regional authority budgets come from state transfers and 60% from own resources (local personal income taxes). Local and regional authorities’ own resources are not included in the equalisation system. On the other hand, according to the information provided by the Association of Ukrainian Cities, local budgets are increasingly dependent on state transfers (43.3% in 2007, 46.7% in 2009, 52.3% in 2011 and 53.6% in 2012).
During its visit, the delegation was told that 98% of first-component expenditure was destined to cover mandatory expenses resulting from the execution of delegated powers and staff wages. The local and regional authorities regret the fact that the state only pays about 80% on average of the necessary transfers to cover mandatory expenses. In their view, the situation could deteriorate still further in 2013, as the state is missing about UAH 30 billion to cover these expenses. The result is a structural deficit of 20% of the first component, which contains the major local revenue of personal income tax (at a maximum rate of 15%).
Local authorities therefore finance both delegated state powers and this 20% deficit through their own resources. About 10% of the first and second components combined are covered by local authority’s own resources. Half (5%) is used to fund delegated powers in the first component of the budget. The second component is financed by local company tax. Authorities have the right to negotiate short- and medium-term loans with the Treasury under conditions set by Article 73 of the Budget Code.
It should be noted that changes to the Budget code were introduced in 2012 in terms of the transfer of some taxes to the second basket of revenues in the oblast budgets and the budget of Autonomous Republic of Crimea. Their amount is estimated to be UAH 1 billion. They will allow to improve the condition of the oblast budgets significantly, primarily in terms of financing the preparation of technical documentation for projects which are financed from the Regional Development Fund and also for co-financing these projects
According to the national audit office, local and regional authorities do not always manage state funds "properly". Sometimes funds are misappropriated in various ways such as the use of funds for different purposes than those outlined in the relevant documents, failure to invest funds properly for want of a precise timetable and the reallocation of unused resources.
With regard to the issue of misappropriation of national funds by local authorities, the national audit office investigated some examples in 2012 which were linked to development funds connected with investments for the 2012 European football championships. The City of Ternopil failed to comply with the funding conditions, and used funds which should have been reserved for investment in infrastructure to finance wages for doctors, teachers and others. In such cases, the legislation provides for penalties against the officials concerned and the possibility of asking for the funds allocated by the state to be reimbursed. The associations emphasise that the inability of local authorities to comply with their budgetary obligations very often stems from the shortcomings of the inter-budgetary system that has been set up.
According to the national audit office it is important for local authorities to use state funds more efficiently. The audit office would be prepared to co-operate with the authorities to improve the application of the rules but to date, no towns have contacted it to ask it for help in improving internal auditing procedures at local level. The audit office has, however, received such requests from ministries. The legislation will have to be amended for there to be any increase in the influence of the audit office on the local and regional authorities.
Opinions differ as to the efficiency of the Treasury. The Deputy Minister of Finance’s views are based
page 572 / 796 on the fact that the Ukrainian Treasury’s system is characterised by daily payments. In his opinion, the system functions and ensures that financial operations take place in real time. For the authorities, the fact that all financial operations pass through the Treasury has a negative effect as the Treasury can delay or prevent payments in order to “manage its cash flow” and hence control the whole procedure. The associations therefore demand that an amendment be made to the legislation to increase the liability of the offices of the Treasury when there are irregularities in financial operations.
There has also been some criticism about a certain lack of efficiency in collecting taxes on the part of the various state authorities, which are accused of being incapable of guaranteeing fair and regular taxation. The city of Ivano-Frankivsk has set up a special committee to deal with tax problems in co- operation with the tax authorities, the employment office and social services. Most of Ukraine’s districts and regions have set up a consultative committee of this type.
As to Ukraine’s budgetary procedure, the local and regional authorities assert that more co- ordination is needed with the relevant government departments. Under Article 75 of the 2011 Budget Code information must be disseminated about the method of calculation, at national level, of funding destined for local budget projects. The authorities have introduced a new method of budgetary programming at local level, which, according to the Ministry of Finance, should make medium-term programming easier and optimise the use of financial resources. This method will be used in 2013 by some 700 Ukrainian municipalities.
With regard to the forms of interaction between the local and central tiers of government in the sphere of public finance, in 2004 the IMF proposed that an intermediate institution should be established to analyse and prepare decisions on the country’s budgetary policy. The rapporteurs take the view that a rule should be introduced into the national budgetary procedure that local authorities should always be consulted first so that they can be more closely involved in estimating tax revenues and so that it is easier to prepare local budgets in the course of the year. This would ease the process of passing on the effects of national tax reform to local budgets. Similarly, the publication of tax data at regional level should be stepped up. The Rapporteurs believe that this kind of co-ordination between the association of local and regional authorities on the one hand and the relevant ministries on the other, under the responsibility of the Ministry of Finance, could significantly improve the co-ordination of the budgetary policies of the two tiers of government. In order to avoid a constant planning of deficit for the cost of implementing the “delegated” competences, it is reasonable to define and formalise the overall size of expenditures for the implementation of such competences in the legislation.
The rapporteurs consider that in practice, in view of the restrictions on the system of inter-budgetary relations, the situation of Ukraine’s local finances does not fully meet the requirements of Article 9 of the Charter as regards the need to have a stable and independent financial basis and sufficient own resources. The rapporteurs believe that strengthening the local authorities’ financial autonomy should form part of Ukraine’s local government reform agenda in order to bring the situation into line with Article 9. The situation in this respect, as the rapporteurs see it, does not make it possible to find that all the paragraphs of this article are being complied with.
United Kingdom [Article ratified - Report adopted on 26 March 2014 ]
England
Local government accounts for about a quarter of all public spending in the UK. Net current expenditure in 2012-13 was £112 billion. The three main sources of income for local government in England are government grants, council tax and redistributed business rates. Local government’s
page 573 / 796 2010-11 budgeted revenue expenditure (not the same as net current expenditure) of £98 billion in 2012-13was budgeted to be financed as follows:
Government grants = £57,657m in 2010-11 (55%), £56,237m in 2011-12 (57%), £46,765m in 2012-13 (50%)
Council tax = £26,254m in 2010-11 (25%), £26,451m in 2011-12 (27%), £26,715m in 2012-13 (28%)
Redistributed rates = £21,517m in 2010-11 (21%), £19,017m in 2011-12 (19%), £23,129m in 2012-13 (25%)
Councils also receive income from returns on borrowing and investments, interest and capital receipts, sales, fees and charges and council rents.
Council tax makes up the majority of the difference between a council’s planned budget and its central funding. In 2011-12, the government began making extra funding available to councils which froze their council tax with the objective of making local authorities more likely to freeze tax levels. Council tax freeze grants have been available in every year since and will continue up to and including 2015-16. The total Government funding for a freeze over the period of time covering 2011-12 to 2015-16 is up to £5.2billion. Under the Localism Act 2011, councils are required to hold a referendum on council tax increases if they are above a certain level as proposed by the Government and approved by the House of Commons. As Council tax accounts for only one quarter of local income; a 4% increase in council tax is needed to achieve a 1% increase in total local spending. It has also been argued by some in local government that council tax is not really a local tax because, for all practical purposes, the government decides it. However, the government’s position is that local authorities have had a choice of whether to (i) freeze council tax and take the Government grant; (ii) increase council tax up to the level of the referendum threshold, or (iii) increase it above the threshold and hold a referendum for local people to either approve or veto the tax increase. In practice, the referendum obligation has operated as an effective deterrent against the raise of council tax as no authorities have so far chosen to hold a council tax referendum. In times of financial and economic crisis, it is politically hardly possible to find popular support for a raise of (council) taxes. Councils can also not revalue properties in their local area (leading to discrepancies between the market price-level and the property value). There are no further tax- raising powers, such as a tourist tax or similar.
Councils collect business rates (officially called National Non-Domestic Rates) on behalf of central government and pay them into a central account controlled by the Department for Communities and Local Government. These funds are then redistributed back to councils by the department on a per head basis. This reflects the basis of distribution prior to 2006-07; after that business rates were distributed on the same basis as the Revenue Support Grant (RSG). Councils do not set business rate levels, they are centrally determined. The Government has now introduced the business rates retention scheme. Operating from 1 April 2013, this scheme sees 50% of business rates paid to central government and 50% of the business rates retained by local authorities. The scheme also allows for local authorities to keep a proportion of any business rates growth, although – according to the LGA – some authorities will be allowed to keep much less than this because of the complicated arrangements for funding the scheme as a whole.
A fundamental question in relation to Article 9 of the Charter is whether local government will have adequate (own) financial resources and whether these are commensurate with its functions.
Following the 2010 General Election the new Coalition Government urgently began to tackle the UK’s “record debts”. This has led to continuous cuts in Government spending since 2010, including cuts to
page 574 / 796 the grants given to local government by central government. Overall these cuts equate to a real terms reduction of at least 32% over the last four year period of the Comprehensive Spending Review (CSR). According to all interlocutors from local authorities and publications of the LGA, “this is the toughest local government financial settlement in living memory”. Some councils face more than 16% of reduction in the amount of money they receive from the Government. The financial cuts mean that City of York Council faces cuts of about £60 million from the budget, over an 8 year period. Leeds is very much in the same financial position – it is just a matter of scale – they will need to make cuts to the tune of a staggering £50 million next year.
Even more worrying is that these changes are structural rather than temporary, as the next CSR (2015) will start from the spending control total resulting from all these changes. It appears that the cuts have also been decided unilaterally by central government, between the Ministries, without the involvement of local authorities or the LGA.
The Government “de-ring-fenced” some of these grants in order to give local government more freedom over how money is spent in individual areas. In 2013/14, ring-fenced grants amounted to nearly two thirds out of a total of £88,953 million Central government grants. This continues to push local government to find further efficiencies and deliver better value for money through structural changes and innovations.
The delegation heard that, in April 2013, central government delegated three services to local authorities: Council Tax benefit Localisation, Social Fund and Children-on-Remand. In each case, local authorities were asked to take over additional responsibility and control costs, leading to the transfer of a significant financial risk as these services are demand dependant. This looks contrary even to the New Burdens Doctrine guidance published in 2011, according to which “all new burdens on local authorities must be properly assessed and fully funded by the relevant (government) department.”
In order to support local service transformation, the Government has introduced a number of measures which include the £3.8 billion Better Care Fund for the integration of the provision of health and social care, a £300 million transformation fund for councils to fund up-front costs of service re-engineering, and the establishment of the Public Service Transformation Network. With regard to article 9.3 (financial resources deriving from the local level), it can be observed that councils have responded to the localisation of resources, in particular to the recent financial incentives, including the localisation of business rates, City Deal incentives (agreements between the government and cities to increase the latter’s powers) and the discretion to determine council and business tax discount, in a positive way. However, as most of these financial reforms are quite recent, it is not yet possible to assess their full impact in practice.
The distribution of central government funding to local authorities is determined using complex distribution formulae, taking into account population and other demographic factors as well as the ability to raise revenues locally from the property tax base. The Standard Spending Assessment (SSA) was designed to provide a notional spending allocation for each local authority taking into account their needs and population. The aim was to ensure that, for the same level of services, each authority should be able to set the same average council tax, having regard to their respective property tax base (i.e. relative values). This was the original aim; by the mid-1990's Government made it clear that SSAs were simply a measure used to distribute grants. This was consolidated in 2003-04 when SSAs were replaced with Formula Spending Shares. It was replaced from 2006-07 onwards by the ‘four block’ model which contained separate components linked to population (central share), needs including deprivation and relative costs pressures (relative need amount), respective residential property tax bases (relative resource amount) and a fourth block (damping) to guarantee a minimum level of change year on year.
page 575 / 796 In recent years, as a result of the reduction in expenditure to meet the Government’s spending targets, damping to reduce the year-on-year volatility of allocations between authorities has become more pronounced. This places authorities in “bands” based on their relative reliance on grant funding. As a result, one London Borough, which was entitled to a 9% grant increase under the needs formula in 2013-14, received the same percentage reduction in grant as another Borough which, on the basis of the formula, should have had a 31% grant reduction. From 2014-15 onwards there will be an even greater focus on limiting variability and giving all authorities undertaking the same services similar percentage cuts – and the link with needs/population/demographic changes will be further reduced. According to interlocutors, local grant allocations will not be recalculated on the basis of updated needs assessments until 2020/21.
There are few budgetary restrictions. Indebtedness and deficits are mitigated by the Prudential Code which received statutory force by the Local Government Act 2003 and subsequent amendments. Local authorities can only borrow long-term to fund capital investment. Operating costs are funded from day-to-day resources through an active treasury management regime. Local authorities are allowed to borrow under the Prudential Code, meaning the amount of debt and other liabilities do not have an upper limit but must be affordable and prudential. The Prudential Code sets out indicators relating to affordability, sustainability and prudence to be respected. It does not apply, however, in all areas. For example, the amount of borrowing councils can undertake for the purpose of increasing local social housing supply is capped by the Government, as part of the Government’s deficit reduction policies. The LGA, London Councils and the GLA are, however, lobbying for this system to be changed to allow more investment in housing.
Scotland
In Scotland, local government is allocated around one third of the devolved budget of around £33 billion, giving them significant procurement power. Moreover, despite substantial staff reductions over the recent years, local authorities remain one of Scotland’s biggest employers. With over 248 200 staff, they employ around 45% of the public workforce in Scotland and provide 1 in 10 jobs in Scotland overall.
In terms of resources, however, councils are very dependent on the Scottish Government. Budgets are not statutorily protected and councils have little statutory ability to influence the budgets they receive. But, most importantly, councils raise only a small amount of their resources locally: 80‑85% of budgets come from the government, with only 15-20% raised through local taxation (council tax). Although there are negotiations with COSLA for the local government budget, ultimately the power rests with the Scottish Government.
The 2012-13 local government settlement was £11,5 billion (£10,9 billion in revenue funding and £0,6 billion in capital grant funding). Income generated from council tax was £1,9 billion. These figures do not include revenue from sources such as housing rents and local charges. Councils are able to borrow (under certain constraints) under the Local Government (Scotland) Act 1973. Interlocutors have underlined the importance of European funding, in particular for the infrastructure.
In terms of expenditure, education accounts for nearly 40% of total expenditure. A further 25% is spent on social work (but this is expected to increase rapidly due to the ageing of the population). The remainder is spent on other services including roads and transport, planning and development and culture related areas.
According to interlocutors, formal ring-fencing has been reduced, leaving definitively more choice in spending, but councils still have significantly less ability to raise and control resources locally. The
page 576 / 796 Rapporteurs would suggest that, in future, the focus should shift to the joint improvement of outcomes. This would allow for an assessment of the services delivered, and leave more room for discretion to councils on how to perform them.
However, also in Scotland, local government budgets have been reduced in the wake of the economic and financial crisis. The crisis and long term trends such as population ageing mean that resources are diminishing while demand for public services is growing rapidly. In the 2007, COSLA and the Scottish Government signed the Concordat, freezing council tax and agreeing upon additional funding to compensate for it. This has been criticised as a voluntary renouncement of own- decision-making powers in financial issues. Today there is ongoing discussion on the replacement of the current council tax system with a fairer local tax, based on ability to pay. Proposals for the introduction of a Local Income Tax have been dropped in 2008.
Wales
Local authorities in Wales receive the majority of their funding in the form of a revenue grant from the Welsh Government (RSG). The RSG is the main component of the local government revenue settlement, which comprises RSG and non-domestic rate income, which together are known as Aggregate External Finance (around 80% of local government finance). The remaining 20% comes from non-domestic rates (a national tax locally set and collected), council tax and income raised from fees and charges. The amount of council tax people pay depends on the value of their home.
Local authorities decide how the money from RSG as well as some additional capital funding should be spent according to their needs and priorities. They also receive a number of ring-fenced grants, both revenue and capital, which must be spent on specific activities (e.g. grants for social care, for bus shelters or for school uniforms). The RSG funding is shared out between authorities on the basis of a population-based distribution formula. The formula is kept under review by the Distribution Sub Group, a working group under the Partnership Council’s Consultative Forum on Finance.
In contrast to other parts of the public sector, local government has been financially sound over the 17 year period of unitary structures. Since 1996 no authority has failed to set a budget or has gone into deficit. Council tax collection rates in Wales are at a level of 96.7% of council tax billed.
The Welsh Government is heavily reliant on providing grants for specific purposes and (around 12% of council spend) regularises council’s abilities to charge for certain services. There is a growing expectation on local authorities to deliver more with less resources and, increasingly, local government needs a more flexible financial framework. The WLGA warns that this approach is unsustainable and will most probably worsen in the coming years, given the bleak financial outlook for local government in Wales (£ 175 million reduction for 2014/15, a £ 460 million reduction by the end of 2015/16).
A key issue is how to provide the necessary services for an ageing population in the context of drastic budgetary reductions alongside rising cost and demand pressures for local public services. Wales has a higher proportion of older people in its population compared with England, Scotland and Northern Ireland: currently over 700.000 people in Wales are over 65 years old (of a total 3 million population), and this number is expected to rise to over a million people in the next twenty years.
Another important question is whether central and devolved governments will succeed in moving beyond annual incremental budgeting and implement financial and budget strategies that cover their whole term in office. Local Government has been improving its system of medium-term financial plans since 2003/04.
page 577 / 796 Northern Ireland
Local government funding in Northern Ireland comes from several sources including rates, grants and fees from services: a) District Rate Revenue – from both domestic and non-domestic properties; b) The “de-rating” Grant, which compensates councils for the loss of income from de-rated properties (de-rating element), and the Rates Support Grant, which is paid to councils whose needs exceed their wealth (resources element); c) Specific Grants – paid from government departments, EU agencies to assist the financing of certain revenue and capital expenditure; d) Fees and charges – e.g. entrance fees for leisure centres.
The majority of district council funding, just over two thirds, is coming from the district rate (67.6%, see below). De-rating Grants and Rates Support Grant are not ring-fenced and make up 7.8% of a council’s income, while Specific Grants and fees and charges, are ring-fenced for special purposes, e.g. emergency planning (Department of Environment), Construction Products Grant for a council’s enforcement role and the Dereliction Grant. Together with fees and charges, these ring-fenced grants make up 23% of the total income.
Each council raises the majority of its income through the rating system. There are two different rates:
(a) a domestic rate for household and occupied residential properties. It is based on the capital value of a home as at 1 January 2005 and calculated by multiplying the rateable capital valuation by the domestic rate for the council area. The domestic rate is made up by the regional rate set by the Northern Ireland Executive and the district rate set by the individual council.
(b) a business rate for all non-domestic properties, such as offices, factories and shops. It is based on the rental value of the property as at 1 April 2001 and made up of a number of parts including the regional rate and the district rate set by the individual council.
Subject to the approval of the Ministry of the Environment, loans may be raised by councils to assist the financing or funding of capital projects.
Public services in Northern Ireland are not (yet) the subject of the severe cuts. Belfast City Council, for instance, is 75% self-funded from domestic and business rates whilst other great metropolitan areas in England are on average only 17.6% funded from the council tax base, or 12% in inner- London Boroughs. While the impact of the crisis has not been so severe, the budgets are relatively lower. With the prospect of new functions being transferred, the contemporary transfer of resources is necessary. As rate payers in Northern Ireland do not have the money for paying higher rates, the power to raise rates will not be sufficient for councils to guarantee a commensurate funding.
The Local Government Finance Act (Northern Ireland) 2011 modernised the legislative framework for local government finance. It introduced a new capital finance system and set out the legislative framework within which a district council may manage its finances and central government may regulate that activity. Control by central government is to be exercised, where necessary, through subordinate legislation and guidance. The Act also contains requirements for each council to approve estimates, authorise expenditure and fix the amount to be raised by its rates for the following year
page 578 / 796 as well as report duties of the council’s Chief Financial Officer. It retains the power for a council to borrow for purposes relevant to its functions (adding purposes for the prudent management of its financial affairs) and removes the requirement for approval by the DCLG. While councils are now able to decide to take a loan to refinance existing debt, they will have to comply with regulations made by the DCLG when determining an affordable borrow limit.
Accounts and audit
Councils are legally required to provide annual accounts to show their financial transactions. These accounts are audited by local government auditors designated by the Ministry of the Environment. They have the power to reject expenditure which is considered not to be lawfully incurred
Conclusions as regards compliance with Article 9
Central government is able to exercise control over local government in England through the allocation of grant funding; Council tax funds only a relatively small proportion of expenditure and any attempt of raising its level above a specified threshold is subject to the referendum obligation. Moreover, business rate levels are also centrally determined, although from 1 April 2013, the business rates retention scheme sees 50% of business rates paid to central government and 50% of the business rates retained by local authorities. The scheme also allows for local authorities to keep a proportion of any business rates growth. The high share of central Government grants (a concern expressed in the 1997 CoE Report, 9) has been reduced, but remains still over 50%. While the proportion of ring-fenced grants has also fallen compared to 1998, it is still at a remarkably high 64%. All this reflects the centralised nature of local funding in England, although the recent business rates retention scheme might mark the beginning of a change.
The dramatic reduction in central government grants since 2010, is a strong indicator of funding being hardly commensurate with the functions and responsibilities of local government in England. This will lead to difficult decisions with regard to where savings can be made, including frontline services in future. The financial burden seems to have become even heavier as new functions have been given or delegated, without providing for adequate financial compensation.
The complex formulae for the distribution of central government funding to local authorities in England has been changed continuously over the last decade producing considerable uncertainty and, it seems, effects of unequal treatment in some specific cases.
Local authorities have freedom to prudentially borrow in practice. However, in 2012 the Treasury capped the amount councils in England could borrow against their ring-fenced housing budgets. In November 2013, in an opinion poll, three-quarters of councillors said that their authorities would borrow to build more homes if the government’s existing cap on Housing Revenue Account borrowing was lifted.
In Scotland, all local authorities have accepted the terms of the Concordat on the council tax “freeze” in return for increased spending flexibility. Although the freeze is based upon an agreement, it makes them virtually totally dependent on the Scottish Government, which transfers government grants, fixes levels of non-domestic rates and has frozen the council tax, leaving almost no room for autonomous fiscal capacity.
Considering the severe budget cuts that local government in the UK is generally facing means that in the current economic climate financial resources will increasingly be no longer commensurate with local authorities’ responsibilities. This will have huge implications on public service delivery, and possible implications for the workforce employed by local government.
page 579 / 796 The capacity to deliver essential public services, quality health and social care and effective and adequate community services and facilities, especially to the growing number of older people will be severely restricted by the austerity measures placed upon local government. This makes the question of commensurate finances for local government even more urgent. The Government seems committed to the introduction of a number of measures to support local service transformation.
The rapporteurs conclude that, given the above, the system cannot be said to be in compliance with Article 9 paragraphs 1, 2, 3 and 4 of the Charter. Local authorities do not have adequate financial resources and the prospects for the coming years appear even worse. Since the first report of 1998, which recommended to “seriously increase local government’s financial capacities”, the financial situation of local authorities has worsened. While local government finances are part of a national economic policy, it seems that local government is faring worse than other public sectors and national government. A diversified base of local revenue appears an urgent necessity, as Council tax is the only tax under some level of local control. However it is limited by central or devolved governments, due to the referendum obligation (England) and the freeze of council tax (Scotland). In addition, all rates are decided by governments and funding is still dominated by central government grants. In England, the new business rates retention scheme appears as a move in the right direction (diversification). Despite significant cuts, in Wales and Scotland local authorities are (still) better off financially than their English counterparts, but lacking diversity of local finances is a concern also there.
On the positive side, ring-fencing has been reduced and access to borrowing is guaranteed; thus, there is compliance regarding these two issues.
Article 9.2 Financial resources of local authorities
Local authorities' financial resources shall be commensurate with the responsibilities provided for by the constitution and the law.
Albania [Article ratified - Report adopted on 31 October 2013 ]
Consult reply indicated at article 9.1
Andorra [Non ratified - Report adopted on 28 March 2018 ]
Article 9 of the Charter is aimed at ensuring that local authorities are entitled to sufficient financial resources. The legal authority to perform certain functions is meaningless if local authorities are deprived of the financial resources to carry them out. Andorra has not ratified Article 9, paragraph 2; Article 9, paragraph 5 and Article 9, paragraph 8 of the Charter.
In Andorra, the financial resources of the municipalities are based on their own taxes, taxes shared with the government, and on transfer of funds from the General Budget. The principles on financial resources are established directly by the Constitution (Articles 80.2 and 81) and developed throughout several Qualified Laws and ordinary laws.
page 580 / 796 At the moment of the visit of the Congress delegation, a tripartite negotiation process on a reform, lasting three years and involving the parliament, the government and the municipalities, was about to be finalised. The purpose of the reform is to update the entire system of transfers, through adapting it to the competences of municipalities and the new framework of State taxation, in place since the introduction of a full system of direct taxes, such as the income tax and the tax on corporation. In addition, the criteria of distribution between municipalities are planned to be revised, taking into account new parameters and based on the principle of solidarity introduced in favour of the municipalities that have fewer revenues from local taxes. The less economically advantaged Parishes would be compensated, as they are less able to generate their own resources. To this purpose, some asymmetries, that have an impact on the budget, have been identified, linking the expenditures for competences to the transfer of funds from the State.
As for the non-ratified provisions of the Charter, the rapporteurs are convinced that the on-going reform on transfers and competences, properly consulted with local authorities, will be implemented with due respect for the relevant principles of the Charter and that no obstacles will exist to the ratification of paragraphs 2 and 5 of Article 9 after the enactment of the reform.
Article 9.2 establishes the principle of an adequate relationship between financial resources and competences: although no elements have been provided till now to show that the actual level of financial resources is not commensurate with the responsibilities of Andorran municipalities, the reform under discussion is aimed at addressing this issue, removing any residual doubts on the compliance with Article 9.2.
The rapporteurs consider that the requirements of Article 9 of the Charter are respected in Andorra. As for the non-ratified provisions, they consider that very little is required to enable ratification of paragraphs 2 and 5 of Article 9. Consequently, the rapporteurs encourage Andorran authorities, once the reform in process is finally approved, to ratify these provisions.
Armenia [Article ratified - Report adopted on 15 June 2021 ]
Article 9.2
2 Local authorities' financial resources shall be commensurate with the responsibilities provided for by the constitution and the law.
206. This article means that the resources available to local authorities should be sufficient and proportionate to their mandatory tasks and functions. This principle also implies that any new task assigned to local governments must be accompanied by the corresponding funding to cover the costs of the fulfilment of the new function.
207. Article 186 of the Armenian Constitution defines that for the purpose of performing the mandatory tasks of a community, the law shall prescribe tax and non-tax sources that are necessary for ensuring the implementation of these tasks. The powers delegated to communities by the state shall be subject to mandatory financing from the state budget. According to the experience of the rapporteurs, in practice in Armenia many local authorities lack adequate financial resources and the lack of resources of municipalities is not only due to the fact that many communities, especially smaller ones, have only very limited opportunities to generate their own revenues, but also because central grants allocated for the fulfilment of compulsory tasks, according to most interlocutors heard by the rapporteurs, do not fully cover the costs of their performance. During the consultation procedure, the MTAI argued that the new policy of subvention funds from the state budget is currently being implemented in order to build and improve different infrastructures within the communities, as part of which the communities make decisions about infrastructure selection and
page 581 / 796 submit applications, and, over the last two years, about AMD 8.5 billion (€16.2 million) of targeted subventions have been provided from the state budget.
208. However, in particular, state subsidies paid for fulfilling delegated tasks are insufficient. This is not a negligible problem, as the financing of the fulfilment of delegated powers amounted to 24% of all municipal revenues in 2017.The lack of sufficient finance of delegated tasks generates more problems as a number of communities are not able to compensate for the missing funds from their own revenues.
209. As already mentioned in section 3.1.5.3, during the consultation procedure, the CAA also pointed out that in the area of local self-government most of the powers delegated to local authorities by law are not exercised, as the state budget does not allocate adequate financial resources and the government has not established procedures for implementing them.
Austria [Article ratified - Report adopted on 28 September 2020 ]
According to the explanatory report to the Charter, this principle assumes that there should be an adequate relationship between the financial resources available to a local authority and the tasks it performs. This relationship is particularly strong for functions which have been specifically assigned to it.
During the consultation procedure, the Austrian delegation to the Congress pointed to an imbalance between the Länder and municipal responsibilities and the financial resources required to fulfil them. According to the Austrian delegation, although the Länder are involved in the negotiations on the distribution of revenues, greater financial autonomy for the Länder would be preferable to this form of consensual federalism. According to the Austrian delegation to the Congress, the complex system of revenue sharing and intergovernmental transfers, as well as the Länder and the municipalities’ own financial resources should be reformed to enable them to generate sufficient and legally secure revenues to fulfil their responsibilities.
In line with the concerns expressed above and in para 3.8.1 about the low level of autonomous taxes available to local authorities, notwithstanding the consensus-based tax-sharing, the rapporteurs consider that Austria is partially complying with this provision.
Azerbaijan [Article ratified - Report adopted on 17 June 2021 ]
Article 9.2 requires that “any new task assigned or transferred to local authorities must be accompanied by the corresponding funding or source of income to cover the extra expenditure” (Contemporary Commentary, Paragraph 150). As it is difficult to pre-determine in abstract terms the commensurability between revenues and mandatory functions, the consolidated interpretation of the Charter requires that “any transfer of powers and tasks be based on careful calculation of the actual service delivery costs to be met by local authorities” (ibidem), with a view to safeguarding the interests and the autonomy of local authorities.
In Azerbaijan, the Constitution and the laws entrust a number of functions to municipalities that, albeit limited especially if compared to the standards of other countries including in the region, are anyway more numerous and significant than they perform in practice. Article 144(I) of the Constitution and article 4, 5 and 6 of the Law on the Status of municipalities establish that municipalities be responsible for programmes in the area of local social security and social development; local economic development; and local ecological programmes, including more specifically preschool and school education, health, culture, use of local water sources, planting and
page 582 / 796 renovation, waste collection, transportation, construction and maintenance of local roads, social protection of the people in need and protection of cemeteries.
In reality, however, most of these activities remain under the authority of local executive bodies and other government-led institutions. Furthermore, the activities that are entrusted to municipalities in an exceptional manner, such as the construction and maintenance of roads in the municipality area, are often not sufficiently financed from the central budget to execute the duties in full scale. The government pointed out that in other cases municipalities are allocated the full amount of funds for road construction and maintenance, mentioning the positive example of Bakikhanov which has received subsidies for 227,000 AZN to this end.
According to the Law on the Budget System, municipalities may receive subsidies and grants from the state budget when it is impossible to finance local social-economic development programmes from local budget funds. Another provision states that a proportion of the local budget expenditure can also be covered by central government subsidies if it is secured by municipal revenues (i.e., the local budget deficit). This means that the state government is obliged to ensure the budgetary independence of local governments and compliance of local budgets with state standards. To this end, the government may allocate the necessary funds to local budgets, and if it passes a resolution that results in increased local expenditures, it must determine a sum to be transferred to the municipality in compensation. As mentioned, this process increases financial dependence of municipalities from the state.
The same applies with regard to the local executive authorities. The Law on the Budget System also guarantees that if the revenues of municipalities fall or their expenditure rises as a result of the decisions taken by executive authorities, the local executive authorities that take such decisions have to compensate them with increased amounts. In spite of these formal guarantees, when municipalities fulfil the functions of local executive bodies they often do not receive sufficient central government support, which raises additional concern as to whether the principle of concomitant financing applies in practice.
It appears that the relationship between activities and funding is caught in a vicious circle. Municipalities cannot perform most of the tasks that in principle the laws would attribute to them because they lack the commensurate financial means, and the absence of sufficient financial means is due to their inability to perform the tasks they are supposed to carry out. This in a way results in extremely limited responsibilities and equally limited financial resources, that can of course not be read as fulfilling the requirement of commensurability between financial resources and responsibilities required by Article 9.2 of the Charter, but rather the opposite.
In light of the above, the rapporteurs consider Article 9.2 of the Charter not to be respected in Azerbaijan.
Belgium [Non ratified - Report adopted on 15 October 2014 ]
Flemish Region (Vlaanderen)
Belgium has not ratified Article 9.2 of the Charter. According to the explanation given to the rapporteurs by the Flemish authorities, “(t)he interpretation of this provision remains difficult. The principle that certain expenditure should be covered by certain contributions is contrary to the principle of the universality of contributions, which is why this provision has not been ratified”.
Walloon Region and German-speaking Community
page 583 / 796 Consult reply indicated at article 9.1.
Brussels-Capital Region
Consult reply indicated at article 9.1.
Bosnia and Herzegovina [Article ratified - Report adopted on 31 October 2019 ]
Consult reply indicated at article 9.1
Bulgaria [Article ratified - Report adopted on 21 January 2021 ]
Article 9.2
1. This paragraph enshrines the so-called “principle of commensurability” of local authorities’ financial resources. This means that the resources available to local authorities should be sufficient and commensurate with their functions and tasks. It does not mean that all these tasks should be financed with their own revenues. This paragraph states that the revenues and mandatory tasks of local authorities should be balanced to ensure that the financial resources available to those authorities are satisfactory in comparison to the tasks assigned to them by law51.
1. The new PFA retained the provision from the repealed Municipal Budgets Act, according to which the State compensates for the reduction in revenues from local taxes and fees when it arises from the conduct of State policy. According to art.19 of PFA no statutory acts that entail an expenditure increase, a revenue reduction and/or expenditure/payment pledges after the adoption of the state budget act for the relevant year shall be stipulated to enter into force not before the date of their amendment or entry into force for the following budget year. Article 53, par. 1 of PFA states that delegated activities are financed with general subsidy for those activities. Art. 51, par. 2 and Art. 55a of PFA stipulates the changes in the amount of the fiscal relations between municipal budgets and the central budget, where this derives from law, restructuring of activities delegated by the State, or changes in economic and/or value indicators for financing the activities concerned under municipal budgets, or when implementing policy areas, projects, programmes, and procurement activities. The regulation determining the obligation of the State to provide full financial compensation in the following cases was not transferred to the new act: 2. updating the salaries of the employees engaged in the State-delegated activities, financed through the municipalities; 3. other cases established by law.
1. However, there is no guarantee in practice that the powers delegated by the State, which are not subject to funding through a subsidy, will be ensured additionally. For this reason, the practice of transferring unsecured powers to local authorities from the central government or the adoption of acts regulating the procedure for spending own funds of municipalities continues with different dynamics in different years of the past period.
1. Preparation of a mandatory impact assessment is envisaged in the Normative Acts Act, which examines the impact of the respective draft normative act on certain areas of public life. In the methodology for preparing this assessment, municipalities and local budgets are not explicitly mentioned as stakeholders.
page 584 / 796 1. The rapporteurs conclude that commensurate financial resources are not secured, while in practice the municipalities carry a heavy burden of tasks without sufficient resources.
Croatia [Article ratified - Report adopted on 20 October 2016 ]
Article 9 paragraph 2 further requires that the resources are commensurate with the local authorities’ responsibilities which are listed above, and particularly in relation to the functions that have been assigned to it. In this regard, the local authorities complain that they are assigned more and more tasks but that sufficient funding doesn’t necessarily follow.
Cyprus [Article ratified - Report adopted on 20 October 2016 ]
See answer at article 9.1
Czech Republic [Article ratified - Report adopted on 8 March 2012 ]
Consult reply indicated at article 9.1
Denmark [Article ratified - Report adopted on 31 October 2013 ]
Consult reply indicated at article 9.1
Estonia [Article ratified - Report adopted on 29 March 2017 ]
With respect to Article 9, paragraph 2, of the Charter, the difference in understanding of the compliance with the judgment of the Supreme Court of 2009 concerning the clear distinction necessary between state and local authorities’ affairs should be mentioned. The government is of the opinion that there has been a sufficient evaluation of tasks and their clear distinction. The associations do not share this point of view. The rapporteurs refer to the spirit of the above- mentioned Supreme Court judgment that entails that a clear distinction between the state and local affairs is needed as this may also affect the financial situation of local governments. If there is a lack of clarification of the situation with respect to the allocation of competences, local authorities constantly run the risk of having to finance delegated state competences, although these competences must be financed completely by the state level directly or by earmarked transfers from the state level.
Finland [Article ratified - Report adopted on 28 March 2017 ]
Consult reply indicated at article 9.1.
France [Article ratified - Report adopted on 22 March 2016 ]
Consult reply indicated at article 9.1
Georgia [Article ratified - Report adopted on 7 November 2018 ]
According to Article 75, paragraph 4, of the amended constitution (2018), “[d]elegation of powers by the state to a self-governing unit shall be carried out on the basis of a legislative act or agreement by transferring appropriate material and financial resources”. Furthermore, according to Article 7, paragraph 4, of the amended constitution, “[t]he State ensures the correspondence of financial
page 585 / 796 resources of self-governing units with its competences determined by organic law”.
When delegating powers to local authorities, the central government provides concomitant financial support through targeted transfers. Audits have not revealed any deficiencies concerning the use of transferred funds in the exercise of delegated powers. According to the State Audit Office, the amount of financial resources allocated to municipalities is sufficient for the exercise of the delegated powers. In only a few cases have municipalities been obliged to contribute from their own revenues in order to finance activities relating to delegated powers.
Georgia therefore complies with Article 9, paragraph 2, of the Charter.
Germany [Article ratified - Report adopted on 14 March 2012 ]
Consult reply indicated at article 9.1
Greece [Article ratified - Report adopted on 26 March 2015 ]
Consult reply indicated at article 9.1
Hungary [Article ratified - Report adopted on 12 February 2021 ]
Another basic principle, established in Article 9, paragraph 2, requires that local authorities should have sufficient financial resources in proportion to the responsibilities assigned to them by law.
In Hungary, Article 34.1 of the Fundamental Law reproduces this principle, establishing that “For the performance of their mandatory functions and powers, local governments shall be entitled to proportionate budgetary and other financial support”.
Nevertheless, in practice, the delegation was informed that in many municipalities and counties the financial resources do not cover the expenditures for mandatory tasks. Also richer municipalities, as a consequence of the already mentioned ‘solidarity contribution’, find difficult to have sufficient financial resources.
Therefore, the requirements of Article 9.2 of the Charter are not complied with in Hungary.
Iceland [Article ratified - Report adopted on 29 March 2017 ]
As for Article 9, para 2, according to which financial resources are in general commensurate with the responsibilities provided for by the constitution and the law, the rapporteurs were told by local government representatives that although funds have been cut after the crisis, State agencies have nevertheless passed several competences to local authorities, without the corresponding allocation of adequate financial resources (e.g. public transportation, that has been transferred to the Regional Associations of Municipalities). In addition, municipalities have had to incur new expenses in conjunction with the touristic boom (that helped Icelandic economy to recover). The rise in tourism has put a pressure on various services offered by the municipalities. Infrastructure investments are needed in many popular tourist places. Municipalities, led by the Association of Local Governments, have lobbied for local tourist taxes or a share in tax revenues from tourism levied by the State. In the more remote areas, municipalities are facing significant depopulation and need more funds for maintaining social services and for encouraging local development. The only tool that local authorities can use to fulfil the new tasks is the increase of local taxes. The measures under discussion are a re-thinking of the Equalisation Fund, in order to make it more dynamic, and the
page 586 / 796 introduction of new municipal taxes, like a tax on tourism. State representatives focused on more efficient expenditures (especially for primary schools, that are very expensive) and on the possibility for local authorities to raise real estate tax or to fully collect the taxes that they already could collect (such as the real estate tax on bed-and-breakfasts).
In the light of the above, the rapporteurs conclude that special attention has to be paid to the allocation to local authorities of adequate financial resources, especially when new competences are transferred.
Ireland [Article ratified - Report adopted on 31 October 2013 ]
Consult reply indicated at article 9.1
Italy [Article ratified - Report adopted on 18 October 2017 ]
Consult reply indicated at article 9.1
Latvia [Article ratified - Report adopted on 27 March 2018 ]
Consult reply indicated at article 9.1
Liechtenstein [Article ratified - Report adopted on 28 March 2018 ]
Consult reply indicated at article 9.1
Lithuania [Article ratified - Report adopted on 6 November 2018 ]
Xonsult reply indicated at article 9.1
Luxembourg [Article ratified - Report adopted on 21 October 2015 ]
Consult reply indicated at article 9.1.
Malta [Article ratified - Report adopted on 29 March 2017 ]
Malta is also not in conformity with Article 9, paragraph 2 of the Charter since the local council’s financial resources are not commensurate with their functions, as mentioned above.
Monaco [Non ratified - Report adopted on 28 March 2018 ]
Consult reply indicated at article 9.1
Montenegro [Article ratified - Report adopted on 21 October 2015 ]
Consult reply indicated at article 9.1
Netherlands [Article ratified - Report adopted on 26 March 2014 ]
Consult reply indicated at article 9.1
page 587 / 796 North Macedonia [Article ratified - Report adopted on 26 February 2013 ]
Consult reply indicated at article 9.1
Norway [Article ratified - Report adopted on 26 March 2015 ]
Consult reply indicated at article 9.1.
Poland [Article ratified - Report adopted on 2 April 2019 ]
Consult reply indicated at article 9.1
Portugal [Article ratified - Report adopted on 28 September 2020 ]
Despite the devolution process embarked upon in 2011 and continued with the local government reform of 2013, Portugal remains a centralised country. The spending levels of local and regional governments within the GDP and public spending are far lower than the OECD average for unitary countries (13.4% of GDP and 29.0 % of public spending) .7 Accordingly, budget devolution in Portugal is among the lowest rates in the OECD zone, falling well below the OECD average. The spending of infra-national administrations stands at 1540 euros per head of population in Portugal, compared to an OECD average of 6052 euros. In Portugal, this is equivalent to 12.6% of total public spending and 5.7% of GDP. By way of comparison, in the whole of the OECD, the spending of infra-national administrations represents 40.4% of total public spending and 16.2 % of GDP. Where public investment is concerned, Portugal is slightly below the OECD: 52% of total public investment was made by local and regional governments (compared to an average of nearly 57%).
The rapporteurs questioned local authority associations on this point during their visit in June 2019. While local situations differ greatly, given the great diversity of municipalities in particular, the ANAFRE deplored the lack of a clear vision for the funding transferred and the fact that certain powers are inadequately funded already: transferred assets and security/safety were mentioned in this connection.
For its part, the ANMP underlines the still insufficient level of funding for municipalities in Portugal, compared with the European average. Admittedly, in 2018, there was a revision of the law on local finances that brought this level closer to European standards, but the first two years of implementation have highlighted the difficulty of putting into practice the principles set out. With regard to municipal taxes, tax exemptions decided by the state do not systematically give rise to compensation by the central administration, even though this principle is also enshrined in law.
The rapporteurs therefore conclude that Article 9 paragraph 2 of the Charter is only partially complied with, as certain funding levels are not guaranteed in the long term.
Republic of Moldova [Article ratified - Report adopted on 4 April 2019 ]
Consult reply indicated at article 9.1
Romania [Article ratified - Report adopted on 3 March 2011 ]
Consult reply indicated at article 9.1
page 588 / 796 Russian Federation [Article ratified - Report adopted on 30 October 2019 ]
Consult reply indicated at article 9.1
San Marino [Article ratified - Report adopted on 28 March 2018 ]
Consult reply indicated at article 9.1
Serbia [Article ratified - Report adopted on 18 October 2017 ]
Consult reply indicated at article 9.1
Slovak Republic [Article ratified - Report adopted on 24 March 2016 ]
See answer indicated at article 9.1
Slovenia [Article ratified - Report adopted on 6 November 2018 ]
Consult reply indicated at article 9.1
Spain [Article ratified - Report adopted on 20 March 2013 ]
Consult reply indicated at article 9.1
Sweden [Article ratified - Report adopted on 2 April 2014 ]
Consult reply indicated at article 9.1.
Switzerland [Article ratified - Report adopted on 20 October 2017 ]
Consult reply indicated at article 9.1
Turkey [Article ratified - Report adopted on 1 March 2011 ]
The analysis article by article is currently unavailable
Ukraine [Article ratified - Report adopted on 31 October 2013 ]
Consult reply indicated at article 9.1
United Kingdom [Article ratified - Report adopted on 26 March 2014 ]
Consult reply indicated at article 9.1
Article 9.3
page 589 / 796 Financial resources of local authorities
Part at least of the financial resources of local authorities shall derive from local taxes and charges of which, within the limits of statute, they have the power to determine the rate.
Albania [Article ratified - Report adopted on 31 October 2013 ]
Consult reply indicated at article 9.1
Andorra [Article ratified - Report adopted on 28 March 2018 ]
Article 9 of the Charter is aimed at ensuring that local authorities are entitled to sufficient financial resources. The legal authority to perform certain functions is meaningless if local authorities are deprived of the financial resources to carry them out. Andorra has not ratified Article 9, paragraph 2; Article 9, paragraph 5 and Article 9, paragraph 8 of the Charter.
In Andorra, the financial resources of the municipalities are based on their own taxes, taxes shared with the government, and on transfer of funds from the General Budget. The principles on financial resources are established directly by the Constitution (Articles 80.2 and 81) and developed throughout several Qualified Laws and ordinary laws.
At the moment of the visit of the Congress delegation, a tripartite negotiation process on a reform, lasting three years and involving the parliament, the government and the municipalities, was about to be finalised. The purpose of the reform is to update the entire system of transfers, through adapting it to the competences of municipalities and the new framework of State taxation, in place since the introduction of a full system of direct taxes, such as the income tax and the tax on corporation. In addition, the criteria of distribution between municipalities are planned to be revised, taking into account new parameters and based on the principle of solidarity introduced in favour of the municipalities that have fewer revenues from local taxes. The less economically advantaged Parishes would be compensated, as they are less able to generate their own resources. To this purpose, some asymmetries, that have an impact on the budget, have been identified, linking the expenditures for competences to the transfer of funds from the State.
Article 9.3 establishes the principle that part of the resources of local authorities shall derive from local taxes, whereas Article 9.4 establishes the principle of the diversification of the resources. The rapporteurs consider that both principles are respected in Andorra, as a relevant part of the financial resources of municipalities derives from their own taxes. The fact that local authorities can determine the rate of those taxes allows the income to keep pace with the evolution of the costs.
The rapporteurs consider that the requirements of Article 9 of the Charter are respected in Andorra. As for the non-ratified provisions, they consider that very little is required to enable ratification of paragraphs 2 and 5 of Article 9. Consequently, the rapporteurs encourage Andorran authorities, once the reform in process is finally approved, to ratify these provisions.
Armenia [Article ratified - Report adopted on 15 June 2021 ]
Article 9.3
page 590 / 796 3 Part at least of the financial resources of local authorities shall derive from local taxes and charges of which, within the limits of statute, they have the power to determine the rate.
211. The municipalities’ power to impose local taxes and duties is recognised at both constitutional21 and legislative levels.22 Local authorities have the freedom to set the rate of local taxes within the limits of the law.
Austria [Article ratified - Report adopted on 28 September 2020 ]
As already mentioned in section 3.8.1 and stressed in the previous Congress report, subnational authorities’ level of autonomous taxes is very low. According to the OECD data,78 “in 2016 tax revenues represented around 10% of subnational government revenues, well below the OECD average for federal countries of 47.5%. In 2016, tax revenue represented a small share of SNG revenue, amounting to 14.6% of local revenue and 5.6% of Länder revenues. As a share of GDP and public tax revenue, SNG tax revenue in Austria is well below the OECD average for federal countries (8.8% of GDP and 42.4% of public tax revenue). Approximately 95% of all tax revenue is levied by federal revenue offices as tax administration is carried out mostly at the federal level. Municipalities levy slightly more than 4% and Länder less than 1% of the total tax revenue. Municipalities can only regulate local taxes if they are entitled to those taxes by either the federal or state law”.
As for Länder, the same OECD report underlines that they “receive a negligible amount of tax income. In 2018, the tax autonomy to raise the housing subsidy contribution (Wohnbauförderungs- beitrag, currently 1% of payroll) was transferred from the central government to the Länder”.
Although municipalities can levy some local taxes (such as municipal business tax (Kommunalsteuer) and the property tax (Grundsteuer), they have no discretion in setting the tax base which is defined at the federal level. Municipalities have only limited discretion regarding the rate of the real property tax within limits set by regional regulations.
The representatives of local and regional authorities and their associations with whom the delegation met during the monitoring visit, particularly stressed the limited level of their own tax income of subnational government in Austria and the need to strengthen local tax raising powers as a key to local financial autonomy.
During the consultation procedure, the Austrian delegation to the Congress particularly stressed the need in a certain degree of fiscal leeway for proper and efficient functioning of a federal system. It advocated a higher degree of sub-national autonomy in tax and financial matters in the system of cooperative federalism in Austria.
The rapporteurs emphasise that local taxation is a critical indicator in measuring local autonomy. In the rapporteurs’ view, the low proportion of their own income coming from local taxes raises doubts over the financial independence of local authorities in Austria. However, since formally a part of the financial resources of subnational authorities derives from local taxes, the rapporteurs conclude that Austria partially complies with this provision.
Azerbaijan [Article ratified - Report adopted on 17 June 2021 ]
The Charter also requires that a proportion of local revenues should come from local taxes, and municipalities must be able to determine the rate applicable. These are two sides of the same coin, as local taxes are not only an important source of funding for local authorities, but also represent the precondition for the ability to make political choices and thus to create political accountability.
page 591 / 796 As mentioned above (Article 9.1), the revenues from municipal taxes remain insufficient. While the right to impose taxes and levies is in theory one of the municipalities’ most important powers, a great majority of these sources of income do not in practice help to form sustainable sources of revenue for municipalities. In spite of the legal entitlement, and of some improvements due to the reforms that introduced electronic payments, municipal taxes are still not imposed, or not collected, in an efficient way, due to the poor human resource situation of local governments. Shortage of staff and equipment, and lack of expertise make it close to impossible to exercise the municipal right to levy taxes in an efficient way. Administrative shortcomings, such as the absence of a reliable registry of private homes for the imposition of property taxes, may also make it difficult to obtain sufficient resources.
Furthermore, also some legal obstacles make it difficult to establish a functioning financial autonomy of municipalities. For example, taxes on land are still difficult to be collected, especially in some parts of the country. The land forming part of the property transferred from the state to municipalities is specified in the List of Municipalities of the Republic of Azerbaijan annexed to the Law on Lands and Territories of Municipalities. The law provides the transfer to municipalities of the state-owned utilities, social and cultural premises necessary for them to carry out their tasks and functions, in the manner specified. According to the definition provided by the Law on the Status of Municipalities, municipal property consists of “assets of the local budget created from local taxes and payments; municipal non-budget funds; municipal land; municipal enterprises and organisations; the municipal housing stock and buildings other than dwellings; roads that do not belong to the state or are personal property; municipal educational, health, cultural and sports organisations, and other movable and fixed property” (Article 33.1). The law also recognises the municipalities’ right to exercise property rights in respect of all municipal properties, including the right to lease and privatise them in accordance with the rules.
Despite improvements as compared to the previous monitoring, the legislation providing that the State Land and Mapping Committee must submit maps of the municipal lands to the body in charge of the State Registry of Municipalities and must indicate the size and the borders of each municipal territory is still not fully implemented. The process is in fact not entirely completed, apparently due to the lack of precise data to identify and define the boundaries of municipal property, in particular municipal land. Consequently, the transfer of property to municipalities has not yet been fully completed, which has an impact on the ability of municipalities to collect all the land and property taxes they are entitled to. The delegation was informed that the Cabinet of Ministers is working on achieving full documentation of buildings and land plots with a view to resolving the remaining problems, which apparently are more acute in some municipalities than in others.
Not only are municipal taxes limited in scope and amount as described above, but financial autonomy of municipalities is limited also as far as determination of tax rates is concerned. As pointed out by the Contemporary Commentary, “in the light of Article 9.3, a tax is a genuine local tax only if the local authority is entitled to determine the rate, “within the limits of statute”. Consequently, the applicable tax legislation may determine a band of tax rates, within which the local entity may freely determine the actual rate. Moreover, “local authorities should also have the power to approve internal by-laws or regulations for determining the technical and operational aspects of tax collection (types of rate, deductions, tax relief programmes, etc.), so that the general provisions of the law are suited to local circumstances and needs” (Paragraph 157).
In Azerbaijan, municipalities have in practice very limited power to determine the rates of local taxes. These are determined on the basis of the Tax Code, which is approved by the central government, and in most cases leaves no room to municipalities to tailor the rates on their specific demographic, geographic or socio-economic situation. Another example come from tariffs for advertisements owned by municipalities, which are determined by the Cabinet of Ministers in
page 592 / 796 accordance with the Law on Advertising.
Article 9.3 of the Charter is fulfilled only in minor part and only on paper in Azerbaijan, to an extent that makes the overall situation only partly compatible with the Charter’s requirements.
Belgium [Article ratified - Report adopted on 15 October 2014 ]
Flemish Region (Vlaanderen)
As regards Article 9.3, Belgium differs from other countries by its open system of local taxes. The collection of taxes by the local authorities is a power enshrined in the Constitution. The local authorities can collect all taxes of local interest, in accordance with the principles laid down in the Constitution (main principles: local self-government and fiscal equality, which means that no privilege may be granted). They can determine the tax rates and the bases of assessment.
A key issue is arrangements for overseeing and limiting the municipalities’ power to levy and collect taxes. They do not have unlimited freedom in this area, and Article 170 of the Constitution allows the federal legislature to limit the municipalities’ tax-raising power. It alone can determine the “exceptions proved to be necessary” for the exercise in principle of this power. However, as the supervisory authorities (i.e., the regions) are responsible for the funding and even for the organisation of the municipalities, they only have under the present statutory framework little room for manoeuvre to intervene directly with regard to the municipalities’ tax-raising power on the grounds of the public, or indeed regional, interest. Regional intervention in this area accordingly may take place indirectly and on a basis negotiated by means of “fiscal peace” agreements”, as it has been the case in 2008 when an agreement was reached on an operation to take over the debts of local governments.
In 2008, the Flemish government drew up a proposal for a “local covenant”, which was submitted to each of the Flemish municipalities and approved. Its general aim is to contribute to a better balance between social concerns and the funding requirements of the different tiers of government in Flanders and the creation of a business – and household-friendly environment.
The Flemish authorities informed the rapporteurs that an average of between 45% and 50% of local revenues was generated by local taxes.
In order to ensure the balance of their budget in 2013, the municipalities have opted for a limited increase in the principal taxes According to the 2013 Belfius Report entitled “The Finances of the Flemish Municipalities”, specifically local taxes have increased substantially by an average of 12% but have had a minimal impact. In fact, they only generate 7.3% of municipal revenues, whereas additional taxes make up almost half (45.9%) of all revenues. In total, a municipality had an average of €703 per inhabitant at its disposal in 2013, or an increase of 4.4% over 2012.
Walloon Region and German-speaking Community
Consult reply indicated at article 9.1.
Brussels-Capital Region
Consult reply indicated at article 9.1.
Bosnia and Herzegovina [Article ratified - Report adopted on 31 October 2019 ]
page 593 / 796 Since 2017, the municipalities in Republika Srpska are responsible for the collection of its taxes and fees. In Republika Srpska, there have been plans (and consultations) for new types of revenues, e.g. real estate or property tax. However, the consulted local representatives seem to have been more interested in exceptions and exemptions rather than in legislative change permitting greater discretion for local self-governmentunits, e.g. through the power to set rates by means of local decisions.
In the Federation of Bosnia and Herzegovina, there are different opinions regarding the adequacy of municipal finances. It has been stated that this is above all a problem for smaller and underdeveloped municipalities, which are hardly self-sustainable. Celic in North Bosnia, with 10.000 inhabitants, mainly farmers, has been mentioned as example, where the budget only covers a basic minimum (salaries, street lights and basic utility infrastructure), while funds for development lack completely. Thus, the municipality is completely dependent on grants from the higher level of government.
The municipal revenues in the Federation of Bosnia and Herzegovina are largely determined by higher levels of government. Local authorities do not have any role in the collection of revenue, which is carried out by the Federation of Bosnia and Herzegovina or Cantons. Only a small segment is left for municipal decision, i.e. local taxes and fees with the two major local charges on citizens being related to land-use (KGZ) and to fees for services.
Another problem is that the proportional relations for determining financial resources were established a long time ago and can hardly be corrected or changed due to the high number of political actors with diverging interests. This also concerns Cantons: while Sarajevo Canton, with approximately 350-400.000 inhabitants, has a budget of ca. 800 mio. KM (ca. 400 mio Euro), Tuzla Canton, with 500‑600.000 inhabitants, only disposes of 350 mio. KM annually (ca. 170 mio Euro). Despite the higher costs of being the capital city, this striking imbalance leads to disadvantages for residents in the Tuzla area, when it comes to the provision of services. Meetings of Prime Ministers of the Cantons for greater co-ordination have not given any success and are now been discontinued.
The rapporteurs observe that the requirements of Article 9.3 are only partially met and giving more powers to local authorities to decide on local sources of revenue appears necessary to strengthen their fiscal autonomy.
Bulgaria [Article ratified - Report adopted on 21 January 2021 ]
Article 9.3
1. According to Article 141 of the Bulgarian Constitution, the municipal council shall determine the size of local taxes under conditions, by a procedure and within the frames, established by law (paragraph 3). The municipal council shall determine the size of local charges by a procedure, established by law (paragraph 4). Regarding local taxes, the legislation gives the municipal councils the power to determine their amounts, and the mayor and the administration the power to administer them. Municipal councils do not have the power to determine the type, basis, limits of rates and tax relief. Concerning the tourist tax, by law the municipalities are obliged to spend the revenues from this tax on certain activities and types of expenses.
1. In Decision No 4/2019 on Constitutional case No. 15/2018 the Constitutional Court notes that, as a rule, taxes are determined unilaterally by the State and only by law. The parliament cannot delegate this power to the executive branch. However, there is an exception to this rule in Article 141, paragraph 3, of the constitution, which states that municipal councils shall
page 594 / 796 determine the amount of the local taxes under conditions, following a procedure and in the framework established by a law. Such an approach introduces a nuance of financial decentralisation in the legal framework of municipal public finances regarding the amount of local taxes but does not change the constitutional requirement for establishment of taxes by law.
1. In 2007, municipal councils were given the power to determine the size of local taxes and fees within a given range. This step was not sufficient and did not lead to a substantial change in the structure of municipal budgets, although several consequent measures have been taken to provide for the financial stability of municipalities. According to the Institute for Market Economics in Bulgaria, developments over the last decade – steps towards more tax powers for municipalities, an enhanced role for EU funds, State regional development programmеs and the municipal financial rehabilitation process, are key to understanding the attitude towards the financial situation of municipalities and the challenges that financial decentralisation is facing. Nevertheless, the results achieved have a limited effect both on the financial independence and sustainability of the municipal budget and on the possibilities for influence of the municipal budget on the local and regional development outside the State transfers and the European funds. The problem is persistent and is a source of policy inefficiency, while the implementation of an effectivedecentralisation model may improve resource allocation, foster market development, and, in turn, promote economic growth.
1. The average share of local taxes in the total own revenues of municipalities for the past 10-year period is 15%, with a clear trend of increasing tax revenues in each subsequent year with growth rates between 5 and 7%. There were considerable changes in the tax powers of the local government. 2. The powers of the municipal revenue units have been expanded. 3. Gradual changes in the system of local taxes were introduced:
- a new local tax on taxi transport for passengers was introduced;
- the tourist fee was transformed into a local tax;
- at the end of 2018, the formula for determining the vehicle tax was substantially changed,introducing an environmental component;
- in 2011, the last partial increase of the real estate tax assessments was made, according to the growth of the market prices reported by national statistics; the legal obligation for updating the tax assessments according to NSI market price data was dropped.
1. Central government officials have stressed that in recent years, thanks to macroeconomic situation in the country, more funds are allocated to municipalities through budget transfers from the State budget, and the State Budget Act for 2021 provides significant additional funds, including to overcome the effects of the COVID-19 pandemic locally. According to local self-government representatives, met by the rapporteurs, however, the Bulgarian local authorities do not have sufficient in quantity, sustainable and with potential for development own sources of income. In this regard, during the consultation procedure, the Ministry of Finance argued that local authorities do not take advantage of the legal opportunity to determine higher rates of local taxes than the limits set out in the Local Taxes and Fees Act pointing that 73% of municipalities have adopted a rate below the average limits set by the Local Taxes and Fees Act as regards the real estate tax for 2020, and 265 municipalities have adopted a rate below the average limits allowed by law as regards the vehicle tax for the most popular cars for 2020 with almost half of them having adopted the minimum statutory
page 595 / 796 rate. The rapporteurs are of the opinion that the difference of views on this point highlights the need to restructure the tax system in favour of local taxes related to economic activity.
1. The conclusion is that the part of municipal resources deriving from local taxes and charges remains extremely low, while the limits of tax rates are defined by central legislation.
Croatia [Article ratified - Report adopted on 20 October 2016 ]
Article 9 paragraph 3 provides that such resources should also derive from local taxes and charges and the authorities should be able to determine the rate. As shown above, Croatia does indeed provide for taxes and charges to be collected both at local and county level but the rates are generally set by statute. In any case, overall these do not amount to more than 10% of the local authorities’ budgets, which low in comparison with other the EU member states, and therefore their impact on local financial autonomy is restricted. Here it may also be noted that the share of local governments’ revenues in Croatia amounts to less than 6 per cent of GDP (2014), which is one of the lowest in both the Council of Europe and the European Union member States While the local authorities do collect personal insurance tax this is not totally controlled by the local authorities but a large portion returns to the State in the so-called “shared taxes” and the rate is fixed by the state. The major portion of the local budget, for most local authorities, derives in one form or another from the state - including line-ministries for the delegated functions – and in financial equalisation transfers and grants etc. which are generally earmarked and limited in some way. In addition, the Law on Financing of Local and Regional Self-Government Units actually specifies in advance how and in what proportion the grants received for enforcing the delegated functions should be spent. Furthermore the Ministry of Finance strictly controls the volume of budget expenditures of local and regional authorities, which limits the local self-government’s right to decide on the budget expenditure priorities independently and under their own responsibility. As the rates are fixed either by law or by the Ministry of Finance, there is little room for manoeuvre for the local units to determine the rate as called for under the Charter. The Institute of Public Finance in Zagreb has criticised the use of tax sharing as an instrument for redressing economic inequalities and financing capital projects in addition to its purpose as a mechanism to finance delegated functions. It suggests that PIT revenue should be left entirely to the local authorities who collect them and that tax sharing should be used only to correct vertical fiscal imbalance, meaning the shortfalls in revenue required for funding delegated functions.1
Cyprus [Article ratified - Report adopted on 20 October 2016 ]
Czech Republic [Non ratified - Report adopted on 8 March 2012 ]
As already mentioned, the Czech Republic is not bound by Article 9 (3) of the Charter on the right to local taxes and charges, the rates of which the local and regional authorities themselves have the power to determine. This declaration corresponds to the actual state of the financial situation in the country. As a matter of fact, non-tax revenues and local charges and fees represent less than 14 % of the revenues of the municipalities and just 3,5 % of those of the regions. The overwhelming part (close to 90 %) of the financial resources for local and regional authorities thus stems from state taxes imposed according to rates decided by central government, and from state transfers.
Denmark [Article ratified - Report adopted on 31 October 2013 ]
Consult reply indicated at article 9.1
page 596 / 796 Estonia [Article ratified - Report adopted on 29 March 2017 ]
Concerning conformity with Article 9, paragraph 3, of the Charter, the table of local revenues for 2015 provided by the minister clearly shows that the tax revenues of local authorities are largely inadequate. The associations have pointed out that these taxes, namely, advertisement tax, tax for closing streets, motor vehicle tax, tax on keeping domestic animals, and parking fees represent about 1% of the revenues. This is not in line with the Charter.
Finland [Article ratified - Report adopted on 28 March 2017 ]
Consult reply indicated at article 9.1.
France [Article ratified - Report adopted on 22 March 2016 ]
Consult reply indicated at article 9.1
Georgia [Article ratified - Report adopted on 7 November 2018 ]
According to information provided by the ministry of finance, up to 85% of local authority revenues come from own revenues, including an equalisation transfer. Without an equalisation transfer this figure is 56%. Local authority tax revenues constitute 34% of total local authority revenues, while other revenues amount to 16% of total local revenues. Municipalities’ revenues cannot determine local tax rates (property tax) but they are allowed to determine the rate within the limits set by the Tax Code of Georgia. The figures shown are for the total of all local authorities, but the picture could be different in a specific municipality. Some municipalities do not benefit from equalisation transfers since their tax revenues are high enough, whereas other municipalities depend almost fully on equalisation transfers.
The rapporteurs therefore conclude that Georgia complies with Article 9, paragraph 3, of the Charter.
Germany [Non ratified - Report adopted on 14 March 2012 ]
Consult reply indicated at article 9.1
Greece [Article ratified - Report adopted on 26 March 2015 ]
Consult reply indicated at article 9.1
Hungary [Article ratified - Report adopted on 12 February 2021 ]
Article 9, paragraph 3, requires that at least part of the financial resources of local authorities must derive from local taxes of which, within the limits of statute, they have the power to determine the rate.
The main local taxes are the local business tax (representing the 74% of local taxes in 2013), the tourism tax, the municipal tax on individuals and businesses, the land tax and the building tax.
In Hungary, the financial resources deriving from “local taxes” represent a minimal part of the municipal incomes (22.5% according to the 2013 OECD data),85 whereas counties do not have any
page 597 / 796 real “local tax”.
Therefore, the requirements of Article 9.3 of the Charter are not complied with in Hungary.
Iceland [Article ratified - Report adopted on 29 March 2017 ]
Local taxes cover about the 70% of the financial resources of the local authorities. Municipal councils have the power to determine the rate of local taxes: they determine annually the income tax level (between 12.44% and 14.52%) and the property tax level (up to 0.5% on residential housing, up to 1.5% for commercial premises: those rates may be increased of 25%), in full compliance of Article 9, para. 3 of the Charter.
Ireland [Article ratified - Report adopted on 31 October 2013 ]
Consult reply indicated at article 9.1
Italy [Article ratified - Report adopted on 18 October 2017 ]
Consult reply indicated at article 9.1
Latvia [Article ratified - Report adopted on 27 March 2018 ]
Consult reply indicated at article 9.1
Liechtenstein [Non ratified - Report adopted on 28 March 2018 ]
As far as specific local resources are concerned, in line with the requirements of paragraphs 3 and 4 the rapporteurs noted that: local taxes account for a high share in the revenue structure of municipal budgets; local authorities are entitled to raise revenues from duties and charges for local public services and use of their assets (municipal property).
The rapporteurs consider that local resources are sufficiently diversified to enable local authorities to obtain the financial resources necessary for carrying out their mandatory tasks and duties, as well as to exercise their statutory powers.
Lithuania [Article ratified - Report adopted on 6 November 2018 ]
Article 9, paragraph 3, establishes the requirement that part at least of the financial resources of local authorities shall derive from local taxes.
The ALAL maintains that the size of tax revenue which the municipalities have the right to regulate is below 10 per cent in the revenue structure of the municipalities and ask for the allocation to municipalities of several taxes, which are currently only allocated to the state budget: a. the property tax on luxury property which is paid by natural persons for the share of residential (non commercial) property owned by them above 220 thousand euro; b. a share of corporate income tax.
Although an improvement of the financial resources deriving from local taxes would be welcomed,
page 598 / 796 rapporteurs consider that the existing level of local taxes, together with the lease tax on State- owned land and water bodies of the State Inland Water Fund and revenues for goods and services, allow to maintain Article 9, paragraph 3, respected.
Luxembourg [Article ratified - Report adopted on 21 October 2015 ]
Consult reply indicated at article 9.1.
Malta [Non ratified - Report adopted on 29 March 2017 ]
The Republic of Malta has not yet ratified Article 9, paragraph 3 of the Charter. Local councils are unable to impose and collect taxes and charges and despite the recommendations of the 2011 Monitoring Report, no change has been undertaken for this purpose to date.
Monaco [Non ratified - Report adopted on 28 March 2018 ]
Consult reply indicated at article 9.1
Montenegro [Article ratified - Report adopted on 21 October 2015 ]
With regards to paragraph 3 of Article 9, the rapporteurs could grasp during practically all consultations that the majority of municipalities are in a difficult financial situation, characterised by a high level of debt and unsettled liabilities, which causes numerous problems in their functioning and fulfilling of their duties under the law. Reasons that have led to the increase in unsettled liabilities and debt of local self-governments, particularly after the investment boom in Montenegro, are primarily: the economic and financial crisis; changes to legislation which regulate the local self- government financing system and a high level of public spending at local level.
The greatest negative effect on revenues of local self-governments has derived from abolishing fees for the use of construction land (as of 1 January 2009). The Union of Municipalities of Montenegro informed the delegation that overall revenues generated by this fee for all municipalities in 2008 amounted to € 29.013.631. Consequently, the calculated revenues on these grounds for the period 2009-2014, would be around € 174 million. Bearing in mind that the total debt of local self- governments at the end of 2014 amounted to €166.94 million EUR1, the negative effect of abolishing the said levy becomes evident, as well as its deleterious effect on the stability of local finances. 88. The Act on Local Utility Fees (which entered into force on 1st January 2008) abolished local utility fees for exploitation of facilities used for electricity transmission, use of telecommunication facilities, and installation of TV and radio transceivers, i.e. abolished local utility fees for the most profitable entities. The Union of Municipalities of Montenegro would like to draw attention to the fact that, prior to these changes, local self-governments generated the following revenue from these local utility fees: €9.309.775 (in 2007), €6.079.575 (in 2008), whereas the amount generated in 2009 from this fee was only €3.638.497, The legal changes have deprived municipalities of minimum 3 million per year since 2008, which amounted to the total of €21 million EUR for the seven-year period until 2014.
Furthermore, the Act on Local Self-Government Financing abolished taxes on: consumption; registration of company name and games of chance and entertainment games (lotteries), which generated around €5.5 million for municipalities in 2010, which amounts to the total of around €22 million not collected by municipalities over a four-year period. Furthermore in 2011, the fee for the use of road motor vehicles and trailers (eco fee), was abolished. This fee, which earned a value of €926.831,40 in 2011, defined in the Act on Local Self-Government Financing as one of transferred
page 599 / 796 incomes of municipalities, was nevertheless abolished by the Decree on Changes and Amendments to the Decree on the amount, method of calculation and payment of the fee for pollution of the environment.
The changes to the Law on Roads also diminish local self-government revenues regarding municipal road tax, by obliging prior government approval for the amount of these fees. Such revenue generated €6.214.159 for local government in 2009 as compared to €2.765.753 in 2010 to 2014 with slight variations. The income lost for the period to 2014has been calculated at approximately €17,5 million. In any case the revenue generated by the municipalities from this fee is totally inadequate for the maintenance and protection of roads, which is its central purpose.
It is important to underline that the Law on Local Self-Government Financing, whose most recent changes entered into force on 1 January 2011, gives to municipalities a higher percentage of transferred income and a higher amount of funds from the Equalization Fund. Also, the Act on Immovable Property Tax, whose most recent changes entered into force also, on 1 January 2011, establishes a new, higher immovable property tax rate and provides for a wider range of tax payers. In the meantime, on 17 February 2015, the Parliament of Montenegro passed the Act on Changes and Amendments to the Act on Immovable Property Tax, which will enter into force on 1 January 2016.
Local governments have further increased revenues in the period 2011-2014, as compared to 2010, in the following areas (amounts are approximate: immovable property tax, €32.5 million; personal income tax ,€8.82 million (it should be noted that the Act on Personal Income Tax – the so-called “crisis tax” -,introduced in 2013, , has certainly affected the increase of the tax base for calculation of this tax); immovable property transfer tax, €8.5 million, concession fees – €12,72 million and the Equalization Fund – €24.38 million. This amounts to approximately €87 million in total, which is not even closely sufficient to compensate for the revenues lost in the previous period2.
These changes and their effect of on total revenue for local government are self-explanatory: €347.848.909 in 2008, €238.010.575 in 2010, €227.350.223 in 2013 and €230.256.314,61 in 20143
From this it is clear that municipalities did not have sufficient funds to implement initiated projects and perform their increased duties. They made up the shortfall by selling land and engaging in expensive credits, leading quickly to substantial debts and high, unsettled liabilities, which amounted to €119.19 million in total at the end of 2014, € 116.80 million in 2013, €109.81 million in 2012 and €98.53 million in 2011. The total debt of local self-governments also showed increasing tendency and amounted to €166.94 million in 2014 (with a peak in 2013 of €170.54 million).
The central authorities have recognized the problem of balancing municipal budgets and have taken a number of actions to address this issue. Such measures include amongst others, the reprogramming of tax debt and the provision of state guarantees for the refinancing of concerned areas. Furthermore, the Government informed the Congress delegation of its joint efforts with the Union of Municipalities in preparing an analysis of the sustainability of local public finances, by assessing in particular the adequacy of available financial resources in light of municipalities’ competences. Accordingly, the Union of Municipalities of Montenegro has initiated a number of activities aimed at a substantial improvement in local public finances. In this regard, the Executive Board of the Union of Municipalities adopted the “Proposed measures for overcoming the difficult financial situation in local self-governments”, sent to all competent state authorities, and the implementation of which has begun. Measures are proposed in three areas: rationalisation of operation costs, improvement of the legal framework and refinancing of debts and unsettled liabilities.
page 600 / 796 Rationalisation of operation costs: According to the conclusions of the Government, local self- government units must provide a strong contribution to stabilisation of local public finances by increasing the efficiency of their work and to rationalisation of operating costs. In those terms, the following is primarily needed at local level: Establish optimum and functional organisation of municipal authorities and public services for the purpose of rationalisation of costs; pass municipal regulations to introduce all legally defined own revenues of the local self-government unit; undertake all legally defined measures for the purpose of efficient collecting of local public revenues; prepare a plan for optimisation of the number of employees in local self-governments, in accordance with obligations under the Plan of internal reorganisation of the public sector adopted by the Government of Montenegro in July 2013, which envisages a reduction in the number of employees in municipalities by 10% by the end of 2016.
Improvement of the legal framework: According to the conclusions of the Executive Board of the Union of Municipalities, sustainability and stabilisation of public finances at local level requires improvement of the legal framework regulating the system of local self-government financing. In those terms, the Parliament of Montenegro passed the Act on Changes and Amendments to the Immovable Property Tax at the session held on 17 February 2015, which improved substantially the individual solutions regulating the system of establishing and collecting of immovable property tax as the main source of revenue of local self-government. The Act on Changes and Amendments to the Law on local Self-Government Financing is in drafting phase, as planned by the Work Programme of Government for the second quarter of 2015, which is an opportunity to improve and to strengthen municipal finances.
With regard to the Law on local self-government financing, the Union of Municipalities has submitted, through the competent Commission and members of the mixed Working Group, a number of proposals and suggestions aimed at the definition of a model to ensure compensation of revenues to local self-governments that have been abolished by numerous changes in the law. It is proposed to transfer a higher percentage of income to municipalities; to re-define individual provisions whose practical implementation have demonstrated certain deficiencies; to adopt the regulations necessary for introducing certain revenues of local self-governments (fee for the protection and improvement of the environment, tax on uncultivated agricultural land); to regulate matters relating to the inclusion in the Equalisation Fund of newly-formed municipalities which do not have sufficient fiscal capacity etc.
The Union of Municipalities also sent an urgent initiative to Parliament for its 2015 session proposing an Act on communal affairs, and an Act on legalisation of informal structures, emphasising their importance for the functional and financial aspects of local government.
Refinancing of debts and unsettled liabilities: in order to create a long-term sustainability of public finances at local level, it is particularly important to create a sustainable model of refinancing of debts and liabilities of local self-government units towards financial institutions, other suppliers, employees, etc., and to finance an awareness programme in order to optimise the number of employees at local level. According to information that local self-government units provided to the Ministry of Finance, the total unsettled liabilities of municipalities at the end of 2014 amounted to €119,19 million, while the consolidated debt of municipalities on the same day amounted to €166,94 million. Since these are the amounts that show increasing tendency compared to previous years, urgent measures are needed to ensure lower expenditures for servicing debts, i.e. ensure refinancing of existing debt due to high interest rates and short repayment periods. Therefore, addressing the settlement of these liabilities is possible only under more favourable credit arrangements with banks, with lower interest rate and more favourable maturity, of 10 to 15 years.
The Government of Montenegro adopted, at its session of 26 March 2015, the Report on the status of
page 601 / 796 debt and unsettled liabilities of local self-governments dated 31th December 2014, and concluded that refinancing of debts and unsettled liabilities for capital expenditures in municipalities, which are beneficiaries of the Equalisation Fund, is to be managed, in such a way that a municipality - beneficiary will sign a Cession Agreement with the Ministry of Finance and the creditor, under which the funds will be used for repayment of refinanced liabilities and credits.
The Government also entrusted the Investment and Development Fund of Montenegro with ensuring funds, or a guarantee, to local self-government units for the purpose of ensuring a favourable credit arrangement for the refinancing of debts.
As the financial standing of most local self-government units is insufficient, the Government of Montenegro, on proposal of the Executive Board of the Union of Municipalities, at the session of 30 April 2015, proposed to local self-government units, who plan refinancing of debts and unsettled liabilities, that the competent municipality authority takes a decision to authorise the Ministry of Finance to dispose of their share of the Fund bearing in mind the nature of revenues ensured by the Fund so as to provide a stable and safe instrument for the financing of local self-governments.
The Government further authorised the Ministry of Finance to prepare Cession Agreements with local self-government units and the Investment and Development Fund of Montenegro or with other financial institutions, to allow the Ministry of Finance to dispose of the funds from the Equalisation Fund so as to ensure settlement of municipalities' liabilities arising from credits for refinancing of debts and unsettled liabilities.
Most of the local self-government units have already adopted appropriate decisions to that end and have undertaken activities towards contracting a credit arrangement with financial institutions which offered the most favourable conditions, under which debts to banks and liabilities towards other suppliers will be refinanced.
Netherlands [Article ratified - Report adopted on 26 March 2014 ]
Consult reply indicated at article 9.1
North Macedonia [Article ratified - Report adopted on 26 February 2013 ]
Consult reply indicated at article 9.1
Norway [Article ratified - Report adopted on 26 March 2015 ]
Consult reply indicated at article 9.1.
Poland [Article ratified - Report adopted on 2 April 2019 ]
Article 9, paragraph 3, requires that at least part of the financial resources of local authorities must derive from local taxes of which, within the limits of statute, they have the power to determine the rate.
In Poland, the financial resources deriving from “local taxes” represent a significant part of the municipal income (43,3% according to the 2017 data of the Ministry of Finance), whereas they are limited for powiat (35,8%).
However, the main issue is not represented by the proportion of those taxes on the total revenues of
page 602 / 796 local authorities. The main concern is that the so-called “local taxes” are set by law or by regulation enacted by the Minister of Finance. Local authorities can only introduce tax exemptions and reliefs, with the only exception of the possibility for municipalities to determine the tax rate of the property tax, within the limits set by national legislation. Powiaty do not have any real “local tax”.
Therefore, the rapporteurs consider that Article 9, paragraph 3, is not respected in Poland.
Portugal [Article ratified - Report adopted on 28 September 2020 ]
According to the principles of devolution and local self-government, the transfer of powers from the State to local authorities is accompanied both by a transfer of prerogative and also by a transfer of funding. Accordingly, local authorities have different sources of funding: their own income, financial equalisation, subsidies and borrowing.
For the running of public services, communal facilities and infrastructures, the rapporteurs note that the municipalities receive most of the taxes collected on their territory by the competent departments and can set the amount of certain taxes and dues. The following levies come back to local authorities:
municipal tax on real estate property whose rate may be set by the local authorities via the municipal assemblies within the limits established by law; the tax on the transfer of property rights in return for payment; part of the road traffic tax.
This means that, simply because local authorities’ own resources are largely dependent on allocated shares of national taxes and these are calculated according to revenue from three taxes, any drop in that income results in lost revenue for local authorities.
The municipalities also have their own income of another type: dues and taxes for the use of their services, and management of their assets. They may decide to introduce a tax to fund the running of infrastructures and facilities made available to users (creation of urban infrastructures, occupancy of squares reserved for markets and fairs, cemeteries, hunting permits). Finally, they receive revenue from the use of their assets and income from financial placements.
Nevertheless, the rapporteurs are concerned by the major disparities that exist between one municipality and another. Some of the mayors spoken to during the June 2019 visit believed that, for the powers currently exercised, financial resources were inadequate and inequalities were making themselves felt: in some cases around 50% of a municipality’s resources came from the State and it was impossible to increase local taxes, which suggests that the financial system is not satisfactory and requires a rethink.
Consequently, the rapporteurs consider that Article 9 paragraph 3 is complied with but that there is non-compliance with Article 9 paragraph 4.
Republic of Moldova [Article ratified - Report adopted on 4 April 2019 ]
First-level Moldovan local authorities can perceive local taxes and fees, while second-level authorities have no taxes of their own but can collect fees, for example for water distribution and waste-water treatment.
All local authorities also have a share of some state taxes (shared taxes), the most important being
page 603 / 796 the personal income tax (PIT). In reality, these “shared taxes” can be categorised both as “transfers” and as “equalisation mechanisms” since the local entities have absolutely no power to regulate, manage or collect those taxes. They are the exclusive responsibility of the state, which later on redistributes all or part of the taxes collected to the local authorities.
As for local taxes and fees, and according to Article 6, paragraph 6, of the Tax Code No. 1163-XIII of 24 April 1997, the system of local taxes and fees includes: a. real estate tax; b. taxes on natural resources; c. land-use tax; d. fees on the organisation of auctions and lotteries on the territory of the administrative territorial unit; e. taxes on advertising; f. taxes on the application of local symbols; g. taxes on commercial units and/or service provision; h. market taxes; i. accommodation taxes; j. resort fees; k. taxes for the provision of passenger transport services on municipal, town and village (communal) routes; l. parking fees; m. taxes from dog owners; n. sanitation fees; o. ad unit fees. Several remarks should be made on this enumeration. First, that taxes and fees are regulated in the same text, without any clear distinction. Second, this enumeration does not mean that all these fees exist in all Moldovan local authorities, but only in those who have decided to create and collect them. Third, that the most important “local” tax is the real estate tax, which is in reality probably the only genuine “local” tax in Moldova. It is regulated by state law but leaves some discretion to the local authorities to set the tax rate and grant tax exemptions.
Regarding the discretion and the room to manoeuvre that local authorities enjoy in regulating their ‘‘own’’ taxes, the system can in short be presented as follows: a. as a general rule, the local tax rate is set by the local authority according to the characteristics of the taxation objects, without the existence of a tax ceiling. Local authorities may grant additional exemptions from paying local taxes. b. In the case of real estate tax, the exact quota is established annually by local councils, based on the minimum and maximum quota set in the Tax Code. Local authorities (councils) can also grant additional tax relief on real estate (tax exemptions or deferrals) under the conditions set by Article 284 of the Tax Code. According to the Ministry of Finances, the government has recently promoted several changes in the field of local taxation, the most important being the abolition of caps or limits on real estate tax. Apparently the local authorities hesitate to raise their taxes, however.
Different structural problems affect the system of local taxation: a. lack of information about taxpayers and the resulting tax evasion; b. non-delimitation of many local properties, whose ownership is disputed, which negatively affects the collection of real estate tax; c. lack of significant taxable transactions or events. Therefore, the possibility of expanding the local tax base is very limited; d. the fact that many local properties are not registered in the cadastre (apparently, only 20% of local assets have been registered with the Cadastre Agency). Many properties are not evaluated for tax purposes, and therefore real estate tax cannot be collected on them.
The Moldovan system for local taxes has been consistently assessed as weak, and the present visit highlighted the fact that the structural situation has not improved. In the light of this fact, the rapporteurs consider that the requirements of Article 9.3 of the Charter are not satisfied.
Romania [Article ratified - Report adopted on 3 March 2011 ]
The same principles have recently been guaranteed by Article 3 of Law no. 195/2006 and sections 16(1) and 17 of Law no. 273/2006.
The local authorities’ financial resources, as provided for by Article 9(3) and (4) of the Charter, are guaranteed in Romanian law by section 27 of Law no. 215/2001, section 5 of Law no. 273/2006, which provides for the establishment of the income and expenditure of the local budget, and in section 16 (2) of that law. The latter states that “the local administrative authorities have the power to determine the rate of taxes and local charges in the conditions foreseen by the law”. These
page 604 / 796 principles have been recently supplemented by section 27 of the same law, which refers to “powers and responsibilities with regard to the determination of taxes and tax rates”.
Russian Federation [Article ratified - Report adopted on 30 October 2019 ]
Consult reply indicated at article 9.1
San Marino [Non ratified - Report adopted on 28 March 2018 ]
As already mentioned in previous parts of this report, the Republic of San Marino declared that it was not bound by Article 9, paragraphs 3 and 8 of the Charter. Furthermore, San Marino made an interpretative declaration that: “….Article 9 of the Charter must be interpreted as an Article establishing a general principle of financial autonomy, according to which local authorities are entitled to freely dispose, in the framework of the national economic policy, of the resources allocated to them for the exercise of their powers”.
Serbia [Article ratified - Report adopted on 18 October 2017 ]
Consult reply indicated at article 9.1
Slovak Republic [Article ratified - Report adopted on 24 March 2016 ]
See answer indicated at article 9.1
Slovenia [Article ratified - Report adopted on 6 November 2018 ]
Consult reply indicated at article 9.1
Spain [Article ratified - Report adopted on 20 March 2013 ]
Consult reply indicated at article 9.1
Sweden [Article ratified - Report adopted on 2 April 2014 ]
Consult reply indicated at article 9.1.
Switzerland [Article ratified - Report adopted on 20 October 2017 ]
Consult reply indicated at article 9.3
Turkey [Article ratified - Report adopted on 1 March 2011 ]
The analysis article by article is currently unavailable
Ukraine [Article ratified - Report adopted on 31 October 2013 ]
Consult reply indicated at article 9.1
United Kingdom [Article ratified - Report adopted on 26 March 2014 ]
page 605 / 796 Consult reply indicated at article 9.1
Article 9.4 Financial resources of local authorities
The financial systems on which resources available to local authorities are based shall be of a sufficiently diversified and buoyant nature to enable them to keep pace as far as practically possible with the real evolution of the cost of carrying out their tasks.
Albania [Article ratified - Report adopted on 31 October 2013 ]
Consult reply indicated at article 9.1
Andorra [Article ratified - Report adopted on 28 March 2018 ]
Article 9 of the Charter is aimed at ensuring that local authorities are entitled to sufficient financial resources. The legal authority to perform certain functions is meaningless if local authorities are deprived of the financial resources to carry them out. Andorra has not ratified Article 9, paragraph 2; Article 9, paragraph 5 and Article 9, paragraph 8 of the Charter.
In Andorra, the financial resources of the municipalities are based on their own taxes, taxes shared with the government, and on transfer of funds from the General Budget. The principles on financial resources are established directly by the Constitution (Articles 80.2 and 81) and developed throughout several Qualified Laws and ordinary laws.
At the moment of the visit of the Congress delegation, a tripartite negotiation process on a reform, lasting three years and involving the parliament, the government and the municipalities, was about to be finalised. The purpose of the reform is to update the entire system of transfers, through adapting it to the competences of municipalities and the new framework of State taxation, in place since the introduction of a full system of direct taxes, such as the income tax and the tax on corporation. In addition, the criteria of distribution between municipalities are planned to be revised, taking into account new parameters and based on the principle of solidarity introduced in favour of the municipalities that have fewer revenues from local taxes. The less economically advantaged Parishes would be compensated, as they are less able to generate their own resources. To this purpose, some asymmetries, that have an impact on the budget, have been identified, linking the expenditures for competences to the transfer of funds from the State.
Article 9.3 establishes the principle that part of the resources of local authorities shall derive from local taxes, whereas Article 9.4 establishes the principle of the diversification of the resources. The rapporteurs consider that both principles are respected in Andorra, as a relevant part of the financial resources of municipalities derives from their own taxes. The fact that local authorities can determine the rate of those taxes allows the income to keep pace with the evolution of the costs.
page 606 / 796 The rapporteurs consider that the requirements of Article 9 of the Charter are respected in Andorra. As for the non-ratified provisions, they consider that very little is required to enable ratification of paragraphs 2 and 5 of Article 9. Consequently, the rapporteurs encourage Andorran authorities, once the reform in process is finally approved, to ratify these provisions.
Armenia [Article ratified - Report adopted on 15 June 2021 ]
Article 9.4
4 The financial systems on which resources available to local authorities are based shall be of a sufficiently diversified and buoyant nature to enable them to keep pace as far as practically possible with the real evolution of the cost of carrying out their tasks.
213. In the proper understanding of the Charter, the diversification of revenues helps local authorities to react promptly to changes in costs of local services and protects them from unexpected economic difficulties, while the requirement of “buoyant” resources means the ability of local authorities to adjust their revenues to new circumstances, more plausibly, to increase their own resources.
214. According to the assessment of the rapporteurs, in a formal sense, this requirement of the Charter is fulfilled as far as the existing laws empower local authorities to obtain revenues from different sources, including local taxes and duties, borrowing, utilisation of local government property, general and specific grants, etc.
215. The problem remains, as has already been mentioned, that the income from these multiple sources is insufficient, and in many cases, such as borrowing, the mere possibility is only of a formal nature without any practical importance. In addition, having regard particularly to the absence of capital revenues (except for Yerevan and the largest cities), municipalities do not have enough financial and technical potential to make adequate local development strategies or follow the changing social requirements. The lack of sufficient resources makes them vulnerable to central influence, even if primary local interests are at stake.
Austria [Article ratified - Report adopted on 28 September 2020 ]
As presented by KDZ (2019), “the overall income of the municipalities has been characterized by high stability in recent years. This can be seen in all important revenue areas. Their own taxes developed most strongly with + 29 percent since 2008, followed by fees and service charges with + 28 percent and the income share with + 23 percent. (…) The investment activity of the municipalities (without outsourced companies) amounted to EUR 3.6 billion in 2017 and can thus follow up on the pre-crisis years. While public investment in the municipalities' core budget increased significantly, public investment in outsourced units is stagnating. Investments even declined in the municipalities' own businesses (quasi-corporations). Investments in education (especially for kindergartens and compulsory schools) developed particularly dynamically, which are mainly reflected in the core budget of the municipalities. In contrast, investments in the service sector developed significantly below average.”
The rapporteurs note again that local authorities in Austria do not enjoy sufficient share of their own taxes to be able to keep pace with increases in the cost of carrying out their tasks. The rapporteurs conclude that more efforts need to be invested in generating sustainable local finances, and therefore, consider that Austria complies partially with this provision.
page 607 / 796 Azerbaijan [Article ratified - Report adopted on 17 June 2021 ]
In order to protect local finances from negative effects in case of fluctuation in economic cycles, Article 9.4 requires a certain degree of diversification of income sources. As mentioned above (Article 9.1) over the last decade the municipal incomes have been impacted by the devaluation. More generally, this applies to the whole of Azerbaijani economy, which significantly relies on oil and gas.37
Legislation provides for diversification of municipal income sources and the right of municipalities to determine their spending priorities. However, the extremely limited functions carried out in practice by municipalities and their largely insufficient financial resources makes these rights much less significant in practice.
Diversification also derives from the transfer system. The Law on Budget System envisages transferring of special funds (earmarked or targeted funds) and general-purpose funds to the budget of municipalities, although the former (earmarked funds) has been implemented only once with regard to the transfer to five municipalities of the management of a module type equipment for cleaning dirty water.
Some steps have been taken to improve transfers of financial aids from the state budget municipalities, such as in particular the changes introduced in 2014 to the Law on Budget System which have introduced more differentiated criteria for unconditional financial aid. These now include the population size, the proportional weight of the municipality in the formation of the country’s financial resources, revenues, and expenditures, the geographical location, the living standards, and the socio-economic projects being implemented in the area.
Also the mechanisms for the allocation of conditional financial aid have been improved to facilitate state subventions for the implementation of projects in the fields of local social protection, environment, economic and social development programmes, as well as financing additional authorities of municipalities granted to them by the law and handed over by the local executive committees.
In practice, as the overall degree of financial autonomy of municipalities remains negligible, also the significance of the differentiation of their resources is far more limited than it could be based on the legislative provisions. In recent years, some improvements have been introduced to tackle the insufficient transparency in the calculation and distribution of subsidies and subventions from the state budget to local budgets, such as the amendments in the Laws on Budget System and on Local (Municipal) Taxes and Fees. Some difficulties however persist, as both block and special grants are not yet distributed in a predictable way on the basis of clear criteria, established in cooperation with the national municipal associations.
The rapporteurs therefore conclude that the current situation is in partial compliance with Article 9.4 of the Charter.
Belgium [Article ratified - Report adopted on 15 October 2014 ]
Flemish Region (Vlaanderen)
With regard to the principle laid down by paragraph 4 of Article 9, it is undeniable that local finances are under considerable pressure today. In 2013, the deficit of the municipalities (in the whole of
page 608 / 796 Belgium) was €220m. This situation is due to various factors. On the expenditure side, the Flemish authorities at all levels have to take account of the ageing of the population, the increase in pension costs and essential investments in water treatment, sewerage, waste management, etc. In the next few years, these challenges will be an increasing burden on local authority budgets, so the Flemish government is urging local government to carry out efficiency measures.
The main tax revenues in Flanders come from the personal income tax surcharge and from the property tax surcharge. Since the local authorities’ main revenues are from taxes (an average of 48% of total income, with the proportion hovering around 55% of income in the case of small and medium-sized municipalities), the tax variations are crucially important. For example, out of the 308 Flemish municipalities only around twenty have raised their personal income tax surcharge or their property tax, so this increase can be explained more by the indexation of the tax base than by a rise in tax rates. The average per capita taxable income in residential urban areas and on the coast is higher than in rural communities, as well as in the central municipalities, with a level close to €18,000 per inhabitant, compared with less than €16,000 per inhabitant (2011 tax returns). In the last few years, the consequences of the economic and financial crisis for taxable incomes have been to some extent compensated by faster tax assessment, but this effect was only temporary.
The revenues of the municipalities in Flanders are rising but none of this prevented the average Flemish municipality from closing the 2013 financial year with a deficit of €51 per inhabitant (3.9% of total revenues). This was €13 better than in 2012. If the reserves and the accumulated balances of previous years are added to this deficit, the financial situation shows a surplus. According to the budget estimates for 2013, a general surplus of €126 per inhabitant was expected for the average Flemish municipality, or 3.9% more than the previous financial year. This bonus is equal to 9.3% of estimated revenues.
The Flemish municipalities’ accounts paint a more realistic picture than the actual budget. The last known budget situation points to a general surplus of €312 per inhabitant in 2011, which is more or less three times as much as the figure estimated for the 2013 budget. In all, 64% of municipalities thought they would not achieve a balance before the 2013 operational year and that they should make use of the surplus of previous years to balance their budget. This can be explained by the fact that the municipal administrations tend to produce a sufficiently broad estimate of their expenditure. The policy and management programme sets out to encourage municipalities to work on the basis of more realistic estimates that are more in line with the amounts actually to be included. The budget appropriations will accordingly be determined at a higher level than at the present time.
After taxes, the second main source of municipal revenues are funds and specific allocations (an average of 23% of the total), with the Flemish Municipal Fund taking the lion’s share (an average of 20% of municipal revenues).
Despite the budgetary difficulties, the Flemish Government is in favour of maintaining the flows of subsidies for the general financing of local government administrations. The Flemish authorities informed the rapporteurs that the Flemish municipalities received subsidies without having to initiate any procedure and that they had complete freedom regarding their allocation.
Apart from taxes and revenues from funds, the municipalities also generate their own income from activities they organise and from services they provide, such as issuing documents and the provision of swimming pools and libraries. Their properties and shareholdings also generate income (in the form of rentals, dividends, etc). The municipalities are banking on an increase in receipts from services, although the rise in this item can partly be explained by a shift in receipts, especially between taxes and services.
page 609 / 796 Nonetheless, some interlocutors told the delegation that the resources of local government administrations were contingent upon the budget constraints of the regions and communities and on the taxation decisions taken at other levels of government (even though the tax surcharge rates can be adjusted to keep the municipalities’ tax burden unchanged).
Walloon Region and German-speaking Community
According to information provided by the UVCW, 50% of municipal revenues in Wallonia comes from tax receipts. 80% of municipalities’ tax receipts derives from the personal income tax surcharge and property tax and 20% from local taxation. It is the Federal Government administration that collects these taxes and calculates the tax bases.
The Walloon municipalities’ tax revenues amounted to €2.269bn in 2013 and represented 49.6% of their ordinary receipts in that tax year, or €640 per inhabitant. Municipal taxation takes various forms. It includes, on the one hand, additional taxes, such as the property tax surcharge and personal income tax surcharge, and, on the other hand, specifically municipal taxation. While additional taxes represented the bulk of tax-based resources (79%), or €505.50 per inhabitant, the proportion of local taxes, up sharply in 2013, was more one-fifth of total tax revenues. Moreover, the Walloon municipalities have their own income, which is made up of receipts from the provision of services (receipts generated by municipal properties and fees due for the use of land occupied by roads by the operators of gas and electricity networks) and financial receipts. All these revenues amounted to €478m in the 2013 budget and represented 9.9% of ordinary income. Receipts from the provision of services and debt-based revenue (investment income) have been moving in the opposite direction for several years.
Apart from taxation, 40.1% of receipts from transfers derives from other levels of government in the form of grants and subsidies, for which the municipalities have no room for manoeuvre. Finally, the municipalities’ own revenues represent 10.4% of total income. They are generated by billing public services provided by the municipality or in the form of receipts from local properties or financial assets.
The UVCW complains, among other things, that the state fails to ensure that the local authorities receive the revenues belonging to them. In particular it complains about the failure to update the cadastres, the negotiation of significant tax relief following tax engineering tricks, insufficient increases in tax compensation for frontier workers in Luxembourg, France Germany, etc.
The general funding of municipalities for the German-speaking Community amounts to €19,163,538 (2013). After a transitional period and following consultations with municipal leaders accompanied by outside experts, the Parliament of the German-speaking Community approved on 15 December 2008 a decree setting out the new rules and criteria for calculating the annual allocation to which each municipality is entitled. These new provisions came into force on 1 January 2009 and enabled the funds available to be redistributed and better adapted to the circumstances of the nine German- speaking municipalities, while at the same time taking into consideration the more rural or more urban character of a municipality. At the same time, the financial autonomy of the social services centres was strengthened by granting them 10% of the overall amount, which was double the previous contribution of €1,965,568 (in 2013).
Brussels-Capital Region
Consult reply indicated at article 9.1.
Bosnia and Herzegovina [Article ratified - Report adopted on 31 October 2019 ]
page 610 / 796 Consult reply indicated at article 9.1
Bulgaria [Article ratified - Report adopted on 21 January 2021 ]
Article 9.4
1. This paragraph refers to two important features of the financial systems on which local authorities’ resources are based: they must be diversified, and they must be “buoyant”. At first, the diversification of income sources is crucial if local authorities are to maintain their autonomy during fluctuation in economic cycles. Consequently, local authorities’ finances should not be based solely on taxes or transfers and should be bolstered by all possible sources of local income: transfers, local taxes, charges, fees, profits under private law, interest on bank accounts and deposits, penalties and fines, sales of property or goods and services offered to the private sector, and so forth.
1. The second aspect mentioned in this paragraph is that the systems of local finance should be “buoyant”. This means that they should allow local finances to rise to meet the costs of the delivery of services, that is to say local finances should be able to adapt to new circumstances, needs and macroeconomic scenarios and be sufficient to cover service delivery. Therefore, transfers from regional or national bodies should be updated and possibly increased over the years to take account of price increases, or factors involved in the delivery of services. And local authorities should also be allowed to increase their tax rates where such a decision is necessary owing to inflation. Accordingly, any delegation of tasks that does not indicate the source of funding to meet the cost of the new responsibility 52 is not compatible with the principle of buoyancy .
1. According to the NAMRB, periodic changes are made in the formulas and mechanisms for distribution of State transfers. Since 2016, the investment transfers from the State to the municipalities have been consolidated in one general target subsidy for capital expenditures. The target transfer for construction and general renovation of municipal roads existing until 2015 is included in the capital subsidy. Its distribution to the municipalities is determined by a formula, according to the annual State Budget Act. Finally, it is not the enlargement of the tax base, but measures for enhancing the collection and broader powers of local revenue authorities which remain the main driver behind the increase in own revenue.
1. In view of this situation the NAMRB has proposed the following measures: reorganisation/restructuring of the tax system to strengthen the role and diversify local taxes, which would also mean transforming some of the national taxes (PIT, VAT, fuel excise rates, and so forth) into local taxes, more related to the dynamics of economic development; updating the real estate tax assessments in view of the real market conditions, and creating a mechanism for periodic automatic updates; a fair approach to real estate ownership taxation (including agricultural land and forests); creation of legal guarantees against the transfer of financially unsecured responsibilities to the municipalities; a legally established mechanism for determining the total amount of the capital subsidy, and the creation of a methodology for assessment of municipal road
page 611 / 796 maintenance needs; optimisation of the criteria for access of municipalities to the general equalisation subsidy (GES).
1. According to the analysis of local government finance already made in this report, local government finance seems to reach an acceptable level of diversification, but the system of local finance cannot be characterised as buoyant, especially concerning the revenue that should cover the costs of additional tasks that were delegated to local authorities (see comments in paragraph 2).
Croatia [Article ratified - Report adopted on 20 October 2016 ]
Article 9 paragraph 4 requires that the local authorities’ financial systems should be sufficiently diversified so that they keep pace with the cost of providing services. The limited nature of own- resources has been shown above (see supra para 129 ff). In addition these resources have been drastically cut since 2015 by changes in the personal income tax rates (see further Article 9 paragraph 6 below) – and this forms the major source of revenue for municipalities in particular. On the diversification of sources of income there is a wide disparity between big and small municipalities, big cities (including the capital city of Zagreb) where more diversified sources of income may guarantee more financial autonomy while municipalities and small cities, as well as counties from less favourable economic areas, face enormous difficulties to pay their operational costs and nearly 80% of their budgets are composed by the financial aid from the central government.
Government, local and county interlocutors in meetings with the delegation all recognised that Croatia in general and its finance system in particular, are still over-centralised. This is one of the reasons why fiscal decentralisation reform, the major preoccupation for the interlocutors the delegation met, is currently on the statute books so as to bring about change. This entails: Redefining the jurisdiction of the local and regional authorities Redefining the tasks of central government bodies responsible for fiscal relations Introducing or changing the financial equalisation mechanism system Changing the taxation system for the lower level units Introducing or changing the fiscal rules for the lower level units.1
The rapporteurs find this encouraging and would be grateful to be kept informed of developments. However, their conclusions are confined to the evidence gathered during the monitoring mission and on this basis, in the light of the foregoing, they conclude that Croatia is not in conformity with Charter Article 9 paragraph 1 concerning adequate financial resources for local authorities, paragraph 2 concerning financial resources commensurate with local authorities’ responsibilities, paragraph 3 on local authorities control over local taxes and charges and paragraph 4 on concomitant revenues.
Cyprus [Article ratified - Report adopted on 20 October 2016 ]
See answer at article 9.1
Czech Republic [Article ratified - Report adopted on 8 March 2012 ]
The issue of whether Article 9 para. 4 of the Charter, by which the country is actually bound, is fully respected depends on considerations already addressed by reference to paragraphs 1 and 2 of Article 9. It should be mentioned, however, that no major complaint regarding the relationship between the overall tasks of municipalities and regions and the financial resources available for
page 612 / 796 pursuing them was heard by the Congress delegation.
Denmark [Article ratified - Report adopted on 31 October 2013 ]
Consult reply indicated at article 9.1
Estonia [Article ratified - Report adopted on 29 March 2017 ]
The same finding is relevant for conformity with Article 9, paragraph 4, of the Charter. The Estonian system of financing local authorities is neither diversified nor evolutionary; there is excessive dependence on state grants and transfers. Even if an important share of personal income tax (which represents about 50% of the local revenues) is transferred to local authorities (according to Article 5 of the Personal Income Tax law 11,6% from the total wage of taxpayer goes to local budgets and the rest of tax yield goes to state budgets), the tax yield is not legally shared between the levels. The state has discretion to fix the tax rate, the tax basis and – within the yearly budget - the quota to be transferred from the state budget to local authorities. The proposed reforms of personal income tax will probably also have consequences for the local share.
Finland [Article ratified - Report adopted on 28 March 2017 ]
Consult reply indicated at article 9.1.
France [Article ratified - Report adopted on 22 March 2016 ]
Consult reply indicated at article 9.1
Georgia [Article ratified - Report adopted on 7 November 2018 ]
As already shown in the analysis of the financial situation of municipalities, Georgian local government has different and diverse sources of revenue, including many different types of taxes. Although Georgia therefore complies with Article 9, paragraph 4, of the Charter, the rapporteurs would nevertheless encourage the Georgian authorities to move forward with the “municipalisation” of immovable property and natural resources that would certainly enlarge and further diversify the financial basis of local government in Georgia, which is a fundamental prerequisite for local autonomy.
Germany [Article ratified - Report adopted on 14 March 2012 ]
Consult reply indicated at article 9.1
Greece [Article ratified - Report adopted on 26 March 2015 ]
Consult reply indicated at article 9.1
Hungary [Article ratified - Report adopted on 12 February 2021 ]
Article 9, paragraph 4, refers to the need for the resources available to local authorities to be of a sufficiently diversified and buoyant nature to enable them to keep up as far as practically possible with the actual changes (increases) in the costs for carrying out their tasks.
page 613 / 796 In Hungary, the main financial resources of local authorities are State grants and subsidies, making local authorities highly dependent on the State. The limited possibility of establishing local taxes makes it difficult to consider local resources as having a sufficiently diversified and expanding nature to enable them to keep up as far as practically possible with the actual changes (increases) in the costs for carrying out their tasks.
Therefore, the rapporteurs consider that Article 9, paragraph 4 of the Charter is not respected in Hungary.
Iceland [Article ratified - Report adopted on 29 March 2017 ]
Local authorities in Iceland enjoy a great deal of fiscal autonomy if compared to local authorities in most countries.1 They have their own resources thanks to local taxes (property tax, municipal income tax), central government contributions from the Equalisation Fund and charges levied on users of public services (water supply, waste collection, child care, etc.): those resources are of a sufficiently diversified and expanding nature to enable them to keep pace as far as practically possible with the real evolution of the cost of carrying out their tasks, in compliance with Article 9, para. 4 of the Charter.
Ireland [Article ratified - Report adopted on 31 October 2013 ]
Consult reply indicated at article 9.1
Italy [Article ratified - Report adopted on 18 October 2017 ]
Consult reply indicated at article 9.1
Latvia [Article ratified - Report adopted on 27 March 2018 ]
Consult reply indicated at article 9.1
Liechtenstein [Non ratified - Report adopted on 28 March 2018 ]
Consult reply indicated at article 9.3
Lithuania [Article ratified - Report adopted on 6 November 2018 ]
Article 9, paragraph 4, refers to the necessity that the resources available to local authorities are of a sufficiently diversified and buoyant nature to enable them to keep pace as far as practically possible with the real evolution of the cost of carrying out their tasks.
In Lithuania, the main revenue for municipalities is the Personal Income Tax. Nevertheless, grants from the State budget constitute an important sources as well, especially for delegated functions. Municipalities have their own-source municipal revenues, which include various taxes, set by municipalities or assigned to municipal budgets by law (e. g. land, property taxes, taxes for various services, local fees, etc.) and other non-tax municipal revenue (e. g. fines, rents, revenue of municipal budgetary establishments). These resources are of a sufficiently diversified and expanding nature to enable them to keep pace as far as practically possible with the real evolution of the cost of carrying out their tasks, in compliance with Article 9, paragraph 4 of the Charter.
page 614 / 796 Luxembourg [Article ratified - Report adopted on 21 October 2015 ]
Consult reply indicated at article 9.1.
Malta [Article ratified - Report adopted on 29 March 2017 ]
Furthermore, Malta is not in conformity with Article 9, paragraph 4 of the Charter, since the formula set out in the Eighth Schedule of the Act, as well as the overall system for the provision of grants is not of a sufficiently diversified and buoyant nature and in light of the inadequacy of the financial resources available to the local councils, the latter find it difficult to cope with the real evolution of the cost of carrying out their tasks and permitted functions.
Monaco [Non ratified - Report adopted on 28 March 2018 ]
Consult reply indicated at article 9.1
Montenegro [Article ratified - Report adopted on 21 October 2015 ]
According to Article 9, paragraph 4, the financial system shall be of a sufficiently diversified and buoyant nature in order “to enable them to keep pace as far as practically possible with the real evolution of the cost of carrying out their tasks”. The Article 5 of the Law on Local Self-Government financing enumerates the different sources of municipal revenues. The tax base certainly is diverse: Municipalities receive 12% of the income tax, 80% of the tax on real estate transfer collected on their territory, as well as 70% of concessions and fees for the use of resources located in the municipality. Of course, these different sources of revenue cannot provide complete protection especially in cases of weak economic growth or even recession. Nevertheless, the situation seems to give municipalities a part to play in the overall dynamics of the economic development.
Netherlands [Article ratified - Report adopted on 26 March 2014 ]
Consult reply indicated at article 9.1
North Macedonia [Article ratified - Report adopted on 26 February 2013 ]
Consult reply indicated at article 9.1
Norway [Article ratified - Report adopted on 26 March 2015 ]
Consult reply indicated at article 9.1.
Poland [Article ratified - Report adopted on 2 April 2019 ]
Article 9, paragraph 4, refers to the need for the resources available to local authorities to be of a sufficiently diversified and buoyant nature to enable them to keep up as far as practically possible with the actual changes (increases) in the costs for carrying out their tasks.
In Poland, the main revenues for municipalities are the shared Corporate Income Tax and Personal Income Tax, together with grants and subsidies from the State budget, whose purpose is to support some tasks (especially education) and to equalise socio-economic inequalities. However, the limited
page 615 / 796 possibility of establishing local taxes makes it difficult to consider local resources as having a sufficiently diversified and expanding nature to enable them to keep up as far as practically possible with the actual changes (increases) in the costs for carrying out their tasks.
Therefore, the rapporteurs consider that Article 9, paragraph 4 of the Charter is not respected in Poland.
Portugal [Article ratified - Report adopted on 28 September 2020 ]
See answer at article 9.3
Republic of Moldova [Article ratified - Report adopted on 4 April 2019 ]
Consult reply indicated at article 9.1
Romania [Article ratified - Report adopted on 3 March 2011 ]
Consult reply indicated at article 9.3
Russian Federation [Article ratified - Report adopted on 30 October 2019 ]
Consult reply indicated at article 9.1
San Marino [Article ratified - Report adopted on 28 March 2018 ]
Consult reply indicated at article 9.1
Serbia [Article ratified - Report adopted on 18 October 2017 ]
Consult reply indicated at article 9.1
Slovak Republic [Article ratified - Report adopted on 24 March 2016 ]
See answer indicated at article 9.1
Slovenia [Article ratified - Report adopted on 6 November 2018 ]
Consult reply indicated at article 9.1
Spain [Article ratified - Report adopted on 20 March 2013 ]
Consult reply indicated at article 9.1
Sweden [Article ratified - Report adopted on 2 April 2014 ]
Voir réponse indiquée à l'article 9.1.
Switzerland [Article ratified - Report adopted on 20 October 2017 ]
page 616 / 796 Consult reply indicated at article 9.1
Turkey [Non ratified - Report adopted on 1 March 2011 ]
The analysis article by article is currently unavailable
Ukraine [Article ratified - Report adopted on 31 October 2013 ]
Consult reply indicated at article 9.1
United Kingdom [Article ratified - Report adopted on 26 March 2014 ]
Consult reply indicated at article 9.1
Article 9.5 Financial resources of local authorities
The protection of financially weaker local authorities calls for the institution of financial equalisation procedures or equivalent measures which are designed to correct the effects of the unequal distribution of potential sources of finance and of the financial burden they must support. Such procedures or measures shall not diminish the discretion local authorities may exercise within their own sphere of responsibility.
Albania [Article ratified - Report adopted on 31 October 2013 ]
Albanian legislation uses unconditional transfers for mitigation of financial disparities between LGUs. Such transfers are made from the State budget in grant form, without destination, without interest and without the right to return. They are used by the decision of local councils to cover local expenditure for their functions, as defined in Law No. 8652.
In the context of the consolidation of the decentralisation reform in 2002, the State Budget included for the first time the concept of giving unconditional transfers to local governments through a formula. This formula balances the need for objective criteria related to the costs of local services and provides a measure for equalisation to help the poorest LGUs. The main results of the formula had to do with improving fairness, creating a greater connection between the size of area, population number, and amount of funds received, and providing some equalisation effect. For the first time transfers to LGUs from the State budget became transparent and predictable, which improved the management of budget by local officials. The effects of formula have been evaluated positively under the proportionality criteria, fairness and equalisation (balance) in the distribution of funds.
The size of the unconditional transfer is based on the functions transferred to local governments, the respective funds for them and the specific regulations on an annual basis based on the transfer of taxes. The total amount of the unconditional transfer is distributed among LGUs (municipalities, communes and counties); it is based on several criteria and a process involving several steps. The basic steps and criteria of the distribution of the unconditional transfer are explained below.
page 617 / 796 The grant pool is first divided into three sub-pools: a share to the municipalities and communes, one share to the regions, and a reserve in the form of "compensation fund". The share of the municipalities and communes is then divided into two sub-pools: a general grant to be distributed according to a specific formula and another “compensation fund” reserved for municipalities and communes. The formula for the distribution of the unconditional transfer to municipalities and communes is based on the size of the population of the relevant unit and the area of the communes.
The formula takes into account the potential fiscal capacity of LGUs which means that units with limited opportunities for generating income from taxes and fees are financed more through unconditional transfers. Part of the unconditional transfers for the regional councils is divided into two sub-pools: the total grant distributed based on a specific formula and ii) the "compensation fund" reserved for regions.
The formula for the regions is based on an equal share for all regions, population, geographical indicators for counties (field, hilly and mountainous) and the length of rural roads.
Fiscal capacity is calculated only on small business tax (SBT) and on vehicle registration tax. A first adaptation of this allocation is done in accordance with the coefficient of fiscal capacity. Each municipality and commune with revenues per capita higher than the national average contributes 25% of the fiscal equalisation difference, divided with its population. This sum is subtracted from the initial calculation of the grant. Each municipality and commune that is below national average is compensated with 25% of this difference, divided by its population; this sum is added to the initial calculation of the grant.
The gross amount of the equalisation fund as well as the specific sum to be transferred to each LGU is calculated on an annual basis and adopted by the Parliament as an appendix to the State budget law. When preparing the draft budget, every municipality and commune can estimate in advance for the following year the amount that it will receive from the State budget in the form of unconditional transfer. However, many representatives of Albanian communes and municipalities expressed concern over the variability, over time, of the formula used for the unconditional grants, making budget planning difficult and uncertain. For a detailed account of the formula used to distribute unconditional transfers, see Appendix III.
To promote the socio-economic development of communes and municipalities, the Albanian government uses competitive grants which are managed by the line ministries and given to communes and municipalities on a competitive basis. The total amount of this grant comes from the line ministry fund invested in LGUs and is accumulated in the “Regional Development Fund”, which is an integral part of the State budget. The Fund aims to identify the problems related to local and regional development and to combat poverty through development policies and consists of competitive grants for local infrastructure, basic education, health, cultural facilities, water supply, building agro-food markets, irrigation and drainage and forestation.
Selection criteria for successful project applications are based on two basic factors: the project’s social impact and the financial feasibility of public expenditure. A special committee led by the Prime Minister of Albania and composed of representatives of line ministries and local government associations awards these grants.
One of the issues is the structure of local budget revenues. The government declares that the majority of LGU revenues are unconditional. However, the conditional grants are the biggest source of funding, and if you add to this the grants provided by various ministries, it becomes obvious that unconditional funds in the local budgets are far less than 50%.
page 618 / 796 The table below makes it evident that LGUs are heavily dependent on financial assistance from the State budget. This, in the rapporteurs’ opinion, should be viewed as a main obstacle to the development of local autonomy in Albania.
Furthermore, the rapporteurs were informed that the central government resorts to the practice of cutting unconditional grants in certain cases. This is a violation of Albanian legislation, which recognises the power of discretion LGUs have over the use of unconditional grants. In the Rapporteurs’ opinion, it also contradicts paragraph 5 of Article 9.
Andorra [Non ratified - Report adopted on 28 March 2018 ]
Article 9 of the Charter is aimed at ensuring that local authorities are entitled to sufficient financial resources. The legal authority to perform certain functions is meaningless if local authorities are deprived of the financial resources to carry them out. Andorra has not ratified Article 9, paragraph 2; Article 9, paragraph 5 and Article 9, paragraph 8 of the Charter.
In Andorra, the financial resources of the municipalities are based on their own taxes, taxes shared with the government, and on transfer of funds from the General Budget. The principles on financial resources are established directly by the Constitution (Articles 80.2 and 81) and developed throughout several Qualified Laws and ordinary laws.
At the moment of the visit of the Congress delegation, a tripartite negotiation process on a reform, lasting three years and involving the parliament, the government and the municipalities, was about to be finalised. The purpose of the reform is to update the entire system of transfers, through adapting it to the competences of municipalities and the new framework of State taxation, in place since the introduction of a full system of direct taxes, such as the income tax and the tax on corporation. In addition, the criteria of distribution between municipalities are planned to be revised, taking into account new parameters and based on the principle of solidarity introduced in favour of the municipalities that have fewer revenues from local taxes. The less economically advantaged Parishes would be compensated, as they are less able to generate their own resources. To this purpose, some asymmetries, that have an impact on the budget, have been identified, linking the expenditures for competences to the transfer of funds from the State.
As for the non-ratified provisions of the Charter, the rapporteurs are convinced that the on-going reform on transfers and competences, properly consulted with local authorities, will be implemented with due respect for the relevant principles of the Charter and that no obstacles will exist to the ratification of paragraphs 2 and 5 of Article 9 after the enactment of the reform.
Article 9.5 sets the principles of solidarity, referring to financial equalisation procedures to protect the financially weaker local authorities. Rapporteurs were told by all the interlocutors, both at national and municipal level, that the introduction of the financial solidarity principle is one of the main points of the reform under discussion. Once the reform is approved, no obstacle will remain to the ratification of this paragraph of the Charter.
The rapporteurs consider that the requirements of Article 9 of the Charter are respected in Andorra. As for the non-ratified provisions, they consider that very little is required to enable ratification of paragraphs 2 and 5 of Article 9. Consequently, the rapporteurs encourage Andorran authorities, once the reform in process is finally approved, to ratify these provisions.
Armenia [Article ratified - Report adopted on 15 June 2021 ]
page 619 / 796 Article 9.5
5 The protection of financially weaker local authorities calls for the institution of financial equalisation procedures or equivalent measures which are designed to correct the effects of the unequal distribution of potential sources of finance and of the financial burden they must support. Such procedures or measures shall not diminish the discretion local authorities may exercise within their own sphere of responsibility.
216. Financial equalisation is a conventional method of assistance for the economically weaker local authorities, a well-known redistribution mechanism for counterbalancing regional disparities and diverse financial capacity of municipalities.
217. As has been found, in Armenia there is a separate system of financial equalisation that is designed to compensate the economic disadvantages of the financially weak communities. In addition, the regional discrepancies, as well as the economic and social differences of the municipalities, are also handled indirectly, through the general system of state grants.
218. Although financial equalisation has different possible methods and ways, designed to redress the effects of uneven economic development and capacity of local governments, the rapporteurs are of the opinion that in Armenia, the great differences between communities are not effectively counterbalanced in practice.
Austria [Article ratified - Report adopted on 28 September 2020 ]
The Austrian Stability Programme, Update for the period 2017 to 2022 and Austrian Draft Budgetary Plan 2018 (update)79 states that “at the end of 2016 intensive negotiations on future intergovernmental fiscal relations were successfully closed with an agreement and the signing of the Pact on a new Intergovernmental Fiscal Relations Act 2017 (IFRA 2017) by the Federal Government, the Länder and municipalities. IFRA 2017 implements a first step towards more task-orientation, more transparency and simplifications as well as strengthened tax autonomy of the Länder (p.38)”. It continues by saying that: “one of the key elements to safeguard the pace of fiscal consolidation is the Austrian Internal Stability Pact. From 2017 its rules require the federation, the Länder and municipalities to achieve structurally balanced budgets as a basic principle. The agreement covers the following key issues: a rule on a structurally balanced general government budget (“debt brake”), with the structurally balanced budget defined as a structural general government deficit not below -0.45% of GDP; a rule on the allowed annual expenditure growth (expenditure brake); a rule on public debt reduction as defined in ESA terms (adjustment of the debt ratio); and a rule on ceilings for public guarantees, whose implementation was harmonized in the course of the negotiations on intergovernmental fiscal relations in 2017. From 2019, the maximum number of guarantees by the central government and the states is limited to 175% of the revenues of the entity, while for municipalities it is limited to 75% of revenues; and rules to strengthen budgetary coordination and medium-term budgetary planning of all governments, mutual exchange of information and transparency”.
KDZ (2019) considers that the area of public debt is stable, overall and points to the success of the Austrian Stability pact. For the public debt by Länder in Euro / capita, 2017, see Figure 4 (Public debt by Länder in Euro / capita, 201780 - Page 35 of the PDF file of the report).
As mentioned above, a significant part of subnational government revenue comes from financial equalisation procedure. This procedure is based on tax-sharing and regulated by Fiscal Relations Act, agreed between the three levels of government. Among the most important shared taxes are VAT, corporation tax, income tax, etc.
page 620 / 796 Tax-sharing is calculated on a formula basis, and formulas are distinct for Länder and municipalities. Both formulas use such indicators as the number of inhabitants and local revenues. The number of inhabitants is the most important indicator for both. For municipalities, an indicator of a weighted population index (WPI) is used: in municipalities up to 10 000 inhabitants one inhabitant counts a factor which is multiplied by 1 41/67 (= around 1.61), in municipalities between 10 000 and 20 000 inhabitants - by 1 2/3, between 20 000 and 50 000 inhabitants by 2 and in communities with more than 50 000 inhabitants by 2 1/3. For statutory cities with the population of up to 20 000 inhabitants, the multiplier of 2 is used.
According to the officials of the Federal Ministry of Finance with whom the delegation met during the visit, the fiscal relations system aims to achieve fiscal equity.
During the monitoring visit, the rapporteurs heard no complaints from their interlocutors about fiscal equalisation.
In light of the above, the rapporteurs consider that Austria complies with this provision, insofar as the financial equalisation institution is concerned.
Azerbaijan [Non ratified - Report adopted on 17 June 2021 ]
Azerbaijan has declared itself not bound by Article 9.5 of the Charter.
Despite the fact that the Law on the Budget System provides the legal basis for covering local budget deficits from the state budget, no standardised financial equalisation procedures or equivalent measures exist with regard to the municipal level of government in Azerbaijan and existing criteria for state subsidies do not differentiate based on population or performance among municipalities.
The rapporteurs remind that the absence of a consistent financial equalisation system is an obstacle to both a less differentiated performance in the different territories of the country and to the real development of the municipal level more in general.
Belgium [Article ratified - Report adopted on 15 October 2014 ]
Flemish Region (Vlaanderen)
Article.5 of concerns financial equalisation mechanisms. An important issue bound up with municipal taxation results from the significant spatial disparities with regard to potential tax revenues. The income of households and cadastral income can vary from one municipality to another, which naturally has an impact on the ability to finance services to the general public. Various equalisation mechanisms (especially in the context of the Municipal Fund) have been introduced by the regions and enable the impact of these disparities to be reduced to some extent.
Mention should also be made of the specific problem of the effects associated with frontier workers. Owing to the exemption in Belgium of the foreign earnings of a large number of Belgian residents, many border municipalities are suffering from a significant shortfall in their income from the personal income tax surcharge.
The main sources of financial equalisation are:
- The Municipalities Fund and the Provinces Fund. As this matter is entirely regionalised, the
page 621 / 796 arrangements for sharing out the budget allocations available vary from region to region. According to the Flemish authorities, since 2003 the Municipalities Fund has grown by 3.5% a year and amounted to nearly €2.17bn in 2013, or approximately 8% of the Flemish expenditure budget. The Flemish government has decided to maintain the annual growth rate of the Municipalities Fund at 3.5%. The amount of the Fund increased in nominal terms during the period 2002 to 2013 by no less than 49%, or 18% in real terms (after allowing for cumulative inflation in that period). Virtually all the Flemish Authority’s expenditure has gone down, but the government is continuing its efforts to help the municipalities. In all cases, the tax potential as the criterion for distributing the money in the fund among the local authorities comes into play.
- The Special Act of 16 January 1989 on the financing of the communities and regions, section 48 of which provides for a so-called national solidarity mechanism that makes corrective intervention possible in favour of one or more regions whose average personal income tax yield is below the national average.
Walloon Region and German-speaking Community
In Wallonia, the financial equalisation between municipalities is mainly provided by the Municipalities Fund (regional allocation). The specific aim of the criteria for distributing this fund is to rebalance the differences between the municipalities with weak and those with strong tax bases. Other distribution criteria seek to bring about the better distribution of social housing throughout Wallonia.
The funding of the municipalities of the German-speaking Community is a matter for the Community, which has its own Municipality Fund. The overall amount of the municipal allocation is distributed as follows: an allocation with a variable amount is designed to bring all the municipalities with a lower tax yield into line with the Community average at the level of this average. The calculation is based on the average yield and the average rate applied in the nine German-speaking municipalities. The remainder is distributed in accordance with five 5 criteria (5% in equal parts, 45% according to the number of inhabitants, 20% according to the number of workers in the municipality, 15% according to the number of unemployed, 15% according to the municipal surface area). In order to avoid too sudden jumps, the amounts according to the criteria are evened out over a period of six years.
There is also a Provinces Fund for the provinces in the Walloon Region. The disbursement of the Fund is as follows: for general funding, representing 80% of the provincial share, disbursed in three advances (February 30%, May 30%, August 20%) and for a partnership, representing 20% of the share, disbursed on 31 December at the latest subject to the conclusion of a partnership agreement and a positive assessment of its execution. The distribution of the Funds between the five provinces is laid down by decree.
With regard to the subsidies granted to the local authorities, to the investment mechanisms and to the national capital market, the UVCW struggled for years to bring about a drawing right for the benefit of the Walloon municipalities. By means of the new drawing right mechanism, the regional authority grants each of the municipalities concerned for a fixed period an “allocation” from which it can draw to carry out certain types of investment. The amount of the allocation available is calculated on the basis of preset criteria (number of kilometres of municipal roads resurfaced, number of inhabitants, average per capital income and other criteria associated with the Municipalities Fund). The legislation also specifies the type of investment covered and permissible.
In terms of the law, this fund was established by the Decree of 6 February 2014 amending the part of the Code of Local Democracy and Decentralisation relating to subsidies for certain investments in the public interest. Specific subsidies have always constituted a key source of income for towns and municipalities. The aim of the Walloon legislature has been to draw in public investment by helping
page 622 / 796 municipalities to finance contracts for public works and services entered into with companies, so this classical arrangement has undergone a genuine revolution because on 1 January 2013 the three- year programme of grant-aided work gave way to a Municipalities’ Investment Fund.
This drawing right is based on multi-year planning extending over a municipal term of office (six years). An annual amount of €45m is planned over the first period of the programme (2013-2016) and l be linked to the consumer price index from 2017. As a result of the Fund, each municipality receives an annual amount known in advance that enables it to carry out investments in a specific field with more freedom to judge the most appropriate projects according to its own strategy.
Following a pilot experiment conducted in 2012, the Investment Fund applies to 253 French-speaking municipalities in Wallonia (the nine German-speaking municipalities already have their own mechanism).
The drawing right mechanism had been called for by the UVCW for a long time and until now only met with a response in a very limited form as part of a pilot project. The creation of the Municipalities’ Investment Fund therefore constitutes a historic victory in terms of strategic planning, which is vital for the local authorities.
However, the mechanism still has room for improvement, and the UVCW intends to continue to work on it. The UVCW is still appealing for less stringent supervision, for an extension of the scope of the Fund and for an increase in its endowment.
In the German-speaking Community, subsidising the road infrastructure has undergone one of the most far-reaching simplification processes to date in Belgium (Decree of 15 December 2008). This has involved the transformation of the administratively cumbersome, complicated and time- consuming grants system into an annual allocation for the municipalities. Here, too, the consultation with municipal stakeholders has made it possible to determine the most appropriate criteria that serve as a basis for calculating the amount due to each municipality. Moreover, planning up to 2023 provides for a regular increase in the amount allocated by the Community for this annual grant from €850,000 in 2009 to €3m in 2023 (€1.2m in 2013).
The Decree of 15 December 2008 also fundamentally changed the procedure by which the German- speaking Community subsidises local (cultural and sports) associations and libraries, while at the same time maintaining the payment of the subsidy to the associations concerned. In the past, both the municipalities and the Community made operating grants to the local associations, which therefore had to lodge their application with the two institutions. Since 2009, after each municipality had drawn up municipal regulations on subsidising the associations situated in its territory, the associations have received a single grant by lodging an application to the municipal authority alone. The Community remits to the respective municipalities an annual grant corresponding to the amount it would have paid to the associations.
One significant problem at present for all Communities and regions is that the ESA 95 accounting standards used to test compliance with the stability and growth pact are really not suitable for recording municipal deficits since, under ESA 95, capital spending is considered to be current expenditure. The application of this accounting rule to municipalities, which provide 50% of Belgian public investment, has meant that local authorities have been required to make substantial investment cuts, constituting a disaster not only for quality of local public services but also for the local economy.
Brussels-Capital Region
page 623 / 796 Consult reply indicated at article 9.1.
Bosnia and Herzegovina [Article ratified - Report adopted on 31 October 2019 ]
Based upon Article 76 of the Republika Srpska Law on Local Self-Government, the distribution of revenues to municipalities depends on their level of development. Thus, Republika Srpska local self- governmentunits are subdivided into 4 categories according to their development status, means and potential (Republika Srpska National Assembly decision on criteria for assessment of the development level, 2016) as (a) developed (cities), (b) medium developed, (c) underdeveloped and (d) extremely underdeveloped municipalities. The situation of the latter raises the question of equalisation mechanisms as there is no cure for the shortage of funds, because their population is not sufficient for generating revenue. Equalisation is mainly achieved through transfers of special grants by the Republika Srpska Ministry of local self-government(2.3 mio KM in 2018) according to criteria in the 2015 Rulebook, which are for each municipality and respectively previous year: (1) total per capita revenues of registered companies (35%); (2) total budget revenues (25%); density of population (20%) and unemployment rate (20%). In addition, other grants cover specific other areas, such as SMEs, agriculture, environment, infrastructure, etc.[21]
The Federation of Bosnia and Herzegovina budget co-finances lower levels with 10-20 mio KM p.a. Although there is neither a formal, legal obligation, nor a formalized equalisation system (considered necessary by interlocutors for the future), government subsidizes Cantons financially under strain by allocation and takes decisions on grants. Grants are received by local authorities in the form of financial assistance, i.e. co-financing of projects, e.g. construction, school buildings or specific- purpose grants. Local authorities have to report justifying the expenses 6 months after. Regarding Cantons, many interlocutors lamented careless financial management and, in general, the difficulty to establish general criteria; also, there are no priorities or guidelines. Instead, need is assessed from year to year.
The Federation of Bosnia and Herzegovina Law on disbursement of public revenue, which sets up criteria for lesser developed areas, simplifies the distribution by relying on 4 fundamental criteria: (1) population-size; (2) territory-size; number of pupils in (3) primary schools and (4) secondary schools. According to some interlocutors, these simplified criteria set an additional cause for inequality through the use of different coefficients for calculating the needs of a local population (ranging from 1.1 to 2.0, e.g. Sarajevo is calculated with 1.5). This leads to advantages with social protection and health services better in Sarajevo and worse in the periphery. Therefore, it shall be reformed (technical mission of IMF, 2018): a new draft law shall include equalisation elements for “vulnerable areas” and higher indirect taxes (for differentiation, while direct taxes, in the Federation of Bosnia and Herzegovina competence, will remain equal everywhere). However, it is now up to the new government to take up the proposal and to update the current law, including the criteria (demographic numbers, number of pupils etc.). So far, the issue of underdeveloped areas is addressed by the Cantons.
The problem of migration will make new equalisation criteria and procedures even more urgent. Many interlocutors shared their concerns regarding this problem. In recent years, many (more) people leave the country; this demographic trend, together with the urbanization of the last 20 years, concentrated on few centers (in particular Sarajevo and Banja Luka) creates great difficulties, above all for rural areas and secondary towns and cities in the periphery, as the only potential for development is people and population growth. Bigger cities are still growing, but mayors estimate that there are more than 100.000 people leaving the country every year, mostly due to the (feeling of) uncertainty created by the “frozen conflict“. By contrast with the past, not only workers (“Gastarbeiter”), but whole families are leaving. In Banja Luka the number of unemployed people has dropped by 5.000 every year and there is already a lack of qualified workers in some professions
page 624 / 796 (e.g. bus drivers). While the reduction of unemployment is certainly a positive factor, the reduction and ageing of the population result in a smaller tax and revenue base and higher costs for essential service (in particular health care and care for the elderly).
The rapporteurs consider that Article 9.5 is only partially fulfilled, as the current systems either rely too heavily on special grants (Republika Srpska) or are in need of reform (the Federation of Bosnia and Herzegovina). Thus, the introduction of a formal, legal obligation for development and equalisation should be considered together with the establishment of a formalised equalisation system after careful examination of the currently used formula and criteria in order to adapt them to a rapidly changing context (e.g. emigration and demographics).
Bulgaria [Article ratified - Report adopted on 21 January 2021 ]
Article 9.5
1. This provision addresses the question of the financial situation of municipalities that are financially disadvantaged due to their location in economically or geographically weak areas (transition, mountain or island regions), or simply because they are too small to obtain the amount of resources needed to perform their tasks.
1. Article 9.5 introduces a rule for the protection of financially weaker local authorities. The Charter refers to financial equalisation as the conventional method of assistance for weaker local authorities, as this is a well-known redistribution mechanism in the context of fiscal federalism. According to the OECD, “fiscal equalisation is a transfer of fiscal resources across jurisdictions with the aim of offsetting differences in revenue raising capacity or public service cost.”53
1. In Bulgaria, the financial equalisation of municipalities is implemented through a GES mechanism. The GES is intended to ensure a minimum level of local services provision in the municipalities, and its total amount may not be less than 10% of the statement of own revenues of all municipalities in the last annual report. This subsidy should reduce financial inequalities between municipalities and for this reason according to the legislation the criteria for its distribution by municipalities are determined jointly by the Minister for Finance and the NAMRB. These criteria should consider differences caused by objective factors beyond the control of local authorities, to maintain the incentive of municipalities to increase collection and cost-effectiveness.
1. The GES applied from 2008 to 2018, including its formula for allocation, was complex and further aggravated by the application of various correction coefficients and components that were not updated in a timely manner. The mechanism equalised in terms of expenditure and revenue capacity with full or limited access of different groups of municipalities. For this reason, there was a tendency to increase the number of municipalities without or with a minimal increase in the subsidy, mainly small and poor municipalities, and the growth was only in 16 to 20 municipalities in a good financial condition. During the consultation procedure, the Ministry of Finance pointed out that the 2019 budget has changed the mechanism for distribution of the general equalization subsidy, placing the focus on its main purpose – provision of a comparable level of fiscal opportunities for municipalities and reduction of the imbalances among them.
1. As of 2019, the GES allocation mechanism has changed significantly. A mandatory condition for access to it has been introduced, namely municipalities whose permanent tax revenues per capita are lower than 120% of the level for the country per capita have the right to
page 625 / 796 participate in the distribution of this subsidy. For this reason, 18 municipalities no longer receive such a subsidy.
1. The new equalisation mechanism consists of five components. The first and second component equalise on the basis of tax revenue (73.1% share of the allocated amount) and expenditure capacity (20.2% share). The third component is for municipalities with very low revenue capacity (3.8% share of the amount). The fourth component does not allow a decrease compared to the previous year (2.7% of the total amount)54. The fifth component is to stimulate the municipalities in terms of tax effort above the national average (0.2% of the total amount).
Due to the impact of the crisis caused by Covid-19, additional transfers were introduced in 2021 for other targeted expenditures for some municipalities without access to the GES.
1. A consolidated and independent evaluation of this new equalisation system would be necessary in order to assess the efficiency of equalisation procedures and the fulfilment of relevant Charter requirements.
Croatia [Article ratified - Report adopted on 20 October 2016 ]
As concerns Article 9 paragraph 5 of the Charter, the Constitution of Croatia defines under Article 138 that the state shall provide financial assistance to weaker units of local and regional self- government in compliance with the law. As in other European countries this is managed through a financial equalisation fund. It has been shown above that the financial equalisation system is based on the collection by the central government of 16% of the personal income tax revenues of self- government units which is then pooled in the special equalisation fund set aside for decentralised functions. The basis for distributing the general equalisation fund changed in 2014 from granting of preferential tax revenue founded on the status of areas of special national concern and hill and mountain areas, to a distribution based on a new development index determined under the Decision on the Classification of Units of Local and Regional Self-government according to the Level of Development (Official Gazette 158/2013). This also entailed amending the Act on the Financing of Units of Local and Regional Self-Government. This development index is used to calculate financial grants to individual towns, municipalities and counties using the following classifiers: a. unemployment rate, b. per capita income, c. local/county budget per capita income, d. population change e. share of population with higher education aged 16-65.
The development index is then established for each unit and the mean national indicator is also calculated. The unit’s indicator is compared as a percentage to the national average and allocated to a Group. For the local self-government units (municipalities and towns) there are five groups: Group I - 50% of the national average Group II between 50% and 75% of the national average Group III 75-100% of the national average Group IV 100-125% of the national average Group V the development index is over 125% of the national average. Only 4 groups are designated for counties: Group I incorporates counties whose development index is less than 75% of the national average, Group II – 75%-100%, Group III – 100%-125%, Group IV – over 125%.of the national average The development index is updated once every 5 years.
In the case of towns and municipalities the general financial equalisation fund will be disbursed for Groups I and II, and in the case of counties – only for Group I – through a differentiated sharing of the PIT (88% to Group 1 and 2 according to development index) and direct grants from the central government budget. The towns, municipalities and counties in those groups receive aid from the
page 626 / 796 equalisation fund. In 2013 Group I of the development index incorporated 48 municipalities, and Group II – 216 municipalities and towns. In the same year 12 counties received the equalisation fund (Group I). As for Group V (over 125% of the national average), it incorporated only 26 municipalities and towns, which in itself indicates a substantial territorial imbalance in Croatia and a failure to ensure the homogeneity of development throughout the country. Grants, incentives and subsidies, such as increased revenue from income tax distribution for example for island municipalities or for hilly mountainous areas may be used to top up the insufficiencies of the equalisation transfer, and are discussed further under Article 9 paragraph 7 below.
The monitoring delegation heard many criticisms of the financial equalisation system during the visit – including that it does not take account of population density nor topographical features. The Association of Counties further states that the fiscal capacities of individual local governments are ignored and therefore the direct grants from central government do not serve as proper grants. Furthermore, it has been said that the rates are not dependable as they change regularly and for the past 5 years the portion fixed by the state has reduced by 13%. In addition it was said that the amount of state aid for single projects has also varied on a year-by-year basis, depending on the projects the state has accepted to finance and this makes planning difficult for the self-government units concerned. Simply put, critics find the equalisation system unsatisfactory as it has not managed to reduce the differences between the units of local and regional self-government1. Some of these criticisms are based on a practice before the introduction of the development index. Nevertheless, the Institute of Public Finance has welcomed the new measures as supporting inadequately developed units of local self-government through the establishment of measurable indicators leading to preferential financing.2
In conclusion, the rapporteurs find that Croatia is making an effort to find objective and measurable indicators to provide for a more homogenous development of its territory. This has certainly not been achieved at this stage but the new system has not yet been in place for a sufficient period of time to test its real efficacy. On this basis the rapporteurs conclude that Croatia partially complies with Article 9 paragraph 5 of the Charter.
Cyprus [Non ratified - Report adopted on 20 October 2016 ]
See answer at article 9.1
Czech Republic [Non ratified - Report adopted on 8 March 2012 ]
Article 9 para. 5 is the next provision by which the Czech Republic is not bound. This corresponds to the present state of the system that does contain elements of financial equalisation between weaker and wealthier municipalities and regions. The authorities seem to consider that the objective criteria of distribution of (mainly) shared taxes between local and regional authorities as defined by law, take sufficiently care of the needs in this respect.
It must be noted in this context that, there being no clear policy instrument in the Czech Republic which deals with fiscal equalisation transfers, and taking into account the inability of small municipalities to achieve a significant level of tax autonomy (only 50% of municipal budgets is based on tax revenue), local fiscal imbalances and investment needs are financed by borrowing (grants and loans). There are no clear rules for the distribution of these grants.
As regards municipal bonds, the delegation was informed during the visit that a draft of a new law would allow local authorities to issue municipal bonds for obtaining funds to
page 627 / 796 a) invest in fixed assets (long term tangible assets), b) remove damages caused by natural or other disaster, and c) finance projects co-financed from EU funds.
This means that under a new legislation local authorities cannot issue municipal bonds for repayment of existing debts, as bonds are expensive investment instruments.. However, it is worth noting that although the indebtedness of municipalities in the Czech Republic is growing and may constitute a problem for individual municipalities, this does not pose a serious problem in relation to the GDP, since the overall indebtedness of all municipalities does not exceed 3 % of GDP.
Denmark [Article ratified - Report adopted on 31 October 2013 ]
Consult reply indicated at article 9.1
Estonia [Article ratified - Report adopted on 29 March 2017 ]
Article 9, paragraph 5, of the Charter is only partially respected in Estonia. According to the Constitutional Judgment No. 3-4-1-8-09 of 16 March 2010: “Financial equalisation mechanisms or analogous measures must be applied in the defence of local authorities whose funds are smaller so as to balance the uneven division of the potential sources of revenue and expenditure between local authorities.” The state has adopted, in section 46 of the State Budget Act, instruments to organise vertical transfers to local authorities. Considering that in 2016, 173 municipalities out of 213 received financing from the equalisation fund, the €75 million allocation is not sufficient to cover the needs of local authorities. The rapporteurs suggest increasing the level of this fund – as was proposed by the Minister of Public Administration in functions – and completely reviewing the system upon completion of the territorial reform process. There will be fewer local authority units which will perform better if the reform succeeds. Along with the reform projects set out in the “Basic Principles” aimed at strengthening local fiscal autonomy, there might be room for new vertical and horizontal instruments to improve the Estonian fiscal equalisation system.
Finland [Article ratified - Report adopted on 28 March 2017 ]
Consult reply indicated at article 9.1.
France [Article ratified - Report adopted on 22 March 2016 ]
Consult reply indicated at article 9.1
Georgia [Article ratified - Report adopted on 7 November 2018 ]
The existing formula for calculating the equalisation transfer is designed with the aim of filling the gap between projected revenues and expenditure of individual local self-governing units. Accordingly, an increase in a municipality’s own revenues will naturally result in a decrease in the equalisation transfer receivable by that municipality. Article 154 of the Code of Local Self- Government was amended to eradicate this shortcoming but the amendment was removed soon afterwards. According to some critics, this means that in general the existing transfer policy offers local authorities no incentive to increase their own revenues, because any increase would automatically cause the ministry of finance to reduce the equalisation and other transfers.
page 628 / 796 Chapter XI of the Budgetary Code regulates the equalisation transfer, which should serve the purpose of achieving a more or less equal level of development across the country. As defined in Article 74, ”the size of the Equalization Transfert made to each Local Authority Budget is calculated with the following equation: T=E-R, whereby: a. T = the transfer to be allocated to the Local Authority Budget; b. E = total amount of the total sum of expenditures and increase in non-financial assets within the budget of a Local Authority, which is calculated on the basis of statistical data (population broken down by the following age groups: children below 6, adolescents from 6 to 18, adults with a socio-economic condition (rating score) falls below the threshold defined by the Government of Georgia, size of the region in square meters and road length of local significance) and equalization ratio by splitting the self-governing cities and municipalities; c. R = revenues to the Local Authority Budget (net of grants), which are calculated by the projections for the current year and actual trend indicators of the past 3 years within the budgets of Local Authorities.” The final amount allocated for the equalisation transfer is determined by the central government and approved by the parliament.
Some experts see serious problems in the equalisation transfer scheme, since 61% of equalisation transfers are channelled to large self-governing cities with a population of 42% of the nation’s total population, while only 39% of the transfers reach municipalities in which 58% of country’s total population reside. By the same token, according to the Law on the Development of Mountainous Regions, the size of targeted transfers did not in fact change in 2015-17, even though the municipalities received additional delegated powers. Targeted transfers amounted to GEL 11.4 million in 2015, GEL 11.6 million in 2016 and GEL 11.7 million in 2017.
The ministry of finance is working on modification of the equalisation mechanism and on revision of the formula for calculation of the equalisation transfer, as already suggested by the Congress in its Recommendation 334 (2013) on local and regional democracy in Georgia and during the post- monitoring procedure. There is therefore no incompatibility with Article 9, paragraph 5, of the Charter. On the other hand, it is obvious that the existing equalisation mechanism does not fully comply with the Charter, since the mechanism should work for the benefit of weaker local authorities and Georgian authorities should be encouraged to further elaborate the equalisation formula and monitor the effects of its implementation upon regional and intermunicipal disparities.
The rapporteurs are of the opinion that the situation in Georgia only partially complies with the Article 9, paragraph 5 of the Charter.
Germany [Article ratified - Report adopted on 14 March 2012 ]
Consult reply indicated at article 9.1
Greece [Article ratified - Report adopted on 26 March 2015 ]
Consult reply indicated at article 9.1
Hungary [Article ratified - Report adopted on 12 February 2021 ]
Article 9, paragraph 5, refers to the protection of financially weaker local authorities through equalisation procedures.
The existing equalisation mechanism (aimed at equalising only the mandatory tasks) is quite obscure. Those municipalities possessing low tax-income capacities (under 8,500 HUF) receive a supplement (with a supplement support of a certain percentage based on the amount of general
page 629 / 796 supports), above this sum, the deduction takes place in single zones. The calculated income to be reduced is 0.55% of the tax base (previously 0.5%), in the case of local governments with very high tax income it might reach 0.65%.86
During the monitoring visit the delegation heard many complaints, especially by representatives of villages, on the equalisation mechanism. It was pointed out that the mechanism does not take into account the real needs of local authorities and is insufficient. In particular, notwithstanding the equalisation, smaller municipalities cannot carry out their mandatory tasks. Other local government representatives complained that the mechanism lacks any objective basis to calculate the equalisation and that its effects are unpredictable, determining a high degree of uncertainty as for the local resources.
Therefore, the rapporteurs consider that Article 9, paragraph 5 of the Charter is only partially respected in Hungary.
Iceland [Article ratified - Report adopted on 29 March 2017 ]
The protection of financially weaker local authorities (Article 9, para. 5 of the Charter) is assured by the Equalisation Fund. On average, about 12% of local authorities’ total revenues come from that Fund. The share varies greatly from one municipality to another. The Minister of the Interior is in charge of the Equalisation Fund, assisted by an advisory committee of 5 members, 4 of them being nominated by the Association of Local Authorities.
During the meetings, the rapporteurs were told by several interlocutors that the Equalisation Fund needs to be revised to take into account the evolving necessities of local authorities, especially in urban areas, and also to stimulate more mergers, as at the moment it encourages fragmentation, by supporting especially the smallest rural municipalities. The Ministry of the Interior assured the delegation that they are working on reviewing the system, to incorporate different criteria, but they need at least one more year to be ready to implement the new system.
Ireland [Article ratified - Report adopted on 31 October 2013 ]
Consult reply indicated at article 9.1
Italy [Article ratified - Report adopted on 18 October 2017 ]
Consult reply indicated at article 9.1
Latvia [Article ratified - Report adopted on 27 March 2018 ]
As in many other European countries, the Latvian system of local finances includes an equalisation mechanism, called Local Government Finance Equalisation Fund. This fund aims at reducing the disparities between local entities. The legal rule governing this instrument is the Local Government Financial Equalisation Act of 2015 Since 2016 a new system was set up. The purpose of the new equalisation mechanism purpose is to provide similar opportunities to local governments to fulfill their statutory functions and to promote their initiative. The equalisation system equalises the revenues of local governments deriving from the personal income tax and the real estate tax and uses indicators which characterised local government expenditures. The local government financial equalization is carried out against the average estimate revenues and the state budget grant reduces the income gap between the poorest local governments and the most prosperous local government, which means that a larger state budget grant is allocated to the municipalities with
page 630 / 796 lowest revenue, consequently, to the municipality with the most unfavourable situation.
In order to calculate the equalisation mechanism for each local authority, the system uses a complex formula that takes into account several variables and coefficients. In this sense, the new regulation incorporates new criteria, indicators and coefficients, mostly of demographic nature, which allow determining the apportionment that is eventually due to each local entity. According to the Minister of Finance, the new system is simpler and more transparent. Five criteria are used: (a) the number of inhabitants: a coefficient of 1 applies; (b) the number of children up to 6 years (a coefficient of 2.34 applies); the number of children and youth from 7 till 18 years (coefficient of 3.26); the number of inhabitants above working age: a coefficient of 0.74 applies; and the size of the local territory, expressed in square kms: here, a 1.52 coefficient applies. The total budgetary allocation of the Fund is 162.9 M € in 2017, while the Latvian Association contradicts this data. The Latvian Association of Local and Regional Authorities said to the delegation that in reality the fund is much greater (60% of shares from Individual Income Tax and revenues from Real Estate Tax + small input from national budget). The figure of 162.9 M is the redistributed part, other part of the Fund returns to local governments that have made an input.
The Fund is financed jointly by the State and by local authorities. According to data provided by the Ministry of Finance, the State budget grants a contribution of 35.7 M € per year, while local governments contribute with a joint effort of 127.2 M €. The specific contribution of every local entity to the Fund depends of its “wealth”. Therefore, there are “net payers” to the Fund and “net receivers” (authorities that do not contribute to the fund). In this sense, the Delegation was told at the Saeima that there are only 15 net contributors, while there are 104 local authorities that receive monies from the Fund. In this sense, the LPS made the claim that the equalisation system is not fair in three aspects: (a) the contribution of the local authorities to the Fund is excessive, and the contribution of the State is too low; (b) the number of net contributors is too reduced, therefore the redistribution effort is made by too few local authorities; and (c) the situation and distinguishing features of small, rural municipalities are not adequately taken into consideration.
In light of the precedent, the Delegation is of the opinion that article 9, paragraph 5 of the Charter is respected in Latvia, although the situation could be certainly improved (see recommendations).
Liechtenstein [Article ratified - Report adopted on 28 March 2018 ]
In Liechtenstein, regional and economic differences between various municipalities are smoothed out by the equalisation system in accordance with the Financial Equalisation Act (Finanzausgleichsgesetz) of 2007. The financial equalisation system is based on a standard mechanism of financial transfers, which takes into account the financial needs of each municipality and its ability to raise tax revenues. As a result, municipalities receive grants of varying amounts, depending on their economic situation. In the rapporteurs’ opinion, this system complies with the relevant provision of the Charter (Article 9 paragraph 5).
Lithuania [Article ratified - Report adopted on 6 November 2018 ]
Article 9, paragraph 5, refers to the protection of financially weaker local authorities by the way of equalisation procedures.
In Lithuania, according to the Law on the Methodology of Determination of Municipal Budgetary Revenues, an equalization of the Personal Income Tax is provided1. According to the procedure established by the Law, part of the revenues from Personal Income Tax of the municipalities whose planned income in the coming financial year exceeds the national average is accrued in the
page 631 / 796 "redistribution fund". In 2018 there were 5 municipalities-donors: Vilnius City, Kaunas City, Klaipéda City, Neringa and Visaginas municipalities.
These funds are allocated to:
1. equalise the Personal Income Tax for those municipalities whose income from this tax is below the national average (additional funds are allocated to such municipalities, so that the total revenues from Personal Income Tax would amount to 90% of the national average).
2. equalise the differences of the composition of the expenditure for municipalities by considering the value of its demographic, social and other indicators (a number of children, schoolchildren, people of retirement age, area of the territory and etc.) and the importance of these indicators. This part is allocated to all municipalities, as well as to the donors. According to the data provided by the Ministry of Finances, in 2018 Vilnius City municipality is allocated EUR 20, 8 million. Source: Ministry of Finances (2018)
Luxembourg [Article ratified - Report adopted on 21 October 2015 ]
Consult reply indicated at article 9.1.
Malta [Article ratified - Report adopted on 29 March 2017 ]
Nevertheless, there seems to be compliance with the equalization provisions of Article 9(5) of the Local Councils Act, since according to the formula laid down under the Local Councils Act, the size of the grant allocated to each locality equals to a proportion of the total government expenditure on the categories stated therein, taking into consideration the figures for each locality separately and ensuring a uniform approach to spreading the available grants to the localities.
Monaco [Article ratified - Report adopted on 28 March 2018 ]
One of the paragraphs ratified, specifically paragraph 5 of Article 9 on financial equalisation procedures to protect financially weaker local authorities, is not applicable to Monaco, owing to the existence of only one municipality.
Montenegro [Article ratified - Report adopted on 21 October 2015 ]
As regards Article 9, paragraph 5 of the Law on Local Self-Government financing prescribes that financial equalisation or equalisation of financing of municipalities is to be done through the Equalisation Fund a particularly important source of revenue for municipalities in the northern region of Montenegro where it constitutes up to 60% of their budgets.
The Law on local self-government financing establishes the Equalisation Fund on the basis of fiscal capacity per capita. The rapid decrease in the number of inhabitants in the municipalities in the north of the country creates a distorted impression of the development level of a municipality when calculating fiscal capacity per capita based on the most recent census of 2011, and legal solutions are required.
The criteria used in the distribution of the Equalisation Fund may be assessed as correct, while changes to legal solutions should ensure a higher share of the Equalisation Fund, whether by introducing a new income or by increasing the percentage of allocation of existing revenues. Therefore, it can be concluded that Montenegro has a coherent concept in place to meet the
page 632 / 796 requirement of Article 9 paragraph 5 of the Charter.
Netherlands [Non ratified - Report adopted on 26 March 2014 ]
Consult reply indicated at article 9.1
North Macedonia [Article ratified - Report adopted on 26 February 2013 ]
Consult reply indicated at article 9.1
Norway [Article ratified - Report adopted on 26 March 2015 ]
Consult reply indicated at article 9.1.
Poland [Article ratified - Report adopted on 2 April 2019 ]
Article 9, paragraph 5, refers to the protection of financially weaker local authorities through equalisation procedures. Recommendation 373 (2015) recommended Polish authorities to “adjust the equalisation system so as to be more reactive to changes in the economic climate, for example by reviewing the scale of donations”. As previously indicated, the general subsidy includes an “equalisation component”, which has been revised after the decision of the Constitutional Court of 2014 (see further infra).
During the monitoring visit, the delegation did not hear specific complaints on the equalisation mechanism. The only issue raised by the Association of Polish Cities refers to the fact that the equalisation system does not take into account the differences in the financial burdens falling on urban local authorities; instead, it takes into account, twice, the specific nature of rural municipalities. Considering the complex equalisation formula, the rapporteurs do not believe this issue to determine an infringement of the Charter. The needs of urban local authorities could be better satisfied by a greater capacity of establishing and managing their own local taxes.
Therefore, the rapporteurs consider that the requirements of Article 9, paragraph 5, are respected in Poland.
Portugal [Article ratified - Report adopted on 28 September 2020 ]
The rapporteurs see the Portuguese system of financial equalisation as an original one as it hinges on spending and not revenue. It is fairly complex as it relates to different levels (municipalities and parishes) and incorporates a whole host of objectives and apportionment criteria. At the municipal level, equalisation accounts for one quarter of the allocated shares of national taxes and revolves around two funds: one is intended to give the municipalities adequate financial capacity to exercise their powers and the other is aimed at the least well-off municipalities and takes account of both economic and social inequalities. This dual equalisation system is geared to counteracting the effects of unbalanced devolution.
The rapporteurs note with satisfaction that their meeting with the President of the Court of Audit in June 2019 provided an opportunity to gain a broad overview of the financial situation of local authorities and highlight the small number of them experiencing difficulties. Where equalisation is concerned, the President of the Court thought that the mechanism fulfilled the aims it was supposed to achieve but that it was perhaps not the best suited tool in the context of the devolution reform. He described a number of risks, particularly as regards the sustainability of public finances in general
page 633 / 796 and the quality of local public service provision.
Consequently, the rapporteurs consider that Article 9 paragraph 5 is complied with on the whole.
Republic of Moldova [Article ratified - Report adopted on 4 April 2019 ]
This provision of the Charter deals with the equalisation of local finances, “which are designed to correct the effects of the unequal distribution of potential sources of finance and of the financial burden they must support”. In the Republic of Moldova, the equalisation system for local authorities operates through two mechanisms: on the one hand, by the share or participation that local authorities have in the PIT that is collected in their territories. Roughly one quarter of total local-government revenue comes from PIT sharing, which is a state tax. There are different shares or percentages of the overall state taxes collected that are transferred to the different local authorities according to their type (villages, communes, cities, municipalities and districts). This share ranges from 20% to 75%. In the case of villages and cities that are centres of the Raions, this percentage is 20%. For the towns and cities with the status of municipality, that percentage is 75% of the PIT collected on their territory. Balti receives 45% and the ChiÈ™inău municipality 50%. Therefore, an important part of PIT is redistributed to local authorities; on the other hand, by general balance transfers (de echilibrare), which are calculated on a formula basis, distinct for local authorities of first or second level. For first-level authorities (towns, cities and villages), these transfers are calculated according to a formula that uses several indicators: the fiscal per capita income, determined according to the income obtained from PIT; the population and the area of the local entity. The allocation of transfers pays particular attention to the poorest local authorities and is carried out in inverse proportion to the fiscal capacity per inhabitant and in direct proportion to the population and area. For second-level bodies (districts-Raioane), these transfers are calculated according to a formula where two indicators are used: the population and the district size.
According to the representatives of the Ministry of Finance with whom the delegation met during the visit, the system implemented so far has focused on maintaining the financial capacity of local bodies, and is based on the principles of decentralisation, territorial cohesion (solidarity) and the ensuring local resources correspond to local competences. The new system of local public finances allegedly ensures that the vast majority of local authorities preserve their financial potential, at least at the level achieved in the old local budgeting system.
In light of these facts, the rapporteurs conclude that, although the system could be improved Article 9, paragraph 5, of the Charter is respected in the Republic of Moldova.
Romania [Article ratified - Report adopted on 3 March 2011 ]
Article 9(5)-(8) of the Charter is also adopted in Law no. 273/2006, namely in section 15, entitled “The principle of solidarity, section 6(3) and various other sections of that law, which has since its last revision in particular permitted financial equalisation at the central level (between counties) and the local level (between the rural localities of the same county) as well as the sharing of resources between the central and local levels. It also authorises the local authorities to issue capital on the European and international capital markets and to take out loans.
Under Government Emergency Order no. 51/2010, local councils can, in order to pay their debts to
page 634 / 796 economic operators, request loans from the state at an annual interest rate of 6.25% for a period of five years with interest payments not beginning until the second year. In order to benefit from these loans, local authorities must be given permission by the Public Finance Ministry’s Commission for the Authorisation of Local Authority Loans. According to the new provisions of Law no. 273/2006 on local public finances, failure to comply with the obligation to request the Public Finance Ministry’s consent makes the local authority representatives criminally liable and is punishable by three to ten years’ imprisonment or, in the case of serious consequences, from five to fifteen years’ imprisonment plus a ban on exercising certain rights. Moreover, if the representatives of the local public authorities do not comply with the obligation to send the Public Finance Ministry the required information on the loans raised and the local public debt, they will incur a penalty in the form of a fine of 10,000 to 30,000 lei (€2392.80 to €7178.40).
Chapter V of Law no. 215/2001, entitled “The financing of local administrative authorities", is equally important. It provides that the administrative-territorial units shall receive amounts for specific purposes deducted from certain state income, in order to guarantee the vertical and horizontal balance of local budgets. The arrangements and criteria for the allocation of the shares and amounts to balance the local budgets are determined by the law on local public finances. The size of the amounts for balancing the local budgets is determined by the law on finances.
The co-rapporteurs were also informed that in practice the county council remains strongly politicised, especially as far as the budget is concerned, and that the distribution of resources is affected by problems of political cronyism, which extend to all government parties. The process whereby budgets are prepared at local level seems to be the object of political negotiation, at the expense of the real needs of the local communities.
Article 9(6) of the Charter is incorporated into section 18 of Law no. 273/2006.
Russian Federation [Article ratified - Report adopted on 30 October 2019 ]
Consult reply indicated at article 9.1
San Marino [Article ratified - Report adopted on 28 March 2018 ]
Consult reply indicated at article 9.1
Serbia [Article ratified - Report adopted on 18 October 2017 ]
Consult reply indicated at article 9.1
Slovak Republic [Article ratified - Report adopted on 24 March 2016 ]
See answer indicated at article 9.1
Slovenia [Article ratified - Report adopted on 6 November 2018 ]
The Local Self-Government Act explicitly states that “The state shall ensure additional funds for municipalities which cannot adequately finance local affairs of public importance from their own resources. The amount of and method of ensuring additional funds shall be determined by law”. Thus, the legislation contains the regulation related to Article 9.5. of the Charter intended to protect financially weaker local authorities.
page 635 / 796 The Slovenian approach to protect financially weaker local municipalities is based on the assumption that the financial equalisation transfers are delivered to local governments as a general grant.
The calculation of an equalisation grant to municipalities is based on the average costs for appropriate expenditures and own revenues. If revenues do not cover the level of appropriate expenditure, then the municipality has the right to a financial equalisation grant.
The Constitutional Court found that re-allocation of surplus between municipalities when one municipality has revenues below the calculated so-called appropriate expenditure, while other municipality has revenues above the appropriate expenditure is not inconsistent with the financial autonomy of municipalities. Therefore, these funds shall be regarded as municipal own resources, not grants.
However, besides the financial equalisation, the financially weaker municipalities are entitled to special grants to cover investment needs or co-financing needs (e.g., for financing joint municipal administration functions). Thus, local municipalities receive co-financing from the EU funds transferred from the state authority to municipalities.
To conclude, the delegation is of the opinion that Article 9, paragraph 5 of the Charter is respected in Slovenia.
Spain [Article ratified - Report adopted on 20 March 2013 ]
Consult reply indicated at article 9.1
Sweden [Article ratified - Report adopted on 2 April 2014 ]
Consult reply indicated at article 9.1.
Switzerland [Non ratified - Report adopted on 20 October 2017 ]
The delegation reiterates that paragraphs 5 and 7 of Article 9 of the Charter have not been ratified by Switzerland.
Turkey [Article ratified - Report adopted on 1 March 2011 ]
The analysis article by article is currently unavailable
Ukraine [Article ratified - Report adopted on 31 October 2013 ]
Consult reply indicated at article 9.1
United Kingdom [Article ratified - Report adopted on 26 March 2014 ]
Consult reply indicated at article 9.1
Article 9.6 Financial resources of local authorities
page 636 / 796 Local authorities shall be consulted, in an appropriate manner, on the way in which redistributed resources are to be allocated to them.
Albania [Article ratified - Report adopted on 31 October 2013 ]
The Ministry of Finance organises consultations with the Associations of Local Authorities on the allocation of equalisation grants and specific transfers. The associations also participate in the decision-making process on the competitive grants scheme for communes and municipalities. However, consultations on resources allocated to local authorities have a formal nature, lacking any real influence on the decision-making. Many municipalities and communes complain against the competitive grants scheme but the associations have never officially challenged the fairness and transparency of this scheme. In general, direct consultation with communes and municipalities can be considered rather weak (especially with those controlled by the opposition party), based on the recurrent remarks the Rapporteurs heard from interlocutors during the visit. This raises an issue under paragraph 6 of Article 9 and there is need for establishing more balanced instruments for consultations with local authorities.
Andorra [Article ratified - Report adopted on 28 March 2018 ]
Article 9 of the Charter is aimed at ensuring that local authorities are entitled to sufficient financial resources. The legal authority to perform certain functions is meaningless if local authorities are deprived of the financial resources to carry them out. Andorra has not ratified Article 9, paragraph 2; Article 9, paragraph 5 and Article 9, paragraph 8 of the Charter.
In Andorra, the financial resources of the municipalities are based on their own taxes, taxes shared with the government, and on transfer of funds from the General Budget. The principles on financial resources are established directly by the Constitution (Articles 80.2 and 81) and developed throughout several Qualified Laws and ordinary laws.
At the moment of the visit of the Congress delegation, a tripartite negotiation process on a reform, lasting three years and involving the parliament, the government and the municipalities, was about to be finalised. The purpose of the reform is to update the entire system of transfers, through adapting it to the competences of municipalities and the new framework of State taxation, in place since the introduction of a full system of direct taxes, such as the income tax and the tax on corporation. In addition, the criteria of distribution between municipalities are planned to be revised, taking into account new parameters and based on the principle of solidarity introduced in favour of the municipalities that have fewer revenues from local taxes. The less economically advantaged Parishes would be compensated, as they are less able to generate their own resources. To this purpose, some asymmetries, that have an impact on the budget, have been identified, linking the expenditures for competences to the transfer of funds from the State.
Article 9.6 provides that local authorities shall be consulted during the preparation of the legislation on the redistribution of resources. The rapporteurs believe that this provision is fully respected in Andorra, taking into account the reduced dimension of the country, the smooth relationship at institutional and personal level between the national government and the municipalities and the representation of the Parishes in the parliament. The currently discussed reform of the transfer and competences which is the result of a long process of tripartite negotiations provides for an additional evidence of consultations.
page 637 / 796 The rapporteurs consider that the requirements of Article 9 of the Charter are respected in Andorra. As for the non-ratified provisions, they consider that very little is required to enable ratification of paragraphs 2 and 5 of Article 9. Consequently, the rapporteurs encourage Andorran authorities, once the reform in process is finally approved, to ratify these provisions.
Armenia [Article ratified - Report adopted on 15 June 2021 ]
Article 9.6
6 Local authorities shall be consulted, in an appropriate manner, on the way in which redistributed resources are to be allocated to them.
220. Having regard to the Charter’s basic function to establish and promote the rights of local authorities, consultation between central and the local governments (or their associations) can be defined as a process by which the parties seek information, advice or the opinion of each other about particular topics, and/or discuss them. From the point of view of local governments, the main functions of consultation is to obtain relevant information on the decision-making process of central authorities affecting their interests; to provide an opportunity for local authorities to express their views and opinions on the relevant statutory laws and regulations at all stages of the decision- making process; and to make proposals and submit claims or complaints to central government, with the latter’s obligation to respond to them.
221. The requirements of “appropriate way” and “due time” mean that consultation should take place in a way that provides real opportunity for local authorities to create and articulate their own views and proposals. During the consultation procedure, the MTAI highlighted that consultations with representatives of local authorities, the Union of Communities of Armenia, the union of community financial officers, and other interested NGOs and government bodies, are conducted on a regular basis. It mentioned the government-created website www.e-draft.am, which contains all legislative drafts including the ones related to local self-government and discussions in the Standing Committee of the National Assembly on Territorial Administration, Local Self-Government, Agriculture and Environment. The ministry specifically pointed out that the Ministry of Finance provides methodological support on the issues related to the process of budget planning and execution by Armenian communities by providing clarifications on specific issues raised by the latter (usually within a 10-day period).
222. As the analysis has shown above (see paragraph 20, sections 3.1.10 and 4.3.6), there is no institutionalised and legally guaranteed mechanism of regular consultation between central and local governments. Referring again to the fragmentation of the Armenian local government system and the constant lack of sufficient financial resources of the municipalities, Article 9.6 is not complied with in Armenia.
Austria [Article ratified - Report adopted on 28 September 2020 ]
Municipalities are represented in the 15a agreements (Article 15a, B-VG) on the Stability Pact and the Consultation Mechanism by their associations (namely, according to Article 115.3, B-VG: Austrian Association of Cities and Towns (Austrian Municipal Federation) and the Austrian Association of Municipalities (Austrian Communal Federation).
During the monitoring visit, the rapporteurs were told that beyond the existing agreements, the associations consider themselves properly consulted on financial matters in practice.
page 638 / 796 The rapporteurs consider that Austria complies with this provision of the Charter.
Azerbaijan [Non ratified - Report adopted on 17 June 2021 ]
Azerbaijan has declared itself not bound by Article 9.6 of the Charter, which establishes that local governments must be consulted, in an appropriate manner, on the way in which redistributed resources are to be allocated to them.
It must be noted, however, that interlocutors met by the delegation, including the national associations of municipalities, the Chamber of Accounts and representatives of the Parliament, were unanimous in mentioning that consultation of municipalities, mainly through their national associations but also individually, is regularly taking place, especially in financial matters. As mentioned, no example or detailed information was provided to the delegation in this regard. However, the rapporteurs point out that if such consultation happens regularly and effectively as the authorities claim, there should be no obstacle in formalising such processes in legislation and in ratifying the provision of Article 9.6 of the Charter, as this would be easily considered to be fulfilled based on such practice.
Belgium [Non ratified - Report adopted on 15 October 2014 ]
Flemish Region (Vlaanderen)
Belgium has not ratified Article 9.6 of the Charter, which constitutes an important element in the relations between the local authorities and the authorities allocating the redistributed resources. According to the Flemish authorities, “In Belgium, this provision is tantamount to saying that the municipalities and provinces must be consulted when the rules for distributing the Municipalities Fund and the Provinces Fund are drawn up. This consultation has never taken place in the past and is not provided for in the regulations, so this provision cannot be ratified”.
Walloon Region and German-speaking Community
As far as the unratified paragraphs of Article 9 are concerned, questions of proportionality in terms of responsibilities exercised are fundamental to the discussions under way in the Walloon Region regarding reorganisation of provincial responsibilities. This raises the issue of the provinces’ fiscal autonomy and their secured ability to raise their own financial resources for which they themselves determine the rate of taxation; the temptation for the Walloon Region to cut the Provinces Fund when transferring responsibilities is a concern, since it undermines provincial self-government. Local authorities believe that it is essential for paragraph 2 to be ratified by Belgium.
As regards consultation of local authorities, the local authorities in Wallonia believe that paragraph 6 could be ratified for Wallonia: municipalities are consulted through the High Council of Cities, Municipalities and Provinces. The German-speaking Community is of the same opinion.
With regard to grants, we note that the Region has introduced a new procedure to make provision of grants more objective: a drawing right for capital spending on subsidised public works such as roads, drainage, street lighting and public buildings. Municipalities will now receive an individual grant from the Region, calculated on the basis of pre-established criteria, on which they can draw for this type of investment. It should however be noted that this option is currently limited to municipalities and excludes the provinces. Paragraph 7 could also be ratified by Belgium.
Brussels-Capital Region
page 639 / 796 Consult reply indicated at article 9.1.
Bosnia and Herzegovina [Article ratified - Report adopted on 31 October 2019 ]
Republika Srpska, specific provisions in legislation guarantee and oblige institutions to consult local self-governmentunits on issues relevant to the position and role of local self-government. Article 73, point 2 of Republika Srpska Law on Local Self-Government (O.G. RS 97/16) states, inter alia, that local self-government units are to be consulted about any issue regarding provision and distribution of resources, as well as about any amendments to the Law, which may affect the financial status of a local self-governing unit. Article 151, point 2 of the same law specifies that in the process of drafting legislation or other regulations concerning the position, rights and duties of local self-government, the respective organs are obliged to submit the draft laws or proposals and other acts of general application to the Association of Local Authorities and local self-government units for consultation. A memorandum which regulates the (means of) co-operation in the field of financing local self- government units has been signed between the Republika Srpska Government and the Association of Local Authorities. However, some interlocutors pointed to too many changes which had occurred in the tax sector producing instability and uncertainty of revenue sources.
In the Federation of Bosnia and Herzegovina the legislative situation is similar. Article 34 of the Federal Law on Principles of Local Self-Government provides that “The legislator shall be obliged to obtain the opinion of the Association of Municipalities and Towns on all issues that concern allocation of funds, as well as on all changes to laws that may affect financial obligations of local units of self- government.” However, as the rapporteurs noted under analysis of Article 4.6 (see supra para.77), some shortcomings remain in the practice of consultation, such as on fee issues.
Therefore, the rapporteurs conclude that the situation of consultation on allocation of budgetary resources in Bosnia and Herzegovina seems compliant in law, but there is still room for improvement in practice to bring it fully in line with Article 9.6.
Bulgaria [Article ratified - Report adopted on 21 January 2021 ]
Article 9.6
1. This paragraph refers to a general principle of consultation, as enshrined at Article 4.6. In this case, consultation is required on the way in which redistributed resources are to be allocated to local authorities by other levels of government. No distinction is made between equalisation funds or other grants, or between general and earmarked grants. The legal form of the allocation decision is not specified. It may be an act of parliament, a decree, a ministerial order or a decision by another body belonging to a higher level of government (that is a regional or provincial assembly or executive committee).
1. The usual bodies covered by this consultation requirement are the State or regional authorities in countries where local authority finances partly or totally depend on the regions. The method of allocating redistributed resources includes temporal aspects (for instance, the timing of financial transfers) and substantive aspects such as the different types and degrees of importance of criteria for such allocations. Therefore, this consultation is not merely a compulsory procedure that has to take place in a timely manner before a final decision is made. It must also cover the manner in which a decision is made and the criteria for doing so, not only the decision itself55.
1. On issues that directly concern the municipalities, the following statutory consultation
page 640 / 796 mechanisms apply. The PFA stipulates the mandatory participation of the NAMRB in consultations on the budgetary procedure. The association has the right to make proposals for the total amount of the main budgetary relations of the municipal budgets with the central budget and other proposals on the draft State budget for the respective year in its part for the municipalities and submit them to the Ministry of Finance. Prior to the submission of the State Budget Act for the next year to the parliament, the NAMRB and the Ministry of Finance sign a protocol for the consultations held, including the proposals made and reflected in the budget. This protocol is part of the package of documents to be submitted to the National Assembly, together with the draft act on the State budget for the following year. According to Article 54 of the PFA, the total balancing subsidy for local activities shall be intended to ensure a minimum level of local services in municipalities. The mechanism for distributing the total balancing subsidy per municipality shall be set out in the State Budget Act for the relevant year and the design of this mechanism shall be agreed upon by the NAMRB. According to Article 55 of the PFA, the amount of the targeted capital expenditure subsidy and the mechanism for distributing it per municipality is set out in the State Budget Act for the relevant year. The design of the relevant mechanism “shall be agreed upon by the NAMRB”. According to Article 71 of the PFA, within the budget procedure, the Council of Ministers shall, upon the proposal of the Minister for Finance, adopt standards for activities delegated by the State involving in-kind and value indicators. These standards shall be used to determine the total amount of resources for financing activities delegated by the State and for their allocation per budget authorised by delegation. The standards for activities delegated by the State shall be developed jointly by the minister concerned, the NAMRB and the Minister for Finance.
1. The rapporteurs got the impression that mechanisms for timely and substantial consultation of financial matters under the participation of local government associations are available in Bulgaria.
Croatia [Article ratified - Report adopted on 20 October 2016 ]
As regards Article 9 paragraph 6 of the Charter, the rapporteurs are concerned in particular about information provided by the associations of local and county authorities that the central government fails to comply with this provision on holding consultations with local authorities on the way in which redistributed resources are to be allocated to them. The associations, as well as the interlocutors individually, say they were not involved in the 2015 personal income tax reform which had dramatic and instant impact on their activities. During the monitoring visit many complaints were heard about the manner in which the changes to the income tax laws were made in 2015, in particular as concerns the portion intended to finance delegated competences. This dropped suddenly and without consultation from a 12% to a 6% share of the income tax in the middle of the financial year, cutting 2 billion Krone from state transfers. The City of Zagreb alone estimated that this induced a drop of HRK 330 million in 2015 as compared to 2014 and the shortfall had to be financed from own non-dedicated resources1. The City of Zagreb estimates the impact of reduction of tax revenues following amendments to the Income Tax Act and the Act on Financing of Units of Local and Regional Self-Government was in 2015 alone approximately HRK 780 million. The City of Rijeka lost 10% of its budget in the same reform and stopped some development projects with immediate effect. Apart from this, as of 1 January 2015, the state limited the income tax surcharge rate to 18%, which directly affected only the City of Zagreb, as it is the only town with the maximum income tax surcharge rate since the start of fiscal decentralisation in 20012. Many interlocutors also complained
page 641 / 796 about the number of times that laws having an impact on their budgets changed – citing three times in the last eight years, making budget planning really difficult.
The consultation process of local authorities regarding the setting out of grants and tariffs is also a weak point. The associations have complained about this lack of consultation before the Constitutional Court. The only consultation mechanism currently operating in Croatia, according to the Congress delegation’s interlocutors, is the special law on public consultation, under which any legal act shall be made public so that citizens are entitled to comment. This is further discussed under the Charter Article 4, paragraph 6 supra. The self-government associations believe that this mechanism fails both to ensure outcome-oriented consultations and to protect local self- government.
Accordingly, the practice of consultation by the central authorities of Croatia in relation to the self- government representatives, in particular as regards the exclusion of representatives of self- government in the consultation process in relation to the Act on Financing of Units of Local and Regional Self-Government and the 2015 Income Tax Act, contradicts the requirements of Article 9.6 of the Charter.
The rapporteurs conclude that Croatia has not acted in conformity with Article 9 paragraph 6 of the Charter.
Cyprus [Article ratified - Report adopted on 20 October 2016 ]
See answer at article 9.1
Czech Republic [Non ratified - Report adopted on 8 March 2012 ]
The fact that the Czech Republic is not bound by Article 9 para. 6 either, must be understood in the light of what has just been said: The absence of a genuine system of financial equalisation makes formal consultations about the criteria of equalisation superfluous.
On the other hand, consultations about the criteria to be used for the distribution of shared taxes to local authorities might be most valuable indeed not only as a means for searching a higher degree of consensus but even for the systematic adaptation of the system that would be needed. After all, the provision talks about “redistributed resources” in a way not at all excluding the kind of redistribution from central to local and regional government that actually plays an important role in the Czech system. In this respect, it should be mentioned that the provision does not require the consultation of every local council. Consultation with representative associations of the different tiers of territorial authorities would be sufficient.
For the reasons just mentioned, the Czech Republic should be invited to consider withdrawing its declaration of non-application of Article 9 para. 6 of the Charter.
Denmark [Article ratified - Report adopted on 31 October 2013 ]
Consult reply indicated at article 9.1
Estonia [Article ratified - Report adopted on 29 March 2017 ]
The rapporteurs have already referred to section 46 of the State Budget Act, which contains specific procedures for negotiations between local authorities, associations and state representatives with
page 642 / 796 respect to the budget. They recommend strengthening the position of the associations at the end of the negotiation process with a view to giving them more than a formal right to participate. In fact, very often at the end of negotiations, the minutes are signed merely to prove that the negotiations have taken place. In relation to negotiations, section 46 of the State Budget Law goes beyond Article 9, paragraph 6, of the Charter. This includes a real will on both sides to agree, in the negotiation process, upon core elements which affect local finances. The rapporteurs suggest that both the associations and the competent ministry develop a common negotiation scheme, which would cover the most important issues to be dealt with and would also be in line with the relevant EU legislation within the so-called two- and six-pack measures to improve financial stability at all levels of government.
Finland [Article ratified - Report adopted on 28 March 2017 ]
Consult reply indicated at article 9.1.
France [Article ratified - Report adopted on 22 March 2016 ]
Consult reply indicated at article 9.1
Georgia [Non ratified - Report adopted on 7 November 2018 ]
According to the ministry of finance, there is a system in place to negotiate grants for investment projects from the State Budget Regional Development Fund; each decision is made by the Government Commission on Regional Development which reviews the proposals made by municipalities. Furthermore, the Code contains provisions permitting a local authority to engage in consultations with the national associations of Georgian local authorities such as NALAG. Georgia therefore complies with Article 9, paragraph 6, of the Charter, and ratification of Article 9, paragraph 6, could be considered, as several Georgian interlocutors also confirmed.
Germany [Article ratified - Report adopted on 14 March 2012 ]
Consult reply indicated at article 9.1
Greece [Article ratified - Report adopted on 26 March 2015 ]
Consult reply indicated at article 9.1
Hungary [Article ratified - Report adopted on 12 February 2021 ]
As for Article 9, paragraph 6, of the Charter, on consultation of local authorities on the way in which redistributed resources are allocated, this issue was addressed in Recommendation 341 (2013), together with the general issue of the lack of adequate consultation, that has been mentioned under Article 4.6. Things haven’t’ changed in the recent years, as it is shown by the enactment of the 2017 budgetary law, which introduced the so-called ‘solidarity contribution’.
Therefore, the requirements of Article 9.6 of the Charter are not complied with in Hungary.
Iceland [Article ratified - Report adopted on 29 March 2017 ]
As for Article 9, para. 6, of the Charter, on consultation of local authorities on the way in which
page 643 / 796 redistributed resources are allocated, it should be considered respected. As we said, 4 out of 5 members of the advisory committee on Equalisation Fund are nominated by the Association of Local Authorities. The Association of Local Authorities plays a task also in the formulation of the Fiscal Strategy Plan, according to Article 11 of the Public Finance Act (123/2015): before it is submitted to the Althingi, the Minister shall seek an agreement with the Association of Local Authorities in Iceland, acting on behalf of the local governments.
Ireland [Article ratified - Report adopted on 31 October 2013 ]
Consult reply indicated at article 9.1
Italy [Article ratified - Report adopted on 18 October 2017 ]
Consult reply indicated at article 9.1
Latvia [Article ratified - Report adopted on 27 March 2018 ]
Latvian local authorities are extensively consulted by State bodies and institutions in the remit of financing. At point 4.3, supra, the general system for local governments consultation and participation in the decision-making of State bodies was already presented. At this point we should specify this consultation patter in the area of financing. Thus, in accordance with the Law on Local Governments (art. 86), the Cabinet of Ministers shall agree with the municipalities on the following financial issues: the amount of subsidies and earmarked grants to be allocated to municipalities in the next economic year; the procedure for equalisation of municipal finance resources, if this is not provided by the law; the sources of financing for new autonomous functions attributed to local authorities by the sectoral laws;
In those consultations, talks and negotiations, the local authorities are represented by the LPS, under art. 96 of the Law on Local Governments.
On the other hand, and in accordance with the Cabinet regulation No. 585 (see supra point 4.3), the Minister for Finance shall represent the Cabinet in coordinating the following issues: the amounts of earmarked grants to be transferred to the local governments for the current financial year; the procedures for equalisation of financial resources of local governments; and the sources of financing necessary for the performance of “new” autonomous functions attributed by fresh sectoral laws. The results of the negotiations are written down in a “protocol on agreements and disagreements”, which is an integral part of the State budget.
Apart from this formal, legal recognition, this negotiation-consultation pattern seems to work well, in an effective a fruitful way. According to figures provided by the Ministry of Finance, in the year 2017 an agreement between the local authorities and the government was reached in 80% of the issues that had been included in the program of negotiations. Since the visit, the Delegation was informed by national authorities that the protocol contained only one point of disagreement which was solved by the Parliament in 2018 the State budget process. On the other hand, the Delegation did not hear complaints about the system on the part of local representatives.
Consequently, the rapporteurs believe that article 9, paragraph 6 of the Charter is clearly respected in Latvia.
Liechtenstein [Article ratified - Report adopted on 28 March 2018 ]
page 644 / 796 With regard to Article 9 paragraph 6, despite the absence of a formal institutionalised system of consultation between central and local governments, either in general or on financial matters, the Conference of Mayors provides an effective consultation mechanism for local authorities. Since the Charter does not specify what forms consultation should take, the rapporteurs consider that the consultation practice in Liechtenstein generally meets the requirements of the Charter, since the Government consults municipalities regularly and effectively on draft budgets and other draft decisions which could affect the financial management of local authorities.
Lithuania [Article ratified - Report adopted on 6 November 2018 ]
As for Article 9, paragraph 6, of the Charter, on consultation of local authorities on the way in which redistributed resources are allocated, it should be considered respected.
Article 11 of the Law on the Methodology of Determination of Municipal Budgetary Revenues establishes that the Government and the ALAL consider draft financial indicators of state and municipal budgets approved by the Seimas and primary statistics of other indicators in accordance with the procedure approved by the Government.
The rapporteurs did not hear any complaint on this respect. They were informed that, in practice, every year in September-October, when the law for the coming budget year is drafted, consultations take place between the Ministry of Finance (the state institution responsible for drafting the Law on the Financial Indicators of State and Municipal Budgets) and the ALAL. In the case of disagreement or new circumstances, the Association of Local Authorities in Lithuania may submit its proposals when the Government is considering the draft at its meeting. Another option is to submit proposals and defend them when the said draft is considered by the Seimas committees and the Seimas.
Luxembourg [Article ratified - Report adopted on 21 October 2015 ]
Consult reply indicated at article 9.1.
Malta [Article ratified - Report adopted on 29 March 2017 ]
As to Article 9, paragraph 6 of the Charter, as mentioned above there is lack of formal consultation on behalf of the central government with the local authorities and as a result, the requirement of the said paragraph of the Charter for the existence of adequate consultation procedures is not observed. Malta is not in conformity with Article 9, paragraph 6 of the Charter.
Monaco [Article ratified - Report adopted on 28 March 2018 ]
The other two paragraphs ratified, 6 and 7, both pose some problems, which could partly be overcome on the basis of Monaco’s unusual situation.
Paragraph 6 provides that local authorities must be consulted, in an appropriate manner, on the way in which redistributed resources are to be allocated to them. Monaco cannot be considered to comply with this provision because of the procedure to determine the fixed grant.
Article 7 of Law No. 841/1968 provides that “the fixed operating grant shall be calculated by applying the coefficient for the projected change in expenditure given in sections 3 and 4 of the initial state budget for the following year to the grant for the current year. If, at the end of the following year, the actual change in expenditure incurred differs from the original estimation of the percentage, the fixed grant shall be adjusted accordingly.
page 645 / 796 When the fixed grant is calculated, all transfers of state or municipal duties which may result in an increase or decrease in the sum required shall be taken into account. The costs corresponding to the performance of transferred duties shall be assessed prior to the transfer.
If the balance of the municipal budget is upset by an exceptional external event, the Mayor may ask the Minister of State to reassess the budgetary allocation”.
This procedure has been criticised by the Municipality and the National Audit Board, because the state budget is adopted at nearly the same time as that of the Municipality, so that the coefficient for the projected change in the funds and functioning of the state may vary until adoption. For the municipal budget to be prepared in the appropriate conditions, it is essential for the various budgetary elements on which the calculation is based, to be transmitted to the Municipality in a timely manner. In contrast, the Minister of the Interior believes that the provision does not pose any particular problem, the system generally works very well and adjustments are always possible, with the Municipality’s agreement.
Although they recognise the complexity and the highly technical nature of the procedure, the rapporteurs consider that the Municipality should be consulted in an appropriate, timely and transparent manner on the way in which the fixed grant is allocated, as provided for by paragraph 6 of Article 9.
The rapporteurs conclude that Monaco does not fully comply with Article 9, paragraph 6. They also invite the Monegasque authorities to ratify paragraph 2 of Article 9, since it complies fully with this provision.
Montenegro [Article ratified - Report adopted on 21 October 2015 ]
Further to Article 4, paragraph 6, the consultation procedure, as required by paragraph 6 of Article 9, relates to the distribution of resources to local self-government units. In this respect local authorities in Montenegro shall be “consulted in an appropriate manner on the way in which redistributed resources are allocated to them”. As a matter of fact, the problems of consultation identified in the analysis of Article 4, paragraph 6 do also extend to the allocation of resources to municipalities. In other words, the discrepancies between the legal framework and the actual praxis of consultation procedures in Montenegro equally exist in regard to financial resources, as covered by Article 9, paragraph 6. From the information provided by the Union of Municipalities of Montenegro at the Congress1, the rapporteurs could deduce that despite the fact that the legal foundation for a consultation mechanism covering the allocation of resources is in place, this principle is not fully applied in practice, as the government does not sufficiently consult local authorities when it comes to the allocation of redistributed resources. In reference to the findings made under Article 4, paragraph 6, it needs to be reaffirmed that the mere presence of elected representatives of local authorities in a consultative body does not by itself trigger a compliance with the principle of consultation enshrined in Article 9, paragraph 6. The rapporteurs are thus not of the opinion that the current status quo fulfils the requirements of article 9, paragraph 6.
Netherlands [Article ratified - Report adopted on 26 March 2014 ]
Consult reply indicated at article 9.1
North Macedonia [Article ratified - Report adopted on 26 February 2013 ]
Consult reply indicated at article 9.1
page 646 / 796 Norway [Article ratified - Report adopted on 26 March 2015 ]
Consult reply indicated at article 9.1.
Poland [Article ratified - Report adopted on 2 April 2019 ]
As for Article 9, paragraph 6, of the Charter, on consultation of local authorities on the way in which redistributed resources are allocated, the delegation was informed that the issues emerged with regard to the consultation process in the last few years in Poland have affected also the consultation on the redistribution of resources.
During the consultation procedure, the government, did not share this assessment and claimed that there are many positive examples of cooperation between local self-government and central authorities. It mentioned in particular the dialogue of the Ministry of Finance with self-government representatives on financial matters held within Joint Committee’s various Task Forces.
However, in view of the rapporteurs, the malfunctioning of the Joint Committee is coupled with the lack of compliance for the provision of the Law on Public Finance (Article 50.2 and 3) according to which “2. A draft law resulting in a change in the level of income or expenditure of local government units requires the determination of the impact of these changes, an indication of the sources of their financing and an opinion of the Joint Commission of the Government and the Local Self-government. 3. The Council of Ministers, by submitting to the Sejm a bill referred to in para. 2, attach the opinion of the Joint Government Committee and the Local Self-government”. The Association of Polish Cities pointed out that laws have been passed by the parliament without any assessment of the effects of the new legislation, despite the fact that such assessment is mandatory.
Therefore, the rapporteurs consider that Article 9, paragraph 6, is not respected in Poland.
Portugal [Article ratified - Report adopted on 28 September 2020 ]
The rapporteurs find it regrettable that the Portuguese local authorities are not formally consulted on the methods for allocating redistributed resources. During the previous visit, in 2012, the rapporteurs had proposed setting up a national stability board, with a view to guaranteeing a coherent policy of co-ordination between the different levels of authority and preserve the budgetary autonomy of local authorities within the meaning of Article 9 of the Charter. The report explained that “its members could be representatives of the associations of regional and local authorities along with an equivalent number of representatives from the relevant ministries. The board should be chaired by the Ministry of Finance; the vice-chairmanship should rotate between regional and local representatives. The recommendations and decisions of the board, though not legally binding, would have an effect through peer pressure and should be published”. However, it is now 2019 and this suggestion has still not been followed up.
The rapporteurs therefore find that Article 9 paragraph 6 of the Charter is still not complied with.
Republic of Moldova [Article ratified - Report adopted on 4 April 2019 ]
According to this provision of the Charter, local authorities shall be consulted, in an appropriate manner, on the way in which redistributed resources are to be allocated to them. According to the CALM and other local leaders and representatives, local authorities are not consulted by the central government on the way in which redistributed resources are to be allocated to them. Moldovan local
page 647 / 796 authorities are not consulted by state bodies and institutions regarding financing. The general system for local-government consultation and participation in the decision making of state bodies has already been presented, with generally unsatisfactory conclusions (see point 4.3.6, above). Therefore, this lack of consultation may not be an exception in a very sensitive area such as financing.
Consequently, the rapporteurs believe that Article 9, paragraph 6, of the Charter is not respected in the Republic of Moldova.
Romania [Article ratified - Report adopted on 3 March 2011 ]
Consult reply indicated at article 9.5
Russian Federation [Article ratified - Report adopted on 30 October 2019 ]
Consult reply indicated at article 9.1
San Marino [Article ratified - Report adopted on 28 March 2018 ]
Consult reply indicated at article 9.1
Serbia [Article ratified - Report adopted on 18 October 2017 ]
Consult reply indicated at article 9.1
Slovak Republic [Article ratified - Report adopted on 24 March 2016 ]
See answer indicated at article 9.1
Slovenia [Article ratified - Report adopted on 6 November 2018 ]
The Local Self-Government Law stipulates that the Government should sign an agreement with local government associations on the amount of the average per capita appropriate expenditure before the budget proposal for the next fiscal year is submitted to the Parliament. Since this arrangement came into force in 2007, the Government reached an agreement with local government associations for the year 2009, 2010 and 2011, 2013 and 2014 for the amount of the average per capita expenditure. This achievement was seen as an important step towards building institutional dialogue.
The Financing of Municipalities Act introduced an institutional dialogue between the government and associations of municipalities. The institutional dialogue includes such topics as determining average costs for mandatory tasks and calculating lump sum. The methodology for calculating lump sum is also a crucial part of the institutional dialogue.
In view of the governmental intention to introduce additional austerity measures on local finance in 2015, there was no agreement reached between municipal associations and the Government. The main issues of disagreement were the decrease in the average per capita appropriate expenditure, the decrease of the co-financing of local investments and additional measures introduced which decreased a share of personal income tax to some municipalities. The association of municipalities had sued the state for the non-compliance to agree on lump sum with the
page 648 / 796 associations. In 2016, municipalities also rejected to accept the lower per capita along with other austerity measures imposed on local finance as, in their view, the costs of statutory tasks increased while own incomes of local authorities remained limited and they were not fully compensated for the execution of constantly growing tasks.
In the light of the precedent, the delegation believes that the government in principle complies with Article 9.6 of the Charter.
Spain [Article ratified - Report adopted on 20 March 2013 ]
Consult reply indicated at article 9.1
Sweden [Article ratified - Report adopted on 2 April 2014 ]
Consult reply indicated at article 9.1.
Switzerland [Article ratified - Report adopted on 20 October 2017 ]
Consult reply indicated at article 9.1
Turkey [Non ratified - Report adopted on 1 March 2011 ]
The analysis article by article is currently unavailable
Ukraine [Article ratified - Report adopted on 31 October 2013 ]
Consult reply indicated at article 9.1
United Kingdom [Article ratified - Report adopted on 26 March 2014 ]
Consult reply indicated at article 9.1
Article 9.7 Financial resources of local authorities
As far as possible, grants to local authorities shall not be earmarked for the financing of specific projects. The provision of grants shall not remove the basic freedom of local authorities to exercise policy discretion within their own jurisdiction.
Albania [Article ratified - Report adopted on 31 October 2013 ]
The transfer of unconditional grants to communes and municipalities is also an issue. It happens on a quarterly basis, based on the spending needs for the quarter and availability of own funds (own tax and non-tax revenues) for that quarter. Such a practice increases the danger of direct administrative intervention in local affairs, as well as limiting the discretion of local financial offices to manage their
page 649 / 796 funds independently and under their own responsibility. In the majority of Council of Europe member States, equalisation grants (the equivalent of the Albanian unconditional transfer) are allocated to LGUs, mutatis mutandis, in equal instalments with a sequence defined in national legislation. In the Rapporteurs’ opinion, such an approach would give LGUs more decision-making power on financial matters.
The practice of payment of membership fees from the unconditional grant to regional budgets needs more clarity and better legal justification. Regions are not inter-municipal entities owned by municipalities and communes, but a level of sub-national administration per se. Furthermore, Albanian legislation defines the qark as a second tier of local government, which means that: a. municipalities and communes are territorial administrative units of qarks as defined by the law on territorial-administrative arraignment of Albania; b. whereas the inclusion of LGUs into qarks is based on public law and not on the free will to associate, the term “membership fee” cannot be applied here; c. a fee is based, inter alia, on a quid pro quo while revenues of regional budgets are for implementation of public functions exclusively assigned to the regional level of Governance.
Thus, based on above listed arguments, it is difficult to understand what category of LGU expenditure these membership fees fall into and what the expediency of such a contribution is, from the perspective of local autonomy. The current practice (i.e. fees are deducted from the unconditional grants and transferred to regions by the Ministry of Finance, leaving municipalities/communes without the right to set conditions or discuss the rate of deduction which was -8.5% in 2011, provides good evidence for the judgment that whereas de jure fiscal decentralisation and autonomy is guaranteed in Albania, de facto financial management is still highly centralised and LGUs have limited rights vis-à-vis the Ministry of Finance when it comes to decision- making and fiscal policy. This goes against the requirements of paragraph 7 of Article 9.
The efficiency of Small Business Tax (SBT) is also a topic for future consideration. The subject of this tax are companies with less than 2 million ALL turnover. Once a company’s profits exceed this margin, they become subject to the corporate income tax (CIT) and contribute to the State budget of Albania. Under the current regulations, the SBT cannot be viewed as an efficient fiscal instrument due to the very low margin of annual turnover (equivalent to 14,300 euros) which does not allow municipalities to generate substantial income. Moreover, municipalities lose any incentive they may have to implement a proactive policy for small business development.
The vast majority of the local officials interviewed by the delegation made it clear that they would prefer to receive a share of the CIT rather than collect SBT which has a huge administrative cost. Sharing the CIT between the central and local governments might be good solution for guaranteeing local financial autonomy, especially, since Albania has recourse to shared functions between local and central levels. It is quite common in Council of Europe member countries that, if and when shared competences are in place, central and local budgets share the income from personal income tax (PIT) and CIT in proportion to the shared functions assigned to each level.
Andorra [Article ratified - Report adopted on 28 March 2018 ]
Article 9 of the Charter is aimed at ensuring that local authorities are entitled to sufficient financial resources. The legal authority to perform certain functions is meaningless if local authorities are deprived of the financial resources to carry them out. Andorra has not ratified Article 9, paragraph 2; Article 9, paragraph 5 and Article 9, paragraph 8 of the Charter.
page 650 / 796 In Andorra, the financial resources of the municipalities are based on their own taxes, taxes shared with the government, and on transfer of funds from the General Budget. The principles on financial resources are established directly by the Constitution (Articles 80.2 and 81) and developed throughout several Qualified Laws and ordinary laws.
At the moment of the visit of the Congress delegation, a tripartite negotiation process on a reform, lasting three years and involving the parliament, the government and the municipalities, was about to be finalised. The purpose of the reform is to update the entire system of transfers, through adapting it to the competences of municipalities and the new framework of State taxation, in place since the introduction of a full system of direct taxes, such as the income tax and the tax on corporation. In addition, the criteria of distribution between municipalities are planned to be revised, taking into account new parameters and based on the principle of solidarity introduced in favour of the municipalities that have fewer revenues from local taxes. The less economically advantaged Parishes would be compensated, as they are less able to generate their own resources. To this purpose, some asymmetries, that have an impact on the budget, have been identified, linking the expenditures for competences to the transfer of funds from the State.
As for Article 9.7, according to which block grants are preferable to earmarked grants, in Andorra the transfers are based on objective criteria and they are not bound to any specific destination.
The rapporteurs consider that the requirements of Article 9 of the Charter are respected in Andorra. As for the non-ratified provisions, they consider that very little is required to enable ratification of paragraphs 2 and 5 of Article 9. Consequently, the rapporteurs encourage Andorran authorities, once the reform in process is finally approved, to ratify these provisions.
Armenia [Article ratified - Report adopted on 15 June 2021 ]
Article 9.7
7 As far as possible, grants to local authorities shall not be earmarked for the financing of specific projects. The provision of grants shall not remove the basic freedom of local authorities to exercise policy discretion within their own jurisdiction.
223. In the terminology of the Charter, one of the forms of central grant is the “earmarked” grant, which means that state subsidies are allocated to local authorities for specific tasks. In this article, it is specified for capital expenditures when the central grant is transferred to specific investment projects. The Charter prefers the non-earmarked grant, because this way of funding allows local authorities to decide on the use of these funds on the basis of strategic decisions and expenditure preferences.
224. During the visit, the rapporteurs received contradictory information from local authorities about the nature of central grants. However, during the consultation procedure, the MTAI informed the rapporteurs that a large share of central grants are not earmarked grants, without specifying the purpose, via financial equalisation mechanisms. Other central grants are earmarked, what are known as subventions. It also indicated that it is the municipality that proposes specific projects to the government to finance and that the new policy of subvention funds from the state budget is currently being implemented in order to build and improve different infrastructures within the communities, as part of which the communities make decisions on the selection of infrastructure and submit applications. Nonetheless, the rapporteurs would like to note that even if it is a municipality that proposes specific projects to the government to finance, under circumstances where there is a constant lack of resources, municipalities appear to have only minimal room for manoeuvre to decide how to spend their revenues, whatever the system of central grants is.
page 651 / 796 Austria [Article ratified - Report adopted on 28 September 2020 ]
The Intergovernmental Fiscal Relations Act defines various types of grants, such as between grants to cover special needs or purposes of other governments, non-earmarked block grants, special need transfers and earmarked grants. For example, there are investment grants or ongoing subsidies in the childcare sector.
General grants are aimed at equalising the average revenue of Länder and municipalities resulting from tax-sharing.
Special grants are made to accomplish a specific task or to achieve a certain goal, and evidence for the use of these funds must be provided. For example, the federal government granted to Länder a special grant for hospital financing in the amount of € 690.8 million in 2018 and € 718.0 million in 2019.
In contrast, other financial allocations can in principle be used freely by Länder and municipalities. An example of this is the new federal financial allocation to the Länder and municipalities to ensure sustainable household management, especially in the areas of health, care and social affairs, € 300 million annually (§ 24 FAG 2017).
During the monitoring visit, the delegation did not hear any complaints from the representatives of local and Land authorities with whom it met about the negative impact of the share of earmarked grants on their financial autonomy.
In light of the foregoing, the rapporteurs consider that Austria complies with this provision, but needs to reflect on the financial sustainability of local self-government in the long term.
Azerbaijan [Article ratified - Report adopted on 17 June 2021 ]
According to the Law on the Budget System (Article 35(2)), if a municipality receives a subsidy from the state budget, its draft budget has to be submitted to the relevant executive authority. While the aim of such provision is to allow for control over the use of earmarked funds, the scope and the consequences of such control remain unclear. Given the uneven position of municipalities, the rapporteurs expect that this mechanism does not create a de facto hierarchical relationship between municipalities and the respective executive authority, which would contradict the principle of budgetary autonomy of the levels of government.
The legislation provides for the financing of the transfer of powers. For 20 years since the establishment of municipalities, there have been no cases of transfer of powers to municipalities, with very minor exceptions, and in some cases the powers were transferred without being accompanied with financial transfers. For example, although the maintenance of cemeteries was entrusted to municipalities, no funds were allocated accordingly, and until 2018 their maintenance had to be carried out at the expense of the municipal budget. According to interlocutors met by the delegation, the “Rules for Construction and Management of Cemeteries” approved by Resolution No. 522 of the Cabinet of Ministers in December 2018 have improved but not yet solved the issue.
In 2020, as mentioned, the first case of transfer with financial support took place, when modular sewage treatment plants installed on the shores of the Caspian Sea, owned by the Ministry of Ecology and Natural Resources, were transferred to 5 municipalities: Buzovna, Binagadi, Bilgah, Pirshagi and Sumgayit. To that end, a limited liability company (Azsu Ecological Plant LLC) was
page 652 / 796 established to manage these plants and other fixed assets. For this purpose, the mentioned municipalities were allocated 3.8 million AZN from the 2020 state budget.
As mentioned under Article 9.1, transfers from the state budget in form of dotation (non-earmarked transfers) and subvention (earmarked transfers), albeit insufficient to compensate the limited own revenues of municipalities, have increased in the last years and amount to 5.46 million AZN in 2020 (4.7 million dotation, 760 thousand subventions). The state budget 2020 includes a significant increase of subsidies and subventions allocated to the municipal budget (see respective table under Article 9.1). This confirms a shift in the financing of municipalities further increasing the financial dependence from the government.
Furthermore, as mentioned under Article 9.4, despite improvements that have made criteria more transparent and more differentiated, the allocation of general grants is not such that it enables municipalities to know in advance how much they are to receive in transfers and to strengthen their planning capacity. Overall, both the amount and the criteria for transferring state grants result in strengthening the dependence of municipalities from the state budget. Such a de facto hierarchical relationship does not comply with the standards required by the Charter and contributes to limit municipal freedom to exercise policy discretion within their jurisdiction as required by Article 9.7.
Article 9.7 is therefore only partly respected in Azerbaijan.
Belgium [Non ratified - Report adopted on 15 October 2014 ]
Flemish Region (Vlaanderen)
The Flemish authorities emphasise that “from the point of view of the local authorities’ freedom of action, general grants or sector-based grants should be preferred to grants earmarked for specific projects. The excessive use of ring-fenced grants also severely limits the local authorities’ freedom to choose their priority expenditure. However, the proportion of total funding sources made up by grants varies a great deal from one country to another. A larger proportion of ring-fenced grants compared to general grants may be considered acceptable if total grants only constitute a relatively limited proportion of all revenues. The aim of the second and third sentences of Article 9.7 is to guarantee that a grant for a specific purpose does not have any adverse effect on the local authorities’ freedom of choice in their own area of responsibility. Since these general provisions are very extensive, Belgium has made a reservation”.
As far as the funds are concerned, with €2.2bn the Municipalities Fund constitutes an extremely important financial transfer from the regional level to local government. Of this amount, 2 billion is allocated to the municipalities and the rest to the social services centres. Each year, the Flemish Authority provides for growth of 3.5% of the sum transferred, so that general funding can more or less keep pace with changes in operational costs at the local level.
Walloon Region and German-speaking Community
Consult reply indicated at article 9.6.
Brussels-Capital Region
Consult reply indicated at article 9.1.
Bosnia and Herzegovina [Article ratified - Report adopted on 31 October 2019 ]
page 653 / 796 Republika Srpska, local self-government units do not easily get loans for financing their investments from the Republika Srpskabudget. Considerable resources are planned for capital investments of local communities, from the Republika Srpska budget for 2018 on the position of public investment (as of 30November 2018, 25.854 million KM has been distributed, i.e. ca. 12.5 million Euro). In addition to resources from the Republika Srpskabudget, local self-government units receive resources for capital projects from the Republika Srpska Government and resources from clearing debt. Two types of transfers by the Republika Srpskalocal self-governmentMinistry can be distinguished: while ordinary transfers are not purpose-specific, extraordinary transfers can be conditioned by the Ministry.
In the Federation of Bosnia and Herzegovina, direct cantonal grants to municipalities are the rule, as partial investments covering 40-50% of the costs, with municipalities obliged to report on the expenditure. In numerous cases, partnerships with International Organisations, such as World Bank, UNDP; GIZ provide additional funds for investments in schools, energy efficiency etc.
The requirements of article 9.7 are satisfied, according to the rapporteurs.
Bulgaria [Article ratified - Report adopted on 21 January 2021 ]
Article 9.7
1. This paragraph is concerned with grants to local authorities from higher levels of government. Grants are a key tool for intergovernmental financial assistance. Local authorities receive centrally allocated grants for specific projects as well as general grants (transfers). The allocation of specific grants should be based on objective, transparent criteria justified by spending needs, and criteria for the allocation of general grants should be specified by law to enable local authorities to know in advance how much they are to receive 56 in transfers .
1. Article 52 of the PFA states the following.
(1) The fiscal relations between the municipal budget and the State budget shall encompass:
1. transfers for:
(a) global subsidy for financing activities delegated by the State;
(b) local activities: a total balancing subsidy and for winter maintenance and snow removal of municipal roads;
(c) targeted capital expenditure subsidy;
(d) other target costs, including target costs for local activities;
(e) financial compensation by the State;
2. temporary interest-free loans.
(2) The municipal budget shall also encompass fiscal relations with other budgets and accounts for European Union funds.
1. Moreover, Article 53 of the PFA states the following.
page 654 / 796 (1) The State shall fund public activities delegated to municipalities with a total subsidy for these activities at the expense of the central budget, as well as at the expense of the budget authorisers, by delegation under the State budget, who implement the relevant policy areas.
1. According to data provided by the NAMRB, municipal revenue in Bulgaria (7 billion euros in 2019) comprises the following:
own revenues – a share of 34%:
-local taxes 43%,
-local fees 35%,
-revenues from property and other revenues 22%;
State transfers – a share of 64%:
-State-delegated activities 75%,
-GES 8%,
-capital expenses 4%,
-targeted transfers and other compensations 11%,
-other transfers 4%.
1. As previously mentioned, municipalities barely have any space of discretion on spending priorities when the relevant activities are financed through State transfers. The share of State transfers is close to 70% of municipal revenue and this system of municipal finance removes, in most cases, the freedom of local authorities to exercise policy discretion.
Croatia [Article ratified - Report adopted on 20 October 2016 ]
Local taxes constitute only an insignificant part (10%) of the local budget and the existing financial equalisation system, explained above, does not respond to the actual needs. Croatia makes use of special-purpose funding, such as grants/subsidies allocated to counties and towns to attempt to make up the shortfall and cover current expenditures. In addition, different line-ministries assign transfers to towns and counties for the exercise of delegated functions and direct how the funding is to be used. As shown above, the major part of the local budget is allocated to financing pre-school and school education, 33% is earmarked for services and acquisition of products, followed by the administrative costs (wage and salary disbursements) at 21% while 19% is spent on increase/decline of non-financial assets. The highest cost for the counties is the spending on education and road infrastructure.
In addition, the Law on Financing of Local and Regional Self-Government Units actually specifies in advance how and in what proportion the grants received for enforcing the delegated functions should be spent. The Ministry of Finance strictly controls the volume of budget expenditures of local and regional authorities, which limits the local self-government’s right to decide on the budget expenditure priorities independently and under their own responsibility. The multilevel financial control system which comprises the regional State Administration Office, the Ministry of Finance and the State Audit Office allows little room for manoeuvre. The latter controls both the expediency of
page 655 / 796 funds spent as well as auditing the management performance and exercise of own competences in local self-government units and, in the view of the delegation, has a more interventionist role than is common in other European countries
It would be unrealistic to expect no earmarking of grants to self-government units. Nevertheless, the principle behind this article of the Charter is that excessive recourse to earmarking of grants or other restrictions will severely limit the authorities’ freedom to exercise its discretion with regard to expenditure priorities. In Croatia such an overall and vertical control system, in the view of the rapporteurs, undermines the effective activity of local authorities within their own sphere of competence and contradicts the provision of Article 9 paragraph 7 of the Charter
The rapporteurs therefore conclude that Croatia is not in conformity with Article 9 paragraph 7 of the Charter.
Cyprus [Non ratified - Report adopted on 20 October 2016 ]
112. Article 9 paragraph 1 of the Charter provides that local authorities must have adequate financial resources of their own, of which they may dispose freely within the framework of their powers. Financial autonomy is an essential component of the principle of local self-government and for the exercise of a wide range of responsibilities in the field of local public affairs. These elements are cumulative and not alternative, which means that all conditions laid down in this provision of the Charter are mandatory. 113. Another basic principle requires that local authorities must have sufficient financial resources in proportion to the responsibilities assigned to them by law. On the basis of the available data and information, it is particularly difficult to assess if and how this requirement is met in Cyprus. While some NGOs claim that the insufficient fund prevents a lot of small communities to provide appropriate public services, others may argue that the principle of adequate finance seems to be more or less met in Cyprus, but only because municipalities have only extremely limited functions. 114. As it was described, local authorities are obliged, according to the Municipalities, the Communities and the Fiscal Responsibility and Budget System (FRBSL) Laws, to submit their annual budget to the central government for approval. During the monitoring visit, the Congress delegation had some opportunities to discuss this issue with leaders and senior officials of two central ministries, other central agencies, and the representatives of the visited local authorities and local government unions. The dominant view of the central authorities is that the municipalities and the communities are parts of the state and they receive grants from the central government. They spend public money, and the state (central government) is the warrant of local government deficit and debt. All these circumstances justify the prior consent of the central government to the local budgets. However, Article 9 paragraph 1 of the Charter requires that local authorities must be entitled to dispose freely of their own resources. This requirement is hardly compatible with the compulsory central government consent to local budgets, where the central authorities may impose special conditions and expectations for local authorities to this approval. Since all council members of the municipalities and the communities are democratically elected in Cyprus, they have enough legitimacy to decide how they spend their revenues. Local authorities should be accountable to their own voters, rather than to the preferences of central government in local public affairs. As stated above, the Ministry of Interior has a different point of view on this issue, highlighting the fact that this control is confined to the sole lawfulness of the proposed budget and that the central government hence does not impose its own proposals upon local authorities. However, according to the rapporteurs, the practice of central approval of local government budget shows the picture of an overcentralized financial system, in which most important local decisions are influenced or tightly controlled by the central government. 115. According to the conclusions of the rapporteurs, in the absence of a predictable and transparent calculation method of central grants, local authorities cannot be sure for getting enough money for their compulsory tasks and functions. They are hardly able to plan their current expenditure if they can just hope that they will receive the usual amount of
page 656 / 796 central subsidy. It is conspicuous in particular when the total amount of central grant has been significantly decreased in the past few years. 116. The presumed calculation method which is based on the previous year’s data of local budgets brings about certain risks for local authorities, because the decrease of local revenues as a consequence of the negative effects of world financial crisis and the drop of central grants as these took place in the last years, might become permanent, fixing local revenues steadily at a low level (see supra para 89. for more details). 117. As some representatives of local authorities said, the allocation of state subsidies is not preceded by an investigation or assessment of real financial needs of local authorities. In this system, it is doubtful whether local governments are able to produce public services at the same level in all towns and the rural areas. Moreover, if the central planning is not based on a careful assessment of local needs, the use of central grants is unlikely to be effective. This view has been opposed during the consultation procedure by the Ministry of Interior, which stated that the central government’s contribution to the local government projects of the poorest authorities reaches 100% of the local investment costs, in addition to the fact that the Ministry of Interior, as stated above, may distribute extra grants to those in need, at its own discretion and based on specific criteria. 118. There is a similar problem with the specific (or earmarked) grants, as most part of the local development projects is financed by central government. In the lack of sufficient local revenues for capital expenditure, local authorities are vulnerable to central encroachment upon local affairs. In fact, most development plans including the smallest local development, like road repairs or bicycle road construction are made at central government level. It seems to be an ineffective way of planning and implementing local development policies and projects. Once again though, the Ministry of Interior disapproved this statement during the consultation procedure, saying that all local authorities without any exception had the possibility to assume and implement on their own development projects, provided they have the necessary financial resources. 119. The Charter requires that at least a part of local revenues should come from local taxes. Article 9 paragraph 3 comprises a definition of local taxes claiming that local authorities, within the limits of the law, must have the power to determine the rate of these taxes. Moreover, local taxes are really “proper” revenues only if the imposition of local taxes is a free decision of local government. In Cyprus, the share of local taxes in local budgets is relatively high, even if some of these revenues are not genuine local taxes (but rather, they are fees and charges paid by users of certain local public services). The only problem which has arisen in this area was the weak capacity of communities to collect local taxes. In this respect, the tax authorities of the central government could make invaluable contribution to the respective local authorities to collect local taxes. 120. Neither the Municipalities Law nor the Communities Law contain the principle of concomitant (adequate) finance, and the practice shows that central grants are not adjusted to the local needs. So, there is no guarantee for adequate local government finance proportionate to mandatory functions of the municipalities and communities. 121. As to the overall assessment of the compliance with Article 9, the rapporteurs concluded that paragraphs 4 and 5 of this Article are not implemented, while the prevalence of paragraphs 2 and 6 are not guaranteed, since the principle of adequate finance, as it is entrenched in paragraph 2 and the prior consultation with local authorities in an appropriate manner in financial issues as required by paragraph 6, do not have any legal safeguard in the relevant statutes.
Czech Republic [Article ratified - Report adopted on 8 March 2012 ]
As to Article 9 para. 7 of the Charter, Czech law features the particularity of combining a system where earmarking and freedom are combined through two quite distinctive parts of local and regional finances. Whereas transfers are basically earmarked in the sense of being linked to the fulfilment of delegated powers, the part of local and regional financial resources that stems from shared (state) taxes are disposed of freely in the interest of the proper powers of local and regional authorities (see above). According to the information received from the Ministry of Finance, earmarked subsidies include subsidies for social care institutions or contributions to the school system, and a special type
page 657 / 796 of subsidy called “contribution towards performance of the state administration”.
Denmark [Article ratified - Report adopted on 31 October 2013 ]
Consult reply indicated at article 9.1
Estonia [Article ratified - Report adopted on 29 March 2017 ]
With respect to Article 9, paragraph 7, the rapporteurs refer to the Supreme Court ruling No. 3-3-1-74-15 of 20 April 2016: “It appears from Article 9 (7) that project-based supports are not excluded but need to be avoided, if possible. Whereas it emerges out of Charter that local government’s freedom of activity can be restricted through ear-marked distribution of a large share of supports to carry out concrete projects, there is no such an influence, if such supports have insignificant relative importance in total revenues.” In conclusion, the Court states that earmarked funding is in compliance with Article 9, paragraph 7, of the Charter, even if such support measures do only "have insignificant relative importance in total revenues". The rapporteurs believe that, when this criterion is respected, Estonia is in conformity with Article 9, paragraph 7, of the Charter.
Finland [Article ratified - Report adopted on 28 March 2017 ]
Consult reply indicated at article 9.1.
France [Article ratified - Report adopted on 22 March 2016 ]
Consult reply indicated at article 9.1
Georgia [Article ratified - Report adopted on 7 November 2018 ]
Besides the equalisation transfer, the central authorities can allocate targeted transfers to self- governing units for the exercise of their delegated powers. They can also allocate special transfers, which are intended to be used for urgent projects and also to cover damage caused by unforeseen events (natural disasters, for example) and which cannot be financed from the local budget, but which are nevertheless considered to be urgently needed in order to benefit the local population.
For the year 2018, the structure of the total financial assistance transferred to local authorities from the central budget was as follows.
Calculation of the targeted transfers is performed on the basis of consultations between the Ministry of Finance of Georgia and the financial administrations in the municipalities, in accordance with the real value of the cost of implementation of the delegated task. A special commission has been created by the government to review the project requests submitted by the municipalities and to prepare requests for funding, for approval by the government. This kind of transfer is earmarked for specific projects and can only be used for such. Special transfers are calculated on the basis of the volume and cost of the approved projects.
The share of State funds which is earmarked for special transfers is relatively small, and therefore the system of State grants in Georgia does not affect the basic freedom of local authorities to exercise policy discretion and is in accordance with Article 9, paragraph 7, of the Charter.
Germany [Article ratified - Report adopted on 14 March 2012 ]
page 658 / 796 Consult reply indicated at article 9.1
Greece [Article ratified - Report adopted on 26 March 2015 ]
Consult reply indicated at article 9.1
Hungary [Article ratified - Report adopted on 12 February 2021 ]
As for Article 9, paragraph 7 of the Charter, according to which “As far as possible, grants to local authorities shall not be earmarked for the financing of specific projects. The provision of grants shall not remove the basic freedom of local authorities to exercise policy discretion within their own jurisdiction”, grants for specific projects do exist in Hungary. Part of local investment projects are also financed through EU structural funds and other financial instruments.
The delegation was informed of a multiplication of earmarked grants, among them the recent ‘Hungarian villages program’, aimed at reviving settlements found in underdeveloped areas, which is about to start in 2019.87
It was also mentioned, beginning from 2019, a special grant for improving the salaries of local government staff: local authorities that are qualified according to the law (taking into account several indicators) may apply.
Another important program is the Modern Cities Program, addressed to the 23 towns with county rights. The government’s Modern Cities scheme, financed by EU funds, provided Hungarian towns with county status more than 150 billion HUF (465 million euros) for development projects in 2018. The delegation received different opinions on the Modern Cities Program. On one hand, the programme resulted in an increase of funds for the recipient municipalities, which were allowed to offer better services and improve the quality of urban spaces and buildings. On the other hand, the process for attributing the grants, based in an agreement between the municipality and the central government, signed by the Prime Minister and the Mayor, makes the grants rather discretionary. The delegation was told that municipalities and counties with an influential Fidesz leader have been in a better position to get additional funding88. Even without following this point of view, however there is a risk of a political exploitation of the government, also considering the media coverage devoted to this programme. Exactly for avoiding political manipulation and influence from central government, Article 9.7 of the Charter sets clear limits to earmarked grants.
Consequently, rapporteurs consider that the requirements of Article 9.7 of the Charter are not complied with in Hungary.
Iceland [Article ratified - Report adopted on 29 March 2017 ]
As for Article 9, para. 7 of the Charter, grants for specific projects do exist, as consequence of agreements between central government and municipalities (like in the recent case of asylum seekers) but they do not represent an important part of the financial resources of local autonomies and do not seem to constitute a problem for their autonomy.
Ireland [Article ratified - Report adopted on 31 October 2013 ]
page 659 / 796 Consult reply indicated at article 9.1
Italy [Article ratified - Report adopted on 18 October 2017 ]
Consult reply indicated at article 9.1
Latvia [Article ratified - Report adopted on 27 March 2018 ]
Consult reply indicated at article 9.1
Liechtenstein [Article ratified - Report adopted on 28 March 2018 ]
According to paragraph 7 of Article 9, central government subsidies transferred to local authorities in the form of general or block grants are preferred to earmarked grants, since the former enable local governments to enjoy greater autonomy and freedom to spend their resources. As central government subsidies in Liechtenstein are allocated to local authorities in the form of lump-sum payments through the financial equalisation system, the rapporteurs consider that this requirement is also met.
Lithuania [Article ratified - Report adopted on 6 November 2018 ]
As for Article 9, paragraph 7 of the Charter, grants for specific projects do exist: among them, appropriations for municipal investment projects, planned in the State Investment Programme and allocated from the state budget in the form of special targeted subsidies. Part of municipal investment projects are also financed from the EU structural funds and other financial instruments, based on the legal instruments, but they do not represent an important part of the financial resources of local autonomies and do not seem to constitute a problem for their autonomy.
Luxembourg [Article ratified - Report adopted on 21 October 2015 ]
Consult reply indicated at article 9.1.
Malta [Article ratified - Report adopted on 29 March 2017 ]
The use of the grants allocation formula laid down in the Eighth Schedule of the local councils Act deprives the Republic of Malta from compliance with Article 9, paragraph 7 of the Charter and there is non-conformity with the said paragraph of the Charter. The funds allocated to each local council by way of grants are provided for specific purposes only and local councils cannot dispose them freely in the exercise of their functions or choose to cut expenditure on one function in order to spend more money on another function at any given year. The ability and discretion of local councils to use their financial resources freely is open to serious doubt in light of their financial dependency on the central government grants and the mechanism/formula for their distribution to each local council.
Monaco [Article ratified - Report adopted on 28 March 2018 ]
The other two paragraphs ratified, 6 and 7, both pose some problems, which could partly be overcome on the basis of Monaco’s unusual situation.
Paragraph 7 provides that as far as possible, grants to local authorities shall not be earmarked for the financing of specific projects. In this connection, it must be reiterated that expenditure is divided
page 660 / 796 into two sections (Article 56, Law No. 959/1974). Section I comprises ordinary expenditure while section II is made up of expenditure on facilities and activities carried out on behalf of the state. The latter accounts for 10% of the municipal budget. Projected expenditure in section II of the municipal budget is discussed by the Mayor and the Minister of State every year before 1 July so as to determine the amount of the grant for facilities and activities on behalf of the state (Article 58, Law No. 959/1974). Bearing in mind Monaco’s unusual situation and that this is only a small part of the municipal budget, the rapporteurs consider that Monaco complies with paragraph 7 of Article 9.
Montenegro [Article ratified - Report adopted on 21 October 2015 ]
As regards Article 9, paragraph 7 of the provision does not prohibit earmarked funds in general. On the contrary, it cannot be regarded as an aim of the Charter to prohibit help from the national governments for specific projects at the local level. Grants given do not challenge the basic concept of independent decision-making by local governments with regard to their own affairs. With regard to earmarked grants the Montenegrin Law of Local Self-Government Financing regulates the right of local governments to receive conditional grants from the central government for the financing or co- financing of investment projects of a special interest for one or several municipalities. The amount of the conditional grant is restricted to 50% of the funds needed for the whole investment project1. It is the explicit aim of the law to make sure that this conditional grant is separated from the funds the municipality has at its disposal. This shows that earmarked grants are the exception used for specific projects while the budgetary independence as such is not in jeopardy. Consequently, there is no reason to suggest that compliance with the provision of paragraph 7 is in doubt.
Netherlands [Article ratified - Report adopted on 26 March 2014 ]
Consult reply indicated at article 9.1
North Macedonia [Article ratified - Report adopted on 26 February 2013 ]
Consult reply indicated at article 9.1
Norway [Article ratified - Report adopted on 26 March 2015 ]
Consult reply indicated at article 9.1.
Poland [Article ratified - Report adopted on 2 April 2019 ]
As for Article 9, paragraph 7 of the Charter, grants for specific projects do exist in Poland. Part of local investment projects are also financed through EU structural funds and other financial instruments, based on the legal instruments. In general, they do not represent a significant part of the financial resources of local autonomies and do not seem to constitute a problem for their autonomy. In this regard, the delegation did not receive any complaint, and therefore the rapporteurs consider that Article 9, paragraph 7 is respected in Poland.
Portugal [Article ratified - Report adopted on 28 September 2020 ]
Although the Portuguese State can no longer formally give support to local authorities under the applicable European legal rules, municipalities may still be granted specific aid in exceptional circumstances (in the event of a natural disaster, creation of new municipalities or parishes, major works on buildings accommodating local authority administrative departments, for example) or via
page 661 / 796 programme-contracts. In the latter case, the State agrees to supplement the financing of investments by local authorities in varied fields such as the environment, sewage treatment, health care, economic development or education.
As this specific financing remains marginal, the rapporteurs conclude that Article 9 paragraph 7 of the Charter is complied with.
Republic of Moldova [Article ratified - Report adopted on 4 April 2019 ]
As noted above, grants and transfers from state budget constitute the fundamental source of revenue for Moldovan local authorities. Basically, there are two types of transfers: the transfer for general purposes and transfers for specific purposes.
In the last four years, the figures concerning the total transfers granted by the state to the local budgets can be broken down as follows: in 2015, the total amount of transfers was 7 504 million lei, of which 852.9 million lei (11.4%) were general purpose transfers (echilibrium), and 6 651.1 million lei (88.6%) were special purpose (earmarked) transfers; in 2016, the total amount of transfers was 8 263.7 million lei, of which 1 082.6 million lei (13.1%) were of general purpose transfers (echilibrium), and 7 181.1 million lei (86.9%) were special purpose (earmarked) transfers ; in 2017 the total amount of transfers was 9 552.5 million lei, of which 1 211.1 million lei (12.7%) were general purpose transfers (echilibrium), and 8 341.4 million lei (87.3%) were special purpose (earmarked) transfers.
These figures seem to indicate that most of the transfers granted by the state are earmarked, or for specific purposes. In this sense, there are different special funds, from which local authorities may receive specific grants: a. the regional development fund; b. the environmental fund; c. the energy efficiency fund; d. the special fund for construction and maintenance of roads. The Raions receive money from this fund, according to a number of lei per km.
The local authorities have no power of decision regarding these transfers, and the arrangements in place do not therefore meet the requirements of Article 9.7 of the Charter.
According to local government representatives, local authorities do not participate in decisions regarding these funds, since they are granted on an ad hoc basis by the line ministries according to criteria that are neither clear, stable or transparent. The CALM and several local leaders have recurrently complained that local authorities are clearly underfunded and that they depend on the transfers granted by the state. Furthermore, they have complained that the current system of transfers is also unsatisfactory, essentially for two reasons. First, most of transfers are earmarked, meaning they are granted for specific purposes (for instance, paying the salaries of local teachers). Second, when transfers are supposed to finance new investments for infrastructures, new facilities or the paving of streets or roads, the system lacks transparency and is allegedly politicised in the sense that local authorities whose mayor belongs to the ruling political party (the Democratic Party) have better chances of obtaining financing than local authorities that are run by other parties. Although the second claim cannot be formally proved by factual data, the first one sounds plausible, in the light of the figures provided by the Ministry of Finance.
Government officials disagreed with the contentions of the CALM. On the one hand, they stated that
page 662 / 796 the share of local authorities own revenue has remained relatively stable over the years. On the other hand, they explained that the lack of discretion in the use of special-purpose transfers is set out in the law. The Local Public Finance Act defines “special-purpose transfers” as financial means allocated from the state budget, conditional upon and linked to ensuring the performance of public functions or for other special purposes. According to another norm of the act cited, these transfers can only be used for a specific, predetermined purpose and are to be returned to the state budget otherwise. However, these replies from the government do no mitigate the situation, as illustrated by the eloquent figures provided above.
Consequently, the rapporteurs conclude that Article 9.7 of the Charter is infringed in the Republic of Moldova.
Romania [Article ratified - Report adopted on 3 March 2011 ]
Consult reply indicated at article 9.5
Russian Federation [Article ratified - Report adopted on 30 October 2019 ]
Consult reply indicated at article 9.1
San Marino [Article ratified - Report adopted on 28 March 2018 ]
Consult reply indicated at article 9.1
Serbia [Article ratified - Report adopted on 18 October 2017 ]
Consult reply indicated at article 9.1
Slovak Republic [Article ratified - Report adopted on 24 March 2016 ]
See answer indicated at article 9.1
Slovenia [Article ratified - Report adopted on 6 November 2018 ]
Consult reply indicated at article 9.1
Spain [Article ratified - Report adopted on 20 March 2013 ]
Consult reply indicated at article 9.1
Sweden [Article ratified - Report adopted on 2 April 2014 ]
Consult reply indicated at article 9.1.
Switzerland [Non ratified - Report adopted on 20 October 2017 ]
The delegation reiterates that paragraphs 5 and 7 of Article 9 of the Charter have not been ratified by Switzerland.
page 663 / 796 Turkey [Non ratified - Report adopted on 1 March 2011 ]
The analysis article by article is currently unavailable
Ukraine [Article ratified - Report adopted on 31 October 2013 ]
Consult reply indicated at article 9.1
United Kingdom [Article ratified - Report adopted on 26 March 2014 ]
Consult reply indicated at article 9.1
Article 9.8 Financial resources of local authorities
For the purpose of borrowing for capital investment, local authorities shall have access to the national capital market within the limits of the law.
Albania [Article ratified - Report adopted on 31 October 2013 ]
The Law on Local Government Borrowing No. 9869, dated 4 February 2008, aims to expand LGUs’ financial autonomy. This law allows LGUs to borrow for cash flow and investment purposes from the capital market (financial institutions and banks) and on the domestic and international markets. It can therefore be said that the legislation is in line with paragraph 8 of Article 9.
Nevertheless, loans are a limited instrument in local government hands for securing revenues. If LGUs are given broader fiscal autonomy and more competences are transferred to them, loans would significantly strengthen LGU’s financial and economic capacities.
Based on the law on borrowing, municipalities’ debt service due in any year on all long-term debt should not exceed 20% of the average total actual revenues of the local government from the unconditional transfer, shared taxes, and local taxes and fees of the last three fiscal years. However, in January 2010, the Public Debt Department of the Ministry of Finance imposed a limit on drawdowns on local borrowing to the equivalent of 5% of 2009 expenditures. As this was applied individually to each local government, it severely constrained the amount of the drawdowns in that year.
The National Commercial Bank (BKT) reports that they have responded to 16 loan requests, mainly from municipalities, but also from 3 communes. The LGPA/USAID funded program has assisted the municipalities of Fushë Krujë, Elbasan, Korcë and Lezhë with their applications, while 12 other units have already applied to the second level banks for a long term loan, of which 7 have been successful. Loans taken by successful municipalities have been used essentially for local road improvements. Since the debt of local governments is part of the public debt, limitations have been imposed on local government borrowing by the Ministry of Finance.
page 664 / 796 Conclusions as regards Article 9
The rapporteurs conclude with a positive assessment of issues covered by paragraphs 1, 3, 4, 8 of Article 9 of the Charter and consider that there are a number of areas under paragraphs 2, 5, 6, 7, and especially fiscal decentralisation, which raise issues of compliance with the Charter and need further improvements.
Regional finances
Article 18 of Law No. 8652 identifies the following revenues for regional budgets: unconditional grants, including fees deducted from unconditional grants assigned to communes and municipalities. The percentage is set up by the Ministry of Finance and, for the last three years, it has been fixed at 8.5% of the total pool of unconditional grants; conditional transfers received from the central government of Albania; fees from services provided by the regions; funds received as competitive grant from line ministries.
Spending priorities of regional budgets are defined by the State through delegated functions and by the regional council via shares from unconditional grants (membership fees). Regional budgets mainly finance general administrative expenditure, vocational education, environment and agriculture.
The qark is recognised as a second tier of local government and in this sense, its power and financial resources should be defined in compliance with the Charter. Article 9 paras.1, 2 and 3 stipulate clearly that each and every level of local self-government should have its own financial resources that are commensurate with the responsibilities provided by the law and that a substantial part of these financial resources should derive from taxes. Where regional budgets are concerned, it is the rapporteurs’ opinion that none of the above listed provisions of the Charter is in place. Consideration should be given to reforming the system of regional finances as a critical part of the overall decentralisation strategy.
The financial viability of the regions is another issue. Albanian regions are relatively small compared to European model (NUTS II) and they lack proper economy of scale. The rapporteurs would recommend the Albanian government to consider the consolidation of regions as a promising solution to increase their financial sustainability.
Relationship between the Treasury Office and local government units
Under Article 8 of Law 9936, dated 26 June 2008 "On budgetary management system in the Republic of Albania”, the LGU receipts and payments are made through the unified treasury account that is held in the Bank of Albania. The Treasury System consists of the Treasury Department in the Ministry of Finance and district Treasury branches. The latter are located in 36 districts. Each LGU has its own account in these branches. LGUs are entitled to benefit from the interest of their monetary assets, temporarily free, in the unified treasury account.
Funds allocated to local government units, immediately upon receipt, are deposited in the treasury accounts, according to the rules and procedures as defined in Article 8 of Law no. 9936. Local budget revenues that are left in the treasury accounts from local taxes, unconditional transfers from the
page 665 / 796 State budget and other resources that are not used during the fiscal year, are carried over for the next budget year. Commitments for paying the costs of local government units have to be authorised by the Treasury Branches after all documents have been inspected and approved. Before making a payment, the treasury system checks the existence of the commitment, the basic documentary evidence of the service performed and whether there is sufficient cash for payment.
Public Private Partnership (PPP)
PPPs are based on agreements for commercial activity between a local government entity and the private sector with the aim of providing services and public investments. The agreement is sanctioned by Law No. 8652, the civil code and other supporting legislation, which allow LGUs to take part in the agreement with their own capital in the form of assets, while the private sector takes the risk of investment and manages the service.
Simple traditional forms of PPPs consist of contracts with third parties for the management of services such as cleaning and waste collection street lighting, etc., or lease contracts giving the management of LGU own assets to a private operator, who is in charge of performing key elements of the public service, etc. Most of LGUs have examples of PPPs.
Andorra [Non ratified - Report adopted on 28 March 2018 ]
Article 9 of the Charter is aimed at ensuring that local authorities are entitled to sufficient financial resources. The legal authority to perform certain functions is meaningless if local authorities are deprived of the financial resources to carry them out. Andorra has not ratified Article 9, paragraph 2; Article 9, paragraph 5 and Article 9, paragraph 8 of the Charter.
In Andorra, the financial resources of the municipalities are based on their own taxes, taxes shared with the government, and on transfer of funds from the General Budget. The principles on financial resources are established directly by the Constitution (Articles 80.2 and 81) and developed throughout several Qualified Laws and ordinary laws.
At the moment of the visit of the Congress delegation, a tripartite negotiation process on a reform, lasting three years and involving the parliament, the government and the municipalities, was about to be finalised. The purpose of the reform is to update the entire system of transfers, through adapting it to the competences of municipalities and the new framework of State taxation, in place since the introduction of a full system of direct taxes, such as the income tax and the tax on corporation. In addition, the criteria of distribution between municipalities are planned to be revised, taking into account new parameters and based on the principle of solidarity introduced in favour of the municipalities that have fewer revenues from local taxes. The less economically advantaged Parishes would be compensated, as they are less able to generate their own resources. To this purpose, some asymmetries, that have an impact on the budget, have been identified, linking the expenditures for competences to the transfer of funds from the State.
As for the non-ratified provisions of the Charter, the rapporteurs are convinced that the on-going reform on transfers and competences, properly consulted with local authorities, will be implemented with due respect for the relevant principles of the Charter and that no obstacles will exist to the ratification of paragraphs 2 and 5 of Article 9 after the enactment of the reform.
The possibility for Andorra to ratify Article 9.8 is more complicated, as there is no national capital market in Andorra and local authorities are too small to have access to the international financial market.
page 666 / 796 The rapporteurs consider that the requirements of Article 9 of the Charter are respected in Andorra. As for the non-ratified provisions, they consider that very little is required to enable ratification of paragraphs 2 and 5 of Article 9. Consequently, the rapporteurs encourage Andorran authorities, once the reform in process is finally approved, to ratify these provisions.
Armenia [Article ratified - Report adopted on 15 June 2021 ]
Article 9.8
8 For the purpose of borrowing for capital investment, local authorities shall have access to the national capital market within the limits of the law.
226. In this respect, while the legal frameworks of municipal borrowing are provided, experience shows that only the largest municipalities can afford to borrow, subject to government approval. Thus, this form of obtaining additional financial resources, although legally planned, does not provide additional resources for the vast majority of municipalities. Nevertheless, local authorities have access to financial markets to secure financial means, so this requirement of the Charter is formally met.
Austria [Article ratified - Report adopted on 28 September 2020 ]
Municipalities are free to borrow, although as a general rule they can only borrow for investment projects. Borrowing of municipalities is regulated by each Land.
During the monitoring visit, the rapporteurs heard no complaints from local elected representatives about their borrowing autonomy. They consider that this provision is generally respected in Austria.
Azerbaijan [Article ratified - Report adopted on 17 June 2021 ]
Based on the Constitution and the relevant legislation, Azerbaijani municipalities are private subjects. This allows them to more easily establish companies and to freely operate on the markets, at least in principle. During the consultation process, the government informed the delegation that, especially in the last couple of years, municipalities have started to set up enterprises operating in various fields.
The Law on the Status of Municipalities establishes that municipal authorities may coordinate the participation of legal entities and individuals in the complex socio-economic development of the municipal territory (Article 36.2). No specific information was provided in this regard.
The Law on the Fundamentals of Municipal Finance establishes in Article 14.3.2 that municipalities have the right to receive short-term and long-term loans from banks and other credit companies that have their seat in the Republic of Azerbaijan.
In 2013 the Cabinet of Ministers passed a Resolution (no. 148) on “Approval of rules of registration of indicators financial and economic activity of the municipal companies and the organizations”. Under the new rules, companies and the organizations legally subordinated to municipalities shall draw up quarterly and annual financial reports on their activities and must submit them to the relevant authorities and ensure their publication.
Based on the information provided, the rapporteurs consider that, as the criteria are met in legislation but not in practice, the commitment under Article 9.8 of the Charter seems to be partially
page 667 / 796 met in Azerbaijan.
Belgium [Article ratified - Report adopted on 15 October 2014 ]
Flemish Region (Vlaanderen)
With regard to access to the national capital market (paragraph 8), the municipalities also receive specific grants for the local implementation of policy areas managed in connection with regional sectoral plans, such as culture, sports, education and environmental policy, among many others. The burden of planning, relative to grant-aided activities, promises to be less onerous with the implementation of the policy and management programme.
Apart from the Municipalities Fund, towns and cities receive additional money from the Cities Fund (Stedenfonds/Fonds des villes) and quite a number of targeted rural communities will soon be able to receive part of the budget Flemish Rural Fund (Vlaams Plattelandsfonds/Fonds rural flamande), the purpose of which is to finance projects that focus on policies specific to their rural or municipal situation. The rapporteurs are therefore of the opinion that the ratification of paragraph 7 of Article 9 should be reconsidered by the authorities.
The municipalities mainly finance their investments in fixed assets through loans (53%) and by using their own funds and capital grants. The municipal investment policy is following a cyclical pattern, with a current reduction in investment. On the basis of the budgets for 2013, investment is also significantly down (by around 25%) during the downward phase of the investment cycle. Economic uncertainty and the increase in the bill for the ageing population may also be playing a role here.
According to the first summary produced for 2013, it would seem that, during this first year of the term of office, the municipalities have no scope for taking out additional loans. The estimated financial capacity on which the operating budget is based is not enough to cover the present net cost of loans. By 2019, i.e. a year after the end of the term of office, the cash flow should be positive or at least not negative. This second criterion is stricter and only takes account of the cash flow of the operating budget and ignores the generally positive balances of previous years or the funds allocated.
In the new situation brought about by the policy and management programme, loans are no longer taken out to support investments but as means of funding aimed at maintaining a balanced cash flow. 61% of municipalities will face a negative cash-flow margin in the next few years, at least on the basis of the 2013 budget. The expenditure figure may have been estimated too high compared with income.
Investor confidence in the municipalities can be explained by the fact that their financial situation in general does not raise any serious fears and seems relatively sound. Total municipal debt is only 4.1% of GDP and their debt ratio is 26%.
Belgium has not ratified paragraphs 2, 6 and 7 of this article, but these provisions could be ratified. Despite the difficulties inherent in the appropriate interpretation of these Charter obligations, it would seem that Flanders already fully complies with them. By adopting a strict interpretation of the obligations imposed by paragraphs 2, 6 and 7, Flanders, alone, continues to oppose the complete ratification of this article. Articles 9.3 and 9.4 necessitate particular attention by the regional and community authorities.
Walloon Region and German-speaking Community
page 668 / 796 At present, municipalities in the Walloon Region and the German-speaking Community are facing the consequences of the financial and economic crisis, which necessitates fiscal consolidation to balance the accounts. The Walloon Region is distinguished by disparities attributable to the socioeconomic situations of the various municipalities. In addition, the socioeconomic indicators for most of these municipalities are lower than the national average. In the rapporteurs’ opinion, paragraphs 1, 3 and 4 of Article 9 are still a concern for Wallonia. The representatives of Wallonia and the German- speaking Community believe that the unratified paragraphs of Article 9 should be ratified.
Brussels-Capital Region
Consult reply indicated at article 9.1.
Bosnia and Herzegovina [Article ratified - Report adopted on 31 October 2019 ]
Republika Srpska government does not impose limitations on indebtedness; these are regulated by the Republika Srpska Law on Borrowing, Debt and Guarantees (O.G. RS, numbers 71/12, 52/14 and 114/17) which sets a ceiling for borrowing. This favours cities, while smaller municipalities can hardly ask for large funds, as their small budgets cannot sustain serving debts.
In the Federation of Bosnia and Herzegovina, borrowing makes up for additional funds for capital investment, with lower levels relying predominantly on domestic means (some also issue their own bonds), and the Federation of Bosnia and Herzegovina relying on domestic and international borrowing as well as on issuing treasury bills and long-term bonds. However, due to the general improvement of the economic situation, there is currently less need to borrow.
Currently, the Association of Municipalities and Cities of the Federation of Bosnia and Herzegovina is a part in court proceedings against the Federation of Bosnia and Herzegovina regarding the repayment of loans to the IMF, which is served as a priority before the distribution of resources to Cantons or municipalities. Thus, the Association claims that the repayment resulted in a reduction in funds for local government units from indirect taxes.
The requirements of Article 9.8 appear as generally satisfied; however, the situation in the Federation of Bosnia and Herzegovina regarding the repayment of IMF loans should be followed due to concerns regarding the consequence of reducing funds for local government.
Bulgaria [Article ratified - Report adopted on 21 January 2021 ]
Article 9.8
1. Access to national capital markets is important for local authorities to finance investment projects necessary for the further development of the local area because in many cases the amount of their own “ordinary” resources is not enough. The law may establish requirements, procedures, criteria, limits, or ceilings concerning local authorities’ financial activities but in any event those standards should not deter them from borrowing on the national capital market or make it extremely difficult in practice.
1. According to Article 21, paragraph 10 of the LSGLA, the municipal council “shall pass resolutions on contracting of bank loans, on extending of interest-free loans, as well as resolutions on incurring of municipal debt through conclusion of loan contracts or issuance of municipal securities and on issuing of municipal guarantees under terms and according to a procedure established by statute”. Access to the national capital market is free and the
page 669 / 796 terms and procedure for assuming municipal debt are set out in a special law – the Municipal Debt Act. Article 35 of the PFA stipulates that the Minister of Finance determines the procedure, manner and time limits for the provision of information by municipalities about their debt position and debt movement, the assets owned by them in the form of debt instruments, their intentions to assume debt, as well as the intention of municipalities to issue guarantees.
1. These provisions are in accordance with the Charter which refers to “access” to the national capital market within the limits of the law.
Croatia [Article ratified - Report adopted on 20 October 2016 ]
As concerns Article 9, paragraph 8, the power of Croatian municipalities to borrow from the private capital market is subject to regulation - as in many other European countries. Borrowing is allowed at the rate of 20% in respect of the consolidated indicator of the previous financial year and requires a preliminary consent of the Croatian central government. The rapporteurs heard no complaints from interlocutors about the system operating in Croatia.
The rapporteurs conclude that Croatia complies with Article 9, paragraph 8 of the Charter.
In conclusion on Article 9 of the Charter the rapporteurs stressed that all interlocutors emphasised during the meetings planned during the visit that Croatia is still an over centralised state and that decentralisation has in the past been approached in too piecemeal a fashion - not allowing for a coherent transfer of powers from the State. Indeed the most recent decentralisation initiatives, and the new government’s commitments to continue reform, including on fiscal decentralisation which was the number one priority for the self-government authorities the delegation met, are evidence of an admission that more still needs to be done. Accordingly, the current proposals in Croatia for the reform of fiscal decentralisation provide an excellent opportunity to remedy the issues mentioned above under Article 9 of the Charter. The rapporteurs will follow progress with great interest and would be grateful to be kept informed of developments.
Croatian counties, towns and municipalities do not currently avail of adequate financial resources to exercise their own powers, a theme repeatedly mentioned in the exchanges of views with the delegation and explained in detail above. Own tax revenues do not exceed 10% of local budget revenues which is mostly composed of the equalisation transfer from shared taxes and the delegated function grants and ministerial transfers. At under 6% of GDP the local authorities’ share of national resources is one of the lowest in Europe and the overall situation does not match up to the expectations of the Charter in Article 9.
For these reasons the rapporteurs conclude that Croatia is not in conformity with Article 9 paragraph 1, paragraph 2, paragraph 3, paragraph 4, paragraph 6 and paragraph 7 of the Charter. Croatia is partially in conformity with Article 9 paragraph 5 of the Charter and fully conforms to Article 9 paragraph 8 of the Charter.
Cyprus [Non ratified - Report adopted on 20 October 2016 ]
112. Article 9 paragraph 1 of the Charter provides that local authorities must have adequate financial resources of their own, of which they may dispose freely within the framework of their powers. Financial autonomy is an essential component of the principle of local self-government and for the exercise of a wide range of responsibilities in the field of local public affairs. These elements are cumulative and not alternative, which means that all conditions laid down in this provision of the
page 670 / 796 Charter are mandatory. 113. Another basic principle requires that local authorities must have sufficient financial resources in proportion to the responsibilities assigned to them by law. On the basis of the available data and information, it is particularly difficult to assess if and how this requirement is met in Cyprus. While some NGOs claim that the insufficient fund prevents a lot of small communities to provide appropriate public services, others may argue that the principle of adequate finance seems to be more or less met in Cyprus, but only because municipalities have only extremely limited functions. 114. As it was described, local authorities are obliged, according to the Municipalities, the Communities and the Fiscal Responsibility and Budget System (FRBSL) Laws, to submit their annual budget to the central government for approval. During the monitoring visit, the Congress delegation had some opportunities to discuss this issue with leaders and senior officials of two central ministries, other central agencies, and the representatives of the visited local authorities and local government unions. The dominant view of the central authorities is that the municipalities and the communities are parts of the state and they receive grants from the central government. They spend public money, and the state (central government) is the warrant of local government deficit and debt. All these circumstances justify the prior consent of the central government to the local budgets. However, Article 9 paragraph 1 of the Charter requires that local authorities must be entitled to dispose freely of their own resources. This requirement is hardly compatible with the compulsory central government consent to local budgets, where the central authorities may impose special conditions and expectations for local authorities to this approval. Since all council members of the municipalities and the communities are democratically elected in Cyprus, they have enough legitimacy to decide how they spend their revenues. Local authorities should be accountable to their own voters, rather than to the preferences of central government in local public affairs. As stated above, the Ministry of Interior has a different point of view on this issue, highlighting the fact that this control is confined to the sole lawfulness of the proposed budget and that the central government hence does not impose its own proposals upon local authorities. However, according to the rapporteurs, the practice of central approval of local government budget shows the picture of an overcentralized financial system, in which most important local decisions are influenced or tightly controlled by the central government. 115. According to the conclusions of the rapporteurs, in the absence of a predictable and transparent calculation method of central grants, local authorities cannot be sure for getting enough money for their compulsory tasks and functions. They are hardly able to plan their current expenditure if they can just hope that they will receive the usual amount of central subsidy. It is conspicuous in particular when the total amount of central grant has been significantly decreased in the past few years. 116. The presumed calculation method which is based on the previous year’s data of local budgets brings about certain risks for local authorities, because the decrease of local revenues as a consequence of the negative effects of world financial crisis and the drop of central grants as these took place in the last years, might become permanent, fixing local revenues steadily at a low level (see supra para 89. for more details). 117. As some representatives of local authorities said, the allocation of state subsidies is not preceded by an investigation or assessment of real financial needs of local authorities. In this system, it is doubtful whether local governments are able to produce public services at the same level in all towns and the rural areas. Moreover, if the central planning is not based on a careful assessment of local needs, the use of central grants is unlikely to be effective. This view has been opposed during the consultation procedure by the Ministry of Interior, which stated that the central government’s contribution to the local government projects of the poorest authorities reaches 100% of the local investment costs, in addition to the fact that the Ministry of Interior, as stated above, may distribute extra grants to those in need, at its own discretion and based on specific criteria. 118. There is a similar problem with the specific (or earmarked) grants, as most part of the local development projects is financed by central government. In the lack of sufficient local revenues for capital expenditure, local authorities are vulnerable to central encroachment upon local affairs. In fact, most development plans including the smallest local development, like road repairs or bicycle road construction are made at central government level. It seems to be an ineffective way of planning and implementing local development policies and projects. Once again though, the Ministry of Interior disapproved this
page 671 / 796 statement during the consultation procedure, saying that all local authorities without any exception had the possibility to assume and implement on their own development projects, provided they have the necessary financial resources. 119. The Charter requires that at least a part of local revenues should come from local taxes. Article 9 paragraph 3 comprises a definition of local taxes claiming that local authorities, within the limits of the law, must have the power to determine the rate of these taxes. Moreover, local taxes are really “proper” revenues only if the imposition of local taxes is a free decision of local government. In Cyprus, the share of local taxes in local budgets is relatively high, even if some of these revenues are not genuine local taxes (but rather, they are fees and charges paid by users of certain local public services). The only problem which has arisen in this area was the weak capacity of communities to collect local taxes. In this respect, the tax authorities of the central government could make invaluable contribution to the respective local authorities to collect local taxes. 120. Neither the Municipalities Law nor the Communities Law contain the principle of concomitant (adequate) finance, and the practice shows that central grants are not adjusted to the local needs. So, there is no guarantee for adequate local government finance proportionate to mandatory functions of the municipalities and communities. 121. As to the overall assessment of the compliance with Article 9, the rapporteurs concluded that paragraphs 4 and 5 of this Article are not implemented, while the prevalence of paragraphs 2 and 6 are not guaranteed, since the principle of adequate finance, as it is entrenched in paragraph 2 and the prior consultation with local authorities in an appropriate manner in financial issues as required by paragraph 6, do not have any legal safeguard in the relevant statutes.
Czech Republic [Article ratified - Report adopted on 8 March 2012 ]
Article 9 para. 8 of the Charter seems to be well taken care of by the Czech system. Under the law, local and regional authorities are free to borrow under their own responsibility, and approximately half of the municipalities have actually contracted debts. If they want to issue obligations, on the other hand, formal acceptance of the Ministry of Finance is needed, a question that is likely to come up only for a few big players. But applications are rarely denied, and should it nevertheless happen in a way not accepted by the relevant authority, the final decision is submitted to the Constitutional Court.
Denmark [Article ratified - Report adopted on 31 October 2013 ]
Consult reply indicated at article 9.1
Estonia [Article ratified - Report adopted on 29 March 2017 ]
Consult replies indicated at articles 9.1, 9.2, 9.3, 9.4, 9.5, 9.6 and 9.7.
Finland [Article ratified - Report adopted on 28 March 2017 ]
Consult reply indicated at article 9.1.
France [Article ratified - Report adopted on 22 March 2016 ]
Consult reply indicated at article 9.1
Georgia [Article ratified - Report adopted on 7 November 2018 ]
The capital market is still developing in Georgia. At the same time, the Government of Georgia has
page 672 / 796 access to donor credits on concessional terms. Municipalities are allowed to borrow only with the consent of the government and they can only borrow for investment purposes. Since the government is in a better position to negotiate with the donor community, in practice the central government signs the loan agreements and then lends the borrowed funds to local authorities for investment projects. In 2017, municipalities borrowed 4% of total 2017 budget expenditure for this purpose.
Generally, local self-governing bodies in Georgia do not possess large amounts of borrowed funds. Audits have not revealed any particular weaknesses related to loans and credit in the municipalities. Municipal debt management is regulated by the fiscal rules (macroeconomic parameters) laid down in the Organic Law of Georgia on Economic Freedom (Article 2): the so-called “debt rule” – 60% of GDP; “expenditure rule” – 30% of GDP, and “balance rule” – 3% of GDP. The government is allowed to set certain overall restrictions in order to keep general government parameters in line with these limits, but municipalities are fully independent to define their priorities in terms of spending within the resources available to them. Local self-governing bodies may only borrow amounts exceeding the limits determined by law from public authorities and from legal entities that are controlled by public authorities. Property owned by the municipalities cannot be used as collateral for a loan.
Restrictions on borrowing autonomy are provided by law and do not exceed similar restrictions in force in other European countries.
The rapporteurs therefore conclude that Georgia complies with Article 9, Paragraph 8, of the Charter.
Germany [Article ratified - Report adopted on 14 March 2012 ]
Consult reply indicated at article 9.1
Greece [Article ratified - Report adopted on 26 March 2015 ]
Consult reply indicated at article 9.1
Hungary [Article ratified - Report adopted on 12 February 2021 ]
Article 9, paragraph 8, refers to the access to the national capital market for the purpose of borrowing for capital investment.
In Hungary, the permission of the government for local government borrowing was introduced by Article 34.5 of the Fundamental Law. Detailed rules are established by Act No. CXCIV of 2011 on the economic stability of Hungary. All loans and other transactions with the nature of loan (for example, municipal bonds) must be authorised by the government. There are exceptions to this principle. For example, there is a de minimis rule, and illiquid loans do not need permission. Similarly, loans required for projects co-financed by the European Union and reorganisation credits linked to the municipal debt settlement process do not need the consent of the government.
The rapporteurs are aware of the impact of the local government debt on the public finances and of the importance of keeping a balanced budget. Nevertheless, they consider that a balance with the principle of local autonomy has always to be pursued. In Hungary, the financial freedom of local governments has been significantly limited by these regulations. Although a great number of other exceptions exist, the financial freedom of local governments remains significantly limited.
The rapporteurs consider that the requirements of Article 9.8 of the Charter are not fully complied
page 673 / 796 with in Hungary.
Iceland [Article ratified - Report adopted on 29 March 2017 ]
Local authorities have access to the national (and international) capital market, within the limits of the law, with the ceiling raised after the 2008 crisis so that the debt ratio of a municipality should not be higher than 150 per cent of its revenues (Article 64 Law n. 138/2011) (see further paragraph 95 infra). Thus Article 9, para. 8, of the Charter is respected.
Ireland [Article ratified - Report adopted on 31 October 2013 ]
Consult reply indicated at article 9.1
Italy [Article ratified - Report adopted on 18 October 2017 ]
Consult reply indicated at article 9.1
Latvia [Non ratified - Report adopted on 27 March 2018 ]
As noted at the beginning of this document, Latvia is not bound by article 9.8 of the Charter. The interlocutors met by the Delegation supported different view about the convenience of Latvia ratifying this provision. For instance, the Minister of Finance declared that the initiative should come from the LPS. The SAO expressed the views that, before ratifying that provision and opening the capital market, it would be necessary to improve the financial responsibility and accountability of the local authorities. The MEPRD expressed a negative position in this field and the same applies to the national Parliament, since the MPs met by the Delegation had a negative view of that possibility. For instance, they stated that when a local authority asks for a loan, the Republic of Latvia is guaranteeing or backing these financial responsibilities, therefore the State should have some control. Furthermore, they said that the present arrangements are necessary to fight effectively against the public deficit. For what concerns the local representatives, some said that they were in favour of that possibility, while others understood that this was not necessary because the present arrangements work well, in particular the financial assistance provided by the public credit institution.
Independently from the prospect of ratifying article 9.8 of the Charter, the present situation in the field of local governments borrowing may be summarily presented as follows: to begin with, since 2009 (due to the economic crisis) Latvian local governments are limited to borrow or to take on long- term liabilities. There are strict restrictions imposed regarding all kind of borrowing operation for local authorities. Thus, local authorities can only carry out long-term borrowing to finance investment projects (infrastructures), not operational costs, and they can apply for a short term loan to be paid back by the end of the fiscal year.
All borrowings must be approved by a special commission created at the Ministry of Finance. Local governments are supposed to borrow preferentially from the State Treasury. This means that they do not have access to the free private financial markets. They can only ask for credits from (national) private banks if the lending conditions are more favorable than the lending conditions offered by the State treasury. In this case, too, the contract requires permission from the Minister of Finance. During the consultation process, national authorities informed the rapporteurs that a special commission set up by the Minister of Finance, which assesses the capacity of the municipality to assume new obligations and the compliance of the loan demand with the statutory borrowing conditions, approves all borrowing requests. Municipalities, after receiving a positive decision from
page 674 / 796 the Commission, may borrow from the Treasury or the Commercial Bank if the terms of the loan are more favourable than the terms of loans granted from the state budget. At the same time municipalities, as well as state institutions and capital companies, have to comply with the law On Prevention of Squandering of the Financial Resources and Property of a Public Person, which stipulates that a public person, as well as a capital company shall administer the financial resources and property rationally, that is: a. actions shall be such as to achieve the objective with the minimum utilization of financial resources and property; b. property shall be alienated and transferred to the ownership or use of another person at the highest price possible; c. The ownership or use of property shall be acquired for the lowest price. Consequently, the legislative act ensures that local governments can borrow in a commercial bank, strictly adhering to the conditions, including the rational and economical use of financial resources.
On the other hand, the local borrowing in a given year cannot exceed 20% of the current local government budget revenues. Every year, the Law on the State Budget determines the limits for local governments borrowing, and the purposes for which loans and credits may be asked for by local entities. These “purposes” are discussed and eventually agreed between the Minister of Finance and the LPS. For instance, in 2016 the total available resources for local governments to borrow were established in around 200 million €, and in 196 M € for 2017 (initial planning). During 2017, local governments have been able to borrow financial resources for investment projects related to the following “purposes” and goals: educational institutions investment programs (roughly 79 M €); projects co-financed by the EU (aprox. 55 M €); roads and streets projects (roughly 30 M €); or for sports infrastructures (3.6 M €). At the same time, the Law on the State Budget for 2017 states that a local authority could borrow between 250 000 € and 400 000 € for the implementation of a freely chosen project.
For what concerns the debt of the local authorities, in 2015 it was estimated in 1,456.2 million €, which represented 6% of GDP. In 2014, that figure was 1,426 million €, which represented also 6% of GDP. In order to assess the relevance of the situation, it would be pertinent to have in mind the general debt of Latvian government: at the end of 2015 it was 8,953.3 million € (36.9% of GDP), and at the end of 2014 that figure was 9,668.5 million € (40.9% of GDP). Therefore, the local debt does not seem to represent a very acute problem.
In the light of the precedent lines, the Delegation considers that the requirements of article 9.8 of the Charter are not respected in Latvia. However, this provision is not ratified by Latvia and will not be subject to recommendation
Liechtenstein [Non ratified - Report adopted on 28 March 2018 ]
The rapporteurs noted that the municipalities in Liechtenstein currently have no need to borrow. At the same time, they are not prohibited from accessing the national financial market.
In the light of the above considerations, the rapporteurs conclude that the situation in Liechtenstein complies with all paragraphs of Article 9.
Lithuania [Article ratified - Report adopted on 6 November 2018 ]
Article 9, paragraph 8, on the access to the national capital market for the purpose of borrowing for capital investment, is highly problematic in Lithuania.
The main concern of the municipalities in Lithuania is related to the Constitutional Law on the Implementation of the Fiscal Treaty, whose Article 4 provisions entered into force from 2016 and
page 675 / 796 severely restricted the annual net borrowing opportunities to 57 out of 60 local authorities. The ALAL requested the central government to address the underlying problem for the municipal budgets and to highly increase the borrowing opportunities for 57 local authorities in 2016, which were reduced several times to 1.5 per cent of the budget revenue.
From 2017 the amount of the annual net borrowing for 57 municipalities could not amount to a positive rate, i.e. the municipal loan could not increase throughout a year and the municipalities had the right to borrow the amount not exceeding the amount repaid for the loans taken out previously.
From 2018 the mentioned provisions (and threats) on limited borrowing opportunities are applicable to 3 biggest municipalities of the cities of Vilnius, Kaunas and KlaipÄ—da, in accordance with Article 13(1)(2) of Law on the Approval of Financial Indicators of the State Budget and Municipal Budgets for 2018 and Article 4(2) of the Constitutional Law on the Implementation of the Fiscal Treaty.
According to the ALAL, this provision undermines the possibility for municipalities to properly implement a part of investment projects planned in the Operational Programme for the European Union Funds' Investments in 2014–2020, as well as other international programmes and the state investment programme, as for the major part of these projects the central government has set the requirements for the municipalities to contribute with own resources, which are essentially borrowed funds.
In conclusion, the rapporteurs consider that the requirements of Article 9, paragraph 3, 4, 5, 6 and 7 are satisfied in Lithuania, whereas the requirements of Article 9, paragraph1, 2 and 8 are not met by the present legal and factual situation in Lithuania.
Luxembourg [Article ratified - Report adopted on 21 October 2015 ]
Consult reply indicated at article 9.1.
Malta [Article ratified - Report adopted on 29 March 2017 ]
The ability of local councils to have access to national markets for the purpose of borrowing for capital investment pursuant to Article 9, paragraph 8 of the Charter is restricted and depends on obtaining the approval of the Minister responsible for government in advance. A holistic view of the provisions of the Local Councils Act regarding the acquisition of loans gives the impression that such a right is severely restricted by the Act both, by reason of the existence of the requirement for securing the consent of the central government through the Minister responsible for Local Government and because of the need to secure a positive outcome to a referendum in the event that the period of repayment of such a loan will last for more than 8 years. It may be argued that the recent economic crisis and the practices used by financial and credit institutions require and necessitate the approval of the central government since the latter may be required by financiers to guarantee such obligations. Nevertheless, local councils’ access to the national capital market is severely restricted and no investment in any commercial undertaking may be made without the consent of the central government.
Hence, compliance with Article 9, paragraph 8 of the Charter is limited. Despite the fact that local councils do have access to the national capital market under the Local Councils Act, the restrictions imposed and the conditions in place under the said Act compromise the aim of Article 9, paragraph 8 of the Charter for access to the national capital market.
Monaco [Non ratified - Report adopted on 28 March 2018 ]
page 676 / 796 The question of compliance with Article 9 of the Charter on financial resources appears complicated in the case of Monaco, particularly as it has not ratified paragraphs 1-4 and 8. Here it is important to check whether Monaco does not already comply with these paragraphs in practice.
Nor may paragraph 8 be ratified, because Article 59 of Law No. 959/1974 explicitly rules out the possibility of the Municipality taking out loans.
Montenegro [Article ratified - Report adopted on 21 October 2015 ]
Access to the capital market (Article 9, paragraph 8) seems to be a realistic option for the Montenegrin municipalities. They have the right to issue securities and to take out loans. Loans with a principle repayment schedule of less than a year may be taken for the purpose of guaranteeing liquidity with a short-term perspective. Long-term loans are allowed for capital infrastructure projects and for purchasing capital assets but not for the purpose of financing the current expenditure. Therefore, it seems that there are no problems for municipalities in Montenegro to have access to the market in order to borrow money.
The rapporteurs therefore consider that the situation is only partly compliant with Article 9, namely as regards paragraphs 4, 5, 7 and 8 of Article 9. A particular attention needs to be paid to paragraphs 1, 2, 3 and 6 of Article 9. Moreover, an improvement of the legal framework is necessary on all legislative projects already submitted by local authorities to state authorities.
Netherlands [Article ratified - Report adopted on 26 March 2014 ]
Consult reply indicated at article 9.1
North Macedonia [Article ratified - Report adopted on 26 February 2013 ]
Consult reply indicated at article 9.1
Norway [Article ratified - Report adopted on 26 March 2015 ]
Consult reply indicated at article 9.1.
Poland [Article ratified - Report adopted on 2 April 2019 ]
Article 9, paragraph 8, on the access to the national capital market for the purpose of borrowing for capital investment, is not especially problematic in Poland. Local authorities have access to the national capital market, within the limits established by law, which indicates that borrowing is possible only for investments. As the Ministry of Interior in its written replies to the questionnaire pointed out, in extreme cases this may result in the inability of local authorities to repay the debt; a circumstance that can even lead to the abolition of the municipality, as it has happened in the case of Ostrowice (see supra, sub Article 5). Therefore, the rapporteurs consider that Article 9, paragraph 8, is respected in Poland.
Portugal [Article ratified - Report adopted on 28 September 2020 ]
page 677 / 796 The rapporteurs noted with satisfaction that local authorities do not require prior authorisation for borrowing but are still subject to some restrictions, including short-term debt control mechanisms, which are to be found, for example, in Law no. 73/2013 of 3 September, Articles 49 to 52.8 This is understandable as, as a member of the EU, Portugal must comply with the Lisbon Treaty and Protocol no. 12 on the excessive deficit procedure. The national authority is responsible, therefore, not only for its own deficit but also for those of local and regional authorities.
Nevertheless, the rapporteurs regret that uniform restrictions on debt take no account of the diversity of local authorities’ budget situations. There is a great disparity between the financial situations of Portugal’s local authorities: while some benefit from very comfortable financial revenues, others find it difficult to balance their budgets and some may be exposed to fluctuating finances that render them vulnerable. Even though the overall situation is less delicate than at the time of the previous visit, some municipalities still face serious difficulties in balancing their budget. Although the interest rates on loans have been on a downward trend for the last few years, where spending is concerned local authorities continue to have increased charges and costs to cover in certain sectors such as sewage treatment or health care, which may lead to growing imbalances in budgets.
The rapporteurs observed that the indebtedness of Portugal’s local authorities remained a highly topical issue despite the efforts made to limit its scale. The role of the Court of Audit in this area seems vital, although its president, Mr Vítor Manuel Da Silva Caldeira, who spoke to the rapporteurs in June 2019, was keen to put the problem into perspective: of all local authorities, he believed that only 24 municipalities were truly in a tricky financial situation.
In the light of the above comments, the rapporteurs consider that Article 9 paragraph 8 of the Charter is complied with.
Republic of Moldova [Article ratified - Report adopted on 4 April 2019 ]
This provision of the Charter states that for the purpose of borrowing for capital investment, local authorities shall have access to the national capital market within the limits of the law.
Moldovan local authorities have recourse to borrowing from private or public banking institutions. The Law No. 397/2003 on Local Public Finance allows local authorities to borrow for capital purposes both domestically and abroad, as well as to grant guarantees on loans to municipal companies. However, according to Law No. 419/2006 on Public-Sector Debt and Government Guarantees, local authorities are required to obtain the prior approval of the Ministry of Finance before borrowing (loans for one year and more). Between 2016 and 2018, eight local authorities received approval from the Ministry of Finance to borrow from banking institutions and three local bodies did not.
If a local authority has payments overdue on existing debt, it may not contract any new debt, except for the purpose of restructuring the unpaid obligations. There is also a cap on credit operations for local authorities such as debt service, including repayment of principal and interest for existing debts (20% of annual municipal revenues). This legal amendment (adopted in 2014) is in keeping with the will of the government to keep local debt in line with international standards, and with the recommendations of the World Bank missions and EU experts. Moreover, local authorities are obliged to keep a debt registry and a guarantees registry in order to keep track of their direct and conditional obligations.
According to provisions of Law No. 419, the Ministry of Finance monitors the situation of public- sector debt. All public-sector entities (including local authorities) must therefore send the Ministry of Finance, on a quarterly basis, the information necessary to monitor the contracting, disbursement
page 678 / 796 and repayment of public-sector debt. The Ministry of Finance then presents the government and parliament with a quarterly and an annual report on the situation of public-sector debt. Reports are published on the website of the Ministry of Finance. As of March 31 2018, the local public authorities’ debt stood at 0.23% of GDP.
During the visit, the delegation was told that, although local authorities have access to the national capital market within the limits of the law, they rarely ask for loans from the private sector, because interest rates in the country are very high (between 10% and 20%), and consequently are dissuasive. At the same time, banking institutions are well aware of the financial situation of most Moldovan local authorities, and know that their cash-flow capacity and their room for manoeuvre in paying off loans is very limited. The national capital market is therefore an infrequent source of funding for local authorities in Moldova.
Therefore, and in the light of the country’s economic situation, the rapporteurs are of the opinion that Article 9.8 is respected in the Republic of Moldova.
Romania [Article ratified - Report adopted on 3 March 2011 ]
Consult reply indicated at article 9.5
Russian Federation [Article ratified - Report adopted on 30 October 2019 ]
Consult reply indicated at article 9.1
San Marino [Non ratified - Report adopted on 28 March 2018 ]
As already mentioned in previous parts of this report, the Republic of San Marino declared that it was not bound by Article 9, paragraphs 3 and 8 of the Charter. Furthermore, San Marino made an interpretative declaration that: “….Article 9 of the Charter must be interpreted as an Article establishing a general principle of financial autonomy, according to which local authorities are entitled to freely dispose, in the framework of the national economic policy, of the resources allocated to them for the exercise of their powers”.
Serbia [Article ratified - Report adopted on 18 October 2017 ]
Consult reply indicated at article 9.1
Slovak Republic [Article ratified - Report adopted on 24 March 2016 ]
See answer indicated at article 9.1
Slovenia [Article ratified - Report adopted on 6 November 2018 ]
Borrowing rights of municipalities are regulated by the Financing of Municipalities Act ZFO-1. According to Article 10.b of this Act, the municipalities are allowed to incur debts if current year debt servicing is lower than 8% of previous year budget realized revenue. In addition, the current year debt servicing can be up to 10% in the case of incurring debts for EU investments.
The data of the Ministry of Finance reflects that amount of borrowing differs over the last ten years. The local municipalities has borrowed 126,3 million EUR and repaid debt in amount of 23,3 million
page 679 / 796 EUR in 2008. A year later, in 2009, amount borrowed by the municipalities has increased to 198,9 million EUR. After 2009, there is tendency of decreasing borrowing that stopped in 2013 when local municipalities had borrowed 133,1 million EUR and payed back 74,3 million EUR. In the following years, borrowing is decreasing again. Finally, some kind of equilibrium between borrowing and amortisation of debts has been achieved in 2017 – the local municipalities borrowed 83.4 million EUR and amortised 87.7 million EUR of debts.
Investment projects to improve the public infrastructure seem to be the main driver for borrowing of local municipalities. However, municipalities are allowed to incur long-term debts only for investments included in the adopted municipal budget approved by the municipal council and having the prior consent of the Minister of Finance. These measures are aimed to balance public and in particular municipal finance.
As it was pointed out by the National Assembly, the municipal debts are not in alarming conditions since two thirds of municipalities have been able to reduce their debts, and at the end of 2016, 16 municipalities were debt-free. At the same time, only few municipalities have faced difficulties to service debt due to unlawful borrowing.
Accordingly, Slovenian local self-government complies with Article 9.8. of the Charter.
Spain [Article ratified - Report adopted on 20 March 2013 ]
Consult reply indicated at article 9.1
Sweden [Article ratified - Report adopted on 2 April 2014 ]
Consult reply indicated at article 9.1.
Switzerland [Article ratified - Report adopted on 20 October 2017 ]
Consult reply indicated at article 9.1
Turkey [Article ratified - Report adopted on 1 March 2011 ]
The analysis article by article is currently unavailable
Ukraine [Article ratified - Report adopted on 31 October 2013 ]
Consult reply indicated at article 9.1
United Kingdom [Article ratified - Report adopted on 26 March 2014 ]
Consult reply indicated at article 9.1
Article 10.1 Local authorities' right to associate
Local authorities shall be entitled, in exercising their powers, to co-operate and, within the
page 680 / 796 framework of the law, to form consortia with other local authorities in order to carry out tasks of common interest.
Albania [Article ratified - Report adopted on 31 October 2013 ]
Article 109 of the Constitution gives LGUs the right to form associations as well as to establish links with similar local authorities in other countries. They may also be represented in international organisations of local authorities. This right has been affirmed in Article 8, Chapter V of the Law no. 8652.
Currently, there are three such associations in Albania: the National Association of Municipalities, the National Association of Communes and the National Association of Regions. There is, in addition, a group of Socialist Mayors who split from the Association of Municipalities and established a new organisation named the Association of Local Autonomy in Albania.
The rapporteurs welcome the fact that these associations have been consulted by the central authorities in matters concerning local affairs. Associations are involved in the process of allocation of competitive grants, as well as in the process of calculation of conditional grants for communes and municipalities. The rapporteurs would recommend that these consultations become part of an institutional mechanism.
However, the local government associations in Albania appear fragmented, without a unified voice for Albanian local authorities at the local level. There is little coordination among the associations and in fact, they appear to be playing a supplementary role to the central government rather than taking a strong stance vis-à-vis the central government, as an active mobiliser of LGUs for the protection of their legitimate interests. The rapporteurs have been informed that such a dialogue involving elected representatives from both political alliances and all associations has been initiated within the framework of the project “Building a sustainable, pluralistic and unified platform of dialogue for local government in Albania”, implemented by the Congress.
The rapporteurs have taken note of the partisan approach which appears to mark the relations among local elected representatives and cannot underline enough that these substantially reduce the efficacy of local government associations, given that the consultation process is largely dominated by party politics. The socialist mayors accuse the leadership of the associations of favouritism toward the ruling political party, while the leadership of the associations blame socialist mayors for adopting a partisan approach and sabotaging the work of the associations. Domination of party politics over the institutional interest of local self-government renders the associations weak and gives the process of consultations with LGUs an essentially formal nature.
The rapporteurs call on all elected representatives in Albania to take a strong stance in favour of local government interests and to convince their leaders to aim for a unified position, perhaps under an umbrella organisation, in order to defend their interests and raise awareness of the independence of local government issues from national politics.
Andorra [Article ratified - Report adopted on 28 March 2018 ]
Article 10 of the Charter covers the co-operation between local authorities and their right to associate, at national and international level.
page 681 / 796 In this regard, the specificity of Andorra has to be considered: there are only seven municipalities and the Principality itself is a product of co-operation among the Parishes. Both elements could contribute to explain why this issue has not been addressed by a written regulation.
The Comuns’ right to associate is expressly granted in Chapter XII of the Order of 24 November 2011 on the organisation and functioning of the Comuns. The rapporteurs were told by local authority representatives that an association of municipalities was set up in 2002 although co-operation between parishes was already well established. On the first Tuesday of every month, mayors meet to promote co-operation. This meeting – the Reunió de cònsols – is expressly referred to in Articles 35 and 36 of the aforementioned order.
Under Article 34 of the order, municipalities are free to co operate with their counterparts in other States without any authorisation from the government. The delegation was informed that they have signed many decentralised co-operation agreements, especially on cultural matters.
During the consultation process the rapporteurs were informed that a draft Law on co-operation between central government and the Comuns and among the Comuns had been tabled in the Consell General. According to the government, this draft Law adopts the principles of institutional loyalty, co-operation in general and mutual information and assistance. It also deals with the development of public intermunicipal co-operation establishments (EPCIs), management requests and co-operation agreements between authorities and has a whole chapter given over to co- operation in the human resources field, laying down the principle of mobility between authorities.
The delegation was also told that despite the absence of a law covering this area, the Comuns provide joint services based on agreements or contracts. Examples of this form of co- operation are joint waste collection centres, the nationally co-ordinated selective waste collection system and forest cleaning arrangements.
The rapporteurs conclude that Article 10 is satisfactorily complied with.
Armenia [Article ratified - Report adopted on 15 June 2021 ]
Article 10.1
1 Local authorities shall be entitled, in exercising their powers, to co‑operate and, within the framework of the law, to form consortia with other local authorities in order to carry out tasks of common interest.
227. The Charter requires signatory countries to provide for the right of local governments to co‑operate and, within the framework of the law, to form consortia with other local authorities in order to carry out tasks of common interest. Each member state is required to recognise the entitlement of local authorities to belong to an association for the protection and promotion of their common interests and to belong to an international association of local authorities.
228. Both the constitution and the LGA empower municipalities to form associations for fulfilling their tasks and functions in a better and more effective way. The latter act, for instance, specifies the right of communities to create intercommunity associations with other communities with the objective of jointly solving individual problems as a basic principle of local self-government.
page 682 / 796 229. At the moment, there are some existing intermunicipal co-operation frameworks, but there could be many more, given the fragmented municipal structure. As far as the rapporteurs have learned, since the last constitutional amendment in 2015, despite the intention to do so, no new associations have been established. Taking advantage of this opportunity could help to counterbalance the disadvantages of municipal fragmentation, and to overcome some difficulties of small municipalities, and could even be a kind of alternative to unpopular amalgamations. However, this would obviously require financial incentives.
Austria [Article ratified - Report adopted on 28 September 2020 ]
Pursuant to Article 116a, B-VG, for the performance of their matters municipalities can agree to associate in municipality associations (Gemeindeverbände). Such an agreement requires the sanction of the supervisory authority. The sanction shall be conferred by ordinance if a lawful agreement between the municipalities concerned is on hand and the formation of the municipal association:
a. does not in the case of performance of matters appurtenant to the sovereign administration jeopardise the function of the municipalities concerned as self-administering corporate bodies; b. in the case of performance of matters appurtenant to the municipalities as holders of private rights it lies for reasons of expediency, economic efficiency, and thrift in the interest of the municipalities concerned. The organs of such created municipal associations need to be formed on democratic principles, and it is the Länder that prescribe their actual organisation.
Article 116a.6, B-VG introduces the possibility of a merger of municipalities of different Länder to municipal associations. Such a situation, however, can be permitted under the provision of an agreement between the respective Länder pursuant to Article 15a, B-VG, in which in particular provisions on the approval of the formation of municipal associations and the implementation of supervision must be contained.
Considering the above, the rapporteurs conclude that Austria complies with this provision.
Azerbaijan [Article ratified - Report adopted on 17 June 2021 ]
As of 2006, three national municipal associations exist in Azerbaijan, representing the interests of the various types of municipalities (villages, towns and cities). Although no exact data are available on the membership of these associations, all sources concur in indicating that most municipalities belong to one of them. The legal basis of municipal associations is the Law on the Status of Municipalities, which states that municipalities may create associations for the purpose of co- ordinating their activities and in order effectively to assert their rights and interests (Article 10). However, they may not be given the powers of municipalities and can therefore only exercise representative and co-ordinating functions. The associations must be registered in accordance with the law.
Interlocutors pointed out to the delegation that the associations are regularly consulted by Parliament and by the relevant Ministries on issues that are relevant to municipalities. However, legislation is not clear in this respect and no specific right of municipalities or municipal associations to be consulted on these matters or on decisions of the central government authorities affecting local government interests is expressly provided.
page 683 / 796 Only two exceptions seem to exist in legislation requiring consultation of the municipal associations. One is the case of boundary changes among municipalities. The other case in which consultation is required by law is the amendment introduced to Article 32.2.2 of the Law on Budget System by the law of June 20, 2014, according to which national associations of municipalities can submit proposals to the relevant executive authority to allocate subsidies to municipalities from the state budget. Even in such case, consultation remains indirect (proposals go through local executive authorities) and its effects are not specified, but it appears that no legal means exist to veto any decision by the state.
Associations are not obligatorily consulted on central government plans or decisions that primarily affect the interests of municipalities and presumably for this reason have no regular opportunities to influence the local government policies of the central government authorities. It appears that consultation happens arbitrarily and in an irregular fashion, mostly informally and often through the local executive authorities and/or political channels. For sure, no general right is established for municipalities and their associations to be consulted by state authorities in due time on all relevant issues, as required by the Charter.
Associations are said to provide assistance to municipalities on legal and administrative issues and to organise trainings for municipal staff. However, no information is available about their services or the professional support they provide to municipalities, so it is not surprising that they do not have the proper capacity to play an important and effective role. In fact, the national associations of municipalities do not play an important role in central policy-making or in representing local interests in Azerbaijan and it seems that they were only established in order to comply formally with the requirements of the Charter and that they do not engage in any significant activities.
Article 10.1 of the Charter also implies that municipalities shall be guaranteed a general right to co- operate with one another in order to deliver local services or discharge their responsibilities. This is particularly important in terms of delivering services, in view of the fact that many municipalities are too small or too weak (financially, organisationally and politically) to deliver all the services they are supposed to or to carry out any meaningful local strategy or policy. It is worth noting that the associations do not even have a website, which testifies of their role in practice.
Inter-municipal cooperation has not been outlined as problematic by any of the interlocutors met by the delegation. The mayor of Saray reported that a constant exchange is in place with the neighbouring municipalities, especially within the framework of the district municipal chairpersons council, but no specific forms of formalized co-operation were mentioned. It appears that also intermunicipal co-operation is carried out primarily through informal ways.
Based on the situation on the ground, whereby consultation takes place irregularly and as a matter of practice but is not sufficiently guaranteed in legislation, the rapporteurs are of the view that the commitments stemming from Article 10.1 of the Charter are only partly met in Azerbaijan.
Belgium [Article ratified - Report adopted on 15 October 2014 ]
Flemish Region (Vlaanderen)
In Flanders, the Decree of 6 July 2001 provides for the regulation of intermunicipal co-operation. At the federal level, the Law of 22 December 1986 remains in force. At the international level, the European Outline Convention on Transfrontier Co-operation between Territorial Communities or Authorities was ratified by Belgium on 6 April 1987 and entered into force on 7 July 1987.
Additional Protocol No. 1 to the Outline Convention on Transfrontier Co-operation between Territorial
page 684 / 796 Communities or Authorities (Madrid Convention) was approved by the Flemish Decree of 7 May 2004 and published in the Belgian Gazette on 16 July 2004. Additional Protocol No. 2 to the Madrid Convention was approved by the Flemish Decree of 21 December 2007 and published in the Belgian Gazette on 6 February 2008. Belgium ratified both additional protocols on 12 June 2009 and they entered into force on 13 September 2009.
Flanders approved Protocol No. 3 to the Madrid Convention (on Euroregional Co-operation Groupings) on 4 May 2012. Flanders was the first entity in Belgium to approve it.
The Benelux Convention on Cross-Border Co-operation between Territorial Partnerships or Authorities, signed on 12 September 1986 (and approved by the Decree of 7 February 1990), also provides concrete legal instruments for decentralised transfrontier co-operation on a basis of public law. For this co-operation, the local authorities can make use of administrative agreements, joint bodies (without legal personality) public transfrontier bodies (with legal personality). There are currently public transfrontier bodies, four joint bodies and eleven administrative agreements, in each case situated on the border between Flanders and the Netherlands.
The agreement on transfrontier co-operation between territorial communities and local public bodies signed in Brussels on 16 September 2002 between the Government of the Kingdom of Belgium, the Flemish Government, the Government of the French Community and the Government of the Walloon Region on the one hand and, the Government of the French Republic on the other was approved by the Flemish Decree of 30 April 2004 and published in the Belgian Gazette on 9 June 2004. This agreement is also called the Brussels Accord.
The rapporteurs consequently conclude that Article 10 is complied with.
Walloon Region and German-speaking Community
In the Walloon Region and the German-speaking Community, local authorities are able to co-operate with each other. Article 162 of the Belgian Constitution acknowledges this right: ‘[S]everal provinces or municipalities can co-operate or form associations. However, provincial councils or municipal councils cannot be permitted to deliberate jointly.’ In the Walloon Region co-operation between municipalities takes place in the shape of agreements between municipalities, project partnerships and intermunicipal partnerships. The latter may take the form of a limited liability co-operative (SCRL, the most frequent form) or that of a public limited company (SA). There are currently a hundred or so intermunicipal partnerships operating in the Walloon Region. They are supervised by the Region, which ensures that municipal politicians have control over co-operation within these organisations. Intermunicipal partnerships are also common among municipalities in the German- speaking Community, where they are supervised by the Community. In addition, intermunicipal co- operation of this kind can take place between local authorities in different regions of Belgium, since on 26 March 2014 the Walloon Parliament passed a decree approving the co-operation agreement signed between the Flemish Region, the Walloon Region and the Brussels-Capital Region on cross- regional intermunicipal partnerships.
Brussels-Capital Region
Approximately one Belgian municipality in ten is participating in a high-quality international programme for municipal co-operation. These municipalities have committed themselves to the campaign against poverty over a number of years, specifically through building the capacity of municipalities in the global South, since one element of the complex phenomenon that is poverty is inadequate access to public goods and services, particularly local services. Practical co-operation between municipalities in Belgium and in Africa and Latin America covers registries of births, deaths
page 685 / 796 and marriages, water purification, waste management, locally generated economic development, improved financial resources and financial resource management. This programme (which has had excellent results) and the resources allocated to it must be kept up and consolidated.
Article 10 of the Charter is observed.
Bosnia and Herzegovina [Article ratified - Report adopted on 31 October 2019 ]
Various forms of intermunicipal co-operation (IMC) exist within the Entities, in particular regarding the organisation and maintenance of infrastructure, such as local roads, water and waste management, as well as schools. However, in case of larger or more important projects, most of these are managed directly by the Cantons (in the Federation of Bosnia and Herzegovina) or by the Republika Srpskagovernment, respectively.
Although there are no specific incentives for promoting them, some forms of inter-Entity co- operation between local authorities exist, too, often with the objective of economic development and within the framework of projects funded by international donors (e.g. UNDP, Council of Europe). However, different regulations in the Entities have to be respected and often create considerable obstacles. The more so, as inter-entity co-operation is not actively promoted and encouraged and thus difficult to realise in practice: thus, co-operation is possible, but remains rather the exception.
Thus, day-to-day services across the Inter-Entity Boundary Linemost often either do not function well or are totally lacking. The Republika Srpska Ministry pointed to the difficulty of finding the right interlocutor on the Federation of Bosnia and Herzegovina-side, as there is no local self- government ministry in the Federation of Bosnia and Herzegovina (sometimes the Ministry of Justice steps in). It seems that only where foreign donors support co-operation financially, cross-Inter-Entity Boundary Lineco-operation can develop, e.g. the Swiss-funded water supply-system for the Una-Sana- region. A telling example regards the situation of commuters between East Sarajevo (Republika Srpska) and the City of Sarajevo (Canton Sarajevo, Federation of Bosnia and Herzegovina) situated in two adjacent and neighbouring valleys. Taxis crossing the Inter-Entity Boundary Line(running between the two cities) have to stop and to take down their taxi signs, if they do not want to risk a fine for running a public service not recognized by the legislation and authorities of the other Entity. The same is true for public transport, which on each side stops just before the Inter-Entity Boundary Line. The rapporteurs were surprised to hear that some interlocutors considered this situation as normal saying: “of course, there is no direct bus-line connecting the two cities”. The interlocutors explained the situation by different legislations regarding public transport in the two Entities. While public transport is part of the powers of municipalities, the Republika Srpska Law on general transport appears to be an effective obstacle for organizing cross-entity public transport as a service for commuters. This bewildering fact (and attitude) is even more strange considering Article I.6 of the Dayton Constitution which provides for the establishment of a Common Market in BiH; this provision is at least not fully implemented, creating disincentives for citizens and enterprises. In contrast with the information received by the concerned local authorities, the Republika Srpska Ministry of local self-government told the delegation that the two cities could resolve the issue by coming together and concluding an agreement. It is true that such agreement had been reached after the war regarding the water supply. Again, it appears that good will would make bottom-up co-operation possible.
Co-ordination problems between the Entities also regard the police forces, with the difficulty to guarantee the continuation of a car chase across the Inter-Entity Boundary Line in the (frequent) case of car-thefts, in particular in Sarajevo, where the Inter-Entity Boundary Lineis close, but also the guarantee of health care-services for citizens from other areas (the guarantee of the latter is difficult even between some Cantons).
page 686 / 796 There are some significant developments with municipalities themselves organizing and agreeing on the modalities of co-operation. Examples are the co-operation between the municipalities of Tesanj, Teslic and Zepce, as well as Sarajevo and East Sarajevo jointly hosting the European Youth Winter Games (EYOF) in February 2019, i.e. a major international sport event organized together across the Inter-Entity Boundary Line. This event, financed mostly by the Canton Sarajevo (4.5 mio KM plus infrastructure), can be considered a positive example for what can be done, if there is political will on both sides.
The Federation of Bosnia and Herzegovina Ministry of Justice and the Republika Srpska Ministry of Public Administration and Local Self-Government suspended the implementation of the project "Beacon Scheme" conducted by the Federation of Bosnia and Herzegovina and Republika SrpskaAssociations, where municipalities had a chance to compete in various areas and topics and were awarded prizes for their best practices. The project promoted inter-municipal co-operation of all local self-governments in BiH with a competitive approach. The project, which had been run for seven years was recently suspended due to a lack of funds (35,000 Euro per Ministry and year).
Cross-border co-operation has been successfully promoted (and financially supported) by the EU and the Council of Europe, e.g. in a trilateral Interreg program (launched in 2007), and results in a number of projects with Serbia, Croatia and Montenegro. In the Drina-river region, the areas of co- operation comprise secondary schools, hospital and transportation as well as twinning agreements. An Action Plan between Serbia and Republika Srpska shall establish priorities. The Herzegovina- Neretva Canton is one of the co-founders of the Adriatic-Ionic-Euregiio, established in 2006.
The rapporteurs welcome the engagement in cross-border co-operation projects and consider the requirements under Article 10.1 and 10.3 satisfied. However, they call upon the authorities in both Entities to promote and support the co-operation of municipalities across the Inter-Entity Boundary Line by creating the necessary positive environment for those activities in order to facilitate the provision of services and to foster economic development.
Bulgaria [Article ratified - Report adopted on 21 January 2021 ]
Article 10.1
1. Under Article 10.1 of the Charter, local authorities have a general right to co-operate with one another to deliver local services or discharge their responsibilities. Inter-municipal co- operation (or co‑operation at other levels of local government) is a fundamental tool for local authorities in terms of delivering services, since many of them are too small or too weak (financially speaking) to deliver all the services they are supposed to or to carry out any meaningful local strategy or policy57.
1. In 2017, a significant change was made in Chapter 8 of the LSGLA (Articles 59-61), setting the framework for inter-municipal co-operation.
· The goals of the inter-municipal co-operation were defined: improving the quality of services provided; optimisation of service costs (economies of scale); optimisation of internal administrative processes and savings; implementation of projects at inter-municipal and regional level.
· The form of co-operation was regulated: concluding an agreement. Through the agreement a joint legal entity for commercial or non-profit purposes can also be established.
· The decision for co-operation is made by the municipal council with a two-thirds majority of the total number of councillors.
page 687 / 796 1. The Social Services Act also defines forms of such co-operation in the provision of certain services of a residential type for users in the respective region. Moreover, the potential of inter-municipal co-operation is expected to expand with the active implementation of the amendments to the Regional Development Act and the implementation of the integrated concepts for territorial development.
1. Mandatory inter-municipal co-operation is regulated by the specialised legislation in some sectoral policies, for example, the municipalities joined the water supply and sewerage associations at regional level (according to the Water Act), established regional associations for landfill management (according to the Waste Management Act). In a number of cases, municipalities associate for the implementation of projects with European funding, for example, for the construction of water supply and sewerage infrastructure on the so-called water cycles, as well as for the purchase of trolleybuses, electric buses and others.
Croatia [Article ratified - Report adopted on 20 October 2016 ]
Article 12 of the Law of Croatia on Local and Regional Self-Government states that for the purpose of promoting common interests and improving co-operation, municipalities, towns and counties may establish a national association of municipalities, a national association of towns and a national association of counties. The national association will be established if the decision is passed by more than half of the local and regional self-government units of the appropriate type (town, municipality and county).
There are three local government associations in Croatia, the Croatian County Association, the Association of Cities of the Republic of Croatia and the Association of Municipalities of the Republic of Croatia. All three associations are well institutionalised and enjoy the status of a national association. These associations carry out important activities to protect the interests of their members, although the practice of a dialogue and consultation with the central government is still weak. All three associations unanimously note that the central government has little political will to involve them in the decision-making process. The associations have been isolated from the process of making such important decisions as the 2009 reform of salaries in the local and county self-government and in personal income tax reform. The associations made an active use of the Constitutional Court and international cooperation to promote and protect the associated municipalities and their interests. The associations enjoy good mutual relations and may take joint initiatives towards central government on issues that concern them all.1
Articles 14, 15, 16 and 17 of the organic Law on Local and Regional Self-Government regulate the co- operation between local authorities to ensure effective implementation of joint activities. There is no need for the municipalities to obtain consent or approval from state administration bodies for intermunicipal cooperation falling under their self-government scope2. The central government promotes the development of the institute of agglomeration; a whole series of municipal services at the regional level, such as kindergartens, cleaning, sewerage, are rendered by joint services. Croatian municipalities are also entitled to co-operate with their counterparts in other states, although the rapporteurs note that so far the government has neither signed nor ratified the two Protocols to the European Outline Convention on Transfrontier Co-operation.
In the light of the foregoing it can be said that Croatia fully complies with Article 10 paragraph 1, paragraph 2 and paragraph 3 of the Charter.
Cyprus [Article ratified - Report adopted on 20 October 2016 ]
page 688 / 796 The Charter requires the signatory countries to provide for the right for local governments to co operate and, within the framework of the law, to form consortia with other local authorities in order to carry out tasks of common interest.
According to this requirement, each member State has to recognise the entitlement of local authorities to belong to an association for the protection and promotion of their common interests and to belong to an international association of local authorities. Furthermore, local governments must be consulted, insofar as possible, in due time and in an appropriate way, in the planning and decision-making processes for all matters that concern them directly.
As it was discussed above, both the municipalities and the communities have their own national associations representing their interests in the central government decision-making. The Congress delegation is not aware that the freedom of local authorities to associate would be limited in any way. Both the Municipalities and the Communities Laws entrench the rights of local authorities to be registered and participate as a member of their relevant unions.
The freedom of local authorities to establish or join associations as well as to express their views and promote their interests is not limited in Cyprus, so this article is completely respected.
Czech Republic [Article ratified - Report adopted on 8 March 2012 ]
According to Article 10 of the Charter, local (and regional) authorities have the right to form different kinds of “consortia” with other municipalities in order to carry out tasks of common interest (paragraph 1), to associate for the protection of protection and promotion of common interests (paragraph 2) and to co-operate with their counterparts in other states (paragraph 3). Czech law seems to comply with all these requirements (see, inter alia, Act. No. 128/2000 Chapter II Parts 3 and 4). Section 50 thereof sets out in detail the activities that unions of municipalities may engage in, namely: “a) tasks in the field of education, social services, health care, culture, fire protection, public order, environmental protection, tourism and care for animals, b) ensuring cleanliness of the municipality, administration of public greenery and public lighting, collection and transport of communal waste and its safe processing, use or disposal, water supply, waste water transport and treatment, c) installation, extension and improvement of networks of technical infrastructures and systems of public passenger traffic to secure transport services for a given locality, d) tasks in the protection of the quality of air, tasks connected with the reconstruction of solid fuel heating or water heating to environment-friendlier sources of thermal energy in residential and other objects owned by the municipality, e) operation of stone quarries, sand pits and facilities serving for the extraction and treatment of mineral resources, f) administration of the municipality’s property, especially local roads, woodland, housing and residential stock, sporting, cultural facilities and other amenities administered by the municipalities.
In particular, it should be mentioned that all the regions are members of their association. And if the Union of Towns and Municipalities of the Czech Republic represents only 40 % of the local councils, its approximately 2500 members holds sway over 75 % of the country’s entire population. In other words, the main “absents” in this organisation are most of the numerous very small municipalities. These small municipalities are organised under several associations, as explained under paragraph 3.4 above,. There are also professional associations of local government staff, such as the Association of Chief Administrative Officers.
The municipal and regional associations seem active and influential. They have trimestrial
page 689 / 796 consultation meetings with the national authorities. The impression the delegation got during the visit is that these regular consultations are considered fruitful by both sides but that their effectiveness very much depends on whether the consultation is launched early in the process. The rapporteurs are of the opinion that it would be an improvement to formalise this consultation mechanism by legislation as regards legal and budgetary procedures directly concerning municipalities and regions, in order to render it more systematic and to establish minimum safeguards.
Denmark [Article ratified - Report adopted on 31 October 2013 ]
The right of association of local authorities is generally respected in Denmark. It is, however, limited to practical functions. Functions involving administrative decisions on citizens’ rights and obligations cannot be delegated to other public authorities or to private bodies. Under the basic legal principles governing public administration, exceptions to this rule are possible only where specifically provided for by law.
Co-operation between two or more municipalities is provided for by law in some fields, such as fire fighting and protection against accidents.
It is also possible for local authorities to co-operate with private enterprises in the form of limited- liability companies and, sometimes, under partnerships. Such co-operation activities generally concern the supply of natural gas and electricity, waste collection and disposal services, food hygiene laboratories and public transport.
Consortia of local authorities run by a specially set-up body are, despite their independence, public services, even where they are set up as private enterprises under partnerships.
The only limit on the possibility of forming an association is the purpose of the association, which must be consistent with the role and responsibilities of local authorities. For example, a Danish municipality does not have the right to join an association campaigning at international level against nuclear power because, in Denmark, this question is outside the sphere of competence of local authorities.
The rapporteurs consider that Article 10 of the Charter is complied with in Denmark.
Estonia [Article ratified - Report adopted on 29 March 2017 ]
The Charter requires signatory countries to entitle local governments “to co-operate and, within the framework of the law, to form consortia with other local authorities in order to carry out tasks of common interest”. The rapporteurs did not hear any remarks or criticism from representatives of local authorities and their associations with respect to this provision. Concerning the future of the two associations, there are obviously plans to reorganise the structure of representing local authorities in Estonia after the territorial reform has taken place.
Finland [Article ratified - Report adopted on 28 March 2017 ]
The freedom of association of local authorities is guaranteed by Article 13 of the Constitution. Intermunicipal co-operation is very common in many different service sectors and many municipalities have had good experiences with it. However, as indicated above, there are problems related to democracy (indirect accountability) when forms of co-operation and specific arrangements are increased in certain service sectors. Furthermore, co-operation of this type does not seem to
page 690 / 796 address the need for economic stabilisation and the potential need to develop the municipality as a whole (instead of fragmented co-operation in various service sectors). These are the problems that the current government seems to be willing to address by creating the new directly-elected level of government.
As regards local authorities’ right to associate, the Association of Finnish Local and Regional Authorities (AFLRA), embodies the implementation of the principle laid down in Article 10. This Association includes both local and regional authorities and constitutes a strong organisation promoting the interests of local government and an important, respected partner for all central public institutions in Finland.
In conclusion, the rapporteurs are of the opinion that Finland fully complies with all the paragraphs of Article 10 of the Charter.
France [Article ratified - Report adopted on 22 March 2016 ]
France is probably the European nation with the richest history of inter-municipal cooperation that already began in the 19th century. Today, French municipalities have a very wide spectrum of possibilities to develop co-operation, not only through the formation of inter-municipal entities, but also through different sorts of public contracts. Nearly all French municipalities are involved in some kind of inter-municipal cooperation, while cross-border cooperation (Article 10 paragraph 3 of the Charter) has also been practiced for decades. French territorial collectivities may also participate in a European Grouping of Territorial Collaboration (EGTC) in order to promote transnational and/or interregional co-operation in order to strengthen economic and social cohesion.
A major reform concerning inter-municipal cooperation was initiated through the law of 16 December 2010, when a procedure of territorial re-structuring of inter-municipal co-operation through the EPCI was promoted, setting the minimum size for the formation of such EPCI’s with own fiscal powers at the number of 20 000 inhabitants, which is considered to be more adequate for public services.
As already mentioned, France declared, in accordance with Article 13 (‘authorities to which the Charter applies”), that the local and regional authorities to which the Charter applies are the territorial authorities which are named in Articles 72, 73, 74 and in Title XIII of the Constitution or which are created on their basis. The French Republic would therefore consider that the public establishments of intercommunal (intermunicipal) co-operation, which are not territorial collectivities, are excluded from the scope of application of the Charter. However, in the opinion of the rapporteurs, this does not mean that the territorial collectivities themselves are not subject to the provisions of Article 10, which does not protect the establishments of intermunicipal co-operation as such, but the right of local authorities to associate and co-operate with each other.
Concerning transfrontier co-operation (see also Art. 10 paragraph 3 of the Charter) it should be reiterated that France signed the European Outline Convention on Transfrontier Co-operation between Territorial Communities or Authorities (ETS no. 106) on 10 November 1982 and ratified it on 14 February 1984. The Outline Convention entered into force on 15 May 1984. France signed on 9 November 1995 and ratified on 4 October 1999 the Additional Protocol to the European Outline Convention on Transfrontier Co-operation between Territorial Communities or Authorities (ETS no. 159), which entered into force on 5 January 2000. France has not signed Protocol No. 3 to the European Outline Convention on Transfrontier Co-operation between Territorial Communities or Authorities concerning Euroregional Co-operation Groupings (ECGs) (CETS No. 206).
Article 10 paragraph 2 of the Charter guarantees the right of local authorities to belong to an association. In France there are several associations promoting the interests of local authorities.
page 691 / 796 Concerning the first tier, however, is the Association of Mayors of France (AMF) and the Association of Rural Mayors (AMRF), furthermore there are several associations of municipalities sharing common characteristics, such as the Association of forestry municipalities, the Association of Municipalities in mining areas, etc. For the second tier there is the Assembly of French Departments (ADF) and the Association of French Regions (ARF). It is clear that French territorial governments and their elected representatives are strongly engaged in a variety of different associations, but the question arising is whether such fragmentation is good for the promotion of common interests of the territorial collectivities. One could consider whether it would make sense to have special legal provisions, introducing, “umbrella” associations that would better be in the position to represent all local governments and better promote their interests.
Georgia [Article ratified - Report adopted on 7 November 2018 ]
Intermunicipal co-operation is gradually emerging in Georgia. In July 2015, the Code empowered municipalities to establish joint enterprises, and local authorities have started to come forward with initiatives for such collaboration. For example, the city of Zugdidi and the community of Zugdidi have been successful in continuing a joint waste management enterprise, even though the municipality was split in 2014. Other self-governing units have established regional development agencies that are still operating in some regions (Mtskheta-Mtianeti, 2016).
Three municipalities in the highlands of the Autonomous Republic of Adjara established a joint municipal services development centre in 2017 and the centre has already obtained its first funding from the European Union in order to improve solid waste removal services.
Article 21 of the Code provides municipalities with the right to implement joint activities and to establish joint entities for the provision of services and implementation of projects. However, according to interlocutors from the Tbilisi Government, a number of changes are needed in sectoral legislation in order to allow municipalities to allocate financial resources for joint projects and shared infrastructure.
Article 76, paragraph 3, of the amended constitution (2018) provides that: “a self-governing unit shall be entitled to co-operate with other self-governing unit[s] to exercise its powers according to rule prescribed by the organic law”.
Georgia therefore complies with Article 10, Paragraph 1, of the Charter. However, the Georgian authorities should be encouraged to further elaborate the legal framework, especially concerning sectoral laws, in order to facilitate and promote intermunicipal co-operation.
Germany [Article ratified - Report adopted on 14 March 2012 ]
The Charter requests the signatory countries to provide the right for local authorities to cooperate and, within the framework of the law, to form consortia with other local authorities in order to carry out tasks of common interest. According to this requirement, each state has to recognise the entitlement of local authorities to belong to an association for the protection and promotion of their common interests and to belong to an international association of local authorities. In accordance with this principle, the federal Basic Law of Germany declares that “[w]ithin the limits of their functions designated by a law, associations of municipalities shall also have the right of self- government according to the laws”, which is almost the repetition of the Charter’s relating rule.
Generally, the view of local government associations is listened to at both the federal and Land level in the decision-making process of law-makers. The representatives of the associations recognise that
page 692 / 796 consultation on key issues affecting local government interests is in practice. Notably, these procedures are less formalised, and the participatory rights of local government associations are not entrenched in standing orders of the Bundesrat, and the Land legislatures.
The Congress delegation heard some criticism relating to legislative procedures, which provide only poorly conceived forms of involvement for local government interests. Strictly speaking, local government associations have hardly any institutionalised participatory rights in law-making processes; they express their views mostly on a customary basis. Only in some Länder are the associations formally involved in the law-making process. For example, the constitution of Lower Saxony prescribes that they have to be heard prior to any regulation by law or ordinance concerning municipalities or counties. The idea to establish a special chamber (Kommunalkammer) alongside Land legislature, which could be a forum for representing municipal interests, has been discussed, but no Land has decided to set up such a body yet.
Frequently, federal legislation is seen as the crucial area for local government interest, and the Länder seem to vindicate the role of representing them against the federal government. However, the core issues are discussed and decided by the respective Land governments, so any consultation between central and local governments has to take place at that level.
Local authorities must have also the right to legal protection of their constitutionally and legally recognised rights and autonomy. For this purpose, they should have the right of recourse to a judicial remedy in order to secure the free exercise of their powers and respect for such principles of local self-government as these to be enshrined in the constitution or domestic legislation.
The major form of this right is the constitutional complaint, which provides the local authorities with a means to turn to the constitutional court of the Land to repeal Land laws and statutory regulations that violate their constitutional or legal rights. The Congress delegation had the opportunity to ascertain at the constitutional courts of Baden-Württemberg and Brandenburg that this is a living practice and that municipalities do use this instrument. Apparently, local authorities usually appeal to the Land-level constitutional courts in two types of constitutional controversies: sometimes they look for remedies against changes in municipal boundaries, and, more recently and frequently, in relation to local finances.
Greece [Article ratified - Report adopted on 26 March 2015 ]
In relation to Article 10, para 1 of the Charter, it should be pointed out that Article 102, para 3 of Greek Constitution establishes, after the 2001 constitutional revision, that “Law may provide for compulsory or voluntary associations of local authorities to execute works or render services or exercise competences belonging to local authorities; these shall be governed by elected administrations”. Co-operation across levels of local government (municipal and regional), as well as inter-municipal co-operation are being regulated and encouraged by law.
Co-operation including both tiers of local government is nowadays explicitly foreseen by law, that provides the (voluntary) establishment of cross-level “associations” (“diavathmidiki sindesmi”, Article 105 Kallikratis), which can deal with public works, service provision, fulfillment of concrete tasks or implementation of development programs and projects. Especially within the Attikia Region, an obligatory special cross-level “association” is provided, for waste management, while in the rest of the country, obligatory special inter-municipal association (on in each region) will deal with waste management.
Inter-municipal associations (“diadimotiki sindesmi”) can also be created on a voluntary basis, dealing with public works, service provision, fulfillment of concrete tasks or implementation of
page 693 / 796 development programs and projects. The law is offering, furthermore, a wide range of contracting and networking possibilities both to municipalities and regions. Municipalities or/and regions can become parts of “contracts of inter-municipal or cross-level cooperation”, where one part can offer support to the other part or/and fulfill some of its tasks (Article 99 Kallikratis). Quite common are the so-called “programmatic contracts” (Article 100, “programmatikes simvasis”), concerning concrete projects (e.g. development projects, constructions etc.), where not only local authorities, but also other public authorities (also Universities) and public sector entities (public enterprises etc.) can become parts of.
Finally, municipalities and regions can also be members of looser co-operation schemes, such as “networks” (Art. 101, 202, 203 Kallikratis, “diktia”) following targets of public interest (including networks with foreign local governments).
An especially important role is played by the completely renovated associations of local authorities: Central Union of Municipalities in Greece (KEDE), the Regional Unions of Municipalities (PED) as well, for regions, by the Union of Greek Regions (ENPE) (see Law 3852/2010, article 282 and Presidential Decree 75/2011), although, as already said above (sub. art. 4), an adequate institutional consultation procedure of these association is not provided within the existing legal framework.
In conclusion, rapporteurs appreciate the multiplicity of instruments provided by the law. Considering also that no remarks or complaints on this issue have been submitted by the interlocutors during the meetings, rapporteurs consider that Article 10, paras. 1 and 3 of the Charter is fully respected in Greece. It should be pointed out that Greece is not bound by paragraph 2 of Article 10.
Nevertheless rapporteurs would like to point out that Greece has not yet signed the European Outline Convention on Transfrontier Co-operation between Territorial Communities or Authorities concerning Euroregional Co-operation Groupings (ECGs) (CETS No. 206).
Hungary [Article ratified - Report adopted on 12 February 2021 ]
Article 10 of the Charter covers the possibility of co-operation between local authorities and their right to associate, at both national and international level. Article 10, paragraph 1, refers to types of cooperation aimed at carrying out tasks of common interest.
Article 32.1, lett. k) of the Fundamental Law establishes that local governments may associate freely with other local governments, establish associations for the representation of their interests, cooperate with local governments of other countries within their functions and powers, and become members of international organisations of local governments.
The Cardinal Law on Local Self-Government, Article 87, states that representative bodies (councils) of municipalities may form inter-municipal associations with legal personality in order to more efficiently and appropriately perform one or more municipal tasks, or the delegated tasks of the mayor and the clerk. Associations are established by written agreement between the participating local governments, based on the decisions of the representative body, made by qualified majorities. The association can establish organisations governed by public law, companies, non-profit organisations, and other forms of organisations for the performance of public tasks.89
The central organ of the inter-municipal association is the council of the association, whose members are delegated by the representative bodies of the participating local governments. The members of the council have a vote that is defined by the agreement. The decisions of the councils are made in the form of a resolution, because associations do not have legislative powers.
page 694 / 796 Therefore, the rapporteurs believe that Article 10.1 of the Charter is fully respected in Hungary.
Iceland [Article ratified - Report adopted on 29 March 2017 ]
In Iceland, inter-municipal co-operation plays a growing role in the attempts to strengthen local government capacities to manage their own affairs and to get more competences from the central government.
According to many interlocutors, inter-municipal cooperation has been seen recently as a replacement for large scale merging, although this raises important questions on democracy. Since there is no formal elected intermediate stage between state government and municipalities, this would mean transfer of power from the elected representatives at the local level to a cooperative organ – not elected but under a board of directors comprising representatives from the municipalities involved. A delegation or endorsement of power of that kind could weaken local democracy rather than strengthen it.
In the new Local Government Act, Chapter IX is dedicated to “Collaboration between municipalities on the execution of functions”. It provides co-owned agencies (byggðasamlag), the possibility that a municipality undertakes tasks for other municipalities, regional municipal associations.
Co-owned agencies are legal entities that municipalities may establish to undertake the execution of specific tasks of municiplities, such as the operation of schools or fire-prevention measures. They are subject to the provisions of Local Government Act, as regards procedure, the rights and obligations of board members, their employees, finances, budgets and the auditing of annual accounts, administrative supervision and other general rules applying to the functions of the municipalities and other public authorities (Article 94). Provisions on the election of the board, quorum at the meetings, the board’s authority to bind the municipalities, the cases in which the approval of the municipal councils is required for the board’s decisions to be valid etc. shall be included in the agreement.
Another form of collaboration directly provided by the Law 138/2011 is the agreement by which one municipality undertakes tasks for other municipalities. When one municipality undertakes tasks for one or more other municipalities, it may be decided that those municipalities which are regarded as purchasers of services may nominate observers to attend meetings of the relevant committee in the municipality which is regarded as the service provider, with the right to address meetings and propose motions when matters covered by the joint task are under discussion. All the details shall be covered by an agreement of collaboration (Article 96).
Regional Associations of Municipalities, established in each region of the country, may, by agreement or in accordance with authorisations in separate legislation, undertake tasks or other activities connected with their role as defined in the first paragraph, such as tasks related to regional development or other common interests of the municipalities (Article 97).
Additional forms of collaboration may be established by agreements between municipalities on the execution of specific functions that must be approved by the municipal councils in question (Article 92). Those If a collaboration agreement between municipalities involves the assignment of final decision-making authority regarding individuals’ rights and obligations, the collaboration may only proceed within the framework of a co-owned agency or in such a way that one municipality takes over tasks for another municipality or other municipalities, unless provisions in law grant special authorisation for some other form of collaboration. In that case, the approbation of the Ministry is required for those agreements to become valid (Article 93).
An especially important role is played by the Icelandic Association of Local Authorities, founded in
page 695 / 796 1945: under the Local Government Act (Article 98), “the Association of Local Authorities in Iceland is the common representative of the municipalities in Iceland”. It defends their interests in dealings with the government and other parties both in Iceland and abroad. It formulates common policy on individual issues and therefore works closely with the government and the Althing. A special co- operation agreement is in force between the association and the government, containing formal provisions covering relations between them. According to Article 98.3, The Association shall be consulted by the central government when issuing government edicts on the basis of the Local Government Act. All municipalities may be members of the Association of Local Authorities in Iceland. All municipalities now belong to the Association, but their participation in its activities is voluntary.
As for Article 10, para 3, of the Charter, local authorities may set up international and European collaborations: the Icelandic Association of Local Authorities plays an important role in international collaboration, specifically on the basis of the EEA Agreement.
In conclusion, rapporteurs consider that Article 10 is fully respected in Iceland.
Ireland [Article ratified - Report adopted on 31 October 2013 ]
Different parts of the LGA regulate local authorities’ right to associate and co-operate.
Section 85 of the LGA provides that two local authorities may enter into an agreement for one of them to perform a function on behalf of the other. Section 86 provides for two or more local authorities to make arrangements for the joint discharge of any of their functions. Section 87 provides for the Minister for the DECLG to make regulations requiring local authorities to enter into an agreement for one authority to carry out the function of another authority. The use of the powers provided in section 85 is a “reserved function” of the elected members of each local authority.
Section 225 of the LGA regulates the right to associate as follows: “ … (2) A local authority may hold membership of an association of local authorities. (3) An association of local authorities may carry out such activities as are necessary to represent the collective interests of the local authorities which constitute its membership, including – (a) the undertaking of research and other studies, (b) the promotion of education and training, (c) the provision of policy support and other assistance to its constituent authorities as regards any matter relating to local government, or (d) the making of submissions to the Minister or other public authorities as regards such matters. (4) An association of local authorities shall operate in accordance with its constitution or other procedural rules (by whatever name called).”
This part of the LGA also provides statutory recognition for local authority representative associations.
According to the DECLG, there are examples of cooperation between local authorities throughout the country that provide efficiencies alongside enhanced customer services. Under their local government reform programme, one of the important local authority initiatives is that of Shared Services, which will provide an important mechanism to make savings in administrative costs across local authority boundaries, without having an adverse impact on front-line services. They expect savings that could potentially be in the region of 10-15% of baseline costs. Priority areas for consideration include regional Shared Payroll, Integrated Procurement, Transactional HR and both Back/Front Office ICT Services. The re-organisation of these ‘back office’ functions will afford local authorities the opportunity to manage both their staff and their assets in a more cost-effective manner in the long term.
page 696 / 796 Italy [Article ratified - Report adopted on 18 October 2017 ]
Concerning the application of Article 10, paragraph 1: In Italy, the right of local authorities to associate and to form common organisations and structures for the delivery of local services is fully recognised. As a matter of fact, the Italian system provides for different possibilities for municipalities to form co-operative structures in order to carry out their common tasks and public services. This legislative situation is in a certain way unavoidable in ca country with so many and small municipalities (some 5,567 municipalities have less than 5,00 inhabitants as of 1 January 2016). The Testo Unico regulates under different headings the “communities” and the “associative forms”, and the regions (especially those of Special Status, may established other forms or co- operation). For what concerns the first ones, there are “Mountain-area community” (comunità montana, Article 27) and island communities (comunità isolana, Article 29). The first ones may be established in the mountainous areas and may discharge in an associative manner the functions attributed to municipalities, as well as any other function that can be attribute to them by the provinces or by the regions (Article 28). The second ones may be established in the different islands, except in Sicily and Sardegna, and they follow the same rules as the comunità montane.
There are three basic associative forms (forme associative): the conventions (convenzioni), the consortia (consorzi) the unions of municipalities (unione di comuni) and the program agreements (accordi di programma). The Conventions may be defined as agreements performed by two or more municipalities regulating the coordinated discharge of common tasks and services, under some requirements that are regulated in a sketchy way at Article 30 of the Testo Unico. Consortia are organisation formed by municipalities and by other public entities, for the associative management of one or more public services. Contrary to what happens with the Convenzioni, the Consorzi are fully recognised as local entities, and they must have an assembly and a management board of their own (Article 31, Testo Unico). Finally, the unions of municipalities are certainly the most important form of inter-municipal associative structure. They are formed by two or more municipalities for the associative exercise of their functions and services, and they are also recognised as local entities (Article 32). Contrary to consortia, that discharge usually one single task, the union may discharge different tasks, and they are multi-functional. Regions, especially the “special status” ones, have authority to regulate in more details these co-operative instruments and entities.
On this aspect of the Italian system, there are three main ideas that should be underlined in this report:
First, the cooperative structures are well developed. According to 2017 data, 69% of municipalities have adopted one or more conventions, 38% form part of consortia and 27 % are members of Unioni. The number of Unioni was 586 in February 2017. Among the “associative forms”, the unions of municipalities are clearly the most important ones and they have been sometimes seen as precursors of municipal mergers.” Second, recent State legislation (mainly the Delrio Act) introduced measures to revamp the field of inter-municipal cooperative structures. In particular, that statute tried to reduce the cooperative formulae, to discourage both the consortia and the mountain authorities, and to favor the Unioni and the “convenzioni”. Apparently, there is a political willingness to suppress step by step the consortia and other forms of co-operation, such as the mountain communities. On the other hand, a minimum joint population of 10,000 inhabitants among the interested municipalities is now required to found a new union of municipalities. The Unions may be also fostered and supported by the regions, in terms of financial assistance or specific projects.
page 697 / 796 Third, since 2010 (Decree No 78 of 2010) the government has established for municipalities under 5,000 inhabitants the obligation to carry out their “fundamental functions” by means of partnerships, through a Union or a Convention. The main rationale is the need to make savings in the public expenditures and to “rationalise” the public sector. However, since then the deadline for implementing this obligation has been successively postponed. The “current” target date is supposed to be 31 December 2017.
In view of the precedent, it may be concluded that Article 10, paragraph 1 of the Charter is respected in Italy.
Latvia [Article ratified - Report adopted on 27 March 2018 ]
In Latvia, the right of local authorities to associate among themselves, to form common platforms and structures for the joint provision of local services is fully recognized in the domestic legal system. As a matter of fact, the Law on Local Governments includes a full chapter (articles 95 to 100), whose title is “cooperation among local governments”. Concretely, art. 95 provides that, “in order to perform tasks in which all or several local governments have an interest, they have the right to co-operate as well as to establish local government associations…”. There are basically two ways to crystallise such a cooperation: by way of creating a new common establishment or body, and without creating such new organisation. In the latter case, it is enough to sign a co-operation agreement, where the respective obligations of the agreeing municipalities will be written down.
Alternatively, local entities, in order to resolve common tasks, can “institutionalise” their cooperation by establishing a new organisation, which is called “joint institution” in the Law of Local Governments (art. 99). In this case, a by-law must be approved by the council of the constituent local entities. This by-law must regulate in detail the procedures for financing, supervision, liquidation and also the withdrawal from the “joint institution”. A supervisory council, made of representative of all the founding local authorities, is supposed to supervise the functioning of the “joint institution”.
Local representatives told the Delegation that inter-municipal cooperation works well in the country, and that it is mainly used in the fields of cultural services, education and in transportation services. This form of cooperation is also used to organise sport competitions and culture festivals. Finally, we should not forget that the planning regions can also be depicted as true structures for inter- municipal cooperation, since they were incepted on the proposal of local entities and one of their functions is to coordinate the delivery of local public services.
Consequently, article 10.1 of the Charter is fully respected in Latvia.
Liechtenstein [Article ratified - Report adopted on 28 March 2018 ]
The Charter requires signatory countries to provide for the right of local governments to co operate and, within the framework of the law, to form consortia with other local authorities in order to carry out tasks of common interest. Each member state is required to recognise the entitlement of local authorities to belong to an association for the protection and promotion of their common interests and to belong to an international association of local authorities. Furthermore, local governments must be consulted, as far as possible, in due time and in an appropriate way, in the planning and decision-making processes for all matters that concern them directly.
In Liechtenstein, municipalities are free to establish consortia to jointly perform their mandatory tasks. Therefore, the requirements of Article 10 paragraph 1 are fulfilled. The rapporteurs were also
page 698 / 796 informed that some local authorities actively co-operate with their counterparts abroad. The 11 Liechtenstein municipalities have not formed an association, but the rapporteurs did not find any legal prohibition or political obstacle which would prevent local authorities from establishing an association. It seems that the Conference of Mayors plays the same role as local government associations in other countries.
In the rapporteurs’ opinion, the situation in Liechtenstein complies with all paragraphs of Article 10.
Lithuania [Article ratified - Report adopted on 6 November 2018 ]
Article 10 of the Charter covers the co-operation between local authorities and their right to associate, at national and international level.
In Lithuania, there is neither inter-municipal co-operation tradition nor any specific organisational arrangements or strategies for the development of such kind of cooperation.1 Article 5 of the Law on Local Self-Government refers to the possibility for a municipality to conclude joint activity contracts with other municipalities or to transfer the implementation of functions of administrative and public services to another municipality by mutual consent of the municipal councils, on the basis of contracts. Article 16, on the competences of the municipal council, refers to “taking decisions on joining municipality unions, co-operation with municipalities of foreign states or joining international self government organisations”.
Since the first years of restored State independence, Lithuanian government chose the way of municipal consolidation: the big size of the municipalities contribute to explain the limited practice. Later, the focus has been on the Regional Development Councils as tools for cooperation. The inter municipal cooperation is possible, but it is very limited and lack material resources. Basically the cooperation is informal and voluntary, based on solely economic efficiency. It is implemented in the forms of ad hoc project agreements, which are mostly financed by EU funds.
During the monitoring visit, the delegation was informed on several co-operation projects, especially as for infrastructures and investment projects. A good cooperation on transportation does exist between Klaipeda City municipality and its neighbours, as well as between Kaunas City municipality and Kaunas District municipality, whereas in Vilnius area such co-operation is proved to be more complicated and a pilot project is about to be launched.
The second paragraph of Article 10 of the Charter is also fully respected in Lithuania, as local authorities are entitled to set up associations for the protection and promotion of their common interest. The Law on the Basic Regulation of the Association of Municipalities of Lithuania established the ALAL as a national association representing “the common interest of its members, municipalities, in all institutions of State power and government”. Registered as a non-profit organisation, the ALAL seems to be an active entity whose right to represent all the 60 Lithuanian municipalities is respected by the Government and Seimas.
Lithuania has signed and ratified the European Outline Convention on Transfrontier Co-operation between Territorial Communities or Authorities and the addition protocol to the European Outline Convention on Transfrontier Co-operation between Territorial Communities or Authorities. This, in connection with Article 10.3 of the Charter, which fully applies in Lithuania, provides for a robust legal and political basis for Lithuania local governments in engaging in transfrontier co-operation.
As a matter of fact, many municipalities have established numerous partnerships, agreements and twining with towns and cities in other countries. Frequently, these involve cross-border co operation with neighbouring districts in Poland, Russia, Latvia and Belarus. The ALAL represents the interests
page 699 / 796 of its members, in relationship with foreign local authorities and international organisations. One of its tasks is to monitor the implementation of the provisions of the Charter.
Therefore, rapporteurs consider that, Article 10 is respected in Lithuania.
Luxembourg [Article ratified - Report adopted on 21 October 2015 ]
Luxembourg communes are entitled, in exercising their powers, to co-operate and, within the framework of the law, to form consortia with other local authorities in order to carry out tasks of common interest. SYVICOL is a case in point. Since 1996, it has been working to promote, safeguard and defend the general and common interests of its members.
SYVICOL has accordingly managed to establish itself as a spokesperson for the communes, by becoming the government’s preferred contact in all matters concerning local authorities. Alongside its lobbying activities in decision-making processes at national level, SYVICOL actively engages with several European and international bodies whose task is to defend common interests.
The communes’ increasingly numerous and extensive responsibilities in the social, economic and cultural spheres together with communal and national spatial planning have ultimately served to put intercommunal consultation and co-operation on a more formal footing, not least through local government groupings, of which there are now 67.
The rapporteurs conclude that the situation is therefore in conformity with Article 10 of the Charter.
Malta [Article ratified - Report adopted on 29 March 2017 ]
According to Article 37(1) of the Local Councils Act two or more local councils may discharge their functions jointly and they may also arrange for the discharge of these functions by a joint committee of theirs or by an officer of one of them. Furthermore, under Article 37(2) of the Act, local councils having such an arrangement may meet in joint session to discuss the discharge of the functions to which the arrangement relates and all Councillors shall be entitled to participate and vote where required unless the arrangement otherwise provides.
Malta seems to comply fully with this provision of the Charter. Local councils have made use of the aforesaid rights quite extensively in the recently devolved fields of local enforcement, street lighting etc.
Monaco [Article ratified - Report adopted on 28 March 2018 ]
However, paragraph 1 of Article 10, according to which local authorities are entitled, in exercising their powers, to co-operate and to form consortia with other local authorities in order to carry out tasks of common interest, is not applicable to Monaco, as there is only one municipality.
The rapporteurs conclude that Monaco complies with Article 10 of the Charter and encourage the Monegasque authorities to ratify paragraph 2, with which it also complies.
Montenegro [Article ratified - Report adopted on 21 October 2015 ]
Inter-municipal co-operation in Montenegro is regulated by the Law on Local Self-Government and the Strategy of Development of Inter-Municipal Cooperation in Montenegro for the period 2011–2015, together with the Action Plan for implementation for the period 2014–2015.
page 700 / 796 Montenegro has a legal and institutional framework for inter-municipal cooperation, which is legally harmonised with the European Charter of Local Self-Government. Experience in the co-operation of local self-governments in Montenegro has indicated the complexity of inherited problems with a necessity to define a new concept of regional development and inter-municipal co-operation. New institutional frameworks have now been established and a new system of regulatory mechanisms has been promoted. Main objectives of the regulatory policy include a reduction of the disparity among local communities and the building of an institutional and inter-municipal infrastructure. The Strategy of Public Administration Reform in Montenegro for the period 2011–2016, "AURUM", envisages one of the directions of future activities to be "Strengthening inter-municipal cooperation and cooperation with public services and agencies".
Article 127 of the Law on Local Self-Government explicitly accepts the right of municipalities to “freely co-operate and associate their resources in the execution of tasks of their common interest and for the purpose of addressing the needs of the local population”. Municipalities can establish a legal entity “Community” performing certain affairs for them. Article 131 paragraph 1 describes these as “affairs related to administration and public services”. The aim stipulated by the law is to perform them in a “common and more economic and efficient manner”. The agreement leading to establishing the community has to be passed by the respective assemblies of the municipalities. The Community may employ staff.
Articles 131-137 of the above mentioned law relate to the establishment of inter-municipal associations which allow municipalities jointly to perform certain administrative tasks and tasks of public services in a more economical and more efficient manner. Article 133 indicates the role performed by the central government in the field of inter-municipal cooperation: "The Government shall give consent to the regulations on establishing the Community or termination of activities of the Community".
The Government, according to Article 133 of the Law on Local Self-Government has to give its “consent to the acts on establishing the Community or termination of work of the Community from Article 131 of this law”. It does not seem to be clear under which conditions the government is obliged to give its consent and under which circumstances consent might be rejected. If rejection can only be based on reasons of legality – which, of course, should be the case –new questions arise as the law, as already mentioned, only prescribes that a common interest is pursued. Nevertheless, a clarification of the law in this respect might be useful in order to demonstrate that the forming of a Community constitutes part of the right of local self-government and that the national government can reject such plans only on the basis of clearly stated grounds of legality. According to the above- mentioned draft proposal for a Law on Changes and Amendments to the Law on Local Self- Government, Article 133 would be deleted.
Concerning the entitlement of municipalities to form an association (Article 10 paragraph 2), it should be noted that the municipalities of Montenegro “have the status of a legal entity” (Article 115, paragraph 1 of the Constitution). This status does not forbid the forming of associations and the rights and duties of the local governments are not put into question. Art. 128 of the Law on Local Self- Government explicitly expresses that municipalities “may found their own association”. The condition for the acceptance of the Association by the state of Montenegro is that it is founded by more than half of the municipalities.
The delegation of the Congress felt that the Union of Municipalities is given access to the processes of decision-making at the national level and that, vice versa, government and parliament at the national level have an interest in involving the Union in their discussions in order better to understand the position of local governments.
page 701 / 796 The right to co-operate across borders is accepted by Article 130 of the Law on Local Self- Government both for municipalities and the Association of Municipalities. They can co-operate both with municipalities and other associations. The purpose of this co-operation is to realise common interests. Therefore, it can be concluded that there are no legal boundaries for a rational use of this option and the situation complies with Article 10, paragraph 3.
The rapporteurs thus conclude that the requirements of Article 10 of the Charter are met partially by Montenegro. Thereby, they invite the Government and the legislature of Montenegro to reconsider the rules which describe the role of the central level in the creation of institutionalised forms of co- operation between municipalities. In particular, the conditions to be met by the municipalities should be clearly stated in the law and in the light of Article 10, paragraph 1 of the Charter. The delegation was informed by the interlocutors that as part of the current reform of the Law on Local Self- Government the requirement of government consent might be abolished altogether. The rapporteurs welcome those legal developments and are optimistic of the positive effects this reform could have for local authorities’ right to associate once they are applied in practice and in this sense, Montenegro’s full compliance with article 10, paragraph 1. They underline however that monitoring a country’s abidance to the principles enshrined in the Charter is by definition an assessment of the actual situation at the time of the visit and does not allow speculating on the implementation in practice of laws that are yet in the process of being adopted. Accordingly the rapporteurs intend to follow closely the legislative developments of the Law on Local Self-Government.
Netherlands [Article ratified - Report adopted on 26 March 2014 ]
The size, population density and the spatial distribution of local authorities constitutes a more than favourable environment for inter-municipal cooperation in the Netherlands. In fact, the importance of inter-municipal cooperation (which is explicitly provided for by Article 134 of the Constitution) has grown over the last decades, especially on grounds of efficiency and getting economies of scale. Inter-municipal cooperation is used in many areas of local life: housing, town planning, environmental policy, fire prevention, sports and cultural facilities, waste collection and treatment, etc. The most important statute in the field is the “Act on Cooperation” (Wet gemeenschappelijke regelingen) of 1984.
Inter-municipal cooperation can be channelled through four basic types of bodies: the “public body” (openbaar lichaam), the “mutual organ” (gemeenschappelijk orgaan), the “central municipality” (centrumgemeente), and the “functional commission” (functionele commissie). The specific case of inter-municipal cooperation in a “metropolitan” area has been described above for Amsterdam. Municipalities can also establish private-Law entities such as companies, associations and foundations.
North Macedonia [Article ratified - Report adopted on 26 February 2013 ]
The LSG Law 2002 promotes various voluntary forms of cooperation between municipalities. The instruments therefore are regulated in detail in the Law on inter-municipal cooperation (2009) and include (Article 9 of the law): forming joint working or administrative bodies; establishing of mutual public services; and concluding agreements on joining of funds and performance of certain work by one municipality on the behalf of another or more municipalities.
In practice, inter-municipal cooperation seems to be widely used. According to the delegation’s various interlocutors, 80% of the municipalities engage in such cooperation agreements, which are also necessary for entering the second stage of the fiscal decentralisation process.
page 702 / 796 There are numerous examples of cooperation between municipalities in order to make savings in financial and human resources, among which can be cited the cooperation between three small municipalities near Strumica: Vasilevo, Bosilovo and Novo Selo.
All 84 municipalities of “the former Yugoslav Republic of Macedonia” and the City of Skopje are members of ZELS, the internal organisation of which comprises an assembly (85 Mayors gathering once or twice a year), a managing board (19 Mayors from different political parties comprising opposition at national level; decision-making by consensus), one President and two Vice-Presidents (one of which, by statute, has to be a member of an opposition party; one is Albanian), 13 committees (Mayors) and networks (municipal administrative staff).
ZELS carries out training activities for elected officials as well as for civil servants and administrative staff through its own Training Centre for about 1 500 persons per year. Currently, the main topic for training is management of (construction) land in order to prepare municipal staff for the required certification in that area. ZELS has also provided translation-equipment for 32 municipalities for meetings as well as training (including the publication of a handbook) for the Committees of Inter- ethnic Relations. In the field of “e-government/e-municipality”, ZELS is developing an ICT-strategy and provides web-design services and software on its server. Problem-communication by citizens, energy efficiency software and construction land are the main areas covered. By 2012, software for the electronic issuance of building permits, the register for underground cadastre and for electronic payments to the municipality by citizens will follow.
Agreements on transfrontier cooperation as well as membership in international organisations of local government is regulated by several laws, including the law on the ratification of the Charter which contains, in its article 10, the principles laid down by the Charter regarding intermunicipal and transfrontier cooperation and the law on local self-government which provides for cooperation with local authorities of other countries and international organisations of local communities and local authorities (Article 14 para. 4). Hence the collaboration with NALAS, the Network of Associations of Local Authorities in South-Eastern Europe, of which ZELS is a founding member.
Since 2010, ZELS (together with the City of Skopje) has an EU office in Brussels. ZELS is also one of the founding members of NALAS, the Network of Associations of Local Authorities in South Eastern Europe, and actively participates in its activities; it acted for one year as NALAS Secretariat in 2007.
Norway [Article ratified - Report adopted on 26 March 2015 ]
The right of local authorities to associate is guaranteed in Norway. There is a Norwegian association of local and regional authorities (KS), to which all municipalities and counties belong, and which is the government’s preferred contact point in all matters concerning local and regional authorities. Local authorities can also set up co-operation structures to carry out tasks of common interest. These intermunicipal co-operation structures may take various legal forms: public bodies, bodies governed by private law or even municipal foundations. Most Norwegian municipalities are involved in a number of co-operation structures that can range from 8 to 15.
There are also associations which bring together counties and which are active on the international front. For instance, the Eastern Norway County Network association, which gathers eight counties, developed a “European Strategy” for the period 2013-2017, resulting in cross-border cooperation, in particular with regions from Nordic countries, the regions of the Baltic Sea and the North Sea. A cooperation agreement has also been signed with the German Land of Schleswig-Holstein.
The situation is in conformity with article 10 of the Charter.
page 703 / 796 Poland [Article ratified - Report adopted on 2 April 2019 ]
Article 10, paragraph 1, refers to types of cooperation aimed at carrying out tasks of common interest. Polish legislation provides for up to three main forms of inter-municipal co-operation: (a) the inter-municipal association created by municipalities for the joint performance of common tasks; (b) inter-municipal agreements, which do not involve the establishment of a separate legal entity, and (c) the consortium of local authorities, which also admits powiaty and voivodeships as members. The delegation did not hear any remark or complaint and the rapporteurs consider that this principle is fully respected in Poland.
Portugal [Article ratified - Report adopted on 28 September 2020 ]
The rapporteurs noted that there were chiefly two national associations of local authorities: the National Association of Portuguese Municipalities (ANMP) and the National Association of Freguesias (ANAFRE), both of which operate in partnership with the government in terms of consultation.
The National Association of Portuguese Municipalities (ANMP) is an entity governed by private law. Its overall goal is to promote and defend local authorities, to uphold respect for them and to represent them, and in particular to represent and defend municipalities and parishes before bodies of sovereign power; it carries out studies and projects regarding topics relevant to local authorities; it sets up and maintains consultancy and technical and legal advice services for its members; it runs information campaigns for local elections and further training for local authority staff; it facilitates exchanges of experience and information on technical and administrative issues between its members and represents its members in dealings with national and international organisations.
The National Association of Freguesias (or parishes) (ANAFRE) is an entity governed by private law with a public-service mission, whose overall goal is to promote and defend local government and in particular to represent and defend parishes before bodies of sovereign power; it carries out studies and projects regarding local administration issues; it sets up and maintains consultancy and technical and legal advice services for the member parishes; it runs information campaigns and trains local elected representatives and represents its members in dealings with national and international organisations.
These associations’ influence over national policy with regard to local government affairs is still only relative however and could be reinforced. The national and local representatives met by the rapporteurs during their visit commended the constitutional protection of local self-government but deplored the fact that their analyses and concerns were not taken into account at national level. The lack of co-ordination and co-operation structures capable of guaranteeing real participation of local authorities in national affairs still calls for reform therefore, as the local authority participation in the Economic and Social Council is regarded as insufficient.
With the notable exception of an unsatisfactory legal situation in the autonomous regions (see the analysis below on regionalisation), the freedom of association of local authorities in Portugal appears to be a reality. The rapporteurs conclude, therefore, that Article 10 of the Charter is partially complied with.
Republic of Moldova [Article ratified - Report adopted on 4 April 2019 ]
This provision of the Charter deals with intermunicipal co-operation and provides that local authorities shall be entitled, in exercising their powers, to co-operate and, within the framework of
page 704 / 796 the law, to form consortia with other local authorities in order to carry out tasks of common interest. In the Republic of Moldova, the right of local authorities to associate among themselves and to form common platforms and structures for the joint provision of local services is fully recognised in the domestic legal system. In this sense, local governments (towns/cities) can freely form consortia and associate to provide common services. This is mostly used in the field of communal services (water supply, waste management, road maintenance, etc.). The legal basis for intermunicipal co-operation is the Law No. 436/2006 on Local Public Administration. Article 14 thereof regulates the powers of local councils and stipulates that local authorities can, within the conditions set by law, “form an association with other local public authorities, including from abroad, to conduct works, and to provide services of public interest, to promote the interest of local public authorities, as well as to co- operate with businesses and NGOs from the country and abroad to implement action and works of common interest”.
Article 5 of Law No. 435/2006, on administrative decentralisation, also provides that local authorities can co-operate in the implementation of their competences, by setting up joint services and works. In this sense, the towns/cities usually establish joint municipal enterprises or joint stock companies, where all participating municipalities are founders.
While intermunicipal co-operation is indeed a reality in Moldova and there are a number of joint projects, it is not very developed in comparison with European standards. Intermunicipal co- operation appears to be facing some problems, among which stands a partisan conception of politics. The delegation was informed that in many cases mayors are not willing to co-operate with neighbouring cities if they are run by a different political party. The Ministry of Agriculture and Regional Development actively encourages local authorities to co-operate with each other and to create intermunicipal corporations. Furthermore, the model regulation on municipal companies was amended recently by the government to allow several municipalities to found joint municipal corporations.
Consequently, Article 10.1 of the Charter is respected in the Republic of Moldova.
Romania [Article ratified - Report adopted on 3 March 2011 ]
The local authorities’ right to associate and the conditions applicable to their associations are laid down in Law no. 215/2001 (sections 11 to 16). On 16 July 2003, Romania also ratified, with two reservations, the European Outline Convention on Transfrontier Co-operation between Territorial Communities or Authorities (CETS 106), adopted in Madrid on 21 May 1980.
By section 12(2) of Law no. 215/2001, the government permits associations of administrative- territorial units in the context of national development programmes. These programmes are financed on an annual basis from the state budget by means of a separate allocation from the budget of the Ministry of the Administration and the Interior in accordance with the law on local public finances.
Russian Federation [Article ratified - Report adopted on 30 October 2019 ]
Russian legislation provides for the right of intermunicipal co-operation, setting out its forms. In accordance with Articles 8, 66 and 67 of Federal Law No. 131-FZ, municipal associations have been established in each subject of the Russian Federation, together with a pan-Russian umbrella association of municipalities known as the Congress. There are also other intermunicipal co-operation organisations operating in the Russian Federation, such as the All- Russian Council of Local Self-Government, the Union of Russian Cities, the Association of Small and Medium-sized Cities of Russia, the Association of Siberian and Far Eastern Cities of Russia,
page 705 / 796 etc.
There are, however, some pieces of legislation that pose obstacles to intermunicipal co- operation. This involves, in particular, budgetary legislation (the problem of mutual financing of local government’s powers and responsibilities by co-operating municipalities), legislation on privatisation and some other problems. For example, according to Federal Law No. 44-FZ, municipal property cannot be transferred to any other entity other than via an open tender. Therefore, if municipalities form some intermunicipal governing body, they cannot transfer any property or means directly to this body. For the same reason a municipality has no ability to purchase any service providing public goods from another municipality, although such a form of co-operation is common in many countries.
Another reason provided to the delegation is that municipalities themselves are not motivated enough to co-operate with each other. For most of them it is safer and more convenient to solve their problems at the upper level of governance, also because regional State governance would usually be reluctant and suspicious of any form of intermunicipal co-operation “behind its back”. On top of this, there is a very low level of trust between local governments, and a lack of tradition of intermunicipal co-operation, much less positive experience or practice.
The most typical forms of intermunicipal co-operation are maintained through the representative bodies such as intermunicipal associations (federal and interregional – North-West, Siberia and Russian Far East, etc.) or are regional or sectoral (between small cities, coal cities, etc.). These associations are quite widespread and many are active in exchanging experiences and lobbying for municipal interests at the State level, although some aspects of their activity are not quite clear according to the existing legislature.
However, forms of intermunicipal economic co-operation at the micro level are developed very poorly. Several intermunicipal agreements signed by municipalities of the same metropolitan area do exist but most of them are mere declarations of intentions and rarely concern issues of economic or social activity. There are quite a few successful intermunicipal projects in the areas of transportation system co-ordination and cemetery management, among others, but they are considered as rare exceptions. Probably the only type of micro-level intermunicipal co-operation that gained some popularity is the co-ordination in the field of strategic planning, but this does not imply economic activity as well.
Interlocutors from the Federation Council have stressed their co-operation with the All-Russian Public Organisation “All-Russian Council of Local Self-Government” (VSMS). The most important direction of work for this organisation is identifying the best practices of municipal management and the organisation of exchanges of experience between representatives of various municipalities. The VSMS also pays special attention to the issues of assistance for improving the potential of staff within the municipalities and the formation of a personnel reserve for the local self-government bodies.
The Federation Council Committee on Federal Structure, Regional Policy, Local Self-Government and Northern Affairs closely co-operates with the Russian National Congress of Municipalities (OKMO). This is a non-profit organisation, which includes councils (associations) of municipal entities of the constituent entities of the Russian Federation. In accordance with Article 67 of Federal Law No. 131-FZ, it is this organisation that submits proposals on the composition of candidates for the representatives of the Russian Federation in the Chamber of Local Authorities of the Congress of Local and Regional Authorities of the Council of Europe.
page 706 / 796 It has been pointed out that most local government associations in the regions have not been able to defend local government’s interests, and merely limit their actions to representative functions. The Russian National Congress of Municipalities would be even less capable of standing for local self-government in general and municipalities in particular.
During the consultation procedure on the present report, the Russian National Congress of municipalities objected that OKMO drew attention on some local issues such as lack of funding of local budgets, hold congress meetings and that a consultation takes place with the Federal Assembly and Federal ministries regarding the implementation of their recommendations.
Formally, the delegation concludes that the Russian Federation seems to comply with Article 10, even though there is an obvious need for further development of pertinent legislation that would encourage independent initiatives of intermunicipal co-operation to be implemented in practice.
San Marino [Article ratified - Report adopted on 28 March 2018 ]
As already mentioned, townships can discuss issues relating to their own interests during a Joint Session of township representatives (the Mayors), established by Article 30 of Law No. 127/2013 (“Consulta delle Giunte di Castello”). They can submit proposals and legislative initiatives to the Congress of State. The participants in this session appoint a spokesperson by absolute majority for one year, with a possibility of renewal, as long as his/her mandate as Head of a township council is still running. The current spokesperon is the Mayor of Serravalle, Vittorio Brigliadori, and the Heads of the township councils therefore meet regularly at the Serravalle City Hall.
This session is an important institution of inter-municipal cooperation and coordination, but it is not an association with legal personality. Furthermore, it seems that international cooperation could be further regulated and encouraged.
The rapporteurs have come to the conclusion that San Marino partly complies with Article 10.
Serbia [Article ratified - Report adopted on 18 October 2017 ]
This article is about legal means for municipalities to form associations. Paragraph 1 concerns inter- municipal cooperation within the country while paragraph 3 refers to associations with local government units in other countries. The need to develop forms of inter-municipal cooperation was emphasized by the Congress after the monitoring visit of 2011, which recommended institutionalising and developing, together with the Standing Conference of Towns and Municipalities, the practice of inter-municipal cooperation and joint delivery of services. It was also suggested that Serbia sign the European Outline Convention on Transfrontier Co-operation between Territorial Communities or Authorities (ETS No 207).
The delegation came across several examples of inter-municipal cooperation both within Serbia and with municipalities outside the country. The rapporteurs believe that Serbia has generally shown good progress in this respect, although various forms of inter-municipal cooperation still need to be developed in order to facilitate more efficient use of resources. In a draft law amending the Law on Local Self-Government, new forms of inter-municipal cooperation have been introduced, with the SCTM involved in its preparation. This will provide a wider range of possibilities for inter-municipal cooperation.
page 707 / 796 The third paragraph of the article sets out the right of local governments to form associations in order to protect and promote common interests. In Serbia, this right is safeguarded in Article 13 of the Law on Local Self-Government. All local authorities are members of the Standing Conference of Towns and Municipalities – National Association of Local Authorities in Serbia, which plays an important role in representing the joint interests of local government in policy-making towards national and EU level (Congress, Joint Consultative Committee with the Committee of the Regions and CEMR), being recognised as a representative of all local authorities. The SCTM also provides training and advice to local authorities, cooperates with donor community and implements EU funded projects (especially manages grant schemes) for local authorities. The Standing Conference is financed by membership fees and donations without funds from the state budget. Another organisation of great significance is NALED – the National Alliance for Local Economic Development – which is a public-private association between local government and businesses. It has a total of 280 members, of which the majority are businesses, but two thirds of all local government units are members of the organisation. NALED is financed by membership fees and donations and coordinates actions aiming at promoting economic development.
In the rapporteurs’ view, local authorities’ right to associate, as regulated in Article 10, has clearly improved. The findings from the recent visit and the initiatives undertaken in the country since the previous monitoring visit support the delegation's conclusion that Serbia complies with all paragraphs of Article 10 of the Charter.
Slovak Republic [Article ratified - Report adopted on 24 March 2016 ]
In Slovakia, the right of local authorities to associate and to form common platforms is fully recognised. Local authorities are entitled to freely associate with others and thus form national associations. In this sense, Art. 66 of the Slovak Constitution provides that “a municipality shall have the right to associate with other municipalities for securing matters of common interest. Consequently, several associations have been established during the last two decades.
The oldest and most important association of local authorities is the « Association of towns and villages of Slovakia » (Zdrudenie Miesta a Obcí Slovenska, ZMOS). The foundation of the association dates back to January 1990, well before the creation of the new independent Slovak state. Based on the principle of voluntary adherence, ZMOS members currently include 95% of all cities and towns in Slovakia Today, ZMOS is regarded as a non-partisan organisation that defends and represents the interests of local authorities. The association acts as a local interlocutor with the government and conducts lobby in favour of vigorous territorial decentralisation in the country. The financial sources of ZMOS come from the contribution of its members. As a matter of fact, out of 140 municipalities with a city status, 132 are members of ZMOS.
The other important association at national level is the UMS (Únia Miest Slovenska – Union of Towns and Cities of Slovakia) founded in 1994. The UMS comprises only “cities” (in the technical sense), and an amendment of the UMS statutes in 2012 cancelled the possibility for villages to become extraordinary members, although it seems that several towns do participate actively in the UMS activities, Currently, the UMS has 63 de jure members (“cities”) in total. Is it possible for a city to be both a member of UMS and of ZMOS.
Besides these two main associations, two other “sectoral” associations have been established: a. the “K8 Association”, which is the Association of the city of Bratislava and seven regional capitals of Slovakia. It was founded in 2006 as an independent organisation or regional capitals. K8 priorities include the reform of public administration and the financing of the larger cities; b. the Association of Historic Towns and Cities of Slovakia (AHTSoS), formed by cities having historical districts and its main goal is the maintenance and development of their historical heritage.
page 708 / 796 Apart from “institutional” associations, formed by “genuine” local entities, there are other “personal” or professional associations at local level, such as: a. the Association of Municipal Finance Officers of the Slovak Republic (AMFO SR); b. the Slovak City Managers Association (SCMA); c. the Association of the Chief Controllers of Towns and Cities of the Slovak Republic (ACCoTC); d. the Club of the Mayors of Slovak Towns and Cities (CMSTC) e. the Slovak Association of IT experts working in self- governing institutions (ZISS) – supporting eGovernment implementation on self-government layer
Therefore, the association phenomenon is very well developed at local level in Slovakia. All the main associations entertain frequent and fluent negotiations and political dialogue with national authorities (Parliament, Prime Minister, President) (see para 27 supra).
As noted in the introduction of this report, the Slovak Republic has signed and ratified the European Outline Convention on Transfrontier Co-operation between Territorial Communities or Authorities and two of its protocols. This, in connection with art. 10.3 of the Charter, provides for a robust legal and political basis for engaging in transfrontier co-operation. The situation may be depicted as being fairly positive, and local leaders and associations told the rapporteurs that they do no perceive limitations or constraints from the State in this domain.
As a matter of fact, many municipalities have established partnerships, agreements and twining with towns and cities in other countries. For instance, the city of Bratislava is very active in the area of international co-operation. It conducts a strong co-operation scheme with Vienna, which has resulted in a number of joint projects (transport links, social housing, bike paths, etc.). Another cooperative structure has been done with the Austrian Land of Lower Austria. The agreement covers 11 main areas (transport, infrastructure and mobility, tourism, etc.). The city is also very active within the context of the Council of Danube Cities and Regions.
Besides the individual municipalities, both the ZMOS and the UMS associations are also very active in trans-frontier local co-operation.
Consequently, the present situation of the right of association is fully in compliance with the requirements of Art. 10 of the Charter.
Slovenia [Article ratified - Report adopted on 6 November 2018 ]
The principle of voluntary municipal cooperation is included in the Slovenian legislation (Articles 49a, 61, 86a of the Local Self-Government Act).
There are several forms of inter-municipal cooperation: - joint municipal administration; - joint managing authority of public enterprises, public funds and public agencies; - joint interest associations of municipalities or unions of municipalities; - associations of municipalities.
At the end of 2017, there were 53 joint municipal administrations with 202 municipalities involved. For joint performance of local tasks, municipalities in joint municipal administration shall be provided with additional funds to perform tasks such as – municipal inspection supervision, legal services, internal audits, budget accounting, environmental protection, spatial planning. The Government provides co financing for joint municipal administrations. During the consultation procedure, the Ministry of Public Administration provided the data according to which the co-financing constantly increased: 2012 4,198 mio EUR 2013 4,426 mio EUR 2014 4,778 mio EUR 2015 4,830 mio EUR 2016 4,863 mio EUR 2017 5,376 mio EUR 2018 5,576 mio EUR
The Ministry of Public Administration also informed the delegation that through amending the Financing of Municipalities Act (Official Gazette of the Republic of Slovenia, No. 71/17), which
page 709 / 796 entered into force on 1 January 2018, the conditions for the co-financing of joint municipal administrations have been changed and the municipalities dispose of a two-year transition period for adaptation.
Joint managing authority of public institutions of public enterprises, public funds and public agencies is a way to ensure efficient provision of public services. Usually such joint bodies perform tasks on behalf of municipalities that have established them. To ensure equal representation of municipalities, they have equal founding shares in joint bodies and each municipality or mayor has one vote in the joint body.
Amendments to the Local Self-Government Act were submitted by the Government in December 2017 to the National Assembly and the amending act ZLS-S was adopted on 17 April 2018. This includes simplifying the establishment of an association of municipalities as an institutional form of inter-municipal cooperation, to which municipalities can delegate the implementation of tasks within their competence, including part of their regulatory powers.
Unions of municipalities are a form of inter-municipal cooperation aimed to implement public services requiring large-scale infrastructural investment and demanding maintenance. These forms of cooperation enable municipalities to pool resources, build new infrastructure and jointly decide on development issues.
Consequently, Article 10.1. of the Charter is fully complied with.
Spain [Article ratified - Report adopted on 20 March 2013 ]
The right of associations of municipalities is guaranteed by Article 44 of the Law 7/1985 and the Fifth Additional Provision of Law.
In this respect, one good example is the Spanish Federation of Municipalities and Provinces (Federación Española de Municipios y Provincias, FEMP), which is the nationwide Association of Local Entities with the largest established base, grouping together Municipalities, Provincial Councils and Insular Councils: a total of 7 287, who represent more than 89% of Spanish Local Governments. The FEMP maintains working relations with the Federations of Local Entities of regional scope who so desire, signing with each of these a protocol that specifies the terms and extent of such agreement in each case. The FEMP also maintains good relations with the Association of Basque Municipalities- EUDEL.
Another positive example was given to the delegation during the meeting with the representatives of FAMSI – the Andalusian Fund of Municipalities for International Solidarity, which is a network of municipalities and provinces and other private and public institutions. FAMSI groups together more than 150 institutions in Andalusia and was founded with the aim of co-ordinating and promoting the public decentralised international co-operation carried out by local governments in Andalusia. FAMSI is present in Latin America, Africa, especially in Morocco, and Asia.
In the light of Article 10 of the Charter the rapporteurs conclude that Article 10 of the Charter is fully respected in Spain.
Sweden [Article ratified - Report adopted on 2 April 2014 ]
For cooperation at local level the national legislation offers two formal solutions under public law: Statutory Joint Authorities or a Joint Local Government Committee. Municipalities and county councils
page 710 / 796 may also cooperate in the form of companies under private law.
A Committee with representatives from the parties in the Riksdag has recently been given the task of looking into the current forms of local government cooperation and, where necessary, proposing new forms of cooperation (Swedish Government Official Reports (SOU) 2012:30. The committee considered that cooperation is an important tool for municipalities and county councils today and considered that the need for local government cooperation could be expected to increase in future. As for the forms of cooperation, no need was seen to create new public law bodies for cooperation. What was requested was more flexible and less formalised cooperation models.
The entitlement of local authorities to belong to an association for the protection and promotion of their common interests is fully guaranteed in Sweden. The Swedish Association of Local Authorities and Regions (SALAR) is both an employers’ organisation and a body that represents and advocates for local government in Sweden. Although membership is voluntary all of Sweden’s municipalities, counties and regions belong to this association.
The rapporteurs consider that Sweden complies with the provisions of Article 10 of the Charter.
Switzerland [Article ratified - Report adopted on 20 October 2017 ]
So long as they abide by cantonal legislation, municipalities are free to decide on the forms of co- operation that they wish to establish. Intermunicipal co-operation (or collaboration) is very common in Switzerland and is being used more and more to carry out responsibilities. Thus every municipality in Switzerland collaborates with other municipalities in about ten fields on average. The most common fields for collaboration are firefighting, health care, school education, sewage, care and support for the elderly, refuse, social security and water supply. Co-operation often involves costly, infrastructure-intensive responsibilities that small municipalities in particular have trouble managing on their own.
Intermunicipal co-operation is an alternative to merging municipalities. It is a way for municipalities to improve their efficiency whilst keeping their identity and autonomy. In practice, however, insufficient democratic legitimacy and the complexity of co-ordinating different intermunicipal organisations stand in the way of this solution.
In the Swiss cantons, intermunicipal co-operation has developed mainly through two instruments of public law: - The intermunicipal agreement, in particular, which lays down methods of co-operation for a specific purpose for action in a single field (education, water or energy supplies, land-use planning). - The intermunicipal consortium, a body governed by public law, which is intended for joint performance of one or more public responsibilities.
On 23 September 2009 the Parliament of Jura amended its Law on Municipalities to allow the establishment of urban consortia. Municipal consortia are often used to manage intermunicipal matters (transport, schools), but it seems that the way in which they are managed is not very democratic, since the municipalities are represented on consortia management bodies by representatives who are not necessarily members of the elected body.
Other co-operative bodies also exist for urban centres. For example, the Canton of Bern, after amending its constitution and Law on Municipalities, has established an intermediate institution between the canton and the municipalities that is known as a “regional conference”, an “authority governed by municipal law for the purpose of regional co-operation among municipalities on a binding legal basis” (Article 110a of the cantonal constitution), which was set up pursuant to a joint decision by the electorate and the municipalities. The role of a regional conference is to prepare
page 711 / 796 regional structure plans (transport, urban development). Cultural policy and regional responsibilities are determined according to the legislation on regional policy. Municipalities can also delegate other responsibilities to the new institution, which has its own decision-making and financial-management bodies.
Co-operation can also be pursued through “metropolitan conferences”, as is the case in Zurich, where the metropolitan conference brings together on a voluntary basis 120 municipalities and eight cantons around Zurich. This private-law body has a board and two chambers (one for the municipalities and one for the cantons) that meet twice a year. This metropolitan conference represents shared interests and can initiate joint projects for transport, the environment and social and economic development, which can then be implemented by the authorities concerned.
The rapporteurs note that municipalities are able to join forces to protect their common interests.
The Union of Swiss Towns, founded in 1897, protects the interests of Switzerland’s towns and urban municipalities, providing them with various services. For a long time, municipalities with more than 10 000 inhabitants were considered to be towns. In December 2014, the Federal Statistical Office provided a new definition based on population density, employment and overnight stays. With the new definition, Switzerland has 162 statistical towns. 84% of the population live in these towns and the urban areas surrounding them. Membership of the Union of Swiss Towns is open to municipalities with at least 5000 inhabitants that, by tradition and as a result of their development, are urban in nature (a cantonal capital, for example). The Union of Swiss Towns has 130 members. Cities such as Zurich and Geneva, but also urban areas such as Meyrin and Riehen and smaller towns such as Burgdorf and St Moritz, all belong to it. The Union of Swiss Towns thus represents some three quarters of the Swiss population. These areas also account for 84% of the country’s economic activity.
The Union of Swiss Towns regularly participates in the Confederation’s consultation procedures, sits on the Confederation’s expert commissions and constantly liaises with the federal administration, Parliament and the parliamentary committees. The Association of Swiss Municipalities was founded in 1953 and now covers over 70% of all the municipalities in Switzerland. Its main aims are to strengthen municipal self-government and the municipalities’ capacity for self-management and to protect the interests of Swiss municipalities in the federal state by seeking to influence federal legislation. To assist municipalities with their daily responsibilities, the Association of Swiss Municipalities offers various services: auditing of annual accounts and special audits; preparation of financial plans and financial analysis; training for municipal officials and authorities, etc.
It should also be reiterated that the Tripartite Conference on Agglomerations (TCA) is an important forum for dialogue between Switzerland’s various institutional levels. Supported by the Confederation, the Conference of Cantonal Governments, and associations of towns and municipalities, the TCA adopts mutually agreed positions on important policy matters. In 2017 its field of action was extended to rural areas, and it has thus been renamed the “Tripartite Conference”.
Lastly, municipalities in the same canton can join forces to facilitate dialogue with the canton. Thus in 2009, for example, municipalities in Jura established the Association of Jura Municipalities (AJC). This important partner allows regular contact between the cantonal authorities and the AJC committee and assembly on issues of current concern involving both the canton and the municipalities.
Municipalities can forge co-operative ties with other municipalities in other cantons provided that this is allowed by cantonal law. Co-operation with municipalities in neighbouring countries may also
page 712 / 796 be instituted, but only if the cantons to which the Swiss municipalities belong are authorised by federal legislation to enter into agreements with entities abroad.
In general, cross-border co-operation is growing in importance. It should here be noted that the Karlsruhe agreement signed on 23 January 1996 between Switzerland, Germany, France and Luxembourg has considerably facilitated this co-operation at the local level by allowing municipalities and associations of municipalities in the cantons concerned to sign agreements directly with authorities in neighbouring countries, particularly for transport.
The rapporteurs consider that Switzerland is in compliance with Article 10 of the Charter.
Turkey [Article ratified - Report adopted on 1 March 2011 ]
The analysis article by article is currently unavailable
Ukraine [Article ratified - Report adopted on 31 October 2013 ]
One particular demand from the associations relates to the issue of strengthening co-operation between local authorities. Article 142(2) of the Constitution makes provision for local authorities to co-operate within the meaning of Article 10 of the Charter. A draft law on co-operation between local authorities was supposed to strengthen co-operation between municipalities still further (Cabinet Decision No. 169 of 29 February 2012).
The rapporteurs have noted with satisfaction the establishment, in 2002, of the Congress of Local and Regional Authorities of Ukraine by the three national associations that have signed an agreement and adopted a charter with the aim of coordinating the decisions between the associations, the presentation of proposals to the government to strengthen local democracy and the development of contacts with international organisations. The conference consists of three Chambers (villages, towns and regions). Each Chamber is composed of 100 delegates. The plenary session requires a quorum of at least 50% of the delegates from each Chamber. Decisions are taken by a majority of the delegates present. The Congress has a Council made ​​up of 12 representatives of the associations, which manages the daily operations, adopts the agenda of the plenary session, approves the composition of the Chambers and manages the budget.
The explanations given above in section 4.2 show that there is a well-established official consultation procedure. In addition, the associations regularly send memorandums to the government describing problems they have encountered or commenting on relations between institutions. The rapporteurs have not been able to ascertain whether the government replies to the associations’ comments – and if so, within what timeframe. It should also be noted that the associations have negotiated “co- operation agreements” with a number of relevant ministries for the preparation of draft administrative legislation and regulations.
As to transfrontier co-operation, by way of an example, the city of Ivano-Frankivsk has said that it is a member of twenty municipal twinning schemes. With financial assistance from the EU (EUR 800,000), the city takes part in a transfrontier co-operation project with Romania. Other projects are implemented with the support of the European Bank for Reconstruction and Development (EBRD), with the authorisation of the state, and the Nordic Environment Finance Corporation (NEFCO).
Ukraine therefore complies with Article 10 of the Charter in law and in practice. However, it does still need to be ascertained whether the draft law mentioned above will provide for genuine local self-
page 713 / 796 government in terms of co-operation and the right to associate or if state pressure to increase co- operation between municipalities will undermine or may undermine local authorities’ freedom in their work.
United Kingdom [Article ratified - Report adopted on 26 March 2014 ]
Given that by comparison with other countries, local authorities in the United Kingdom are relatively large and have considerable functions, it is no surprise that inter-municipal co-operation has not developed much. However, there are statutory powers allowing for co-operation; in particular, councils are empowered to arrange for the discharge of their functions by another local authority as well as to establish joint committees (e.g. for running combined services in urban areas in England, such as the Tri-borough in London). In addition, certain ministerial powers exist for the compulsory establishment of joint boards which are arrangement for the joint exercise of functions by two or more local authorities (e.g. joint police boards, joint fire and rescue boards). More recently, in some cases, local authorities have opted for sharing the services of certain administrative offices among them. The economic downturn and the financial cuts have produced a new trend towards co- operation in combined authorities. The latter are established by Parliamentary Order upon request which guarantees certainty and permanence (individual authorities cannot leave the authority once established).
England
One English policy that should be mentioned is “Community Budgets”, which combine local authorities and other agencies in areas of integrated services to deliver better outcomes and realise efficiency savings. This initiative began with four pilots (London, Manchester, Essex and Cheshire) working with a wide range of agencies, including local police, fire and health services. Due to their success and potential demonstrated, the Government (through the Public Service Transformation Network) are working intensively with 9 new places to support them transform the way they deliver services and spreading learning wider to all areas interested in this approach. However, they also require changes in the organisation of services under central control and pose the question of who assumes leadership in these processes.
In November 2011, the Greater Manchester Combined Authority used the Localism Act 2011 for obtaining a further transfer of powers from the UK central government, enhancing its powers over transport and housing and granting it competencies to fund and control schemes on its own terms. The focus is on economic growth in a functional economic area. Favoured by the historical experience of cooperation in the area, 10 local authorities came together on a voluntary basis and co- operate in particular on policing, tourism and markets. Central government supported this with financial benefits.
A City Region is a functional economic area based around one of the eight core cities: Birmingham, Bristol, Leeds, Liverpool, Manchester, Nottingham, Sheffield and Newcastle. Normally, the local authorities come together in a partnership. The Leeds City Region is the functional economic area, defined by the way businesses operate and residents live their lives. It is the largest city region in the UK, home to 3 million people and 100,000 businesses, and generating 4% of the UK’s economic output. The Leeds City Region refers to the local authority districts of Barnsley, Bradford, Calderdale, Craven, Harrogate, Kirklees, Leeds, Selby, Wakefield and York and brings together the public and private sectors – and partners in government, education and the third sector. The partnership works to a common vision for economic prosperity. However, partnerships involving other bodies than local authorities might bear negative consequences for local leadership and democratic accountability.
City Deals are an incentive for co-operation, e.g. through combined authorities. They are all
page 714 / 796 different, negotiated and supported in financial terms by the central government. Although widely seen as positive, it is also criticised on the ground that the exclusive government funding risks creating new dependencies and forms of central patronising. As their extension to bigger towns (not to rural areas) is probable, the power(s) to set own local agendas with these forms should be strengthened.
Wales
Local Service Boards (LSBs) are non-statutory partnerships across all 22 local authorities in Wales. They were set up in response to the 2006 Beecham Review’s observations that local public services in Wales faced three major barriers in terms of delivering citizen centred services: culture, complexity and capacity. Working across organisational boundaries and pooling capacity and expertise LSBs provide a platform where the leaders of local public and third sector organisations come together to take collective action to ensure public services are effective and citizen focussed. The membership, structure and approach of LSBs vary across Wales, but all have the key leaders and chief executives of the major public service providers in the area. Concern has been expressed with regard to the domination exercised by the authorities responsible for the greatest expenditure. In recent years, local authorities have had to consider whether to focus efforts on ‘deepening’ relations at the local authority level through, for example, LSBs, or ‘widening’ joint working by collaborating across a number of local authority areas.
In Wales, the Welsh Government’s City Regions concept shall strengthen economic development by overcoming practical difficulties due to the fact that different services are often organised on different bases. Apart from police, powers necessary for realizing the concept are devolved. Two City Regions are developed for South Wales: the Swansea Bay City Region and the South East Wales City Region. All relevant local authorities are playing a full and central role in the development of these City Regions together with other key partners for economic development. In North East Wales (Dee region), the possibility of a cross-border City Region is being explored, but there is real concern amongst North Wales local authorities that the focus on City Regions in South Wales will be to the detriment of investment and economic development in North Wales. However, it is still too early to assess the success of this approach.
There are four organisations representing local government in the United Kingdom:
Local Government Association (LGA)
The Local Government Association (LGA) is the national representation of (English and, where applicable, Welsh) local government and works with councils to support, promote and improve local government. It is a cross-party organisation that works on behalf of councils to ensure local government has a strong, credible voice with central government. It aims to influence and set the political agenda on the issues that matter to councils so they are able to deliver local solutions to national problems; it also intervenes in the legislative process, by giving evidence, publishing position papers and lobbying MPs. Two years ago, the LGA had seen its budget halved and, by consequence, had to reduce staff drastically.
In total, 412 local authorities are members of the LGA for 2012/13. These include English local councils, Welsh councils via the Welsh LGA, and fire, national park, passenger transport and police authorities, plus one town council.
“Core Cities” are a self-selected group of bigger, metropolitan cities with similar problems and lobbying interests. Arguments discussed in this forum are not limited to the local authorities in the strict sense, but also linked to City Regions. There was a controversy in spring whether they still feel
page 715 / 796 represented by the LGA, but the question seems settled now.
“London Councils” is a forum of and for the London Boroughs which meet together and also, sometimes, with the GLA.
Welsh Local Government Association (WLGA)
As an ‘umbrella’ organisation, the Welsh Local Government Association (WLGA) represents the 22 local authorities in Wales; the 3 fire and rescue authorities and 3 national park authorities are included as associate members. Originally established in 1996 primarily as a policy development and representative body, the WLGA has since developed into an organisation that also leads on improvement and development, equalities, procurement, employment issues and hosts a range of partner bodies supporting local government. With the introduction of devolution in Wales, the WLGA has played an important role in representing Welsh local authorities in negotiations with the devolved government and giving evidence in committee-meetings by invitation of the Welsh National Assembly. The WLGA members are still members also of the LGA.
Convention of Scottish Local Authorities (COSLA)
The Convention of Scottish Local Authorities (COSLA) represents Scottish local government. It was formed in 1975 following local government reform of the previous year to act as an interface between local authorities and Scottish Government and the Scottish Parliament, as well the UK and EU institutions where applicable. The organisation represents all 32 Scottish local authorities. It also acts as the employers’ association for all Scottish local authorities, negotiating on conditions of services with trade unions. In addition, there is a range of organisations representing the interests of particular professional groupings within Scottish local government, in particular SOLACE (Scotland), representing Chief Executives and senior managers in Scottish local authorities. COSLA meetings with all 32 Council Leaders are held regularly once a month plus bigger gatherings three times a year. Recently, the COSLA Convention has launched a general public debate on the position of local government in Scotland; all Councils have agreed on a vision called “Local Matters. To develop this approach further, the Commission on Strengthening Local Democracy has been launched.
Northern Ireland Local Government Association (NILGA)
The Northern Ireland Local Government Association (NILGA) is supported by the main political parties in Northern Ireland together with representatives from other parties, and is supported by elected representatives from all 26 local authorities who are members. NILGA is involved in the reform process and consulted, in particular by evidence in the Northern Ireland Assembly. It cooperates with Irish and other UK Local Government Associations.
Trans-frontier co-operation (Northern Ireland)
North/South cooperation is one of the important elements of the Good Friday Agreement for Northern Ireland. Apart from the North/South Ministerial Council, concrete trans-frontier cooperation projects and regions have been established bridging the border between Northern Ireland and the Republic of Ireland. East Border Region Ltd is a local authority led trans-frontier network with 10 local councils from Northern Ireland and 3 county councils of the Republic of Ireland engaged in a cooperation, also for access to EU structural funds (with the role of Implementing Body in the Ireland/Northern Ireland INTERREG IIIA and IVA Programmes). It is a member of the Association of European Border Regions (AEBR).
The Special EU Programmes Body (SEUPB) manages cross-border European Union Structural Funds
page 716 / 796 programmes in Northern Ireland, the Border Region of Ireland and parts of Western Scotland. The SEUPB is one of the six cross-border Bodies set up under the “Agreement between the Government of Ireland and the Government of the United Kingdom of Great Britain and Northern Ireland establishing implementing bodies” signed on 8 March 1999 (the British-Irish Agreement of 8 March 1999). The Agreement was given domestic effect, North and South, by means of the North/South Co- operation (Implementation Bodies) (Northern Ireland) Order 1999 and the British-Irish Agreement Act 1999 respectively. The SEUPB has a role to facilitate project participation in the INTERREG IVB Transnational Programmes which are relevant to Northern Ireland and the Border Region of Ireland and also the INTERREG IVC Programme, which is open to projects across the European Union. It functions as the Managing Authority, Joint Technical Secretariat and Certifying Authority for the INTERREG IVA and PEACE III Programmes.
However, according to interlocutors, in Northern Ireland structural funds and peace funds are currently under the responsibility of five different Managing Authorities as five Departments are involved in structural funds projects. Through concentration in one system, red tape could be cut and funds be managed more efficiently.
Conclusions as regards compliance with Article 10
Joint activity in the provision of services and in relation to management of an authority involves, as a result of resource pressures, ia range of different forms of collaboration from formal joint committees to informal partnership arrangements. Voluntary co-operation also develops in new forms in urban areas to cope with metropolitan situations, and there is also a lot of voluntary cooperation and sharing of staff in rural areas. It is certainly an alternative to structural change. Some forms are still experimental, but the current trend might be interpreted as the beginning of a bottom-up restructuring process of local government to be systematically assisted. At least in urban areas, single tier (unitary) authorities are now standard. A balance between efficiency gains through these new forms of cooperation and sufficient guarantees for democratic accountability seems important for the future. This also leads to the question whether in the medium-term the experience with these developments should not be organically regulated in a systemic legal regulation on local government.
The developments in Scotland and Wales appear similar, despite differences in detail (e.g. English and Welsh City Regions). Co-operation seems a general trend also in Scotland and Wales. While in Northern Ireland the process of reducing the number of local authorities is under way, further amalgamation is subject to a (controversial) debate option in Wales and Scotland.
In the law-making process, consultation with local authorities in England takes place mainly through Parliament (MPs and Members of the House of Lords as well as evidence). The Rapporteurs are of the opinion that, overall, the representation through the LGA appears as efficient and effective and in compliance with the requirements of the Charter.
The Rapporteurs consider that the situation regarding the right to associate and to associations is in compliance with Article 10.
Article 10.2 Local authorities' right to associate
The entitlement of local authorities to belong to an association for the protection and promotion of their common interests and to belong to an international association of local authorities shall be
page 717 / 796 recognised in each State.
Albania [Article ratified - Report adopted on 31 October 2013 ]
Consult reply indicated at article 10.1
Andorra [Article ratified - Report adopted on 28 March 2018 ]
Consult reply indicated at article 10.1
Armenia [Article ratified - Report adopted on 15 June 2021 ]
Article 10.2
2 The entitlement of local authorities to belong to an association for the protection and promotion of their common interests and to belong to an international association of local authorities shall be recognised in each State.
231. Although only in an indirect way, the LGA recognises the right of communities to form and join associations with the objective of co-ordinating the activities of the communities, as well as representing and protecting common interests, when it authorises the community councils to take a decision on these issues (Article 16(22)).
232. There is a national association of Armenian municipalities that any community may freely join. For further detail on this issue, see Part 5. There is also an association of municipal councillors that formally exists.
233. Thus, the right of municipalities to form and belong to associations in order to protect and promote their interests is guaranteed.
Austria [Article ratified - Report adopted on 28 September 2020 ]
All municipal codes of the Länder allow municipalities to form municipal associations, administrative associations and conclude agreements (e.g. in Burgenland, the relevant Articles are 20, 21 and 22a; for Carinthia, Articles 17, 81 and 82; in Lower and Upper Austria, Section 3; for Salzburg, Articles 12 and 48; in Styria, Articles 37, 38 and 38a for small regions; in Tyrol, Articles 129 et seq and 142a and finally, in Vorarlberg, Article 93 et seq. and Article 97).
The rapporteurs conclude that Austria complies with this provision.
Azerbaijan [Article ratified - Report adopted on 17 June 2021 ]
As mentioned above, national associations for each of the different category of municipalities exist and operate in Azerbaijan, although their impact and influence on determining policies for the local level and on assisting municipalities in better performing their tasks remain limited.
No limitations exist in the law with respect to the right of each municipality to join said associations and reportedly most municipalities are indeed members.
page 718 / 796 For these reasons, the rapporteurs conclude that the legal and practical situation is in compliance with the provision of Article 10.2 of the Charter.
Belgium [Article ratified - Report adopted on 15 October 2014 ]
Flemish Region (Vlaanderen)
Consult reply indicated at article 10.1.
Walloon Region and German-speaking Community
Local authorities in the Walloon Region and the German-speaking Community also have the right to belong to an association for the protection and promotion of their common interests. The most significant associations are the Union of Towns and Municipalities of Wallonia, which defends the interests of local government at all levels whilst also acting as its mouthpiece, and the Association of Walloon Provinces, which aims to provide its members with all the services they need to carry out their missions, as well as to promote the institution of the province and uphold its independence. Local authorities also belong to international associations; for example, some Walloon municipalities are members of the International Association of French-speaking Burgomasters.
Brussels-Capital Region
Consult reply indicated at article 10.1.
Bosnia and Herzegovina [Article ratified - Report adopted on 31 October 2019 ]
Bosnia and Herzegovina has two independent Associations of Municipalities and Cities (AMCs), one in and for the Federation of Bosnia and Herzegovina and the other one in and for Republika Srpska. The Association of local authorities of Republika Srpska consists of 64 local governments, whereas the Association of Municipalities and Cities of the Federation of Bosnia and Herzegovina represents 80 local governments, plus Brčko District. They play a crucial role in advocating for changes in legislation and funding on behalf of municipalities, hold regular meetings and frequently organize discussions for their members and the public. They also provide professional services to municipalities primarily in the area of legal and fiscal support and EU integration. A jointly funded project by the Swiss and Swedish Governments aims at strengthening capacities and activities over three phases in the period from January 2016 to December 2027, with a total investment of 5.000.000 CHF. The project will be realized in partnership of the Swiss Agency for Development and Co-operation (SDC) and the Swedish International Development Cooperation Agency (SIDA).
The Association of Municipalities and Cities of the Federation of Bosnia and Herzegovina repeatedly criticized the authorities for not having been sufficiently involved in the reform processes, by contrast with the Congress’s last recommendation.
The situation of the associations is in compliance with Article 10.2.; their representative role should be continuously and constructively used in consultation processes, in particular where reforms are planned.
Bulgaria [Article ratified - Report adopted on 21 January 2021 ]
Article 10.2
page 719 / 796 1. In this paragraph the Charter sets out the right of local authorities to belong to: (a) a national association for the protection and promotion of their common interests; and (b) an international association of local authorities. At this point, the Charter is unusually categorical: that right “shall be recognised in each State”. This is the only provision in the Charter where this wording is used, which reinforces the directly enforceable nature of the paragraph.
1. The National Association of Municipalities in the Republic of Bulgaria (NAMRB) was established on 11 December 1996 by one third of all Bulgarian municipalities. By the middle of 1997, the number of municipalities-members reached two thirds, which entitles the association to be a legitimate representative of the local government and to represent and defend its interests. Since 1999, 264 municipalities have been members of the NAMRB, and the newest Bulgarian municipality, Sarnitsa, became a member of the NAMRB in 2015. The association is a legal non-profit entity created under Article 9 of the Law on Local Government and Local Administration and under the Non-Profit Legal Entities Act. It operates on a voluntary principle and on principles of equality of its members.
Croatia [Article ratified - Report adopted on 20 October 2016 ]
See answer at article 10.1
Cyprus [Article ratified - Report adopted on 20 October 2016 ]
See answer at article 10.1
Czech Republic [Article ratified - Report adopted on 8 March 2012 ]
Consult reply indicated at article 10.1
Denmark [Article ratified - Report adopted on 31 October 2013 ]
Consult reply indicated at article 10.1
Estonia [Article ratified - Report adopted on 29 March 2017 ]
Consult reply indicated at article 10.1.
Finland [Article ratified - Report adopted on 28 March 2017 ]
Consult reply indicated at article 10.1.
France [Article ratified - Report adopted on 22 March 2016 ]
Consult reply indicated at article 10.1
Georgia [Non ratified - Report adopted on 7 November 2018 ]
Article 76, paragraph 3, of in the constitution provides that: “a self-governing unit shall be entitled to join unions of self-governing units in accordance with the organic law”. The right of local self- governing units to associate is also guaranteed by Article 20 of the Code of Local Self-Government. It
page 720 / 796 allows local self-governing units to establish a union (association) in the form of a non-commercial legal entity for the purpose of co-ordinating their own activities. Such unions are authorised to participate in the decision-making process and conduct consultations with the State authorities, and also to review draft laws and other projects. They are also entitled to join international associations of self-governing units. NALAG is recognised as the national association of Georgian local self- governing units. It renewed its political leadership following the local elections in 2014 and another transfer of power took place after the 2017 local elections. The current president of NALAG is the Mayor of Tbilisi, but NALAG has a multiparty executive board and its membership is formed on the basis of regional representation.
NALAG has concluded a memorandum of understanding with the Georgian Parliamentary Committee on Regional Policy and Self-Government and also with the Georgian Ministry of Regional Development and Infrastructure. The association is actively involved in discussions on any matter that has direct influence on local government. During the presentation of the new decentralisation strategy, the Government of Georgia stated that NALAG will be a key partner for the government during implementation of the next stage of decentralisation in Georgia.
Georgia therefore fully complies with Article 10, paragraph 2, of the Charter and could ratify the relevant provision.
Germany [Article ratified - Report adopted on 14 March 2012 ]
Consult reply indicated at article 10.1
Greece [Non ratified - Report adopted on 26 March 2015 ]
Hungary [Article ratified - Report adopted on 12 February 2021 ]
The second paragraph of Article 10 of the Charter is also respected in Hungary.
Advocacy associations of Hungarian local governments are regulated by the Cardinal Act on Local Self-Government in Article 131, as part of the relationship between national and local authorities. The main reason for this paradigm is that members of associations have initiative and advocacy tasks in the field of legislation on the structure of the local governments and local public services. These bodies are defined by the Act as the main consultation partners of the Government of Hungary; thus, these bodies are classified as special consultative organisations. The conditions for the formation of these associations are defined by the Act, and strict terms of representativeness are required.
Hungary has several associations of local authorities, even compared with countries with considerably larger populations and surface areas. These associations all have differing missions, and their members appear to be keen on maintaining this diversity of representation.
The seven local authority associations are as follows: - National Interest Group of Small Town Local Governments (Kisvárosi Önkormányzatok Országos Érdekszövetsége, KÖOÉSZ) - National Local Government Federation of Villages, Smaller Municipalities and Micro-Regions (Községek, Kistelepülések és Kistérségek Országos Önkormányzati Szövetsége, KÖSZ) - The Hungarian Village Federation (Magyar Faluszövetség)
page 721 / 796 - Alliance of Cities of County Rank (Megyei Jogú Városok Szövetsége, MJVSZ) - National Alliance of County Governments (Megyei Önkormányzatok Országos Szövetsége, MÖOSZ) - National Alliance of Municipal Governments (Települési Önkormányzatok Országos Szövetsége, TÖOSZ) - National Alliance of Local Governments (Magyar Önkormányzatok Szövetsége, MÖSZ)
Therefore, the rapporteurs believe that Article 10.2 of the Charter is fully respected in Hungary.
Iceland [Article ratified - Report adopted on 29 March 2017 ]
See answer at article 10.1
Ireland [Article ratified - Report adopted on 31 October 2013 ]
Consult reply indicated at article 10.1
Italy [Article ratified - Report adopted on 18 October 2017 ]
As regard Article 10, paragraph 2, the right of local authorities to form associations for the representation and defense of their interests is fully recognised in Italy, and the vitality of the associations life is the best argument to support the full compliance with Article 10, paragraph 2. In this sense, the most important local associations are: ANCI (associazione nazionale di Comune d’Italia). This is the largest and most important national association. The municipalities that have adhered are more than 7,300, representing 90% of the overall number. This association has also “regional” chambers or sections; UPI (unione delle provincie italiane): this is the association of Italian provinces, and currently a powerful and clear voice of the provinces in the changing political landscape. It represents all Italian provinces, except those of Trento and Bolzano (parts of a region having a special status); UNCEM is the association representing the mountain towns and communities; AICCRE is the “Associazione italiana per il Consiglio dei Comuni e delle Regioni d’Europa”. It is the Italian section of the CCRE (Conseil del Communes et des Regions de l´Europe).
Apart from these “institutional” associations, formed by “genuine” local entities, there are other associations at regional level.
These associations are very active and play an important role in the defense and advancement of the interest of they represented local authorities. The Minister of the Interior affirmed that ANCI and UPI are fully recognised as partners and that they entertain fruitful relationships.
In light of the precedent, Article 10, paragraph 2 of the Charter is respected in Italy.
Latvia [Article ratified - Report adopted on 27 March 2018 ]
This second paragraph of article 10 of the Charter is clearly and fully respected in Latvia, as local authorities are entitled to set up associations for the protection and promotion of their common interest. Latvian local authorities are also free to join international associations of local authorities. In the country there is one and comprehensive association of local authorities, called Latvijas PašvaldÄ«bu savienÄ«ba in Latvian (LPS), which stands for Latvian association of local and regional authorities, LALRG in English (although the word “regional authorities” may be here misleading for the reasons advanced at point 3.2). There is also the Latvian large cities Association of (founded in 2001), but this is not so formal and relevant as the LPS, and its activities are much more limited and there are also other associations of specific groups of local governments.
page 722 / 796 Based on the principle of voluntary adherence, LPS was founded on December 15, 1991 and its members currently include 118 of the existing 119 local authorities in the country (all the 9 republican cities and 109 novads). The LPS is regarded as “the” national association that defends and represents the interests of local authorities. The association acts as a local interlocutor with the government and conducts lobby in the defense of the local interests. Furthermore, and under art. 96 of the Law on Local Governments, LPS invested with the authority to represent local governments in the negotiation with the Cabinet of Ministers. The most important stages and scenarios where the LPS carries out its representative and negotiation activities have been described in the present report (see supra). The LPS also follows closely any legislative initiative being discussed in the Saeima which affects the interests of local governments. In this sense, the LPS works in close contact with several parliamentary committees and performs lobby.
Apart from its purely representative tasks, the LPS carries out many different activities of common interest and provides assistance and help to local governments. For instance, the LPS is instrumental in developing a “local” opinion in public policies affecting local governments. It secures local governments with information and other services and organizes training for local government rulers and employees. Furthermore, the association facilitates cooperation between Latvian local governments and the local governments of other countries. It really fosters international cooperation (through the encouraging of twinings, for example), and in this sense the LPS has a very developed and active international relations department, with a permanent representation in Brussels. The LPS is a member of the Council of European Municipalities and Regions (CEMR).
The highest decision making body of the LPS is the Congress, which meets annually. The Council and the Board run the regular administration of the LPS. The financial sources of LPS come from the contribution of its members.
Consequently, article 10.2 of the Charter is fully respected in Latvia.
Liechtenstein [Non ratified - Report adopted on 28 March 2018 ]
Consult reply indicated at article 10.1
Lithuania [Article ratified - Report adopted on 6 November 2018 ]
Consult reply indicated at article 10.1
Luxembourg [Article ratified - Report adopted on 21 October 2015 ]
Consult reply indicated at article 10.1.
Malta [Article ratified - Report adopted on 29 March 2017 ]
According to article 10, paragraph 2 of the Charter imposes the obligation on signatory States to recognise the entitlement of local authorities to belong to an association for the protection and the promotion of their common interests and to belong to an international association of local authorities has to be recognized in each State.
According to Article 37(2) of the Local Councils Act, local councils shall form part of an association recognised as such by the government for the protections and promotion of their common interests as well as belong to international associations of local government authorities.
page 723 / 796 Malta complies fully with this requirement of the Charter and Article 37, paragraph 2 of the Charter essentially mirrors the wording of Article 10, paragraph 2 of the Charter. The Association mentioned in Article 10(2) of the Act is the Local Councils Association which is quite active notwithstanding its limited clerical and other resources.
Monaco [Non ratified - Report adopted on 28 March 2018 ]
Firstly, it should be noted that Monaco has not ratified paragraph 2 of Article 10 of the Charter on the entitlement of local authorities to belong to an association for the protection and promotion of their common interests and to belong to an international association of local authorities. While membership of a national association of local authorities is not applicable in Monaco because there is only one municipality, membership of an international association of local authorities still applies.
The Municipality of Monaco is a member of the Euro-Mediterranean Regional and Local Assembly (ARLEM), which is the assembly representing local and regional elected representatives from the European Union and its Mediterranean partners. The Mayor of Monaco is a member of the International Association of French-speaking Mayors (AIMF).
In the rapporteurs’ opinion, paragraph 2 of Article 10 of the Charter could easily be ratified by Monaco and they encourage the Monegasque authorities to do so.
The rapporteurs conclude that Monaco complies with Article 10 of the Charter and encourage the Monegasque authorities to ratify paragraph 2, with which it also complies.
Montenegro [Article ratified - Report adopted on 21 October 2015 ]
Consult reply indicated at article 10.1
Netherlands [Article ratified - Report adopted on 26 March 2014 ]
The situation of the “right to associate” requirements of Article 10 para.2 of the Charter in the Netherlands can only deserve a highly positive assessment. In the country there are two powerful, well-structured and active associations: one for municipalities (Vereniging van Nederlandse Gemeenten, VNG) and another of Provinces (Interprovinciaal Overleg, IPO) and one of the waterboards(UvW). They have provided much appreciated assistance to the Congress delegation before, during and after the visit. In both cases, the national associations are well-inclusive and representative of local authorities (at municipal or provincial scale). They play an active role in the representation, defence and advancement of the local interest, and they negotiate on a regular basis with the central government on major developments affecting the local interest. This is also favoured by the pattern of inter-governmental negotiation, which is deeply rooted in Dutch political culture. For instance, and as noted above, in 2004 the central government and the representatives of the sub- national authorities drew up an “inter-governmental relations code” (BZK, 2005). Other negotiated positions have followed in subsequent years: for instance, in June 2010 the Dutch local and regional authorities, in conjunction with the Dutch Government, adopted in The Hague a joint position paper on the future of the European cohesion policy.
Therefore, the VNG and IPO are fairly recognised as the right interlocutors on territorial governance by the central government, and negotiations are conducted on a regular and fruitful basis.
North Macedonia [Article ratified - Report adopted on 26 February 2013 ]
page 724 / 796 Consult reply indicated at article 10.1
Norway [Article ratified - Report adopted on 26 March 2015 ]
Consult reply indicated at article 10.1.
Poland [Article ratified - Report adopted on 2 April 2019 ]
The second paragraph of Article 10 of the Charter is also respected in Poland. Article 172.1 of the Constitution provides that «Units of local government shall have the right to associate». Local and regional authorities of Poland have made active use of the right to form domestic associations for the promotion and protection of their common interests. Currently, there are six well-structured and active associations of local and regional authorities in Poland: the Association of Rural Communes of the Republic of Poland (ZGWRP), the Association of Polish Cities (ZMP), the Association of Polish Powiaty (ZPP), the Association of Polish Metropolises (UMP), the Union of Polish Towns (UMP) and the Association of Polish Voivodeships (ZWRP).
These associations (all of them having a national dimension) are inclusive and representative of local authorities (at municipal, district or regional level). They play an active role in the representation, defence and advancement of local interests, and they negotiate on a regular basis with the central government on major developments affecting local interests, essentially within the Joint Committee (see supra, sub Article 4).
As for the possibility to join international associations of local authorities, Article 172.2 of the Constitution establishes that “A unit of local government shall have the right to join international associations of local and regional communities as well as cooperate with local and regional communities of other States”. The Law of 15 September 2000 states that the decision to join an international association must be approved by the Minister competent for foreign affairs (Article 4).
In conclusion, the rapporteurs believe that Article 10 of the Charter is fully respected in Poland.
Portugal [Article ratified - Report adopted on 28 September 2020 ]
See answer at article 10.1
Republic of Moldova [Article ratified - Report adopted on 4 April 2019 ]
“The entitlement of local authorities to belong to an association for the protection and promotion of their common interests and to belong to an international association of local authorities shall be recognised in each State”.
In the Republic of Moldova, local authorities are entitled to set up associations for the protection and promotion of their common interest, and to join or withdraw from existing associations. Moldovan local authorities are also free to join international associations of local authorities. In the country there is one comprehensive association of local authorities, the Congresul autoritatilor locale si regionale din Moldova (CALM) which stands literally for “Congress Local and Regional Authorities of Moldova”.
Based on the principle of voluntary membership, the CALM was founded in the 90s and its members currently include about 800 local authorities of first and second level, out of the current 898 entities. The CALM is far and above the most important national association that defends and represents the
page 725 / 796 interests of local authorities. It is supposed to act as a local intermediary in dialogue with the government and lobbies in favour of local interests. Apart from its purely representative tasks, the CALM carries out different activities of common interest and provides assistance and help to local governments, such as legal and fiscal advice and technical support. in addition to the CALM, other networks or co-operative schemes exist among local authorities in the country, with varying degrees of formality and relevance, such as the Association of District Councils or the Association of City Mayors, but their social and political relevance is much more limited. The delegation also held meetings with these associations and networks (see the programme of the visit in the appendix).
Consequently, Article 10.2 of the Charter is respected in the Republic of Moldova.
Romania [Article ratified - Report adopted on 3 March 2011 ]
Consult reply indicated at article 10.1
Russian Federation [Article ratified - Report adopted on 30 October 2019 ]
Consult reply indicated at article 10.1
San Marino [Article ratified - Report adopted on 28 March 2018 ]
Consult reply indicated at article 10.1
Serbia [Article ratified - Report adopted on 18 October 2017 ]
Consult reply indicated at article 10.1
Slovak Republic [Article ratified - Report adopted on 24 March 2016 ]
See answer indicated at article 10.1
Slovenia [Article ratified - Report adopted on 6 November 2018 ]
The Local Self-Government Act establishes local authorities’ rights to form associations in order to exercise common interests and to defend the position of self-governing local communities.
Article 86a of the Local Self-Government Act provides that “an association shall be deemed representative if it is joined by at least 30 percent of municipalities or, in case of urban municipalities, by at least a half of urban municipalities”.
The key national associations in Slovenia representing interests of local municipalities are – the Association of Municipalities and Towns of Slovenia (SOS) and the Association of Municipalities of Slovenia (ZOS).
The Association of Municipalities and Towns of Slovenia is the largest association of municipalities comprising 175 member municipalities (out of 212 municipalities). In order to coordinate the work regarding matters relevant to the local municipalities there are 19 different commissions and 4 working groups tailored to coordinate legal acts. The association provides different services for its
page 726 / 796 member, inter alia: represents common interest, drafts the common development projects; provides education for members, negotiates with the Ministry of Finance, informs members of latest development and issues related to municipal functioning.
Another association – the Association of Municipalities of Slovenia (ZOS) has current membership of 115 municipalities, mainly small ones. It represents the interests of Slovenian municipalities at the national and international level, as well as at related institutions and organisations both at home and abroad. This association offers such service as the Joint Internal Audit Service of the Association of Municipalities of Slovenia which performs annual internal audit of the municipalities. In 2018, 33 municipalities were included in the Joint Internal Audit Service.
Finally, the Association of Urban Municipalities of Slovenia (ZMOS) consists of eleven largest cities and urban centres of Slovenia. The two largest cities are Ljubljana and Maribor, with a combined population of over half a million people. Koper is the only commercial port of Slovenia. The remaining cities are; Ptuj, Celje, Kranj, Novo mesto, Nova Gorica, Murska Sobota, Slovenj Gradec and Velenje.
Municipal associations are representatives of the interests of local self-government in relation to the state. Before submitting the state budget to the National Assembly, the Government shall sign an agreement with the representative associations of municipalities determining the average costs for financing the mandatory tasks and the new statutory tasks of the municipalities that will start in the financial year.
Consequently, Article 10.2. of the Charter is complied with in Slovenia.
Spain [Article ratified - Report adopted on 20 March 2013 ]
Consult reply indicated at article 10.1
Sweden [Article ratified - Report adopted on 2 April 2014 ]
Consult reply indicated at article 10.1.
Switzerland [Article ratified - Report adopted on 20 October 2017 ]
Consult reply indicated at article 10.1
Turkey [Non ratified - Report adopted on 1 March 2011 ]
The analysis article by article is currently unavailable
Ukraine [Article ratified - Report adopted on 31 October 2013 ]
Consult reply indicated at article 10.1
United Kingdom [Article ratified - Report adopted on 26 March 2014 ]
Consult reply indicated at article 10.1
page 727 / 796 Article 10.3 Local authorities' right to associate
Local authorities shall be entitled, under such conditions as may be provided for by the law, to co- operate with their counterparts in other States.
Albania [Article ratified - Report adopted on 31 October 2013 ]
Consult reply indicated at article 10.1
Andorra [Article ratified - Report adopted on 28 March 2018 ]
Consult reply indicated at article 10.1
Armenia [Article ratified - Report adopted on 15 June 2021 ]
Article 10.3
3 Local authorities shall be entitled, under such conditions as may be provided for by the law, to co‑operate with their counterparts in other States.
234. In Armenia, there are some international development projects that demonstrate that local authorities are not excluded from international co-operation.
Austria [Article ratified - Report adopted on 28 September 2020 ]
According to Article 23c.4, B-VG, proposals for the nomination of members of the Committee of the Regions and their deputies is made by the Federal Government on the basis of proposals presentations from the Länder as well as from the Austrian Association of Municipalities and the Austrian Association of Cities and Towns. Each Land is to propose a member and its deputy; the other members and their deputies are to be proposed by the Austrian Association of Municipalities and the Austrian Association of Cities and Towns.
Durà (2018)81 provides several examples of best practices in Euroregions. Among those, there are several which involve several Austrian Länder and cities, including The International Lake Constance Conference, founded in 1972 is the joint platform of different territorial administrations surrounding Lake Constance (German, Austrian, Swiss, and Lichtenstein); the Euregio Bodensee; Europaregion; Via Salina Euregio, INNTAL Euregio.
Considering the above, the rapporteurs conclude that Austria complies with this provision.
Azerbaijan [Article ratified - Report adopted on 17 June 2021 ]
In 2019, the Law on the Status of Municipalities was amended to incorporate new standards to guide arrangement, by the appropriate executive authority, of municipality activities and experience exchanges with self-government bodies in other countries, as well as their associations and professional organisations to enhance the professionalism of the national municipality members and
page 728 / 796 officials.
This change has allowed Azerbaijan to lift the previous declaration of not being bound by Article 10.3 of the Charter and to include this provision as part of the binding commitments under the Charter. The rapporteurs commend this move, which shows a positive attitude towards the Charter and a spirit of openness towards the development of local self-government.
The new Article 10-1 of the Law on the Status of Municipalities enables municipalities and associations of municipalities to enter into cooperation agreements with local self-government bodies of foreign countries and become members of specialized organizations of local self- government bodies. This can happen, however, only “in coordination with the relevant executive authority”. Also the exchange of experience with local self-government bodies of foreign countries, their associations and specialized organizations has to be organised by the relevant local executive authority.
The government informed the delegation that about 30 agreements are in place with municipalities in a dozen of foreign countries. No interlocutor mentioned to the delegation any practice in this regard, nor any problems faced by municipalities in international exchange and cooperation.
Given the dominant role of the local executive authorities in this regard, the rapporteurs consider the commitments under Article 10.3 of the Charter to be met.
Belgium [Article ratified - Report adopted on 15 October 2014 ]
Flemish Region (Vlaanderen)
Consult reply indicated at article 10.1.
Walloon Region and German-speaking Community
Lastly, as regards co-operation of local authorities with their counterparts in other states, it should be pointed out that Belgium ratified the European Outline Convention on Transfrontier Co-operation between Territorial Communities or Authorities in 1987 and subsequently signed and ratified the first two additional protocols and signed the third. Consequently, in 1996 the Walloon Region and the German-speaking Community signed the Karlsruhe Agreement on transfrontier co-operation between local authorities and local public bodies. In addition, in 2002 the Walloon Region signed the Brussels Agreement on local-government co-operation between France and Belgium. Both the Walloon Region and the German-speaking Community are also helping to implement the Benelux Convention on transfrontier and interterritorial co-operation.
Article 10 is observed in Wallonia and the German-speaking Community.
Brussels-Capital Region
Consult reply indicated at article 10.1.
Bosnia and Herzegovina [Article ratified - Report adopted on 31 October 2019 ]
Consult reply indicated at article 10.1
Bulgaria [Article ratified - Report adopted on 21 January 2021 ]
page 729 / 796 Article 10.3
1. This paragraph reiterates the right of local authorities to co-operate, but it does so with a specific dimension: local authorities in one country are entitled to co-operate with local authorities in another country, so this paragraph sets out the right to engage in transnational, or transfrontier, co-operation, which is another form of inter-local co-operation58.
1. Bulgarian municipalities co-operate with their partners from EU member States through the cross-border co-operation programmes Interreg VA, with municipalities from Romania and Greece. Under the cross-border co-operation programmes, funded by the European Instrument for Pre-Accession Assistance Interreg-IPA, Bulgarian municipalities are implementing joint projects with municipalities from Serbia, North Macedonia, and Turkey. Joint municipal projects are implemented with funding from other European programmes– Danube, Balkans-Mediterranean Sea, and others.
Croatia [Article ratified - Report adopted on 20 October 2016 ]
See answer at article 10.1
Cyprus [Article ratified - Report adopted on 20 October 2016 ]
See answer at article 10.1
Czech Republic [Article ratified - Report adopted on 8 March 2012 ]
Consult reply indicated at article 10.1
Denmark [Article ratified - Report adopted on 31 October 2013 ]
Consult reply indicated at article 10.1
Estonia [Article ratified - Report adopted on 29 March 2017 ]
Consult reply indicated at article 10.1.
Finland [Article ratified - Report adopted on 28 March 2017 ]
Consult reply indicated at article 10.1.
France [Article ratified - Report adopted on 22 March 2016 ]
Consult reply indicated at article 10.1
Georgia [Non ratified - Report adopted on 7 November 2018 ]
page 730 / 796 In principle, Georgian municipalities are allowed to co-operate with foreign municipalities without a need of national government’s approval. Approval from the Government is needed only if this cooperation involves reception of a grant and if this grant is not part of an intergovernmental agreement between the Georgian State and a foreign State (or an international organisation). Concerning the Additional Protocol to the European Outline Convention on Transfrontier Co-operation between Territorial Communities or Authorities, Georgian interlocutors were rather cautious. The Georgian side closely connects this issue with the restoration of Georgia’s territorial integrity and realisation of the principles of the European Charter of Local Self-Government in Georgian territories which are not currently under the control of the Georgian Government, and where foreign troops are present without its consent.
The second issue is the exact demarcation of the State borders. Georgia officially left the Commonwealth of Independent States (CIS) in 2009 and the process of demarcation of State borders with CIS member States (Russia, Armenia and Azerbaijan) has not yet been completed. Georgian interlocutors pointed out that before the ratification of any international legal act on transfrontier co- operation, those frontiers must be physically and legally defined. The process of demarcation of the State borders with Armenia and Azerbaijan is in progress; all remaining difficulties are technical in nature and so this process may be expected to end successfully in the near future. According to the Congress delegation’s Georgian interlocutors, Georgia is committed to ratifying the additional protocol to the outline convention. However, continuing occupation of parts of Georgian sovereign territory and the on-going process of demarcation of borders with CIS member States means that the process of ratification can move only slowly.
Georgia complies with Article 10, paragraph 3, of the Charter.
Germany [Article ratified - Report adopted on 14 March 2012 ]
Consult reply indicated at article 10.1
Greece [Article ratified - Report adopted on 26 March 2015 ]
As for Article 10, para 3, of the Charter, first and second level local authorities may set up international and European collaborations under international, European Union and national law, according to the scope of their responsibilities and subject to the country’s international obligations, as follows: a) Municipalities and regions collaborate with respective foreign authorities, at the European and international level, in order to facilitate and promote transnational, inter-regional, cross-border and territorial co-operation and participate in programmes, activities and initiatives of European (EU, etc.), international and regional organisations (Council of Europe, etc.); b) Municipalities may enter into twinning programmes with other cities with a view to promoting economic, cultural, educational and social relations and building and developing close and friendly relations; c) Municipalities, regions and de-concentrated administrations may participate in a European Grouping of Territorial Co-operation (EGTC) in order to facilitate and promote cross-border, transnational and/or interregional co-operation with the exclusive aim of strengthening economic and social cohesion. A European Grouping of Territorial Co-operation with its headquarters in Greece is an urban non-profit company; d) Municipalities may organise cultural, artistic and sporting events and mission exchanges; e) Regions may cooperate with respective local authorities and other foreign organisations.
In conclusion, rapporteurs appreciate the multiplicity of instruments provided by the law. Considering also that no remarks or complaints on this issue have been submitted by the interlocutors during the meetings, rapporteurs consider that Article 10, paras. 1 and 3 of the Charter
page 731 / 796 is fully respected in Greece. It should be pointed out that Greece is not bound by paragraph 2 of Article 10.
Hungary [Article ratified - Report adopted on 12 February 2021 ]
Article 10, paragraph 3, addresses the cooperation of local authorities with their counterparts in other States. The right to engage in cross-border cooperation is also protected.
Hungarian local authorities are entitled to co-operate with their counterparts in other States. Article 42.6 of the Cardinal Act on Local Self-Government considers the “agreement with foreign self- governments on cooperation, affiliation with and departure from international associations of self- governments” as a competence of local assembly, that cannot be delegated to other bodies.
This cooperation is well developed also in practice, as the delegation was told during the monitoring visit. Transfrontier cooperation projects exist between Hungarian counties and local authorities in Serbia and Romania.
It is also worth mentioning that Hungary has signed and ratified the European Outline Convention on Cross-border Co-operation between Territorial Communities or Authorities (CETS No.106).
Therefore, the rapporteurs believe that Article 10.3 of the Charter is fully respected in Hungary.
Iceland [Article ratified - Report adopted on 29 March 2017 ]
See answer at article 10.1
Ireland [Article ratified - Report adopted on 31 October 2013 ]
Consult reply indicated at article 10.1
Italy [Article ratified - Report adopted on 18 October 2017 ]
On Article 10, paragraphe 3: As noted in the introduction of this report, the Italian has signed and ratified the European Outline Convention on Trans-frontier Co-operation between Territorial Communities or Authorities (signed on 21 May 1980 and ratified on 29 March 1985. Entry into force for Italy: 30 May 1985). On the other hand, Italy has signed, but not ratified yet the addition protocol to the European Outline Convention on Trans-frontier Co-operation between Territorial Communities or Authorities, of 9 November 1995, ETS No.159. And, finally, Italy has not yet signed Protocols No.2 (1988) and No. 3(2009) to the European Outline Convention on Trans-frontier Co-operation. The delegation did not hear any official position of Italy as to the ratification of the said Protocol.
At the same time, the rapporteurs did not hear any complaint about limitations or constraints imposed by the State on local authorities in order to engage in trans-frontier co-operation. This co- operation is especially fruitful in some territories in the north where German is the coofficial Language (for instance, Alto Adige/Südtirol). Italian municipalities have established partnerships, agreements and twining with towns and cities in other countries.
In light of the precedent, Article 10, paragraph 3 of the Charter is respected in Italy, that is why the rapporteurs do not see any reason not to ratify the above mentioned Conventions in a near future.
Latvia [Article ratified - Report adopted on 27 March 2018 ]
page 732 / 796 Latvia has signed and ratified the European Outline Convention on Transfrontier Co-operation between Territorial Communities or Authorities and the addition protocol to the European Outline Convention on Transfrontier Co-operation between Territorial Communities or Authorities, of 9 November 1995 (although it has not signed Protocol nº2). This, in connection with article 10.3 of the Charter, which fully applies in Latvia, provides for a robust legal and political basis for Latvian local governments in engaging in transfrontier co-operation. The situation may be depicted as being fairly positive, and local leaders and associations told the Delegation that they do no perceive limitations or constraints from the State in this domain.
As a matter of fact, many municipalities have established numerous partnerships, agreements and twining with towns and cities in other countries. This activity is usually conducted, facilitated or fostered by the LPS, as noted supra, through its international department. A great deal of this trans- national cooperation takes place with local entities based in the two other Baltic republics, Lithuania and Estonia. The capital city Riga is very active in the area of international cooperation. For instance, it is a partner of the USEACT project framework (embracing 12 European cities), in the field of urban development.
Article 10.3 of the Charter is also respected in Latvia. Therefore, article 10 is fully respected in Latvia.
Liechtenstein [Non ratified - Report adopted on 28 March 2018 ]
Consult reply indicated at article 10.1
Lithuania [Article ratified - Report adopted on 6 November 2018 ]
Consult reply indicated at article 10.1
Luxembourg [Article ratified - Report adopted on 21 October 2015 ]
Consult reply indicated at article 10.1.
Malta [Article ratified - Report adopted on 29 March 2017 ]
Article 10, paragraph 3 of the Charter provides that local authorities must be entitled to co-operate with their counterparts in other States.
Article 79(1) of the Local Councils Act enables a Local Council to make twinning arrangements with any city, town, village or other locality in any other country, provided that the approval of the Minister responsible for Local Government is obtained, upon the latter taking into consideration the opinion of the Local Councils Association on such proposed twinning.
Furthermore, under Article 79(2) of the Local Councils Act, the Minister responsible for Local Government may issue regulations to regulate the twinning agreements between local councils. To this end, Subsidiary Legislation was passed on 12.5.2009 regulating the entering into and operation of twinning agreements between local councils and other local councils in Malta or other communities, local authorities or local councils in another country.
page 733 / 796 According to the Local Councils (Twinning) Regulations, Subsidiary Legislation 363.141, dated 12.5.2009, a twinning is defined as a friendship agreement, co-operation or association between two communities in different countries or a friendship agreement, co-operation or association between Maltese local councils, even though this agreement is not expressly called a twinning. Regulation 3 enables a local council to make twinning arrangements with another Local Council or with another community, local authority or another Local Council, in another country upon taking into consideration that, as much as possible the country chosen shall be a member of the European Union, or a candidate to join the European Union, or a candidate to join the European Union, by which the arrangements the Local Council shall be in a position to benefit from the European Union. However, under Regulation 4, before initiating a twinning process, the Council shall submit a report in writing to the Director responsible for local councils, including the objects and reasons of the proposed twinning, an estimate of the expenses related to the proposed twinning, the name of the Councillor in charge of the twinning process, a declaration by the executive secretary that this report has been discussed and approved by the Council and a Twinning Work Plan.
The Director responsible for local councils gives his recommendations to the Minister responsible for Local Government, and the said Minister has the power to either approve the proposed twinning arrangement or dismiss the proposal, giving reasons supporting his decision not to approve it.
The aforesaid Regulations are quite narrow and they even prescribe the form of the Twinning Agreement which will be signed. Furthermore, the Twinning Regulations include detailed provisions as to the expenses incurred for the purpose of entering into, signing and operation of the twinning arrangement, even prescribing that in the event that the twinning agreement is with a community of another country, the travel tickets should be economy/tourist class, not business class, and that the expenses should be kept as low as possible.
Local councils resolving to make twinning arrangements and local councils already having entered into twinning arrangements have the obligation to prepare a budget for twinning purposes, which shall not exceed €3.500 or 0,5% of the financial allocation for that year, whichever is higher.
The aforesaid provisions are clearly in conformity with Article 10, paragraph 3 of the Charter.
Monaco [Article ratified - Report adopted on 28 March 2018 ]
With regard to paragraph 3 of Article 10, according to which local authorities are entitled, under such conditions as may be provided for by the law, to co-operate with their counterparts in other states, the rapporteurs highlight that Article 25, last paragraph, of Law No. 959/1974, as amended by Law No. 1316 of 2006, provides that “the Municipality of Monaco, after deliberation by the Municipal Council, may contact and enter into agreements with foreign local authorities and their associations within the limits of its powers and in compliance with the Principality’s international commitments, on condition that it keeps the Minister of State informed”. The government authorisation provided for in the previous text is no longer required. As a result, the Municipality has fostered intensive cross- border co-operation.
The rapporteurs conclude that Monaco complies with Article 10 of the Charter and encourage the Monegasque authorities to ratify paragraph 2, with which it also complies.
Montenegro [Article ratified - Report adopted on 21 October 2015 ]
Consult reply indicated at article 10.1
page 734 / 796 Netherlands [Article ratified - Report adopted on 26 March 2014 ]
The geographical location of the Netherlands, the historical tradition and the general co-operative culture of the country provide an optimal ground for municipal co-operation in a trans-frontier context. Furthermore, and as noted at point 1, the Netherlands have signed and ratified the applicable conventions and protocol on the matter (namely, the European Outline Convention on Transfrontier Co-operation between Territorial Communities or Authorities, and its protocols). Therefore, Dutch local authorities are entitled to co-operate with their counterparts in other States. The international cooperation agency of the VNG (VNG international) entertains a huge amount of international co-operation projects, literally around the world. In conclusion, the rapporteurs consider that the requirements of Article 10 of the Charter are presently satisfied by the Dutch system.
North Macedonia [Article ratified - Report adopted on 26 February 2013 ]
Voir réponse indiquée à l'article 10.1
Norway [Article ratified - Report adopted on 26 March 2015 ]
Consult reply indicated at article 10.1.
Poland [Article ratified - Report adopted on 2 April 2019 ]
Article 10, paragraph 3, addresses the cooperation of local authorities with their counterparts in other States. The right to engage in cross-border cooperation is also protected by Artcile 172.2 of the Constitution. Furthermore, the Law on Municipal Self-government (Article 18.2, no. 12), assigned to the council the exclusive competence to adopt resolutions on cooperation with local authorities of other countries. Analogous provisions are included in the Law on Powiaty Self-Government (Article. 75a and Article 12.9a).
Therefore, Polish local authorities are entitled to co-operate with their counterparts in other States. This cooperation is well developed also in practice. It is also worth mentioning that Poland has signed and ratified the European Outline Convention on Cross-border Co-operation between Territorial Communities or Authorities (CETS No.106).
In conclusion, the rapporteurs believe that Article 10 of the Charter is fully respected in Poland.
Portugal [Article ratified - Report adopted on 28 September 2020 ]
See answer at article 10.1
Republic of Moldova [Article ratified - Report adopted on 4 April 2019 ]
This provision of the Charter deals with transfrontier co-operation, and provides that local authorities shall be entitled, under such conditions as may be provided for by law, to co-operate with their counterparts in other states. The possibility for Moldovan local authorities to co-operate with their counterparts in other states is recognised in Moldovan legislation on local government. Namely, Article 14.1 of Law No. 436/2006 on Local Public Administration enables co-operation with municipalities abroad: local councils can establish co-operation projects, including cross-border ones and town twinnings with other towns abroad. In practice, there are many projects and activities
page 735 / 796 involving cross-border co-operation, especially in the framework of cross-border co-operation programmes supported by the EU (Moldova, Ukraine, Romania). According to Romanian legislation, municipalities can finance joint projects with municipalities in Moldova using their local budgets. This is another way to realise for cross-border co-operation between municipalities, which is fostered by the common heritage of these two countries.
As noted above, the Republic of Moldova has signed and ratified the European Outline Convention on Transfrontier Co-operation between Territorial Communities or Authorities; the Additional Protocol to the European Outline Convention on Transfrontier Co-operation between Territorial Communities or Authorities; and Protocol No. 2 to the European Outline Convention on Transfrontier Co-operation between Territorial Communities or Authorities concerning interterritorial co-operation. However, it has not yet signed Protocol No. 3 to the European Outline Convention on Transfrontier Co-operation between Territorial Communities or Authorities concerning Euroregional Co-operation Groupings (ECG).
Consequently, Article 10.3 of the Charter is also respected in the Republic of Moldova.
Romania [Article ratified - Report adopted on 3 March 2011 ]
Consult reply indicated at article 10.1
Russian Federation [Article ratified - Report adopted on 30 October 2019 ]
Consult reply indicated at article 10.1
San Marino [Article ratified - Report adopted on 28 March 2018 ]
Consult reply indicated at article 10.1
Serbia [Article ratified - Report adopted on 18 October 2017 ]
Consult reply indicated at article 10.1
Slovak Republic [Article ratified - Report adopted on 24 March 2016 ]
See answer indicated at article 10.1
Slovenia [Article ratified - Report adopted on 6 November 2018 ]
As indicated in the introduction, Slovenia ratified the European Outline Convention on Transfrontier Co-operation between Territorial Communities or Authorities, the Addition protocol to the European Outline Convention on Transfrontier Co-operation between Territorial Communities or Authorities, of November 9, 1995 and its Protocols No 2 and No 3. This, in the light of Article 10.3 of the Charter, there is a required legal and political basis for municipalities to develop cross-border cooperation in Slovenia. The situation is rather positive, and representatives of associations did not mention any concerns to the rapporteurs in this respect.
Many municipalities have established various partnerships, agreements and twining with local government units in other countries for exchanging best practice, mutual learning and carrying out joint cooperation projects. A great deal of this trans-national cooperation takes place with local
page 736 / 796 entities based in the neighbouring countries (e.g. Austria, Italy).
To conclude, the rapporteurs consider that Article 10.3 of the Charter is complied with.
Spain [Article ratified - Report adopted on 20 March 2013 ]
Consult reply indicated at article 10.1
Sweden [Article ratified - Report adopted on 2 April 2014 ]
Consult reply indicated at article 10.1.
Switzerland [Article ratified - Report adopted on 20 October 2017 ]
Consult reply indicated at article 10.1
Turkey [Non ratified - Report adopted on 1 March 2011 ]
The analysis article by article is currently unavailable
Ukraine [Article ratified - Report adopted on 31 October 2013 ]
Consult reply indicated at article 10.1
United Kingdom [Article ratified - Report adopted on 26 March 2014 ]
Consult reply indicated at article 10.1
Article 11 Legal protection of local selfgovernment
Local authorities shall have the right of recourse to a judicial remedy in order to secure free exercise of their powers and respect for such principles of local self-government as are enshrined in the constitution or domestic legislation.
Albania [Article ratified - Report adopted on 31 October 2013 ]
Local authorities in Albania have the status of a legal person (entity of public law) and have the full right to represent their interests, to enter into agreements, and to have assets and liabilities. Local authorities have their own and delegated functions, financial resources and property. They have the right to apply to civil courts and to the Constitutional Court of Albania for the protection of their interests.
Albanian local authorities use legal instruments for the protection of their interests very rarely. Mayors encountered during the visit have told the rapporteurs that legal cases take several months
page 737 / 796 in the Albanian courts and cannot be considered to be an effective legal remedy for the protection of local authorities.
The Constitutional Court of Albania exercises overall supervision over the Constitution of Albania and scrutinizes issues related to the protection of constitutional rights and provisions. The Congress delegation learned during the visit that there had been no appeals from the municipalities to the Constitutional Court of Albania.
The principles of local self-government are enshrined in the Constitution (Part VI) and in the domestic legislation of Albania. The Charter is recognised as an integral part of Albanian legislation. Local authorities have access to the judiciary for the protection of their rights, including the Constitutional Court of Albania. There have been cases where local authorities have applied to courts to protect their interests. The rapporteurs have heard various comments during the visit to conclude that, although judgments take a long time to be processed, the courts are considered to be an effective mechanism for the legal protection of local authorities by a vast majority of Albanian local representatives. They consider therefore that the legal protection of local authorities in Albania is in compliance with the Charter.
Andorra [Article ratified - Report adopted on 28 March 2018 ]
Article 11 of the Charter refers to an effective judicial remedy to secure the respect of local self government.
In Andorra, the municipalities have, in addition to ordinary legal remedies, the possibility to lodge a complaint on an individual basis directly to the Constitutional Court. According to Article 82.1 of the Constitution, “Conflicts arising from the interpretation or exercise of jurisdiction between the general organs of the State and the Local Councils shall be settled by the Constitutional Court”.
In addition, three Comuns are entitled to lodge appeals of unconstitutionality against laws or statutory rules, within the thirty days following the publication of the rule. The Tribunal constitucional shall pass judgement within the maximum of two months (Articles 83 and 99 of the Constitution).
Finally the Comuns may lodge, on an individual basis, a complaint of empara, according to Article 102 of the Constitution (for example to protect the right to jurisdiction).
In practice, only 13 conflicts have been submitted to the Constitutional Court between 1997 and 2008, the last one being decided on 8 of June 2009. It is evident that, notwithstanding this broad range of judicial remedies available to local authorities, other avenues to protect local self- government do exist. All the interlocutors agreed that personal and geographical closeness is conducive to the amicable settlement of most of the disputes.
The rapporteurs consider that the requirements of Article 11 of the Charter are fully respected in Andorra.
Armenia [Article ratified - Report adopted on 15 June 2021 ]
Article 11: Legal protection of local self-government
Local authorities shall have the right of recourse to a judicial remedy in order to secure free exercise of their powers and respect for such principles of local self‑government as are enshrined in the constitution or domestic legislation.
page 738 / 796 235. As far as the legal protection of local authorities is concerned, the rapporteurs regret to say that they have not had an opportunity to meet with representatives of the Constitutional Court, so they have no information on the judicial protection of local government rights in Armenia and how the available procedures work in practice.
236. Having regard to the fact that municipalities are public law entities, they presumably have access to the ordinary courts to protect their rights in compliance with Article 11 of the Charter.
Austria [Non ratified - Report adopted on 28 September 2020 ]
In accordance with Article 12.2. of the Charter, Austria has not declared itself bound by this provision.
Pursuant to Article 119.a.9, B-VG, a municipality is party to supervisory authority proceedings and is entitled to lodge complaint with the Administrative Court (Articles 130 to 132, B-VG). It is party to the proceedings before the Administrative Court and is entitled to file a final complaint at the Supreme Administrative Court (Article 133, B-VG) and a complaint at the Constitutional Court (Article 144, B-VG).
During the monitoring visit at the Austrian Constitutional Court, the rapporteurs were presented with several cases where municipalities defended their right to local self-government: e.g. E50/2015 on the alcohol prohibition regulation of the municipal council of Innsbruck82 and G386/2018 on the violation of the principle of local self-government through zoning plans in Sankt Ulrich am Pillersee.83
Taking into consideration the above, as well as the Länder constitutional provisions as described briefly further in section 4.3 the rapporteurs invite the Austrian authorities to ratify Article 11 of the Charter since it is respected in practice.
Azerbaijan [Article ratified - Report adopted on 17 June 2021 ]
Article 146(V) of the Constitution states that “the judicial protection of municipalities, and compensation for additional expenditures resulting from the decisions of state bodies, shall be guaranteed”. Article 50 of the Law on the Status of Municipalities, instead, in regulating the “judicial protection of local self- government”, focuses on the protection of the citizens’ right to local self- government, stating that “citizens living in the territory of the municipality, municipalities, municipal bodies and officials of municipal bodies shall file a lawsuit to invalidate acts of state authorities and state officials, municipalities, municipal bodies and officials of municipal bodies, legal entities established by municipalities, as well as public associations violating the rights of local self- government”. The same approach emerges in Article 53 of the same law, which ensures that “decisions and actions (or inaction) of municipalities, municipal bodies and their officials may be appealed in an administrative manner and/or in court”. Legislation seems more concerned with the right to challenge decisions by municipalities than with the right of municipalities to self- government, as this right does not belong to municipalities but rather to the citizens.
Such an approach derives from the peculiar condition of municipalities in Azerbaijan, which are not part of the system of state organisation but, rather, are a “special form of the social activity of the citizens”, as the Law on the Status of Municipalities states (Articles 2 and 3). Accordingly, municipalities have the same position as citizens, companies or NGOs as far as challenging laws and other legal acts is concerned.
Consequently, municipalities are entitled to lodge a direct complaint with the Constitutional Court, as
page 739 / 796 everyone can do, “against acts of the state” that violate their rights. This right, however, is not used by municipalities and there are no precedents, as the delegation was informed by the Constitutional Court. In practice, therefore, this is not an effective remedy to safeguard the free exercise of the powers of municipalities. As the delegation has been told, there is apparently no tradition and culture of judicial challenge on the side of municipalities.
The Constitutional Court deals, inter alia, with issues regarding the “conformity of acts of municipalities with the Constitution and laws of the Republic of Azerbaijan, decrees of the President of the Republic of Azerbaijan, resolutions of the Cabinet of Ministers of the Republic of Azerbaijan” (Article 130(III)5 of the Constitution). Between 2004 and 2020, the Constitutional Court received 138 complaints from citizens on the verification of conformity of judicial acts on the activities of local self- government bodies (municipalities) with the Constitution and laws, 17 of which in 2020, against municipalities, 7 of which reached the plenum, while the others have been adjudicated in chamber. Nearly all cases were individual complaints on property disputes, which are the main source of litigation involving municipalities, since the separation between state land and municipal land is not regulated by law yet and in several cases it is not clear who owns certain parts of land and who can sell them or collect taxes on them. As mentioned, no case was brought by municipalities challenging laws or regulations.
Against this background, it has to be reminded that, for Article 11 to be fulfilled, “it is not enough if, in a given member State, local authorities are granted the right to bring legal actions in a court of law in the same manner as any other legal entity (for instance, a business) in order to defend its private rights or property. The Charter refers to the ability of local authorities (as cogs in the wheels of public administration) to bring actions under public law against other levels of government (inter- governmental litigation)” (Contemporary Commentary, Paragraph 211).
Some litigation arises by way of supervision over municipalities caried out by the Ministry of Justice (see above, Article 8). In case the recommendations issued by the Centre for Working with Municipalities on the compliance with laws and regulations are not followed by municipalities, the Ministry of Justice can take the issue to a court. According to information provided by the Ministry of Justice, by the national associations of municipalities and by the Constitutional Court, judicial cases of this kind are rare. In 2020, according to the annual Report on the implementation of administrative control over the activities of municipalities by the Ministry of Justice, the Ministry filed 13 lawsuits to annul the decisions of municipalities, two of which were settled and 11 were taken to court.
More frequent are complaints brought to (district or urban) courts by citizens and legal persons against acts of municipalities or of their officials, mostly regarding property and land issues due to the mentioned unclear division between state-owned and municipal-owned land and the resulting uncertainty in terms of ownership and lease.
According to information provided by the Ministry of Justice, no precedent exists so far in Azerbaijan in which a court has found an act or a measure by either municipalities of the state to be in violation of the European Charter of Local Self-Government.
As the right to judicial protection is provided essentially against, rather than for, municipalities and other litigation is substantially non-existent in Azerbaijan, the rapporteurs conclude that the commitments under Article 11 of the Charter are not fulfilled.
Belgium [Article ratified - Report adopted on 15 October 2014 ]
Flemish Region (Vlaanderen)
page 740 / 796 The legal protection of local self-government follows first of all from the fact that Belgium has ratified the Charter. Article 41 of the Constitution states that interests exclusively of a municipal or provincial nature are determined by municipal or provincial councils in accordance with the principles laid down by the Constitution.
The Special Act of 9 March 2003, amending that of 6 January 1989, considerably expanded the jurisdiction of the Belgian Constitutional Court, which can now examine the conformity of a given “legislative rule” (a law, administrative regulation, etc) with the principle of municipal tax-setting autonomy contained in the Constitution (Article 170).
Apart from this special legal supervision, in Belgium the legal protection of local self-government is guaranteed either by the ordinary courts, subject to the final jurisdiction of the highest court of appeal (the Court of Cassation), or by the administrative courts, in particular the Council of State. The “ordinary” courts have the power to deny the application of “decisions and regulations” that do not comply with the laws. There is a pure and simple review of legality.
Consequently, a local authority affected by a measure, decision or regulation that has been adopted by a higher tier of government (the community, region or federal state) and that it considers illegal can bring an action before the “ordinary” courts seeking the rejection of the requirements of the decision challenged. However, the authority to set aside or have set aside administrative decisions and regulations that do not comply with the law lies exclusively with the administrative courts and the Council of State. For this reason, if a local authority is affected by an administrative decision taken by a higher tier of government and judges it to be illegal it can simply lodge an application to the Council of State to have it set aside. These reviews of legality do not affect the “ordinary” courts’ general power to declare officials and local government bodies accountable.
The legal protection of local self-government is respected in Flanders.
Walloon Region and German-speaking Community
Local authorities in the Walloon Region and the German-speaking Community are entitled to legal protection of local self-government inasmuch as they are able to enter an appeal if they consider their self-government to have been restricted. Since 2003 and the special law of 9 March, the Constitutional Court has had jurisdiction regarding compliance of legal provisions with the principle of fiscal autonomy enshrined in Article 170 of the Belgian Constitution. As far as the other elements of local self-government are concerned, the Court of Cassation and the Council of State review the legality of all decisions and are therefore able to rescind any unlawful decision taken by a higher authority (federal state, Community or region).
Legal protection of local self-government is guaranteed in Wallonia and the German-speaking Community.
Brussels-Capital Region
Legal protection of self-government in the Brussels-Capital Region is the same as for other entities arising out of the legal standards of the Belgian state and its institutions, including the Constitutional Court, the Council of State, the Court of Cassation and administrative courts.
Legal protection of self-government in the Brussels-Capital Region poses no problem in terms of Article 11.
Bosnia and Herzegovina [Article ratified - Report adopted on 31 October 2019 ]
page 741 / 796 The effective legal and judicial remedy for municipalities as a guarantee for local self-government depends on the issue raised. For many issues, the ordinary jurisdiction is competent; municipalities enjoy locus standi in courts in order to defend their rights, property or interests, just as any other legal person. Therefore, cities and municipalities have access to regular courts, where they can defend their interests and rights. In this matter, the delegation did not hear any complaints from interlocutors.
Other issues can be brought by the municipalities to the Constitutional Courts of the Entities, which can decide with “final and binding“ judgments (for local self-government, see e.g. Articles IV.C.3 and 10 (3) of the Federation of Bosnia and Herzegovina Constitution). There are constantly controversies involving local authorities in front of the Constitutional Courts of the Entities, most of them regarding the obligation to consult on legislative proposals concerning local authorities. In particular, many laws in the Federation of Bosnia and Herzegovina have been declared unconstitutional for violation of consultation requirements. Due to the competence of the Constitutional Courts of the Entities, the Constitutional Court of BiH has declined its own competence in 10 cases which included, among others, also issues related to local self-government.
In fact, mirroring the absence of any provision on local self-government in the Constitution of BiH, the Constitutional Court of BiH does not have any competence in this field. However, some of its rulings on electoral matters can influence the situation of local government, e.g. the Ljubic case of 1.12.2016 (U 23/14) which strongly affects the situation in Mostar. After the expiry of a 6-months deadline without action by the legislator, the unconstitutional provisions have been eliminated creating a legal vacuum and making action by the legislator a precondition for holding local elections in Mostar (see below).
In front of the Federation of Bosnia and Herzegovina Constitutional Court, in the ten years between 2009 and 2019, 99 cases concerned local self-government: 57 decisions stated a violation of the right to local self-government, 14 found that there was no violation, 9 cases were inadmissible or withdrawn and 11 cases are still pending. Most cases concern the violation of Article 4 of the Charter or the lack of consultation. A second major group of cases concerns the imposition of duties and tasks without sufficient funding, in contrast with the principle of commensurate financing; an example is the provision by allowances for firefighters by cantonal legislation without consulting the municipalities whether they can afford these and without providing additional funds. And finally, the non-harmonisation of cantonal local self-government legislation with the Federation of Bosnia and Herzegovina Law on local self-government principles. For instance, the Sarajevo Canton did not yet adopt its own law on local self-government and after a complaint by Mayors and the Association of Municipalities, in 2011 the Federation of Bosnia and Herzegovina Constitutional Court stated the need to legislate. However, this decision has not yet been implemented.
Problems with the lack of respect and implementation of the judgments of the Federation of Bosnia and Herzegovina Constitutional Court regarding the protection of the rights to local self-government continue: until December 2017, 44 decisions of the Federation of Bosnia and Herzegovina Constitutional Court have not been not executed. As an example, despite a judgment from 2009 in favour of the Association of Municipalities and Cities of the Federation of Bosnia and Herzegovina together with the municipality of Konjic, amendments to the Law on Forestry have not yet been adopted. The judgment obliged the relevant Ministry to harmonise the law in question in co- operation with the Association of Municipalities and Cities of the Federation of Bosnia and Herzegovina, within a period of six months which has passed without anything been done. As forests are a significant municipal resource and source of income, this is of great concern.
page 742 / 796 But Constitutional Courts cannot enforce their own judgments. Although there are provisions in the criminal codes sanctioning non-enforcement of judicial decisions, no action has been taken on their basis, as elements of intent would have to be proven, which would – with regard to the legislator – be interpreted as limiting the principles of the free mandate and of the separation of powers. The real problem lies in the political dimension of these cases which would require wider and profound changes for which there is no political agreement, in particular regarding the current system of ethnic representation. Thus, even legal void seems more acceptable (as it guarantees the status quo) than reforms which would necessarily have to touch and shift balances. However, the legal void may create considerable financial consequences: a 2009 complaint against the Sarajevo Canton regarding preschool education led in 2011 to a judgment in favour of the municipalities. That this decision has not been enforced is certainly due to the cost of the measure for the budget of Sarajevo Canton: enforcing the decision means to distribute 300 Mio KM to local self-government units.
The rapporteurs underline that it is a matter of great concern that judicial protection through the Federation of Bosnia and Herzegovina Constitutional Court is in many cases not effective, as court decisions are not implemented.
By contrast with the situation in the Federation of Bosnia and Herzegovina, in front of the Republika Srpska Constitutional Court there are hardly any cases regarding the conflict over jurisdiction, while there are numerous initiatives by citizens challenging local decisions encroaching upon their rights in ordinary courts. The most controversial issues concern utilities, infrastructures, publicly owned land or planning decisions (development and zoning plans). The problem often seems to consist in mistakes in implementing legislation, as claims are often confirmed for procedural reasons. While no violation has been found regarding the constitutionality of the Republika Srpska Law on local self- government, some violations have been detected in decisions and general acts of administrative supervision (Ministry of local self-government) and ordinary courts.
Following the German model, there is also a direct complaint of municipalities to the Republika Srpska Constitutional Court for alleged violation of the right to local self-government, but the delegation was informed by the Court that this is not used in practice, as municipalities seem to prefer political channels through their Association, and voluntary harmonisation is often an alternative to a complaint before a court. The judicial means for obtaining guarantees of local self- governmentvis-à-vis the Ministry, e.g. regarding the exercise of inspection powers, are also not exercised in practice; it seems that again the political dialogue with the Ministry is preferred by local self-government units. The dominance of the same political party at both levels (municipalities and Republika Srpska government), may play a role here.
In light of the preceding considerations, the requirements of Article 11 appear to be formally respected.
Bulgaria [Article ratified - Report adopted on 21 January 2021 ]
Article 11 – Legal protection of local self-government
Local authorities shall have the right of recourse to a judicial remedy in order to secure free exercise of their powers and respect for such principles of local self-government as are enshrined in the constitution or domestic legislation.
1. This article stresses the requirement that local authorities should have the right to invoke and to defend in the courts the principles of local self-government, especially in the context of lawsuits in which their rights and powers are challenged or curtailed, or when those rights are endangered by the higher (central or regional) levels of government. “Recourse to a
page 743 / 796 judicial remedy” means access by a local authority to either a properly constituted court of law or an equivalent, independent, statutory body.
1. According to Article 145 of the constitution, “a municipal council shall be free to challenge before a court any act which infringes its rights”. Since the Charter was ratified by law by the Bulgarian Parliament in 1995, it became part of the domestic legislation of the State. In this sense, any administrative act, as well as normative acts of a lower rank, can be challenged before an administrative court on the grounds of contradiction with the Charter. In addition, according to the Constitutional Court Act, it is in the competences of the Constitutional Court to rule on disputes over jurisdiction between local self-government bodies and central executive bodies. The Constitutional Court also rules on the conformity of laws with norms of international law and with international treaties to which Bulgaria is a party. It is worth mentioning that the question of the constitutionality of a law that violates the constitutional status of local self-government can be brought before ordinary judges (Supreme Court of Cassation or Supreme Administrative Court). If they consider the question important, they will suspend the procedure and apply to the Constitutional Court.
1. With the adoption of the Management of European Structural and Investment Funds Act (MESIFA), in 2016, an important possibility was given to challenge in court the imposition of financial corrections in the implementation of grant agreements for realising projects with European funding. The concept of “administrative contract” was introduced, though which grants for each European project are provided. Through its regulation also in the Administrative Procedure Code (APC) it became possible to appeal against decisions of the managing body for imposing a financial correction, in a similar way to appeals of other administrative acts. Municipalities use this opportunity for judicial protection in case of insufficiently substantiated decisions of the central administration.
1. Taking into consideration the legal framework and the practice that came to their knowledge, the rapporteurs concluded that Bulgaria complies with Article 11 of the Charter. However, they would strongly encourage the Bulgarian authorities to introduce the possibility of lodging a constitutional appeal for local authorities that would not be restricted only to jurisdiction disputes. This possibility would decisively strengthen the judicial protection offered to the institution of local self-government.
Croatia [Article ratified - Report adopted on 20 October 2016 ]
Article 129 of the Constitution of the Republic of Croatia states that the Constitutional Court of the Republic of Croatia “shall decide on constitutional petitions against individual decisions taken by governmental agencies, bodies of local and regional self-government and legal persons vested with public authority where such decisions violate human rights and fundamental freedoms, as well as the right to local and regional self-government guaranteed by the Constitution of the Republic of Croatia”. Article 137 of the same constitution defines that “In administering the affairs within their jurisdiction, units of local and regional self-government shall be autonomous and subject only to the review of the constitutionality and legality by the authorized national governmental bodies”.
The Constitutional Court shall, as in the case of a violation of rights, have the right of final verdict in the sphere of supervision of legality. Local authorities may resort to the Constitutional Court in two ways. According to Article 36 of the Constitutional Act on the Constitutional Court of the Republic of Croatia, “If the representative body of the unit of local and regional self-government in the Republic of Croatia considers that a law regulating the organisation, competence or financing of units of local and regional self-government is not in accordance with the Constitution, it may present a request to the Constitutional Court to review the constitutionality of that law or some of its provisions”.1 Article
page 744 / 796 38.1 of the same Constitutional Act reads as follows: “Every individual or legal person has the right to propose the institution of proceedings to review the constitutionality of the law and the legality and constitutionality of other regulations”.
On the basis of Article 36, from 2010-2015, 23 appeals were filed with the Constitutional Court but no proceedings were instituted thereon. On the basis of Article 38 regarding a review of constitutionality 108 recourses were filed with the Constitutional Court, of which 91 concerned adopted laws and 17 concerned bylaws adopted by different level authorities. With regard to administrative supervision of local self-government bodies from 2010 to 2015, 21 claims were filed of which 18 were immediately adjudged and 3 cases are pending. In the same period, 240 appeals concerning constitutionality were lodged by citizens (natural persons) of which 110 have been adjudged, and 130 are being processed, out of which 127 are from the City of Zagreb.
It should be noted that with the entry into force of the Administrative Disputes Act (1 January 2012), the High Administrative Court was given the competence to review the legality of general acts of the units of local and regional self-government, legal persons vested with public power and legal persons performing public services. On this authority the High Administrative Court shall repeal a general act or some of its provisions with a judgment if it establishes that it is not in conformity with law or the statute of the body of public law. Before the entry into force of this act the constitutional court maintained supervision over all local regulations but since 2013 it supervises only the local statutes.
The High Administrative Court also has a role in providing recourse to judicial remedy as regards state supervision when the Ministry of Public Administration issues a decision declaring the session of the representative body (the council) null and void. Whilst an appeal against the decision is not possible, an administrative dispute may be instituted before the High Administrative Court of the Republic of Croatia. The law also ensures legal protection against a Government decision on dissolution and dismissal of local bodies where the High Administrative Court may be seized of an action against the decision.
Local authorities therefore have the right of recourse to judicial remedies and the rapporteurs conclude that Croatia fully complies with the obligations of Article 11 of the Charter.
Cyprus [Article ratified - Report adopted on 20 October 2016 ]
As far as the Congress delegation has been informed, the judicial protection of local governments’ interests is provided by the Cypriot legal system. Article 146 of the Constitution declares that any person whose rights or legitimate interests are adversely and directly affected by a decision, an act or omission of any organ, authority or person, exercising any executive or administrative authority which is contrary to any of the provisions of the Constitution or of any law or is made in excess or in abuse of powers vested in such organ or authority or person, may recourse to the Supreme Court for legal remedy. Under this constitutional provision, some local authorities took legal recourse to the Supreme Court for remedy against certain central government actions in the past few years. In addition, local governments may turn to the administrative court in the case of a conflict of powers with another public authority in the protection of their own competences. Consequently, the situation complies with Article 11 of the Charter.
Czech Republic [Article ratified - Report adopted on 8 March 2012 ]
Finally, local (and regional) authorities’ right of access to a judicial remedy according to Article 11 of the Charter is very well taken care of in the Czech Republic.
page 745 / 796 First of all, central government cannot decide over local and regional authorities with legally binding effect. In cases of disagreement, they are bound to refer the question to the Constitutional court for the final decision. This instance (sitting in Brno) is completely independent from central government and takes itself care of the procedural rights of territorial authorities when considering such matters.
Constitutional complaints of local authorities can be dealt with by the Constitutional Court (Act 182/1993) and there can also be disputes over competences that are dealt with both by the Constitutional Court and the Supreme Administrative Court. The Constitutional Court also deals with petitions emanating from the Ministry of the Interior which may propose the annulment of a statute, or the individual provisions of a municipal self-government regulation.
Even in cases brought to the administrative court by private citizens or legal persons against a local or regional council, the relevant authority has an equal status as a party to the process, and may itself have access to courts in given cases.
The right of recourse to a judicial remedy guaranteed under Article 11 of the Charter is limited to securing free exercise of the powers of local (and regional) authorities as enshrined in domestic law. In the Czech Republic, however, international treaties by which the state is bound are a part of domestic law with a semi-constitutional position (Article 10 of the Constitution). By consequence, the Constitutional court has referred to the Charter in more than 20 decisions initiated by the Ministry of the interior (on behalf of the relevant ministry) or – more frequently – by members of parliament according to the procedure for abstract up-stream review of new legislation. In the landmark decision 34/02 (2002), the Court defines in some length the exact impact of the Charter in domestic law, underscoring among others (as translated by the services of the Court) that “the framework nature of the Charter and the specific nature of collective rights it expresses do not prevent it from being used as a measure for the abstract review of the constitutionality of statutes”.
Denmark [Article ratified - Report adopted on 31 October 2013 ]
Local authorities have a right of recourse to a judicial remedy in order to secure free exercise of their powers and respect for such principles of local self‑government as are enshrined in the constitution or domestic legislation.
During its discussion with the Supreme Court, the delegation was able to see that Article 11 is guaranteed in practice. The rapporteurs were told that there is a presumption of compliance with the Charter in Denmark. This rule means that Danish law has to be in conformity with the principles laid down in the Charter. It also means that, in practice, a municipality can allege an infringement of one of its rights on the basis of the text of the Charter itself. It was made clear to the rapporteurs that, in Denmark, the Charter is regarded as a basic text around which domestic law has been built – obviously as regards the local self-government aspects.
Legal protection of local self-government is generally guaranteed. However, compared with the number of cases where there is a disagreement, it is rare for a municipality to bring legal proceedings to enforce its rights vis-à-vis the State. In the event of a local authority applying to a court to enforce a right derived from the application of a principle of the Charter, the LGDK supports the local authority in order to draw the court’s attention to the general scope of the case.
Estonia [Article ratified - Report adopted on 29 March 2017 ]
The Supreme Court has underlined the importance of judicial control to guarantee local self- government in Estonia. The Chancellor of Justice told the rapporteurs that local authorities had
page 746 / 796 always had the right to apply to an administrative court to obtain protection of their lawful rights with regard to application of the law or another act of a more general nature. The Constitutional Review Court Procedure Act of 2002 gave an additional effective remedy to local authorities to protect them directly against an act of a general nature, (including the law itself. According to the Act, local government councils may submit a request to the Supreme Court to declare an act which has been promulgated but which has not yet entered into force, or a regulation of the Government of the Republic or a minister which has not yet entered into force, to be in conflict with the Constitution or to repeal an Act which has entered into force, a regulation of the Government of the Republic or a minister, or a provision thereof, if it is in conflict with the constitutional guarantees of local government.
Bearing in mind the important, diversified and permanent jurisdiction of the Supreme Court concerning local self-government topics and the possibility for local authorities to turn to the President of the Republic (cases under Article 107 of the Constitution), the Chancellor of Justice (cases under Article 142 of the Constitution and control of conformity of international agreements with the Constitution), the National Audit Office, or the administrative courts (Article 152 of the Constitution) if they consider that there may be an infringement by state administrations with respect to the core guarantees of local self-government, the rapporteurs consider that Estonia is inconformity with Article 11 of the Charter .
Finland [Article ratified - Report adopted on 28 March 2017 ]
As already mentioned, Finland has no constitutional court, but civil and administrative courts have the power to review the constitutionality of legislation enacted by parliament if this legislation is to be applied in an actual case. If they find that a statute or a provision thereof is in clear conflict with the Constitution, the courts may decide not to apply the suspect legal provision in that specific case, but they do not have the power to set aside the said provision. On the other hand, a municipality can challenge any administrative decision through an administrative appeal. According to information provided by the Supreme Administrative Court of Finland, municipal appeals mostly deal in practice with various internal disagreements or individual claims. Disputes between municipalities also occur, e.g. with regard to various costs or intermunicipal co-operation. As a rule, however, municipal self- government rarely focuses primarily on appeals or court rulings. If a municipal decision has been repealed by the (Regional) Administrative Court, only the municipality may appeal against the court’s decision. At the Supreme Administrative Court, about 150-200 cases per year are categorised as “municipal law cases” (out of a total of 4,000).
The rapporteurs conclude that Finnish local authorities have the right of recourse to a judicial remedy in order to secure their rights and therefore Finland fully complies with Article 11 of the Charter.
France [Article ratified - Report adopted on 22 March 2016 ]
Local authorities shall have the right of recourse to a judicial remedy in order to secure the free exercise of their powers and respect for such principles of local self-government as are enshrined in the constitution or domestic legislation.
Free administration (“libre administration”), as mentioned in Articles 34 and 72, is the key constitutional concept of local autonomy. This concept has allowed the Constitutional Court to produce a creative case law. Its positions are rather balanced, and very cautiously in favour of decentralisation. Its voluminous case law has developed since new (2009) procedures allow a litigant in any ordinary suit to claim that a law violates the constitution and should therefore be examined
page 747 / 796 for conformity by the Constitutional Council (the “constitutionality question”). This has been used by many local governments, often with success, to contest laws that had been in force for a long time.
Legal protection of local autonomy in France is guaranteed by the Constitution, by the European Charter of Local Self-Government, and by the Constitutional Council. More concretely, the administrative courts decide hundreds of cases each year opposing the State and local and regional authorities, or between those bodies. For example, decisions on the grants allocated to a given local community may be discussed in the courts, as well as new regulations that create expenses for local government units, or any administrative regulation issued by a state authority.
France has a specialised administrative jurisdiction that traditionally had the monopoly to regulate government bodies and agencies in their relations with citizens and in their relations together. Local and regional authorities may also challenge any decision taken by state authorities or other local bodies, either on individual adjudications or regulations, including decrees of the president, the prime minister or the prefect (préfet). Combined with access to the Constitutional Council, these should be deemed as sufficient judicial protection. The Conseil d’Etat (the Council of State) generally has a balanced case law. On the basis of an ambiguous provision in the Municipal Act of 1884, it recognised that municipalities had a general clause of competence to act autonomously in all matters of local interest, as long as there is no legal prohibition or explicit power given to another authority. But the courts also take care to preserve the core power of central government, within the logic of a unitarian state and legal system.
Georgia [Article ratified - Report adopted on 7 November 2018 ]
A major guarantee for the legal protection of each local self-governing unit is provided by the constitution. Article 60, paragraph 4, of the constitution entitles a local authority to have access to judicial remedy, namely to apply to the Constitutional Court if a decision by a State agency has infringed on the powers and competencies prescribed to local authorities by law. The Code, too, provides that a municipal Sakrebulo (council) may, in accordance with Georgian legislation, file an appeal with the Constitutional Court of Georgia requesting a review of the constitutionality of normative acts. Furthermore, according to Article 7, paragraph 4, of the Code, a municipality may appeal to a court in respect of those administrative legal normative acts and actions that restrict the exercise of local self-government powers provided for by law. Finally, according to the Code (Articles 132,135 and 136), any decision on the legal compliance of any normative act adopted by a self-governing body within its exclusive competences shall be taken by judicial authority, and such decisions may be appealed to a court of higher instance. Within the area of its delegated competences, every self-governing authority is entitled to challenge a decision of the State supervisory body before a court.
In view of this legal framework, Georgia fully complies with Article 11 of the Charter.
Germany [Article ratified - Report adopted on 14 March 2012 ]
Consult reply indicated at article 10.1
Greece [Article ratified - Report adopted on 26 March 2015 ]
Concerning the protection of local self-government, as public law entities, local authorities have all the substantial and procedural rights which apply to such entities, while they furthermore can refer to fundamental rights applicable to private entities, whenever their private property rights are concerned.
page 748 / 796 However, the rapporteurs would like to point out that Greece lacks a constitutional court and in particular a special remedy for local authorities is not foreseen by law. The lack of these remedies can entail a weakening of constitutional and legal protection of local self-government as far as legislation is involved.
For executive acts, Article 95 para. 1, letter a) of the Constitution establishes the direct and centralised jurisdiction of the Council of State (Συμβούλιο της Επικρατείας, Symvoulio Epikratias”, the supreme administrative court), “to annul upon petition enforceable acts of administrative authorities for excess of power or violations of law”. Municipalities and regions can challenge administrative acts infringing their administrative and financial autonomy. The Third Chamber of the Council of State has jurisdiction over such applications. If the Chamber holds unconstitutional a legal provision, it is obliged to refer the matter to the Plenum.
As far as legislation is concerned, a diffuse system of judicial review exists. Thus, the question of constitutionality can be addressed by any court, and local authorities can invoke their constitutional and further legal status, whenever they appeal against State decisions (e.g. decision of State supervision authorities, the Court of Audit, or if they appeal against court decisions at a higher court). Notwithstanding this diffuse system, several factors – the availability of legal remedies against judicial decisions, the lower courts’ standard practice of following the pronouncements of the high courts, the possibility to directly challenge executive acts before the Council of State – pushed towards a “de facto” concentration of judicial review in the hands of the Council of State (at least as far as administrative matters are concerned. For civil and criminal matters this tendency is in favour of the Supreme Court. Whenever their interpretations differ, a Special Highest Court shall be established, according to art. 100, para. 1, letter e) of the Constitution).
Legislative acts that include individual measures – and do not need any further executive act for their implementation – cannot be challenged in courts, thus bypassing both direct and diffuse judicial review. The Council of State’ has indicated that to enact regulations of an individual nature by statute in order to bypass direct judicial review is constitutionally permissible only in exceptional circumstances and is always subject to judicial scrutiny. However, many reforms of local government have been introduced by statutes that exhaustively provide all details and thus preclude any further executive regulations. Therefore, they cannot be challenged, neither directly, nor indirectly (by challenging the executive acts) by local authorities.
In the light of the foregoing, the rapporteurs point out that the lack of any mechanism to directly challenge the constitutionality of legislative acts in the Greek system of judicial review results in a substantial gap in terms of legal protection of local self-government.
Hungary [Article ratified - Report adopted on 12 February 2021 ]
Article 11 of the Charter refers to an effective judicial remedy to ensure respect for local self- government.
In Hungary, as it was stated in the 2013 report, Article 5 of the Cardinal Act on Local Self- Government establishes that the lawful exercise of the constitutional powers of local authorities is protected by the Constitutional Court and ordinary courts.
Local authorities may apply directly to the Constitutional Court only in case of conflict with another authority concerning their respective responsibilities.90 Apart from this, indirect access to Constitutional Court, via preliminary ruling, is allowed to local authorities.91 As for the possibility of local authorities to lodge a direct complaint to the Constitutional Court, according to sections 26-31 of the Act on Constitutional Court, according to the case-law of the Constitutional Court it is limited
page 749 / 796 to cases in which the local government acts as a private entity.92 On the contrary, direct complaint is not allowed when the local authorities act as public powers.93
Article 16 of the Act provides for the possibility (on the part of local authorities) of appealing to the court against decisions which go against their interests in very specific cases (such as when the government takes away a development project which would have been of local interest for a municipality). This leads the rapporteurs to conclude that the right to lodge a complaint, when the interests of local authorities are – or risk to be – undermined, was very limited and that the legal protection of local self-government was not effective in the light of the relevant provision of the Charter. Recommendation 341 (2013) asked the Hungarian government to “revise the legislation in order to provide local authorities with an effective judicial remedy to secure the free exercise of their powers and guarantee the judicial protection of the good implementation of the basic principles of local self-government provided in the Charter ratified by Hungary”.
Since 2013, the concerns for the capture of the Constitutional Court by the government94 and for the weakening of the independence of the judiciary have been growing, as pointed out by many resolutions and opinions adopted by the European institutions.95 During the 2019 monitoring visit, although the legal protection was not the main concern of local authorities, some of the local representatives met by the delegation showed their reservations with regard to the possibility to have their local autonomy upheld by the courts, considering the general situation of the judiciary and of the rule of law in Hungary.
In light of the preceding considerations, the rapporteurs conclude that the requirements of Article 11 of the Charter are not complied with in Hungary.
Iceland [Article ratified - Report adopted on 29 March 2017 ]
Concerning the protection of local self-government, as legal persons, municipalities enjoy the substantive and procedural rights which apply to such entities and can challenge any act in courts.
A recent example of those judicial remedies was presented to the rapporteurs during the monitoring visit: a case involving Reykjavik municipality, that had to sue the Ministry of Interior before the Supreme Court to have a contract enforced, relating to the third strip of the city airport. The case showed that those remedies are effective.
In addition, as Iceland follows the diffuse model of judicial review of legislation, the municipalities – as any other person or entity – can directly challenge legislation in court on the grounds of unconstitutionality. As in other Nordic countries, the judicial review of legislation is only seldom exercised and courts are not seen as the main remedy to avoid violations of the constitution. The focus is much more on collaboration rather than on litigation.
During the meeting with the rapporteurs the President of the Supreme Court was unable to quote any case of unconstitutionality for violation of Article 78 of the Constitution. According to him, Article 78 was quoted in 6 or 8 cases in the entire history of the Supreme Court. As regards the Charter – which, as previously indicated, has never been incorporated in the Icelandic legal system – no data have been found on its impact. According to the President of the Supreme Court during the meeting with rapporteurs, it has never been mentioned by Courts in their rare decisions on local self- government that are rather based on Article 78 of the Constitution. In his opinion, the reference contained in the Article 3.4 of the Local Government Act could open the doors to more direct references by the courts.
Recommendation 283 (2010), para.5 lett. h), invited Icelandic authorities to “introduce appropriate
page 750 / 796 legislation to give local authorities a right of appeal against decisions taken at national level which could infringe principles of local self-government enshrined in the charter”. This issue has not yet been addressed in a general way. Nevertheless, in the new Local Government Act there are specific provisions giving the municipalities the right of appeal against decisions adopted at national level in the exercise of administrative or financial supervision (Article 117).
Taking into account the recent legislative developments and the Icelandic tradition, the rapporteurs maintain that Article 11 should be considered respected in Iceland.
Ireland [Article ratified - Report adopted on 31 October 2013 ]
In Ireland a possible remedy exists, but is not known to have been used in practice. Very seldom does a local authority challenge an act of a higher authority (or a national law) in court.
The Constitution entrusts the power of judicial review to the High Court and the Supreme Court. Article 34.3.2 of the Constitution states that: “Save as otherwise provided by this Article, the jurisdiction of the High Court shall extend to the question of the validity of any law having regard to the provisions of this Constitution, and no such question shall be raised (whether by pleading, argument or otherwise) in any Court established under this or any other Article of this Constitution other than the High Court or the Supreme Court.”
Therefore, a local authority could challenge the constitutionality of legislation enacted by the Oireachtas in accordance with Article 34.3.2, but it is highly unlikely to do so. It could also seek judicial review of the actions of a higher authority such as a Government Minister if, for example, it was alleged that the Minister breached fair procedures in making a decision.
Italy [Article ratified - Report adopted on 18 October 2017 ]
The implementation of this article of the Charter in Italy should deserve a nuanced assessment. It is true, as noted supra, that Italian local authorities enjoy a large scope of autonomy, an autonomy that is protected both by the Constitution and by the legislation on local government. It is also true that local authorities, as legal entities, do have the right to go to ordinary or regular courts in order to defend their statutory rights, interests, assets and properties. Local authorities can also go to the administrative courts, where they can defend their statutory rights and interests, as well as their autonomy, if it were ignored or reduced by a decision, plan or policy of the central government or by regional agencies. In this field, the regional Administrative Courts and above all the Council of State, play a decisive role.
There are different legal scenarios where local authorities may have access to the administrative courts: (1) the municipality, as an entity representing the interests of its inhabitants, may oppose, for instance, the construction of a State project or work that are disliked by the local residents; (2) conflicts between local authorities. For example, Municipality A authorises an energy-production installation, close to the territorial limits of Municipality B. This entity opposes such projects and sues Municipality A; (3): a conflict between a municipality and a region, mainly in the field of urban management and planning. For instance, a municipality does not get the final approval of the region for a local land use plan. Then, the municipality appeals such denial in the administrative courts; (4) a conflict between a local authority and the State. For instance, in a recent case, a State department issued a circular prohibiting the inscription of same-sex marriages in the municipal civil register (this is a competence of the mayor, exercised on behalf of the State). A municipality sued the government, as it believed that such circular would be illegitimate because it would ignore local autonomy and that it would unduly interfere with the powers of the mayors. The appeal was upheld
page 751 / 796 by the Council of State. The associations of local authorities have standing, also, to sue in the administrative courts on behalf of the associated local entities.
However, the rapporteurs would like to additionally comment on the implementation of Article 11 of the Charter when it comes to having access to the Constitutional Court. This might be useful or even necessary when a region or the central legislative powers enacts a piece of legislation that might ignore, reduce or affect negatively whatsoever the local autonomy. Under Italian public law, local authorities are not entitled to sue in this court when a region or the State approves a piece of legislation which in a way or another disrespects, reduced or limits the local autonomy. Contrary to what happens in other European countries, there is no specific remedy that those entities might use in the precedent scenario. They do not have locus standi.
Neither can they have automatic access to the said court by way of an incident or specific referral that they could trigger independently or automatically. It is true that, in the context of an actual administrative lawsuit triggered in scenario 3 or 4 above described, where a piece of State or regional legislation stands at the center of the legal debate, the regional administrative court may refer to the Constitutional Court and it may ask about the constitutionality of such a hypothetical piece of legislation (question of unconstitutionality). In that case, there would be an alleged violation of Article 5 of the Constitution (principle of local autonomy) and the Charter, in connection with the Constitution (especially Article 117) can be used as a parameter of validity or legitimacy of the contested law, that is, the Charter may be used as a part of the argumentative referral made by the administrative court. But the court cannot refer directly to the Charter in order not to apply the Law, and it is obliged to refer to the Constitutional Court. This specific feature of Italian constitutional law has already been presented at point 5.1, supra.
Nevertheless, this procedural device can only be triggered by the court, not by the plaintiff municipality, and the court will do that only if it finds that it is reasonable and justified. This situation, as explained supra, is not exclusive of the Charter, but is the result of a specific feature of the Italian constitutional system: no court may pronounce the unconstitutionality of an Act of Parliament, and if any court has doubts as to the constitutionality of that legal rule, it has to formulate a referral or preliminary ruling to the Constitutional Court.
This does not mean that this possibility is a closed door. As a matter of fact, in last years there have been several such referrals, which gave the Constitutional Court the possibility to adjudicate whether a given piece of legislation was constitutionally legitimate (because it was contested that it could constitute a violation of the principle of self-government). For instance, the above presented ruling No 50/2015 was the result of such a referral. The delegation was also informed that in January this year the Administrative Regional Court of Lazio made a preliminary question to the Constitutional Court in connection with a State legislative provision that imposes the obligatory merger of municipalities in some cases. According to the court, that provision could go against local autonomy. The ruling of the Constitutional Court on this case may be very interesting in the field of the protection of local autonomy.
In the light of the precedent, it may be concluded that Article 11 of the Charter is generally respected in Italy, since local authorities do have access to regular and administrative courts to defend their statutory rights. The rapporteurs believe that ensuring the right of local authorities to directly access the Constitutional court would give them an additional remedy to defend the principle of local autonomy against a piece of regional or State legislation undermining that principle. In the view of the Council of State, the lack of access to the Constitutional court is, at least in part,
page 752 / 796 balanced by the wide locus standi which is granted to provinces and municipalities before the Administrative courts.
Latvia [Article ratified - Report adopted on 27 March 2018 ]
Latvian local authorities, as legal entities, do have the right to go to courts in order to defend their rights, ownerships or interests, just as another entity would do. Therefore, municipalities and cities can have access to the regular courts, where they can defend their interests and rights.
The same is true concerning litigation in the Constitutional Court. Each and every local authority may have access to the Constitutional Court when it believes that a measure adopted by a State authority and addressed to it violates the rights of that local authority. As a matter of fact, the Latvian system is in this respect one of the most advanced, progressive and liberal of all Europe. In very few countries a single local authority has the right to appeal in the Constitutional Court to defend local autonomy, since in the majority of the countries individual local entities are barred from this possibility. Moreover, litigation in the Constitutional Court is free for the plaintiff local authority, and there are no litigation fees associated.
This reality is the most remarkable from the fact that, as seen supra, the Latvian Constitution does not contain in its written text recognise explicitly the principle of local self-government. The architect or craftsman of this state of facts is the Constitutional Court, which has played a key role not only in the guarantee of the applicability of such principle but also in recognising the direct invocability in courts of the Charter.
The Constitutional Court is regulated by art. 85 of the Constitutional and among other functions, it reviews cases concerning the conformity of laws with the Constitution and with international treaties ratified by Latvia (like the Charter). According to data provided to the Delegation by some Justices of the Constitutional Court, between 1997 and 2015 the local authorities have submitted 38 applications in the Constitutional Court. In most of these proceedings, the local authorities claimed that a given piece of national legislation had violated the principle of local autonomy; that the contested measure violated the Law on Local Governments; or that it violated the Charter. Local authorities can complain not only against acts of the Parliament, but also against governmental regulations and against the suspensive order issued by the Minister of Envionmental Protection and Regional Development when he suspends local binding regulations. Thus, in 16 cases the local authorities complained about regulations of the Cabinet of Ministers, and in nine of the cases, the local authorities complained about the suspensive decisions of the Minister. In some of the appeals directed against governmental regulations, the Cabinet had accepted to amend the contested regulation during the judicial procedure, therefore the appeal did not lead to a final ruling of the merits, for the case became moot. Out of those 38 appeals lodged by local authorities, 13 have resulted in a ruling on the merits and in four of these cases the Constitutional Court has found that the contested measure is contrary to a legal norm of a higher legal force.
The controlling provisions of the Constitution that are used by the Constitutional Court to adjudicate the appeals are: art. 1 (the principle of democratic state, as according to the case-law of the Constitutional Court it includes also the local authorities); art. 25 (reference is made to local governments); art. 104 and, especially, art. 101. From these articles, the Constitutional Court has declared that the principle of local government is an inherent constitutional principle of the country.
For what concerns the legal status of the Charter, the Constitutional Court has the competence to declare that an Act of Parliament or a regulation of the Cabinet of Ministers is not in conformity with the Charter, since it is an act of International Law that has been ratified by Latvia, and the acts of international law take precedence over domestic legislation and regulations. Therefore, the
page 753 / 796 Constitutional Court understands that any violation of the Charter would be at the same time a violation of the Constitution. In defending and articulating this position, the Latvian Constitutional Court is probably the champion of all European constitutional courts in the guarantee of the applicability and effectiveness of the Charter.
Among the different cases where the Constitutional Court has analysed the applicability of the Charter stand the following ones: Case n° 2007/2101: this case deals with an Act that regulated the transport services between Riga and the neighbouring local authorities. Case n° 2008/08.0106: this case pertains to the administrative reform of municipalities. Case n° 2009/04.06: 32 local councils challenged in this case the Act establishing the territorial reform of 2008, claiming that there was no provision for the local authorities to be heard, and thus that article 5 of the Charter had been violated. Once the proceedings were open, the Saeima amended the rule in order to introduce provisions on local governments consultation, thus making the case moot. Case n° 2016/2303: in this case the Constitutional Court analysed whether the Cabinet of Ministers can adopt a regulation that provides for a minimum number of pupils at a particular grade who have to attend a particular school in oder for that school to be able to deliver education at the said grade, and if this could be binding on the affected local authorities. The local authority won the case. Case n° 2009/2406: in this case the Constitutional Court noted that the power of the Minister of Environmental Protection and Regional Development to suspend a local regulation does not violate the principle of self- government. Case n° 2013/1005: this case was discontinued since the Minister of Environmental Protection and Regional Development changed his decision during the course of the procedure.
During the visit, the LPS made the claim that they would like to be recognised by the law as a legitimate actor in proceedings in the Constitutional Court, in representation of the whole group of Latvian local governments whenever a piece of parliamentary legislation or a Cabinet regulation does not comply with the principle of local self-government. Currently this is not possible because the appeal must be filed by the affected local authority/ies.
The Delegation asked the Constitutional Court representatives about their opinion on this matter, and the Justices said that they were not, in principle, against this possibility, something that would lead to an “abstract” control of constitutionality. Other interlocutors, though, were not convinced about the convenience of that arrangement. The MPs that the Delegation met at the Saeima were clearly reluctant about this proposal, because they consider that the current situation is sufficient, in which any local authority may lodge an application to the Constitutional Court. The representatives of the Ministry of Environmental Protection and Regional developement were also asked about this possibility, but they replied that they did not have a clear position on that.
In the light of the precedent, the Delegation understands that Latvia complies with article 11 of the Charter.
Liechtenstein [Article ratified - Report adopted on 28 March 2018 ]
As far as the legal protection of local authorities is concerned, municipal councils can appeal to the Administrative Court against a supervisory act of the Government if they consider that it is unlawful and restricts local self-government.
Municipalities also have the right, within the limits of the law, to petition state authorities and initiate referendums in order to defend their rights.
Although local authorities are not legally entitled to submit constitutional complaints to the Constitutional Court (Staatsgerichtshof) for legal protection in a case involving a violation of their rights, the Congress delegation was informed that judicial practice has developed this right.
page 754 / 796 However, this remains purely theoretical, since no such complaint has been submitted to the Court in the last ten years. Given that the Constitutional Court can also rule on jurisdictional conflicts between public authorities, in theory at least, municipalities can appeal to it in the event of an abuse of power by a state authority.
The rapporteurs were informed that there are wide-ranging possibilities and good instruments for the legal protection of municipalities, and these mechanisms and procedures are laid down in the Municipalities Act. However, they were told that in practice “there is no need for them” since municipalities can usually solve all problematic issues through direct contact with the Government.
In the light of the above, the rapporteurs consider that Liechtenstein municipalities have various legal instruments to protect their rights and interests, ranging from the judicial review of actions taken by the state to the right to initiate local referendums. They therefore conclude that Article 11 is duly implemented in Liechtenstein.
Lithuania [Article ratified - Report adopted on 6 November 2018 ]
Article 11 of the Charter refers to an effective judicial remedy to secure the respect of the local self government.
In Lithuania, according to Article 122 of the Constitution, municipal councils have the right to apply to a court regarding the violation of their rights. Consequently, municipalities can apply to ordinary courts (courts of general jurisdiction) or administrative courts (specialised courts) in case of all violations of their rights.
The Law on Local Self-Government, Article 41, establishes that “Municipalities may appeal to the court for the violation of their rights, taking into consideration the character of violation”.
The Constitution does not give municipalities, as well as any natural or legal person, the right to submit their petitions on the violation of their rights to the Constitutional Court directly. The municipalities can make use of the possibility of indirect access to this Court through ordinary or administrative courts. Paragraph 2 of Article 110 of the Constitution provides that, in cases when there are grounds to believe that a law or another legal act that should be applied in a concrete case is in conflict with the Constitution, the judge shall suspend the consideration of the case and shall apply to the Constitutional Court, requesting that it decide whether the law or another legal act in question is in compliance with the Constitution. However, the delegation was informed that new initiatives have been undertaken recently to introduce this new legal remedy.
Recommendation 321 (2012) invited Lithuania authorities to “ensure that the Association of Local Authorities of Lithuania is given the appropriate standing to represent all municipalities before domestic courts”.
During the monitoring visit, the ALAL reiterated this request, with specific reference to the proceeding of abstract application on the review of the legality of administrative regulations.
According to the Law on administrative proceedings (Article 112, paragraph 1), the right to apply to the administrative court with a petition for review of conformity of a regulatory administrative act with a law or a regulation issued by the Government shall be vested in the Seimas members, the Seimas Ombudsmen, the Children's Rights Ombudsmen, the Equal Opportunities Ombudsmen, state control officers of the Republic of Lithuania, courts and tribunals, the prosecutors and the professional self government associations, founded by law to implement public functions.
page 755 / 796 The ALAL claimed the lack of the standing to represent the municipalities in administrative courts, taking into account that, according to Article 2 of the Law on the Basic Regulations of the Association of Municipalities of Lithuania as well as Article 53 of the Law on Local Self-Government, the ALAL represents the common interests of its members (the municipalities) in the Government, other State institutions and international organisations.
The rapporteurs consider that the requirements of Article 11 of the Charter are partially satisfied in Lithuania.
Luxembourg [Article ratified - Report adopted on 21 October 2015 ]
Under the Constitution (Article 107, paragraph 1), the communes possess legal personality and, as such, can take legal action against any state decision that might interfere with the free exercise of their powers.
Supervisory measures may also be challenged in the courts. Article 107 of the Communal Law further provides that local authorities have a right of appeal concerning any decision of an individual or regulatory nature which has been set aside or denied approval by the Grand Duke, by the Minister of the Interior or by another supervisory authority. Such appeals are to be lodged with the Administrative Court.
As regards communal council decisions which require the approval of a higher authority if approval is denied, the communal authorities can appeal to the Administrative Court.
In the light of the foregoing, the rapporteurs consider that the situation is wholly compliant with Article 11 of the Charter.
Malta [Article ratified - Report adopted on 29 March 2017 ]
Article 11 of the Charter prescribes that local authorities shall have the right of recourse to judicial remedies in order to secure free exercise of their powers and respect for such principles of local self- government as tare enshrined in the constitution or domestic legislation.
Under Article 38 of the Local Councils Act, local councils have the right to challenge in Court any decision in any way which interferes with the free exercise of their powers granted by the said Act.
Hence, the Republic of Malta fully complies with Article 11 of the Charter and the wording of Article 38 of the Local Councils Act is similar to the Article 11 of the Charter.
Monaco [Article ratified - Report adopted on 28 March 2018 ]
Regarding the protection of local self-government, as a legal person the Municipality may contest any act before the courts.
Nevertheless, there is a limitation with regard to laws: the task of monitoring the constitutionality of the laws in Monaco is entrusted to the Supreme Court, which is one of the oldest constitutional bodies in the world. Under Article 90-A of the Constitution, however, the review of constitutionality is limited to monitoring compliance with Chapter III of the Constitution, on freedoms and rights.
Consequently, the Municipality, in its capacity as a legal person, may appeal to the Supreme Court to contest a law, but only if it infringes freedoms and rights granted by Chapter III of the Constitution,
page 756 / 796 for example with regard to the Municipality’s right to property. The local authority has no judicial remedy against a law to secure free exercise of municipal powers and respect for the principles of local self-government enshrined in Chapter IX of the Constitution and the Charter.
Of course, when acting as an administrative court, the Supreme Court has jurisdiction to assess all the Municipality’s appeals against the state’s regulatory or individual decisions. The full Constitution and international treaties form the legal basis in this respect. However, a distinction must be made between international treaties whose standards are directly applicable, in that they establish rights and obligations for natural or legal persons, and those which establish laws and obligations only with regard to the state.
As to relations between the state and the Municipality, according to the report which the vice- president of the Supreme Court presented to the rapporteurs, the Municipality has only ever lodged four applications before the Supreme Court concerning alleged abuses of authority by the state.
The limited number of applications notwithstanding, it is still possible for the Municipality to appeal against the state’s administrative decisions in several fields, examples being the dissolution of the Municipal Council or measures to suspend or dismiss the Mayor or his/her deputies; decisions made by the government concerning the acts of the Municipal Council or Mayor; government decisions made without consulting the Municipal Council when this is required by law; and government decisions in a field legally reserved for the Municipal Council or Mayor.
The rapporteurs conclude that the Municipality of Monaco does not have a direct or indirect right of recourse against laws in order to secure free exercise of their municipal powers and respect for such principles of local self-government as are enshrined in the Constitution and in the Charter. The delegation notes that, although the implementation of Article 11 of the Charter is incomplete in law, the jurisdictional protection of local self-government exists de facto in Monaco: indeed, the Municipality’s recourse to the Supreme Court against decisions to apply laws which affect municipal interests works well.
The rapporteurs therefore conclude that there is partial compliance with Article 11 of the Charter.
Montenegro [Article ratified - Report adopted on 21 October 2015 ]
The constitution of Montenegro provides a framework for a coherent system of legal protection of local self-government. As already mentioned, local self-government is guaranteed by the constitution and Law on Local Self-Government. The question if this constitution is violated by laws or other acts by the state is the key element of the jurisdiction of the Constitutional Court: According to Article 149, paragraph 1 the Constitutional Court shall decide on the “Conformity of laws with the Constitution and confirmed and published international agreements”. According to paragraph 2 of the same article, the Court’s jurisdiction includes the question of “Conformity of other regulations and general acts with the Constitution and the law”. In this sense, the Court is given the very far- reaching role of a guardian of the legality of all rules if they are not restricted to single cases but have a more general character.
Constitutional Court is also given a far-reaching jurisdiction in all matters of competences. This applies to conflicts between state authorities and local governments as well as between different authorities within local self-government units. This provision shows that the relationship between the central and the local level is defined as one determined by law. The competences given to local governments by the constitution and by the law in general are regarded as subjective positions that are of a similar nature as enforceable individual rights.
page 757 / 796 The Constitution establishes the following judicial remedies for the protection of local governments: a. The initiation of proceedings before the Constitutional Court to review the constitutionality of laws or constitutionality and legality of regulations which violate the right of local government by local self-government bodies. Firstly, local self-government bodies (the Assembly and the President), pursuant to Article 150, paragraph 2 of the Constitution and article 54, paragraph 1, item 2 of the Law on the Constitutional Court of Montenegro, are authorised to initiate proceedings to review the constitutionality of law or the constitutionality and legality of other regulations and general acts regulating issues related to local self-government. Secondly, pursuant to the provisions of Article 124 of the Law on Local Self-Government, the Government of Montenegro, may, before the Constitutional Court has reached a decision, suspend the implementation of regulations or general acts of the Local Assembly or the Mayor of a municipality, if it considers that act is not in accordance with the Constitution and the law, or if it limits the constitutionally and legally protected freedoms, rights and duties of citizens. If the execution of a regulation or general act is suspended, the Government shall without delay and no later than eight days, initiate proceedings before the Constitutional Court. If within eight days, the Government does not take action, the regulation or general act shall be applied. b. A further judicial remedy provides for a constitutional complaint against the individual act of a state body that violates the exercise of the right to local self-government. Bodies of local self- government can lodge a constitutional complaint before the Constitutional Court of Montenegro against an individual act, action or inaction of state organs or organs of state administration, or organs of local authorities, if they violated their right to local self-government under the conditions prescribed by Article 68 of the Law on the constitutional court of Montenegro. c. Within its nine competences the Constitutional Court directly decides on the following proceedings relating to local self-government:
- The conflict of responsibilities between courts and other state authorities, between state authorities and local self-government authorities, and between the authorities of the local self-government units1
- Electoral disputes and disputes related to the referendum, which are not the responsibility of other courts2
- On violation of rights during the election of Mayor of City Capital, Mayor of Old Royal Capital or Mayor of municipality, if elected in direct elections (Article 104, paragraph 4 of the Law on the Constitutional Court of Montenegro).
The legal protection of local self-government is respected in Montenegro.
Netherlands [Non ratified - Report adopted on 26 March 2014 ]
121. Legal protection of local government in the Netherlands presents a rather unsatisfactory situation, although it should be recalled that the Netherlands made a declaration in their instrument of acceptance (1991) that “it shall not consider itself bound by the provisions of Article 11 of the Charter” and are not bound by it. 122. At present, the Dutch legal system does not grant local authorities any specific right to recourse to a judicial remedy in order to secure the free exercise of their powers. There is no specific legal proceeding or remedy that might be used in order to challenge an Act of Parliament that would clearly reduce or disregard the essential content of local autonomy. Moreover, the Netherlands has no Constitutional court, and there are no signs that such a court will be established in the near future. Therefore, there is no legal remedy against a statute that
page 758 / 796 could potentially restrict the scope or the depth of local autonomy in the Netherlands, that is, there are no legal proceedings for enforcing autonomy. However, during the consultation process, the Minister of the Interior and Kingdom Relations stressed that municipalities can challenge any decision that they wish to contest, to the administrative courts (Council of State for the second instance) and also to civil law jurisdictions. 123. The VNG contends that, in 2007, the VNG called for the establishment of a Constitutional Court in its first government report from the Aartsen committee but never received a reply from the government. 31 The government’s comment on this was that they never officially received the report. During the consultation process the VNG informed the rapporteurs that this rapport has been offered to the Minister of the Interior and Kingdom Relations during the annual VNG Congress in 2007 and during his speech the former Minister reacted to this booklet. 124. On the other hand, there is no specific “locus standi” for local authorities in the administrative court system, where they could use local autonomy as a legal argument to challenge a measure, decision or regulation approved by the central government. It is true that municipalities (and provinces) may sue the central government using the system of remedies provided by civil law. A municipality may act in the civil court as an “affected person”, a situation that is seen as sufficient and satisfactory by the Council of State. However, the rapporteurs find it difficult to share this view, in the light of the letter and the spirit of Article 11 of the Charter. 125. Moreover, in recent times new statutory developments have exacerbated this situation. For instance, in recent years the Parliament approved the Crisis and Recovery Act (CRA) which aims to promote economic growth and accelerate decision-making processes (construction of roads, housing, wind farms, etc.). All the projects mentioned in its annexes are subject to a “fast track” approval procedure, where access to court is restricted on ground of administrative efficiency. Namely, Article 1 para.4 of the CRA aims at restricting access to administrative courts, by denying local and regional authorities the right to judicial review by the administrative courts in connection with the approval procedure of such projects. It states that a legal entity established pursuant to public law and not being part of the central government (for instance, a municipality), may only appeal against an approval decision, if the decision is addressed to that legal entity. Technically, this produces the practical result that a municipality cannot challenge in the administrative courts a decision adopted by a central agency by which approval is granted to an infrastructure project that seriously affects that municipality (because it is not the formal “addressee” of the decision). 126. In the light of the precedent considerations, the rapporteurs draw attention again (see supra § 116) that the Netherlands are not bound by Article 11 of the Charter as it was not ratified. Consequently this conclusion will not be part of the Congress Recommendation. This being said, the rapporteurs are of the opinion that the current situation of the Dutch legal system would not meet the requirements of Article 11 of the Charter if it would have been ratified.
North Macedonia [Article ratified - Report adopted on 26 February 2013 ]
The LSG Law (2002) distinguishes between the protection of the constitutional position of municipalities and the “ordinary” judicial protection.
The constitutional position of municipalities can be protected through the submission of an initiative, by the municipal council or the mayor, before the Constitutional Court in order to assess the constitutionality of a law, or the constitutionality and legality of general acts of the Ministries and other organs of the State administration which might infringe upon the constitutional position or constitutionally guaranteed rights of municipalities (Article 87). In practice, there have not been any constitutional complaints for alleged violations of LSG rights (Article 110); conflicts of competence between the State and local authorities have not given rise to controversies.
The notion of “general legal acts”, which are examined by the Constitutional Court on procedural conformity with the Constitution, includes acts adopted by municipal councils. Based on Article 87 of the Constitution, mayors have frequently challenged acts adopted by municipal councils granting
page 759 / 796 additional benefits or fees, mostly with success.
Individuals can also submit an initiative for constitutional review before the Constitutional Court (actio popularis). This has occurred in only few occasions. The Constitutional Court only controls the formal and legitimacy of procedures, while details and discrimination in single cases is left to the administrative courts. One such complaint regarding procedural consultation rights has led to the annulment of the “Skopje 2014” urban planning procedure by the Constitutional Court and the procedure had to be repeated.
Against acts and activities of the organs of the State administration and the Government, which impede the performance of municipal competences determined by the Constitution and law, municipalities are guaranteed judicial protection before competent Courts (Article 88).
The Law on Administrative Disputes was amended in order to establish a High Administrative Court with jurisdiction to decide on appeals against decisions of the Administrative Court, which itself hears appeals against decisions of misdemeanour commissions in the administrative bodies, government second instance commissions and the acts of local authorities. The court became operational in July 2011.
As mentioned before, international treaties are taken into consideration as integral parts of the legal system. Thus, direct reference to the Charter has been made in two cases before the Constitutional Court regarding budget issues quoting large parts of the Charter.
There is no special commission or procedure for disputes between municipalities. There has been one exception which arose due to different interpretations of the provisions of a law and it was overcome by forming a joint committee of the affected municipalities and the proposed amendment helped in overcoming the reasons of their disagreement.
Norway [Article ratified - Report adopted on 26 March 2015 ]
In its Recommendation 203 (2006), the Congress of Local and Regional Authorities recommended that the Norwegian authorities bring their legislation and judicial practice into compliance with Article 11 of the European Charter of Local Self-Government by guaranteeing, in their domestic legal system, local authorities the right, and the full exercise of that right, to judicial remedies against decisions taken by the state administration. In a reasoned opinion, the Group of Independent Experts on the European Charter of Local Self-Government expressed regret that there was no independent judicial body for settling disputes between central government and local authorities or even between two local authorities. For the text of Article 11 implies that a local authority must have the right to a judicial remedy against any legal entity that violates its powers or autonomy, whether central government, another local authority, a regional authority or even a private individual. The right to a judicial remedy further presupposes that the procedure is fair and offers guarantees such as adversarial proceedings, a public hearing, equality of arms, the rights of the defence and reasoned grounds given for the solution. In the Norwegian system, it appears that where a dispute arises between central government and local authorities, whether it concerns the interpretation of legislation, the division of powers or the apportionment of costs, central government is usually both judge and jury. Accordingly, any decisions by the governor which adversely affect local authorities may be challenged by lodging an administrative appeal with the relevant minister.
Although local authorities are fully fledged legal entities governed by public law, they have no legal right to a judicial remedy in disputes between central government and local authorities regarding their public authority and competences, and Norwegian courts have issued rulings refusing to grant such a remedy. The Appeals Selection Committee of Norway’s Supreme Court accordingly found in
page 760 / 796 Case No. 1993-445 that “the position of the local authority as a public authority under the Concession Act (Norway) cannot of itself provide grounds for a right of action for the local authority”. Likewise, in the Kongsberg-Nes case of 2007 (No. 2007–234), the Supreme Court confirmed that decisions taken by the governor (fylkesmann) could not be challenged through the courts.
There have, however, been a number of positive changes as regards the settlement of disputes between central government and local authorities since Recommendation 203 (2006).
For example, under an agreement between the Ministry of Child Welfare and Equality and KS, an independent body to settle child welfare disputes was set up on 1 January 2010. The new body’s remit is confined to resolving disputes over expenditure and the division of responsibility between central government and municipalities in matters relating to child welfare. It is chaired by a judge, assisted in each case by two members. These members are selected on a case-by-case basis from a list, drawn up in advance based on area of expertise, of six members, three of whom are freely chosen by central government and three on a recommendation from KS. The proceedings are mainly written but the parties may be called upon to appear where deemed appropriate. Although the decisions taken are purely in the nature of recommendations and are not binding on the parties, the latter are nevertheless expected to comply with them.
The ministry of health and KS also signed an agreement in February 2012 to set up another independent national advisory body to settle certain local disputes between central government and local authorities in the health sphere. The body in question consists of a chairperson, who must be a lawyer, and a vice-chair, also a lawyer.
In January 2011, KS suggested that the government set up independent semi-judicial bodies, or even an administrative court, where central government and local authorities would be represented but where decisions would be taken by the judge or a body with no connection to either party to the dispute. In the white paper dated 10 February 2012, the government refers to this proposal from KS, while emphasising that it would prefer to observe the operation of the existing bodies for a time, before considering extending this arrangement to other sectors.
The setting-up of independent bodies with the authority to resolve disputes between local government and local authorities in certain sectors does not seem to meet the requirements of Article 11 of the Charter as the bodies in question are of a non-judicial nature, and have a purely advisory role. This is nevertheless an improvement on the previous situation where local authorities were in a very weak position vis-à-vis central government in the event of a dispute.
Lastly, it is important to note that in January 2014, the government set up an inter-ministerial working party to consider and propose setting up a dispute resolution body that would have the authority to deal with disputes between central government and local authorities. This working party has also been asked to consider what restrictions might be placed on the power of central government to reverse decisions taken by municipalities. It is expected to produce a report recommending a number of legislative changes by the end of 2014. According to the Norwegian government, the setting-up of this independent dispute resolution body would enable Norway to meet the requirements of the European Charter of Local Self-Government.
The rapporteurs conclude that the situation is not in conformity in law with Article 11 of the Charter.
Poland [Article ratified - Report adopted on 2 April 2019 ]
Article 11 of the Charter refers to an effective judicial remedy to ensure respect for local self- government.
page 761 / 796 In Poland, legal protection of local self-government is expressly guaranteed by the Constitution, namely in Article 165.2 which stipulates: «The self-governing nature of units of local government shall be protected by the courts». Moreover, Article166, paragraph 3 stipulates that «The administrative courts shall settle jurisdictional disputes between units of local government and units of government administration».
In addition, each local government unit that is allegedly affected by a piece of legislation is allowed to file a complaint with the Constitutional Court. Article 191.1. 3) of the Constitution establishes that “the constitutive organs of units of local government” may lodge a complaint with the Constitutional Court, against a normative act that relates to matters relevant to the scope of their activity. Article 188 specifies the jurisdiction of the Court: “1. the conformity of statutes and international agreements with the Constitution; 2. the conformity of a statute with ratified international agreements whose ratification required prior consent granted by statute; 3. the conformity of legal provisions issued by central State organs with the Constitution, ratified international agreements and statutes; 4.the conformity with the Constitution of the purposes or activities of political parties; 5. complaints concerning constitutional infringements of rights and freedoms, as specified in Article 79, para. 1”.
Therefore, the local authorities (considered as individual entities) and the principle of self- government (as a principle) generate a wide range of recourses in Poland. On this basis, in the past the Constitutional Court played an active role in implementing the Charter in several constitutional proceedings dealing with local government issues, as it was underlined by the 2015 Report.
During the monitoring visit, the delegation was informed of several complaints submitted in the past few years by local authorities to the Constitutional Court, and that all of them have been rejected. Many of the local representatives met by the delegation showed their reservations with regard to the possibility to have their local autonomy upheld by the Constitutional Court, to the point that they are not submitting any new applications and complaints. During the meeting at the Constitutional Court, the delegation could not address this issue further, since no judge of the Court participated in the meeting and the delegation could only meet with members of the Court’s administrative staff. The case-law of the administrative courts mentioned by the interlocutors during the monitoring visit seems presently more open to the principles of local self-government.
In light of the preceding considerations, it can be said that the requirements of Article 11 of the Charter are complied with in Poland; however, considering the general situation of the judiciary and of the rule of law in Poland, the issue will require closer monitoring in the future.
Portugal [Article ratified - Report adopted on 28 September 2020 ]
Administrative oversight (Art. 242 of the Constitution) is intended to ensure that local authorities conform to the law and is exercised by the civil governor, who refers unlawful measures to administrative courts. Oversight is also exercised through inspections or, more rarely, through prior approval, as for urban planning. But in parallel to this oversight of local authority acts there is a possibility afforded to the local authorities themselves, enabling them to settle disputes with higher authorities through the administrative and constitutional courts.
That said, there is no general procedure open to local authorities whereby the Constitutional Court carries out a theoretical check on the constitutionality of national laws having a particular impact on local and regional self-government. A special procedure, entailing a verification of constitutionality open to local and regional authorities but preceded by a preliminary phase ruling on admissibility, could fill this gap and fully ensure compliance with the “principles of local self-government as are enshrined in the Constitution or domestic legislation”, within the meaning of Article 11 of the
page 762 / 796 Charter.
During their visit in June 2019, the rapporteurs met the vice-president of the Constitutional Court who pointed out that, while the Charter was an international treaty, the country’s domestic legal order was particularly accommodating for such texts. Article 8 paragraph 2 of the Constitution stipulates that such treaties become part of the domestic legal order once ratified and published. So while the Charter has no constitutional value, it does have strong legislative value.
Likewise, the rapporteurs note with satisfaction that the Fundamental Rights Defender, whom they spoke to in June 2019, draws no distinction between the local and national level. This institution, set up in 1976, may receive applications from any citizen as well as any local authority, and local authorities do avail themselves of this remedy, particularly for disputes with the State, mostly over financial matters or the definition of prerogatives.
Consequently, the rapporteurs consider that Article 11 of the Charter is partially complied with.
Republic of Moldova [Article ratified - Report adopted on 4 April 2019 ]
The analysis of the legal protection of local self-government in the Republic of Moldova should consider two different aspects: regular access to ordinary courts and access to the Constitutional Court to defend the principle of local self-government. Concerning the first aspect, Moldovan local authorities do enjoy locus standi to go to courts in order to defend their rights, property or interests, just as any other legal person may. Therefore, towns, villages, municipalities and Raioane can have access to the regular courts, where they can defend their interests and rights. In this matter, the delegation did not hear any complaints from local leaders and representatives.
The Constitutional Court is regulated by Article 134 et seq. of the constitution, which describes the Constitutional Court as the “sole authority of constitutional jurisdiction in the Republic of Moldova”. Among other functions, it exercises the review of constitutionality of laws and decisions of the parliament, presidential decrees and decisions and ordinances of the government. The Moldovan Constitutional Court follows the so-called “Kelsenian” type of constitutional jurisdiction, that carries out a concentrated and abstract control of constitutionality of laws and regulations, and can ensure that the legal order contains only rules that respect the constitution.
At present, Moldovan local authorities are also authorised to appeal to the Constitutional Court if they think that the constitutional and legal principle of local self-government has been neglected, disregarded or violated by a piece of legislation or by a governmental regulation. This has been possible since 2016, thanks to an amendment to Article 25 of the Act governing the Constitutional Court of the Republic of Moldova (Law No. 24). Concretely, this amendment has been in force since 15 April 2016.
The system now allows any individual council of the administrative territorial units of first and second levels, and that of the People’s Assembly of Gagauzia (Gagauz Yeri) to sue in the Constitutional Court on questions of local autonomy, to trigger a control of unconstitutionality by the Constitutional Court. Any such council is entitled to address the Constitutional Court as regards laws and regulations issued by the parliament or by the government even if it is not the only addressee of the legal measure in question. For this reason the legal amendment referred to above deserves a very positive assessment, especially considering that in most European countries single local entities are barred from this possibility.
This does not mean that prior to 2016 the Constitutional Court could not adjudicate proceedings where a violation of the principle local autonomy was at stake. In reality, the Constitutional Court has
page 763 / 796 issued a handful or rulings in this manner, because individual members of parliament or parliamentary groups have always been allowed to file appeals in the Constitutional Court, a possibility that some have used to challenge pieces of legislation. The paradox is that, since the 2016 amendment, no local authority has yet used the possibility of suing in the Constitutional Court. That is, since 2016, the local authorities have filed no appeals in the Constitutional Court, and at the time of the monitoring visit no cases triggered by a local authority council were pending in the Constitutional Court. Therefore, all the case law of the Constitutional Court on local autonomy corresponds to claims triggered by plaintiffs other than local authorities, namely members of parliament. In some cases these rulings were rendered in the context of questions of unconstitutionality.
In the cases that were brought to the Constitutional Court, the main contention was not that the Charter had been violated, but that Article 109 or 112 of the constitution had been breached (or Article 111 if the controversy concerned the ATU of Gagauzia). It is considered that the Charter cannot be violated independently from the principle of local autonomy that is embodied in those constitutional provisions. This is connected with the issue of the value of the Charter in the Moldovan legal order, a question that was addressed at point 3.3, above. The Charter is an international treaty that has been ratified by Moldova and is an integral part of the domestic legal system. Under domestic constitutional law, the direct and invocable supremacy of international law over national legislation is only recognised in the field of human rights: for instance, in a case of contradiction, international conventions such as the European Convention on Human Rights should prevail. Thus, international treaties per se do not have supremacy over the Moldovan Constitution. International treaties have an infra-constitutional nature, but also supra-legal authority.
Thus, the Constitutional Court can check whether the laws and regulations governing local authorities contravene the constitution and the principle of local autonomy enshrined in it (and in the Charter, by extension), and in connection with Article 8 of the constitution, which governs the observance of international treaties. Thus the Constitutional Court has issued a number of rulings were the principle of local autonomy or that of decentralisation were at stake. The case law is not very abundant and the issues of local autonomy have been mainly included in the obiter dicta, rather than in the ratio decidendi of the rulings. With these limitations, it is worthwhile to mention the following cases and rulings:
Ruling 19/2013 on incompatibilities of local elected officials, and 36/1998 on local autonomy: in these decisions the Constitutional Court declared that local public administration plays an important role for the development of administrative territorial units and in ensuring the workflow of public services. Consequently, they are to be seen as a basis of the constitutional system and they are safeguarded as such;
Ruling 99/2004: the Constitutional Court elaborated on the particular features of administrative decentralisation;
Ruling 2/2014, on budgetary autonomy (amount of local taxes);
Rulings 36/1998, 13/2002, in which the Constitutional Court elaborates on the meaning and content of local autonomy, and the need to protect it;
Ruling 89/2017, in which the Constitutional Court analyses one of the most controversial aspects of the current landscape of Moldovan local democracy, namely the possibility for a court to suspend a mayor who is the object of a criminal investigation open by the prosecutor (dossar penale). The Constitutional Court analysed the constitutionality of this suspension, carefully examined the law concerning the suspension, and concluded that the suspension of a mayor who is subject to a
page 764 / 796 criminal investigation does not violate the constitution because it is a proportionate, justified measure, which is not of a punitive character but a preventive one;
Ruling JCCM M 13/2002 on the constitutionality of local referendums to recall a mayor. The court held that, given that under the constitution the mayor is elected by the citizens, it is for them (the local community), who are the competent subjects, by law, to decide the revocation of the mayor.
In the light of the precedent, the rapporteurs consider that the requirements of Article 11 of the Charter are met in the Republic of Moldova.
Romania [Article ratified - Report adopted on 3 March 2011 ]
Romanian legislation does not grant the local authorities a right to lodge a legal remedy in order to secure the free exercise of the right to local self-government. Nonetheless, the local authorities can take legal action, before the ordinary courts, to demand compliance with the provisions of the Constitution and/or domestic legislation that affect them directly.
The local communities, the administrative-territorial units and the local or county authorities do not have their own right to apply to the Constitutional Court, but administrative-territorial units can appeal to the Constitutional Court by filing a plea of unconstitutionality. There are a number of examples of decisions in which the Constitutional Court has ruled in the local authorities’ favour.
Similarly, the local communities, the administrative-territorial units and the local public authorities defend their right to self-government, which is understood to be an individual right, before a court (administrative tribunal or court of law). The only remedies available to certain local public authorities concern their composition and their internal organisation. These local public authorities can be considered an aspect of administrative self-government, in the sense given by the institutional law to this concept. However, these remedies do not constitute effective legal protection for self-government within the meaning of the Charter.
Russian Federation [Article ratified - Report adopted on 30 October 2019 ]
According to Article 133 of the Russian Federation Constitution, local authorities have the right of recourse to a judicial remedy. Moreover, according to Article 7, paragraph 5, of the statutory Law 131-FZ on local government, if a local self-government body considers that a federal law or another regulatory legal act of the Russian Federation or a law or another regulatory legal act of a Russian region concerning issues of organisation of local self-government and/or the establishment of rights, duties and liabilities of local self-government bodies and local self- government officials does not comply with the Constitution of the Russian Federation, federal constitutional laws, federal laws, agreements on delineation of cognisance and powers between governmental bodies of the Russian Federation and governmental bodies of a Russian region the issue of compliance shall be resolved by the responsible court.
In practice, however, according to information provided during the visits, local authorities make rather rare use of this right. Partly, this is explained by the growing dependence of the judicial system, its subordination to the executive bodies and the Procurator’s Office. This is felt especially in the actions and rulings by the Constitutional Court of the Russian Federation. For a long period of time it had remained to a certain extent a custodian of local self-government, but in recent times it has lost this function, according to critical experts locally.
The legal framework of the Russian Federation also stipulates the existence of regional
page 765 / 796 constitutional courts; however, only 15 federal subjects have established their own constitutional court, whereas 70 federal subjects decided not to take this step. In the Republic of Tatarstan, the law provided for the existence of a Constitutional Court in 1992. According to information provided by this court, eight out of 60 decisions implementing international law have been the implementation of the European Charter of Local Self-Government. During the consultation procedure the Constitutional Court of the Russian Federation stated that the court ruling No. 81-P of 5 March 2019, referred to in the draft report, deals with the transfer of municipal property when changing the boundaries of municipalities, rather than providing resources for the exercise of delegated powers. The Constitutional Court of the Republic of Tatarstan noted in its ruling that the constitutional nature of the order of changing the boundaries of municipalities is based on proactive discretion and mutual consent of municipalities to implement such transformations, which in itself presupposes the observance of reasonable terms when initiating the transfer (acceptance) of municipal property in the ownership of another municipality in order to distinguish between municipalities.
The rapporteurs conclude that the Russian Federation complies with Article 11. Criticisms bringing into question the independence and impartiality of the judicial system could not be examined further, as it is not part of the mandate of the Congress.
San Marino [Article ratified - Report adopted on 28 March 2018 ]
Since Law No. 127/2013 grants the status of a legal person to the Townships, these institutions can be the challenging or opposing party in any judicial dispute. After the constitutional reform of 2002 and the establishment of the Collegio Garante, the township councils (at least five out of nine) are granted the power to challenge an ordinary law before the Collegio with a view to constitutional review. Furthermore, according to Art. 16 of the Declaration, the Collegio Garante has jurisdiction regarding disputes of competence between “constitutional bodies”. This provision can be interpreted as referring not only to the bodies of the central authorities but also to the local entities. However, as no case has so far arisen before the Collegio, the question of the legal standing of the townships in such a procedure has not yet been settled.
Another point is the status of the Charter in San Marino. Up to now, it has not been determined through case law whether the Charter should take precedence over ordinary legislation. This question remains open since there is no explicit norm prescribing the primacy of the Charter. Notwithstanding. Art. 1, the last paragraph of the Declaration provides that: “International agreements protecting freedoms and human rights, regularly signed and made enforceable, shall prevail over domestic legislation in case of conflict”. The question is therefore, whether the Charter fits into this definition, whether it can be considered as “protecting freedoms and human rights” or not.
Given the aforementioned, the rapporteurs conclude that local authorities have the right of recourse to a judicial remedy in order to secure their rights and therefore San Marino fully complies with Art. 11 of the Charter. Nevertheless, the rapporteurs recommend that the national authorities include an explicit provision concerning the precedence of the Charter in the next constitutional revision.
Serbia [Article ratified - Report adopted on 18 October 2017 ]
Article 11 of the Charter provides that local authorities should have the right to seek a judicial remedy in order to safeguard local self-government. Article 193 of the Constitution stipulates that local authorities “have the right to lodge an appeal with the Constitutional Court if an individual legal act or action by a state body or body of local self-government obstructs performing the competences
page 766 / 796 of the municipality”. In addition, the Constitution gives local government units the right to call for an a posteriori review by the Constitutional Court of any legal act or action that would infringe self- government. This protection is further developed in the Law on Local Self-Government (Articles 95-97). The Constitution includes relevant provisions for the protection of provincial autonomy (Article 187).
The rapporteurs conclude that the Constitution and the Law on Local Self-Government are appropriate judicial tools for the legal protection of local and provincial autonomy and that Serbia is therefore in conformity with Article 11 of the Charter.
Slovak Republic [Article ratified - Report adopted on 24 March 2016 ]
The implementation of this article of the Charter deserves a nuanced assessment. It is true, as noted supra, that Slovak municipalities enjoy a large scope of autonomy and that State control, as presented in the previous points, is legally limited and light in practice. It is also true that municipalities, as legal entities, do have the right to go to courts in order to defend their rights, ownerships or interests, but just as another entity would do. Therefore, municipalities can have access to the regular courts, where they can defend their autonomy, if it were ignored or reduced by the central government or by State agencies. The same is true concerning litigation in the Constitutional Court. Under Art. 127a of the Slovak Constitution, the court has competence to decide “on complaints of the bodies of territorial self-administration against unconstitutional or unlawful decision or against other unconstitutional or unlawful action into the matters of self-administration”. Furthermore, the court has the power to cancel the challenged decision, or if the infringement of the right lay in an action different than in a decision, “it shall prohibit continuing of infringement of the right and shall order, if it is possible, to reinstate the status before the infringement”.
The frequency of this type of litigation remains unclear, in any case, and so is the question whether this provision could be used by local authorities to challenge an Act of Parliament in the Constitutional Court, in the case that the said law would reduce or cripple local self-government.
In the light of the above, the Slovak Republic meets the basic standards enshrined in Art. 11 of the Charter.
Slovenia [Article ratified - Report adopted on 6 November 2018 ]
Slovenian local authorities are legal entities, and therefore they are entitled with the right to address courts in order to defend their rights and interests. Local authorities can refer issues to the Constitutional Court and to the Administrative Court, particularly in cases of conflicts regarding the central government decisions.
Among the different cases in which the Constitutional Court has analysed the applicability of the Charter stand the following ones: - Decision No. U-I-150/15, dated 10 November 2016, on municipal solidarity balancing funds; - Decision No. U-I-164/13, dated 10 June 2015, on tasks of municipalities the costs of which are taken into account when establishing the appropriate expenditure of a municipality; - Decision No. U-I-37/10, dated 18 April 2013, on special protection areas (Natura 2000 areas); - Decision No. U-I-88/10, dated 22 November 2012, on public services provided by local self government; - Decision No. U-I-239/10, dated 23 June 2011, on dual office holding for municipal mayors employed on non-professional base; - Decision No. U-I-230/10, dated 23 June 2011, on position of the mayor in joint bodies established for public utility service delivery; - Decision No. U- I-312/08, dated 20 May 2010, on original tasks of municipalities.
page 767 / 796 It is also noteworthy that the representative associations of local communities in Slovenia have the right to initiate the review of the constitutionality or legality of regulations or general acts before the Constitutional Court, provided that the rights of local communities are threatened.
In the light of the precedent, the rapporteurs conclude that the system of legal protection of local self-government in Slovenia fully meets the requirements of Article 11 of the Charter.
Spain [Article ratified - Report adopted on 20 March 2013 ]
In Spain, two different legal devices are relevant as regards Article 11 of the Charter: “Ordinary protection”, which is enforced by regular or administrative courts; and secondly, “constitutional protection” that is carried out by means of a special appeal before the Constitutional Court.
Ordinary protection: Should a national or regional agency adopt a decision or an administrative regulation which could interfere with local competences or touch upon the legal realm of local self- government, the local authority which considers itself affected by that measure may sue the State or regional agency in the administrative courts, claiming that local autonomy has been violated. These courts may set aside and even quash the contested State or regional measure, if they find that there is a clear and evident violation of local autonomy. The case-law of this court of justice is, consequently, very important, and constitutes an unavoidable element of the legal idea of “local autonomy”.
Constitutional protection: An additional difficulty is presented by the protection of local autonomy from violations as a result of statutes (passed either by the national or the regional legislatures). In essence, administrative courts do not have the power to annul acts of parliaments. In Spain, such a power is exclusively reserved to the Constitutional Court. Nevertheless the locus standi in this Court has traditionally been very restricted and was not recognised as a local authority prerogative. Therefore, if national or regional parliaments pass a statute involving some type of violation of local autonomy (for instance, an expediency control by regional or national agencies of local government activity) the local administration could neither react nor bring a constitutional challenge against such a piece of legislation. This situation changed dramatically in 1999, when the Constitutional Court Act (Ley orgánica del tribunal constitutional) of 1979 was amended, in order to provide for a specific procedural mechanism, which allows local authorities to protect their autonomy. This device is referred to as “Conflict in defence of local autonomy” (Conflicto en defensa de la autonomía local).
As regards the case law on provincial autonomy, a number of specific guarantees - (“minimum constitutional standards” as they have been qualified by the doctrine) - reveal the constitutional scope of provincial autonomy. Especially relevant are the guarantees (that result from the Constitutional case-law) to preserve the financial aspects of provincial autonomy. In addition, the constitutional case-law has emphasised the responsibility that depends primarily on the State to provide adequate financing of municipalities and provinces.
The provinces, in accordance with constitutional jurisprudence, are empowered to determine the structure of expenditure and, consequently, to decide what specific amount of money is being spent in each of its areas of competence.
Despite this Constitutional protection, the document provided by the Constitutional Court to the Congress delegation confirmed the extremely limited use of this very important means of legal protection of local authorities (an average of 2 appeals per year in the twelve years from 2000 to 2011). According FEMP the protection through the Constitutional Court is more formal than real, as the conditions for the admissibility of a case before the Court led so far to declare the admissibility of only 2% of the complaints lodged to the Court.
page 768 / 796 The rapporteurs recall that Article 11 requires that local authorities shall have the right of recourse to a judicial remedy which is the case de jure. Therefore they concluded that Article 11 is respected by Spain.
Sweden [Article ratified - Report adopted on 2 April 2014 ]
In its 2005 recommendation the Congress suggested that there should be a system of redress, referred to in the Constitution, to which the local authorities could turn in case of breaches of the principle of local self-government. It was proposed to establish a Constitutional Court which does not exist in Sweden. The question of whether a constitutional court should be established has been the subject of an inquiry and was dismissed by the parties in the Parliament (SOU 2008:125). It was argued, that there is a relatively broad political consensus in Sweden that such a court should not be established. Another proposal was to strengthen the position of local authorities’ vis-à-vis the Parliament by creating a parliamentary committee on local self-government. This proposal has been implemented by giving the Council of Legislation (Lagradet) the mandate to submit opinions on legislative proposals which impose an obligation on municipalities or county councils (Chapter 8, sections 20-22). The Council provides a way to ensure quality in new legislation. It also provides a window of opportunity to highlight conflicting interests between national and local levels in the application of the principle of proportionality.
The local authorities can turn to the Supreme Administrative Court if and when they consider that the funding principle has not been adhered to by laws attributing tasks to the local level. When a local government goes to court to challenge state legislation because of its financial implications, the court has to balance the individual rights of citizens or persons in general (foreigners) and the independence of local government. For example, the Supreme Administrative Court recently ruled in favour of a municipality in a number of cases concerning the right to compensation for costs for refugees (Judgment of 23 April 2013, case 3303-12).
Local authorities therefore have a right of appeal, which leads the rapporteurs to conclude that, from this point of view, Sweden complies with the provisions of Article 11 of the Charter.
Switzerland [Non ratified - Report adopted on 20 October 2017 ]
If a municipality considers its autonomy to be infringed, it has various remedies at both the cantonal and federal levels. At cantonal level, remedies vary from one canton to another. Generally, however, municipalities are able to use the administrative courts. At the federal level, municipalities can bring a constitutional claim before the Federal Supreme Court if their autonomy is violated (Article 189, paragraph 1(e), of the federal constitution and sections 82, 89.2c and 95c of the Federal Supreme Court Act of 17 June 2005). Article 189, paragraph 1(e), of the federal constitution provides that the Federal Supreme Court shall hear disputes concerning violations of “the autonomy of the municipalities and other cantonal guarantees to public-law institutions”.
Actions for violation of municipal self-government can be brought not only by “political municipalities” but also by citizens’ municipalities (“communes bourgeoises”) and by special- purpose municipalities. Individuals, on the other hand, cannot plead a violation of municipal self- government as a cause of action in itself; they can plead it only as a preliminary question, in support of other grounds, if they hold, for example, that a cantonal decision encroaching on a municipality’s authority also restricts their constitutional rights or that the act that they are challenging as the principal issue also infringes municipal self-government. Appeals brought by municipalities against cantonal decisions are admissible if the latter affect the municipalities as holders of public authority, in their exercise of self-government, or in their very existence. The Federal Supreme Court can find
page 769 / 796 in favour of a municipality if it is satisfied that the impugned decision affects the municipality in a field in which it is self-governing and in a manner prohibited by cantonal law.
The Federal Supreme Court has been led to determine a minimum standard for local self- government that would be applicable in each of the 26 cantonal legislations. Following the position adopted in 1967 (Federal Supreme Court, Gemeinde Volketswil judgment, 93 I 154) the scope of municipal self-government no longer depends on the nature of the powers exercised (own powers or delegated powers) or how the cantonal authority supervises these powers. A municipality is self- governing in all the fields in which cantonal law allows it “fairly significant decision-making authority” although the adequacy of the measures that it takes on the strength of this authority may be subject to review. In other words, a municipality is self-governing if it is free to make its own choices, on its own authority, on the basis of options that it determines itself. This judicial test of municipal self-government thus seems to be quite broad and likely to ensure definite protection of municipal self-government by the Federal Supreme Court.
In general, however, it should be said that potential disputes between cantons and municipalities are usually settled politically rather than in the courts. The European Charter of Local Self-Government can be cited by municipalities in support of an appeal to the Federal Supreme Court. The rapporteurs note that in a ruling of 3 June 2016 (TF 14/38), the Federal Supreme Court made specific reference to the Charter (Article 4.6 and Article 5) to uphold an appeal against a proposal to amend the constitution of the Canton of Ticino to allow amalgamation of municipalities (Locarno and seventeen others). This appeal was made on the ground that the citizens of the municipalities concerned had not been consulted beforehand. The rapporteurs welcome this recognition of the Charter by a Swiss domestic court, since this once again shows a genuine acknowledgement of international law, which is a real problem in other member States.
In conclusion, the situation in Switzerland complies with Article 11 of the Charter.
Turkey [Non ratified - Report adopted on 1 March 2011 ]
The analysis article by article is currently unavailable
Ukraine [Article ratified - Report adopted on 31 October 2013 ]
Article 71(4) of the Law on Local Self-Government of 1997 provides as follows: “The bodies and staff of self-governing authorities shall be entitled to appeal to the courts to establish the unlawful nature of acts of local bodies with executive powers, other local self-governing authorities, enterprises, institutions and organisations, which infringe the rights of local and regional authorities and undermine the powers of self-governing authorities.”
In 2006 Ukraine set up a system of administrative courts. These courts may declare the acts of the bodies and institutions referred to in Article 71 “which infringe the rights of local and regional authorities and undermine the powers of self-governing authorities and their representatives” unlawful.
The rapporteurs take the view that Ukrainian legislation complies with Article 11 of the Charter, which stipulates that there must be a right of recourse to a judicial remedy. However, the delegation was unable to obtain any information to assess whether and in what specific subject areas the local authorities have successfully appealed to the administrative courts. Nor is it clear whether the Charter has been used as a reference text in this type of judicial proceedings.
page 770 / 796 For all that, the rapporteurs encourage the government to consider adding a provision to the Constitution, which would give the local and regional authorities the right to appeal to the Constitutional Court against an act “addressed to” or of direct and individual concern to a legal person, in order to improve the legal protection of authorities.
United Kingdom [Article ratified - Report adopted on 26 March 2014 ]
There is fairly limited protection against central government. In extreme cases, local authorities might approach the High Court for judicial review. The parameters for judicial review depend on whether protection of local self-government is sought against the legislature (Parliament), or the executive (central or local government). In the former case, possibilities of a judicial challenge are very limited, mainly to a breach of the rule of law or fundamental rights. In the latter case, judicial review may be possible against decisions or actions of the executive, if the public body has acted in violation of the law, such as acting outside its powers. A judicial review challenges the way in which a decision has been made, rather than analyse or weigh the result of the decision, action or conclusion reached.
Typical court actions concern planning decisions, housing and the reduction of the number of local authorities In the first two cases, individuals challenge decisions or actions of local authorities (example: current planning decisions in London on enlargement of basements challenged by neighbours or provision of housing to immigrants). In the past, local authorities won some cases, defending themselves against the elimination of two-tier authorities. Also inspection powers might be challenged by judicial review (process review).
As the Charter is not part of domestic law, it cannot therefore be relied on as a source of substantive rights or restrictions. The Charter is neither directly applicable by the courts nor can local governments refer to it (in case of judicial review) as a ground for invalidity leading to striking down primary legislation. It might be used as an aid to interpretation (only).
The number of judicial court actions related to legal protection of local authorities is still relatively small. Local authorities in fact often look for “political” rather than legal solutions, such as campaigns supported by MPs and Members of the House of Lords or through the LGA. An example is the controversy regarding the Publicity Code, i.e. the publication of freely distributed papers and magazines with information on council activities. Numerous councils wrote to central government and campaigned against the proposals. In other cases, also online petitions have been used.
The rapporteurs consider that, despite fairly limited protection, judicial review is possible and the situation can be considered to be in compliance with the Charter.
Article 12.3 Undertakings
Any Party may, at any later time, notify the Secretary General that it considers itself bound by any paragraphs of this Charter which it has not already accepted under the terms of paragraph 1 of this article. Such undertakings subsequently given shall be deemed to be an integral part of the ratification, acceptance or approval of the Party so notifying, and shall have the same effect as from the first day of the month following the expiration of a period of three months after the date of the receipt of the notification by the Secretary General.
page 771 / 796 Azerbaijan [Non ratified - Report adopted on 17 June 2021 ]
177. As discussed earlier, Azerbaijan has made some reservations concerning the scope of the European Charter of Local Self-Government and stated that it is not bound by Article 4(3), Article 7(2), Article 9(5) and (6) and Article 10(3) of the Charter. The Congress delegation is convinced that Azerbaijan is currently failing to comply fully with these provisions of the Charter (as in the case of some other provisions) and consequently believes that the maintenance of these reservations could be justified. Nevertheless, as the proposals in this report show, the Azerbaijani authorities are strongly advised and encouraged to draw up and implement comprehensive decentralisation reforms that may lead to the withdrawal of all these reservations. 178. The representatives of the Minister of Justice informed the delegation that several state bodies had been instructed to submit proposals on the possibility of Azerbaijan’s accession of to the relevant articles of the Charter and that the matter would be considered in the near future. The rapporteurs welcome this positive information brought to their attention during the visit and will closely follow further developments in this respect. 179. At the same time, the representatives of the Minister of Justice added that it should be noted that, despite the fact that the Republic of Azerbaijan had not yet acceded to paragraph 3 of Article 10 of the Charter, certain measures had been taken towards its implementation. For example, the Law of 25 October 2011 had inserted a new paragraph into the Law on the Status of Municipalities providing for the right of municipalities and their associations, as agreed with the Ministry of Foreign Affairs, to conclude co-operation agreements with foreign local government bodies and to become members of specialised organisations of local government bodies.
Cyprus [Non ratified - Report adopted on 20 October 2016 ]
127. Since the ratification of the Charter, Cyprus has not considered itself bound by paragraph 2 of Article 7 of this convention. During the monitoring process, the rapporteurs have not received any explanation for sustaining the non-ratificaion of this provision. The spirit of the Charter requires the acceptance of all of its provisions, unless certain compelling interests exist justifying the reservation. 128. In the views of the rapporteurs, the legal status of the Charter in the domestic legal system of Cyprus makes some concern. Although the Charter, as an international treaty and according to the Constitution of Cyprus should have a legal force and a direct application, it is not seen as a self- executing legal norm. The Supreme Court, in the case of Pandelides v. Leantzi (1991) 3 C.L.R. 293 declared that the Charter, even though ratified by law, was not directly applicable, because its wording had been considered too vague to give rise to concrete rights and obligations recognized by domestic law. However, Cyprus, by signing and ratifying this convention, undertook a commitment to implement its provisions, so it cannot refer to any internal decision or specific legal interpretation to justify the non-compliance with its provisions. 129. In this regard, the rapporteurs draw the attention of the Cypriot authorities to the fact that the relevant jurisprudence of the Supreme Court declaring the Charter as a directly non-applicable legal tool violates Article 12 paragraph 1, as each signatory country under this provision undertook the implementation of all articles of the Charter, with the exceptions of reservations they made at the time of signature and ratification, and have maintained since then.
Denmark [Non ratified - Report adopted on 31 October 2013 ]
Estonia [Non ratified - Report adopted on 29 March 2017 ]
page 772 / 796 115. Estonia has not given notification of any reservations or declaration with respect to the Charter provisions. 9. THE ADDITIONAL PROTOCOL 116. On 16 November 2009, Estonia signed and on 20 April 2011, ratified the Additional Protocol to the European Charter of Local Self-Government on the right to participate in the affairs of a local authority (CETS No. 207), which entered into force on 1 June 2012. The Supreme Court has in different judgments accepted the Additional Protocol as a valid legal basis for controlling the constitutionality of Estonian laws.97
Greece [Non ratified - Report adopted on 26 March 2015 ]
226. As noted above in various paragraphs, the Instrument of Ratification of the Charter by Greece was deposited on 6 September 1989. The Charter entered into force in respect of that country on 1 January 1990. On the ground of Article 12, paragraph 2 of the Charter, Greece declared itself not to be bound by: Article 5 Article 7, paragraph 2; Article 8, paragraph 2; Article 10, paragraph 2 of the Charter. 227. Moreover, while an explicit declaration according to Article 13 of the Charter is not included in the ratification instrument, as indicated above, Article 2 of Law 1850/1989 establishes that the implementation of the Charter is restricted to local authorities of the first tier. 228. In the written answers to the rapporteurs’ questions the Ministry of the Interior informed the rapporteurs that, for the time being, it is still not possible to ratify all the above mentioned provisions. The only provision on which the reservation could be lifted, according to the competent Directorate of the Ministry of Interior could be Article 8, para. 2, as control, which is strictly limited to their legality and not to their expediency, is exercised over local government actions. 229. Regarding the other provision, the Ministry of the Interior pointed out that: “- Art.5 Any change of the administrative boundaries of a municipality may take place under certain conditions provided for in articles 2-5 of the Law 3463/2006 (“Code of Municipalities and Communities”), Articles 10-13 of the same law, and Article 5 (redefinition of boundaries of municipal communities within municipalities of over 100.000 inhabitants, transfer of a local community to a neighbouring municipality) and Article 6 (establishment of a local community from a settlement which is defined in the census as independent) of Law 3852/2010 (“the Kallikratis reform”), with different regulatory acts, as the case may be, and based on the opinion of the local authorities involved. Holding local referendums is provided for in Article 216 of Law 3463/2006; however, in practice, referendums have not been held, pending the issuance of a Presidential Decree, which will provide for legality and other organisational issues; - Article 7, par.2: The Law 3852/2010 (article 92 in relation to municipalities and article 181 in relation to regions) and provisions which settle specific issues are mainly issued on the initiative of the Ministries of Finance and of Labour. Α payment is provided for the heads of the regions, the deputy heads of the regions, the mayors and the deputy mayors, as well as representation allowances are provided for the presidents of local and municipal communities. However, such payments or allowances are not provided for the municipal or the regional councillors. For any loss of profit or fees in respect of services provided, court action should be taken; […] - Article 10, par 2: The possibilities for municipal authorities to engage in international co-operation are provided for in Articles 219-221 of Law 3463/2006 and in Articles 99-101 (inter-municipal or intra-level cooperation, contract plans, and networks of municipalities and of regions) of law 3852/2010. Articles 202 (networks) and 203 (international co-operation at the regional level) of the same law provide for such cooperation possibilities especially for the regions. However, at both tiers of local government , networks are set up in Greece in accordance with the provisions of the Civil Code (obligatory establishment of a non-profit partnership under civil law ) while any kind of international co- operation is subject to the approval of the special inter- ministerial committee in accordance with law 3345/2005. This special committee is set up on a joint decision of the Ministers of Interior and of Foreign Affairs. Concerning the collective organs of the two tiers of local government, respective international co-operation possibilities are also provided, without the terms provided for in Law 3345/2005 (Article 2 of the Presidential Decree 74/2011 on the Union of Regions and article 1 of the Presidential Decree 75/2011 on the Regional Unions of Municipalities and the Central Union of Municipalities of Greece).” 230. The Ministry confirmed as well that “in relation to Recommendation
page 773 / 796 247 (2008) and the ratification of the Charter of Local Self-Government, we note that according to Article 2 of Law 1850/1989, the scope of the Charter does not concern the second tier of local government.” 231. In consequence, this report would recommend the Greek authorities to consider revisiting the advisability of reviewing some of the declarations made at the time of ratification. For instance, the withdrawal of the declaration made in connection with Article 5 and Article 8, para. 2 of the Charter should not represent a serious problem. 232. In addition, the rapporteurs recommend the Greek authorities to extend the scope of the Charter to the second tier of local government (regions) as after the Kallikratis reform no doubts remain on their nature of self-government authorities, as we will point out below.
Hungary [Non ratified - Report adopted on 12 February 2021 ]
173. Hungary has no declarations or reservations in respect of the Charter, having withdrawn, on 8 March 2002, the declaration previously formulated in respect of Article 13 of the Charter upon ratification.
Iceland [Non ratified - Report adopted on 29 March 2017 ]
195. Iceland ratified the Charter without reservations.
Ireland [Non ratified - Report adopted on 31 October 2013 ]
161. The Charter was ratified in Dáil Éireann on 20 March, 2002 and the instrument of ratification (with declarations) was deposited by Ireland on 14 May 2002, the treaty entering into force in Ireland on the 1 September 2002. The declaration attached to the ratification instrument stated that “Ireland considers itself bound by all the paragraphs of Part I of the Charter” (the substantive provisions of the Charter) and that “Ireland intends to confine the scope of the Charter to the following categories of authorities: county councils, city councils, town councils.” 162. The Congress outlined its understanding of the position of dualist States, including Ireland, in relation to the Charter in a memorandum at the 21st Session of the Chamber of Local Authorities on 28 September 2011. It accepts that Ireland is a dualist state and that the Charter does not have direct effect and consequently a direct application in domestic law without a further legal instrument. 163. It stated this of the Charter’s binding effect: “32. The Charter was conceived as an instrument with binding effects, entailing commitments under international law (and not domestic law). Countries signing and ratifying the Charter undertake to abide by it in that they will not only refrain from future adoption of domestic law provisions at variance with the Charter, but also amend any provisions which conflict with the Charter. 164. In the opinion of the rapporteurs, the expected commitment of Ireland to adopt all the principles expressed in the Charter into domestic legislation was partly reflected by the contents of the LGA 2001, but no further effort was made to harmonise or amend all the provisions of national legislation which conflict with the Charter after 2001. The rapporteurs maintain that there is no direct “conflict” between Irish legislation and the provisions of the Charter, although several important gaps exist in the legislation. 165. The rapporteurs welcome the publication of the Policy Paper “Putting People First” in October 2012. This document re-invents, so to speak, issues of local democracy in Ireland after more than a decade of non-realised proclamations (all the important points of this Policy Paper are discussed in topical parts of the report). A major programme of local government legislation is expected to proceed in 2013 to provide for the extensive reforms set out in the Action Programme. Assuming that legislative proposals will be adopted by the Parliament, the reflection of the spirit of the Charter in Irish public policy is expected to improve. 166. Some of the recommendations dating back to 2001 are still valid: Local authorities in Ireland still cannot be said to “regulate and manage a substantial share of public affairs”; the principle of subsidiarity is still not a primary concern in the allocation of public responsibilities. Local authorities’ discretion is still highly
page 774 / 796 circumscribed through the use of statutory instruments and regulations to supplement laws, and the need to secure sanctions and prior approvals from national government for many activities. Consultation of local authorities over new legislation or financial decisions is not systematic. Local authorities are not provided with adequate or sufficiently diversified resources which are commensurate with the responsibilities of local government. Specific or earmarked grants still make up a significant proportion of central government transfers. 167. The rapporteurs had the opportunity to discuss with Minister Hogan the possibility of the signing and ratification of various Council of Europe legal instruments related to local democracy such as the Additional Protocol to the European Charter of Local Self-Government on the right to participate in the affairs of a local authority (CETS No.: 207), the Additional Protocol to the European Outline Convention on Transfrontier Co-operation between Territorial Communities or Authorities (ETS No. 159), and the Convention on the Participation of Foreigners in Public Life at Local Level (ETS No. 144). 168. They were informed that, it is intended to give consideration to the issue of ratification of the Additional Protocol to the European Charter of Local Self-Government on the right to participate in the affairs of a local authority as soon as possible in the context of implementation of the Action Programme. As regards the signature of the Convention on the Participation of Foreigners in Public Life at Local Level, the rapporteurs were given to understand that providing separate rights and arrangements for new-comers would run contrary to Ireland’s national policy, which is consistent with the European Common Basic Principles of Integration (established by the Council of the EU and the Governments of the Member States in 2005). Consequently, no development is to be expected on this particular point.
Italy [Non ratified - Report adopted on 18 October 2017 ]
177. As noted at point 1 of this Report, the Italian Republic ratified the Charter without formulating any reservation, or with no territorial or organic restriction on its scope of application. The “declaration” annexed to the Instrument of Ratification clearly states that Italy is bound by all the articles of the Charter.
Liechtenstein [Non ratified - Report adopted on 28 March 2018 ]
61. When it ratified the Charter in 1988, Liechtenstein decided not to ratify some of its provisions, namely Article 3 paragraph 2, Article 6 paragraph 2, Article 7 paragraph 2, Article 9 paragraphs 3, 4 and 8, and Article 10 paragraphs 2 and 3. The spirit of the Charter requires the acceptance of all its provisions unless certain compelling interests justify a reservation. In the rapporteurs’ opinion, the situation in Liechtenstein is in compliance with the Articles of the Charter which were not ratified by Liechtenstein, and they would therefore like to recommend that the Liechtenstein authorities consider the possibility of ratifying all the non-ratified provisions.
Montenegro [Non ratified - Report adopted on 21 October 2015 ]
127. As already mentioned, Montenegro became a member of the Council of Europe on 11 May 2007. Montenegro signed the European Charter of Local Self-Government (ETS No. 122, hereinafter "the Charter") on 24 June 2005 and ratified it on 12 September 2008. The Charter entered into force with respect to Montenegro on 1 January 2009. The commitment to observe the Charter was restricted to Articles 2; Article 3 paragraphs 1 and 2; Art. 4 paragraphs 1, 2, 4 and 6; Article 5; Article 6 paragraph 1; Article 7 paragraphs 1 and 3; Article 8 paragraph 1; Article 9 paragraphs 1, 2, 3, 4, 5, 6, 7,and 8; Article 10, paragraph 1,2 and 3; Article 11. Consequently, Montenegro is not bound by Article 4, paragraph 3 and 5, Article 6 paragraph 2; Article 7 paragraph 2; Article 8 paragraph 2 and 3. 128. In the context of its international obligations as well as its internal legislation, Montenegro is a very young country. The institutions are still faced with a situation in which not many routines in
page 775 / 796 the exercise of the legal framework have been established. This might, for example, have an impact on the need for supervision. It can be expected that in the context of further consolidation, the different provisions of the Charter might be seen in a different light. During its visit, the delegation received the impression that there is a very serious intention to live up to the standards of the Charter without restricting the provisions that Montenegro is formally bound by. 129. The delegation of the Congress was told that the ratification of the paragraphs of the Charter that Montenegro has not ratified so far is considered as a realistic option. It seems that the respective legal acts will be under discussion in the context of the reform legislation that is being discussed at present (2015). The delegation also has reason to believe that Montenegro will be able fulfil the requirements of the rules that it is not bound by to date. Even if the law might not express some of the rules explicitly, the state institutions generally seem to accept them in practice. 4. Conclusions and further steps of the monitoring procedure 130. Since the last monitoring visit in 2010, Montenegro has continued to demonstrate a firm willingness to comply with the Charter and other international standards, which served as a catalyst for various reform processes. The legal framework relating to Local Self- Government is in constant flux, particularly in regard to the on-going public administration reform (AURUM), which suggests a promising legal evolution for the state of local democracy in Montenegro. At the outset, the rapporteurs state that the constitutional and legal foundations, as well as the actual concept of local self-government, are duly in place in Montenegro (Article 2, 3). Moreover, the situation in regard to Articles 5, 7, 8 and 11 is overall in compliance with the Charter. In the light of those positive observations, there are nevertheless some issues that would require closer attention. 131. In regard to Article 4, it can be concluded that even if local authorities are mostly consulted on matters which are of immediate interest to them, this process requires further improvement in practice. In particular Article 4, paragraph 2, which affords local authorities the full discretion to exercise their initiative with regard to any matter which is not excluded from their competence nor assigned to any other authority, needs special attention by the national authorities. Likewise, closer attention should be given to Article 4, paragraph 6, according to which local authorities must be consulted, as far as possible, in due time and in an appropriate way, in the planning and decision- making processes for all matters that concern them directly. This primarily refers to the application of this principle in practice, since legal framework and mechanisms are established. 132. Concerning the administrative structure and resources for the tasks of local authorities (Article 6), the rapporteurs emphasize that human capacities remain insufficient, thus leading to the conclusion that there is only a partial compliance with this article. They see as a positive development the provisions of the draft Act on Changes and Amendments to the Law on local self-government that concern the development of new solutions which will introduce a system of merits and reward of staff members who are ready to provide quality services to citizens. Yet, the rapporteurs are concerned that operational capacities and management of the local level encounter great challenges. In this respect, they consider that a development and rationalisation of the local administrative capacities in the next period has to be a priority for the Government. 133. Furthermore the situation in Montenegro does only partly comply with the requirements of Article 9 of the Charter. Particular attention needs to be paid to paragraphs 1, 2, 3 and 6 of Article 9. During the visit, the rapporteurs were able to grasp the fundamental differences in financial, administrative and economic capacity. In fact, a large share of Montenegro’s municipalities does not dispose of adequate financial resources of their own and lack commensurate funding for implementing additional activities assigned to them (Article 9 paragraphs 1, 2). With regards to paragraph 3 of Article 9, the general assessment of the financial situation is that a majority of municipalities are in a difficult financial situation which is characterised by a high level of debt and unsettled liabilities, causing numerous problems in their functioning and fulfilment of duties under the law. Globally, the criteria used in distribution of funds of the Equalisation Fund may be assessed as correct and the fund does indeed serve as an indispensable tool for many municipalities, particularly in the economically weaker north of the country (Article 9 paragraph 5). Nevertheless, further legal solutions should ensure a higher level of funds of the Equalisation Fund, whether by introducing a new form of income into its structure, or by increasing the percentage of allocation of existing revenues constituting the fund. Lastly, there is a
page 776 / 796 need for a further improvement in the consultation process regarding the allocation of redistributed resources in Montenegro (Article 9 paragraph 6). 134. Generally, the rapporteurs can conclude that the requirements of Local Authorities’ right to associate, as specified in Article 10 of the Charter are met by Montenegro. Nevertheless, they invite the Government and the legislature of Montenegro to reconsider the rules which describe the role of the central level in the creation of institutionalised forms of co-operation between municipalities. In particular the conditions that have to be met in order for the municipalities to receive the necessary permission should be clearly stated in the law and in the light of the Article 10, paragraph 1 of the Charter. In this sense, the fact that the requirement of governmental consent might be abolished altogether seems to be a positive step. The rapporteurs intend to follow closely the legislative developments of the Law on local self- government and its impacts on this issue. 135. As for the non-ratified provisions, relating to Article 4, paragraph 3 and 5, Article 6 paragraph 2; Article 7 paragraph 2 and Article 8 paragraph 2 and 3, the Congress delegation was informed that the ratification of those paragraphs constitutes a realistic option, as they will be under discussion in the context of the reform legislation that is discussed at present. The delegation also has reason to believe that Montenegro will be able fulfil the requirements of the rules, to which it is not bound by to this date. Even if the law might not express some of the rules explicitly, the state institutions generally seem to accept them in practice.
Netherlands [Non ratified - Report adopted on 26 March 2014 ]
127. As noted above in various paragraphs, the Instrument of Ratification of the Charter by the Netherlands was deposited on 20 March 1991. The Charter entered into force in respect to the Netherlands on 1 July 1991.The said Instrument contained several “declarations” to different articles of the Charter, on the ground of Article 12, paragraph 2 of the Charter: namely, that the Netherlands will not consider itself bound by the following provisions: Article 7, paragraph 2; Article 8, paragraph 2; Article 9, paragraph 5; Article 11 of the Charter. 128. Moreover, and in accordance with Article 13 of the Charter, the Netherlands declared that it intended to confine the scope of the Charter to provinces and municipalities and that the Charter would apply to the Kingdom in Europe (on the ground of Article 16 of the Charter).32 129. During the consultation process, the Minister of the Interior and Kingdom Relations informed the rapporteurs that, for the time being, it is still not possible to ratify the above mentioned provisions. 130. On the other hand, and in a letter from the Permanent Representative, dated 20 March 1991, handed over to the Secretary General at the time of deposit of the instrument of acceptance on the same day, the Netherlands filed the following “declaration”: “With regard to Article 6, paragraph 2 of the Charter, the Government of the Kingdom of the Netherlands takes the view that, in the framework of the Charter, only Article 9 of the Charter has any bearing on the financial resources of local authorities. This means that local authorities may not take any financial claims on central government based on the provisions of Article 6, paragraph 2, of the Charter. In the opinion of the Government of the Kingdom of the Netherlands, Dutch legislation is in accord with both the wording and the purport of Article 6, paragraph 2, of the Charter.” 131. The rapporteurs were told that, at the time of the promulgation of the Charter Ratification Act, the government committed itself to try to ratify the other provisions where possible. In its third review of inter-administrative relations (see supra) the Council of State stated that the non-ratified provisions to the Charter were still not signed, and that the previous recommendations of the Congress had not been respected. 132. In consequence, this report would recommend the Dutch authorities to consider revisiting the pertinence of reviewing some of the declarations made at the time of ratification. For instance, the withdrawal of the declaration made in connection with Article 7 para.2 of the Charter should not represent a serious problem in the light of the present legal situation. 133. The same can be said in relation with Article 8 para.2, since the current system does, in practice, seem to satisfy the requirements of that provision. The withdrawal of the declaration made in respect of Article 11 represents more difficulties in the light of the above described situation, but Dutch authorities are warmly encouraged to introduce the appropriate changes in the present legal scheme so as to conform to that provision.
page 777 / 796 Portugal [Non ratified - Report adopted on 28 September 2020 ]
Portugal has not formulated any declarations or reservations, or has it so far signed the Additional Protocol to the European Charter of Local Self-Government on the right to participate in the affairs of a local authority (CETS No. 207).
Slovak Republic [Non ratified - Report adopted on 24 March 2016 ]
102. As noted in the Introduction to this report, the Instrument of ratification of the Charter that was first deposited by Slovakia contained several declarations or “reservations” to the Charter. Once the ratification process was fully culminated in 2007, there are no longer reservations, and this international instrument is fully applicable and binding on Slovakia. As compared to the practice of other countries, the Slovak approach must deserve a positive appraisal, and fully complies with Art. 12 of the Charter.
Switzerland [Non ratified - Report adopted on 20 October 2017 ]
129. Switzerland signed the European Charter of Local Self-Government on 21 January 2004 without ratifying Articles 4.4, 6.2, 7.2, 8.2, 9.5 and 9.7. The rapporteurs nevertheless believe that compliance with the requirements arising out of these articles would not pose any major problems if the articles were ratified, since the current situation of local self-government in Switzerland is likely to meet these requirements fully, albeit with the (partial) exception of Article 7.2, which provides that local elected representatives shall be given appropriate financial compensation for exercise of their office. Such compensation is however important to guarantee for everyone the access to elective function and the real exercise of responsibilities that go with these posts by elected representatives and not mainly by administrative structures.
Article 12.2 Undertakings
Each Contracting State, when depositing its instrument of ratification, acceptance or approval, shall notify to the Secretary General of the Council of Europe of the paragraphs selected in accordance with the provisions of paragraph 1 of this article.
Azerbaijan [Non ratified - Report adopted on 17 June 2021 ]
177. As discussed earlier, Azerbaijan has made some reservations concerning the scope of the European Charter of Local Self-Government and stated that it is not bound by Article 4(3), Article 7(2), Article 9(5) and (6) and Article 10(3) of the Charter. The Congress delegation is convinced that Azerbaijan is currently failing to comply fully with these provisions of the Charter (as in the case of some other provisions) and consequently believes that the maintenance of these reservations could be justified. Nevertheless, as the proposals in this report show, the Azerbaijani authorities are strongly advised and encouraged to draw up and implement comprehensive decentralisation reforms that may lead to the withdrawal of all these reservations. 178. The representatives of the Minister of Justice informed the delegation that several state bodies had been instructed to submit proposals on
page 778 / 796 the possibility of Azerbaijan’s accession of to the relevant articles of the Charter and that the matter would be considered in the near future. The rapporteurs welcome this positive information brought to their attention during the visit and will closely follow further developments in this respect. 179. At the same time, the representatives of the Minister of Justice added that it should be noted that, despite the fact that the Republic of Azerbaijan had not yet acceded to paragraph 3 of Article 10 of the Charter, certain measures had been taken towards its implementation. For example, the Law of 25 October 2011 had inserted a new paragraph into the Law on the Status of Municipalities providing for the right of municipalities and their associations, as agreed with the Ministry of Foreign Affairs, to conclude co-operation agreements with foreign local government bodies and to become members of specialised organisations of local government bodies.
Cyprus [Non ratified - Report adopted on 20 October 2016 ]
127. Since the ratification of the Charter, Cyprus has not considered itself bound by paragraph 2 of Article 7 of this convention. During the monitoring process, the rapporteurs have not received any explanation for sustaining the non-ratificaion of this provision. The spirit of the Charter requires the acceptance of all of its provisions, unless certain compelling interests exist justifying the reservation. 128. In the views of the rapporteurs, the legal status of the Charter in the domestic legal system of Cyprus makes some concern. Although the Charter, as an international treaty and according to the Constitution of Cyprus should have a legal force and a direct application, it is not seen as a self- executing legal norm. The Supreme Court, in the case of Pandelides v. Leantzi (1991) 3 C.L.R. 293 declared that the Charter, even though ratified by law, was not directly applicable, because its wording had been considered too vague to give rise to concrete rights and obligations recognized by domestic law. However, Cyprus, by signing and ratifying this convention, undertook a commitment to implement its provisions, so it cannot refer to any internal decision or specific legal interpretation to justify the non-compliance with its provisions. 129. In this regard, the rapporteurs draw the attention of the Cypriot authorities to the fact that the relevant jurisprudence of the Supreme Court declaring the Charter as a directly non-applicable legal tool violates Article 12 paragraph 1, as each signatory country under this provision undertook the implementation of all articles of the Charter, with the exceptions of reservations they made at the time of signature and ratification, and have maintained since then.
Denmark [Non ratified - Report adopted on 31 October 2013 ]
Estonia [Non ratified - Report adopted on 29 March 2017 ]
115. Estonia has not given notification of any reservations or declaration with respect to the Charter provisions. 9. THE ADDITIONAL PROTOCOL 116. On 16 November 2009, Estonia signed and on 20 April 2011, ratified the Additional Protocol to the European Charter of Local Self-Government on the right to participate in the affairs of a local authority (CETS No. 207), which entered into force on 1 June 2012. The Supreme Court has in different judgments accepted the Additional Protocol as a valid legal basis for controlling the constitutionality of Estonian laws.97
Greece [Non ratified - Report adopted on 26 March 2015 ]
226. As noted above in various paragraphs, the Instrument of Ratification of the Charter by Greece was deposited on 6 September 1989. The Charter entered into force in respect of that country on 1 January 1990. On the ground of Article 12, paragraph 2 of the Charter, Greece declared itself not to be bound by: Article 5 Article 7, paragraph 2; Article 8, paragraph 2; Article 10, paragraph 2 of the
page 779 / 796 Charter. 227. Moreover, while an explicit declaration according to Article 13 of the Charter is not included in the ratification instrument, as indicated above, Article 2 of Law 1850/1989 establishes that the implementation of the Charter is restricted to local authorities of the first tier. 228. In the written answers to the rapporteurs’ questions the Ministry of the Interior informed the rapporteurs that, for the time being, it is still not possible to ratify all the above mentioned provisions. The only provision on which the reservation could be lifted, according to the competent Directorate of the Ministry of Interior could be Article 8, para. 2, as control, which is strictly limited to their legality and not to their expediency, is exercised over local government actions. 229. Regarding the other provision, the Ministry of the Interior pointed out that: “- Art.5 Any change of the administrative boundaries of a municipality may take place under certain conditions provided for in articles 2-5 of the Law 3463/2006 (“Code of Municipalities and Communities”), Articles 10-13 of the same law, and Article 5 (redefinition of boundaries of municipal communities within municipalities of over 100.000 inhabitants, transfer of a local community to a neighbouring municipality) and Article 6 (establishment of a local community from a settlement which is defined in the census as independent) of Law 3852/2010 (“the Kallikratis reform”), with different regulatory acts, as the case may be, and based on the opinion of the local authorities involved. Holding local referendums is provided for in Article 216 of Law 3463/2006; however, in practice, referendums have not been held, pending the issuance of a Presidential Decree, which will provide for legality and other organisational issues; - Article 7, par.2: The Law 3852/2010 (article 92 in relation to municipalities and article 181 in relation to regions) and provisions which settle specific issues are mainly issued on the initiative of the Ministries of Finance and of Labour. Α payment is provided for the heads of the regions, the deputy heads of the regions, the mayors and the deputy mayors, as well as representation allowances are provided for the presidents of local and municipal communities. However, such payments or allowances are not provided for the municipal or the regional councillors. For any loss of profit or fees in respect of services provided, court action should be taken; […] - Article 10, par 2: The possibilities for municipal authorities to engage in international co-operation are provided for in Articles 219-221 of Law 3463/2006 and in Articles 99-101 (inter-municipal or intra-level cooperation, contract plans, and networks of municipalities and of regions) of law 3852/2010. Articles 202 (networks) and 203 (international co-operation at the regional level) of the same law provide for such cooperation possibilities especially for the regions. However, at both tiers of local government , networks are set up in Greece in accordance with the provisions of the Civil Code (obligatory establishment of a non-profit partnership under civil law ) while any kind of international co- operation is subject to the approval of the special inter- ministerial committee in accordance with law 3345/2005. This special committee is set up on a joint decision of the Ministers of Interior and of Foreign Affairs. Concerning the collective organs of the two tiers of local government, respective international co-operation possibilities are also provided, without the terms provided for in Law 3345/2005 (Article 2 of the Presidential Decree 74/2011 on the Union of Regions and article 1 of the Presidential Decree 75/2011 on the Regional Unions of Municipalities and the Central Union of Municipalities of Greece).” 230. The Ministry confirmed as well that “in relation to Recommendation 247 (2008) and the ratification of the Charter of Local Self-Government, we note that according to Article 2 of Law 1850/1989, the scope of the Charter does not concern the second tier of local government.” 231. In consequence, this report would recommend the Greek authorities to consider revisiting the advisability of reviewing some of the declarations made at the time of ratification. For instance, the withdrawal of the declaration made in connection with Article 5 and Article 8, para. 2 of the Charter should not represent a serious problem. 232. In addition, the rapporteurs recommend the Greek authorities to extend the scope of the Charter to the second tier of local government (regions) as after the Kallikratis reform no doubts remain on their nature of self-government authorities, as we will point out below.
Hungary [Non ratified - Report adopted on 12 February 2021 ]
173. Hungary has no declarations or reservations in respect of the Charter, having withdrawn, on
page 780 / 796 8 March 2002, the declaration previously formulated in respect of Article 13 of the Charter upon ratification.
Iceland [Non ratified - Report adopted on 29 March 2017 ]
195. Iceland ratified the Charter without reservations.
Ireland [Non ratified - Report adopted on 31 October 2013 ]
161. The Charter was ratified in Dáil Éireann on 20 March, 2002 and the instrument of ratification (with declarations) was deposited by Ireland on 14 May 2002, the treaty entering into force in Ireland on the 1 September 2002. The declaration attached to the ratification instrument stated that “Ireland considers itself bound by all the paragraphs of Part I of the Charter” (the substantive provisions of the Charter) and that “Ireland intends to confine the scope of the Charter to the following categories of authorities: county councils, city councils, town councils.” 162. The Congress outlined its understanding of the position of dualist States, including Ireland, in relation to the Charter in a memorandum at the 21st Session of the Chamber of Local Authorities on 28 September 2011. It accepts that Ireland is a dualist state and that the Charter does not have direct effect and consequently a direct application in domestic law without a further legal instrument. 163. It stated this of the Charter’s binding effect: “32. The Charter was conceived as an instrument with binding effects, entailing commitments under international law (and not domestic law). Countries signing and ratifying the Charter undertake to abide by it in that they will not only refrain from future adoption of domestic law provisions at variance with the Charter, but also amend any provisions which conflict with the Charter. 164. In the opinion of the rapporteurs, the expected commitment of Ireland to adopt all the principles expressed in the Charter into domestic legislation was partly reflected by the contents of the LGA 2001, but no further effort was made to harmonise or amend all the provisions of national legislation which conflict with the Charter after 2001. The rapporteurs maintain that there is no direct “conflict” between Irish legislation and the provisions of the Charter, although several important gaps exist in the legislation. 165. The rapporteurs welcome the publication of the Policy Paper “Putting People First” in October 2012. This document re-invents, so to speak, issues of local democracy in Ireland after more than a decade of non-realised proclamations (all the important points of this Policy Paper are discussed in topical parts of the report). A major programme of local government legislation is expected to proceed in 2013 to provide for the extensive reforms set out in the Action Programme. Assuming that legislative proposals will be adopted by the Parliament, the reflection of the spirit of the Charter in Irish public policy is expected to improve. 166. Some of the recommendations dating back to 2001 are still valid: Local authorities in Ireland still cannot be said to “regulate and manage a substantial share of public affairs”; the principle of subsidiarity is still not a primary concern in the allocation of public responsibilities. Local authorities’ discretion is still highly circumscribed through the use of statutory instruments and regulations to supplement laws, and the need to secure sanctions and prior approvals from national government for many activities. Consultation of local authorities over new legislation or financial decisions is not systematic. Local authorities are not provided with adequate or sufficiently diversified resources which are commensurate with the responsibilities of local government. Specific or earmarked grants still make up a significant proportion of central government transfers. 167. The rapporteurs had the opportunity to discuss with Minister Hogan the possibility of the signing and ratification of various Council of Europe legal instruments related to local democracy such as the Additional Protocol to the European Charter of Local Self-Government on the right to participate in the affairs of a local authority (CETS No.: 207), the Additional Protocol to the European Outline Convention on Transfrontier Co-operation between Territorial Communities or Authorities (ETS No. 159), and the Convention on the Participation of Foreigners in Public Life at Local Level (ETS No. 144). 168. They were informed that, it is intended to give consideration to the issue of ratification of the Additional
page 781 / 796 Protocol to the European Charter of Local Self-Government on the right to participate in the affairs of a local authority as soon as possible in the context of implementation of the Action Programme. As regards the signature of the Convention on the Participation of Foreigners in Public Life at Local Level, the rapporteurs were given to understand that providing separate rights and arrangements for new-comers would run contrary to Ireland’s national policy, which is consistent with the European Common Basic Principles of Integration (established by the Council of the EU and the Governments of the Member States in 2005). Consequently, no development is to be expected on this particular point.
Italy [Non ratified - Report adopted on 18 October 2017 ]
177. As noted at point1 of this Report, the Italian Republic ratified the Charter without formulating any reservation, or with no territorial or organic restriction on its scope of application. The “declaration” annexed to the Instrument of Ratification clearly states that Italy is bound by all the articles of the Charter.
Liechtenstein [Non ratified - Report adopted on 28 March 2018 ]
61. When it ratified the Charter in 1988, Liechtenstein decided not to ratify some of its provisions, namely Article 3 paragraph 2, Article 6 paragraph 2, Article 7 paragraph 2, Article 9 paragraphs 3, 4 and 8, and Article 10 paragraphs 2 and 3. The spirit of the Charter requires the acceptance of all its provisions unless certain compelling interests justify a reservation. In the rapporteurs’ opinion, the situation in Liechtenstein is in compliance with the Articles of the Charter which were not ratified by Liechtenstein, and they would therefore like to recommend that the Liechtenstein authorities consider the possibility of ratifying all the non-ratified provisions.
Montenegro [Non ratified - Report adopted on 21 October 2015 ]
127. As already mentioned, Montenegro became a member of the Council of Europe on 11 May 2007. Montenegro signed the European Charter of Local Self-Government (ETS No. 122, hereinafter "the Charter") on 24 June 2005 and ratified it on 12 September 2008. The Charter entered into force with respect to Montenegro on 1 January 2009. The commitment to observe the Charter was restricted to Articles 2; Article 3 paragraphs 1 and 2; Art. 4 paragraphs 1, 2, 4 and 6; Article 5; Article 6 paragraph 1; Article 7 paragraphs 1 and 3; Article 8 paragraph 1; Article 9 paragraphs 1, 2, 3, 4, 5, 6, 7,and 8; Article 10, paragraph 1,2 and 3; Article 11. Consequently, Montenegro is not bound by Article 4, paragraph 3 and 5, Article 6 paragraph 2; Article 7 paragraph 2; Article 8 paragraph 2 and 3. 128. In the context of its international obligations as well as its internal legislation, Montenegro is a very young country. The institutions are still faced with a situation in which not many routines in the exercise of the legal framework have been established. This might, for example, have an impact on the need for supervision. It can be expected that in the context of further consolidation, the different provisions of the Charter might be seen in a different light. During its visit, the delegation received the impression that there is a very serious intention to live up to the standards of the Charter without restricting the provisions that Montenegro is formally bound by. 129. The delegation of the Congress was told that the ratification of the paragraphs of the Charter that Montenegro has not ratified so far is considered as a realistic option. It seems that the respective legal acts will be under discussion in the context of the reform legislation that is being discussed at present (2015). The delegation also has reason to believe that Montenegro will be able fulfil the requirements of the rules that it is not bound by to date. Even if the law might not express some of the rules explicitly, the state institutions generally seem to accept them in practice. 4. Conclusions and further steps of the monitoring procedure 130. Since the last monitoring visit in 2010, Montenegro has continued to demonstrate a firm willingness to comply with the Charter and other international standards, which
page 782 / 796 served as a catalyst for various reform processes. The legal framework relating to Local Self- Government is in constant flux, particularly in regard to the on-going public administration reform (AURUM), which suggests a promising legal evolution for the state of local democracy in Montenegro. At the outset, the rapporteurs state that the constitutional and legal foundations, as well as the actual concept of local self-government, are duly in place in Montenegro (Article 2, 3). Moreover, the situation in regard to Articles 5, 7, 8 and 11 is overall in compliance with the Charter. In the light of those positive observations, there are nevertheless some issues that would require closer attention. 131. In regard to Article 4, it can be concluded that even if local authorities are mostly consulted on matters which are of immediate interest to them, this process requires further improvement in practice. In particular Article 4, paragraph 2, which affords local authorities the full discretion to exercise their initiative with regard to any matter which is not excluded from their competence nor assigned to any other authority, needs special attention by the national authorities. Likewise, closer attention should be given to Article 4, paragraph 6, according to which local authorities must be consulted, as far as possible, in due time and in an appropriate way, in the planning and decision- making processes for all matters that concern them directly. This primarily refers to the application of this principle in practice, since legal framework and mechanisms are established. 132. Concerning the administrative structure and resources for the tasks of local authorities (Article 6), the rapporteurs emphasize that human capacities remain insufficient, thus leading to the conclusion that there is only a partial compliance with this article. They see as a positive development the provisions of the draft Act on Changes and Amendments to the Law on local self-government that concern the development of new solutions which will introduce a system of merits and reward of staff members who are ready to provide quality services to citizens. Yet, the rapporteurs are concerned that operational capacities and management of the local level encounter great challenges. In this respect, they consider that a development and rationalisation of the local administrative capacities in the next period has to be a priority for the Government. 133. Furthermore the situation in Montenegro does only partly comply with the requirements of Article 9 of the Charter. Particular attention needs to be paid to paragraphs 1, 2, 3 and 6 of Article 9. During the visit, the rapporteurs were able to grasp the fundamental differences in financial, administrative and economic capacity. In fact, a large share of Montenegro’s municipalities does not dispose of adequate financial resources of their own and lack commensurate funding for implementing additional activities assigned to them (Article 9 paragraphs 1, 2). With regards to paragraph 3 of Article 9, the general assessment of the financial situation is that a majority of municipalities are in a difficult financial situation which is characterised by a high level of debt and unsettled liabilities, causing numerous problems in their functioning and fulfilment of duties under the law. Globally, the criteria used in distribution of funds of the Equalisation Fund may be assessed as correct and the fund does indeed serve as an indispensable tool for many municipalities, particularly in the economically weaker north of the country (Article 9 paragraph 5). Nevertheless, further legal solutions should ensure a higher level of funds of the Equalisation Fund, whether by introducing a new form of income into its structure, or by increasing the percentage of allocation of existing revenues constituting the fund. Lastly, there is a need for a further improvement in the consultation process regarding the allocation of redistributed resources in Montenegro (Article 9 paragraph 6). 134. Generally, the rapporteurs can conclude that the requirements of Local Authorities’ right to associate, as specified in Article 10 of the Charter are met by Montenegro. Nevertheless, they invite the Government and the legislature of Montenegro to reconsider the rules which describe the role of the central level in the creation of institutionalised forms of co-operation between municipalities. In particular the conditions that have to be met in order for the municipalities to receive the necessary permission should be clearly stated in the law and in the light of the Article 10, paragraph 1 of the Charter. In this sense, the fact that the requirement of governmental consent might be abolished altogether seems to be a positive step. The rapporteurs intend to follow closely the legislative developments of the Law on local self- government and its impacts on this issue. 135. As for the non-ratified provisions, relating to Article 4, paragraph 3 and 5, Article 6 paragraph 2; Article 7 paragraph 2 and Article 8 paragraph 2 and 3, the Congress delegation was informed that the ratification of those paragraphs constitutes a realistic
page 783 / 796 option, as they will be under discussion in the context of the reform legislation that is discussed at present. The delegation also has reason to believe that Montenegro will be able fulfil the requirements of the rules, to which it is not bound by to this date. Even if the law might not express some of the rules explicitly, the state institutions generally seem to accept them in practice.
Netherlands [Non ratified - Report adopted on 26 March 2014 ]
127. As noted above in various paragraphs, the Instrument of Ratification of the Charter by the Netherlands was deposited on 20 March 1991. The Charter entered into force in respect to the Netherlands on 1 July 1991.The said Instrument contained several “declarations” to different articles of the Charter, on the ground of Article 12, paragraph 2 of the Charter: namely, that the Netherlands will not consider itself bound by the following provisions: Article 7, paragraph 2; Article 8, paragraph 2; Article 9, paragraph 5; Article 11 of the Charter. 128. Moreover, and in accordance with Article 13 of the Charter, the Netherlands declared that it intended to confine the scope of the Charter to provinces and municipalities and that the Charter would apply to the Kingdom in Europe (on the ground of Article 16 of the Charter).32 129. During the consultation process, the Minister of the Interior and Kingdom Relations informed the rapporteurs that, for the time being, it is still not possible to ratify the above mentioned provisions. 130. On the other hand, and in a letter from the Permanent Representative, dated 20 March 1991, handed over to the Secretary General at the time of deposit of the instrument of acceptance on the same day, the Netherlands filed the following “declaration”: “With regard to Article 6, paragraph 2 of the Charter, the Government of the Kingdom of the Netherlands takes the view that, in the framework of the Charter, only Article 9 of the Charter has any bearing on the financial resources of local authorities. This means that local authorities may not take any financial claims on central government based on the provisions of Article 6, paragraph 2, of the Charter. In the opinion of the Government of the Kingdom of the Netherlands, Dutch legislation is in accord with both the wording and the purport of Article 6, paragraph 2, of the Charter.” 131. The rapporteurs were told that, at the time of the promulgation of the Charter Ratification Act, the government committed itself to try to ratify the other provisions where possible. In its third review of inter-administrative relations (see supra) the Council of State stated that the non-ratified provisions to the Charter were still not signed, and that the previous recommendations of the Congress had not been respected. 132. In consequence, this report would recommend the Dutch authorities to consider revisiting the pertinence of reviewing some of the declarations made at the time of ratification. For instance, the withdrawal of the declaration made in connection with Article 7 para.2 of the Charter should not represent a serious problem in the light of the present legal situation. 133. The same can be said in relation with Article 8 para.2, since the current system does, in practice, seem to satisfy the requirements of that provision. The withdrawal of the declaration made in respect of Article 11 represents more difficulties in the light of the above described situation, but Dutch authorities are warmly encouraged to introduce the appropriate changes in the present legal scheme so as to conform to that provision.
Portugal [Non ratified - Report adopted on 28 September 2020 ]
Portugal has not formulated any declarations or reservations, or has it so far signed the Additional Protocol to the European Charter of Local Self-Government on the right to participate in the affairs of a local authority (CETS No. 207).
Slovak Republic [Non ratified - Report adopted on 24 March 2016 ]
102. As noted in the Introduction to this report, the Instrument of ratification of the Charter that was first deposited by Slovakia contained several declarations or “reservations” to the Charter. Once the ratification process was fully culminated in 2007, there are no longer reservations, and this
page 784 / 796 international instrument is fully applicable and binding on Slovakia. As compared to the practice of other countries, the Slovak approach must deserve a positive appraisal, and fully complies with Art. 12 of the Charter.
Switzerland [Non ratified - Report adopted on 20 October 2017 ]
129. Switzerland signed the European Charter of Local Self-Government on 21 January 2004 without ratifying Articles 4.4, 6.2, 7.2, 8.2, 9.5 and 9.7. The rapporteurs nevertheless believe that compliance with the requirements arising out of these articles would not pose any major problems if the articles were ratified, since the current situation of local self-government in Switzerland is likely to meet these requirements fully, albeit with the (partial) exception of Article 7.2, which provides that local elected representatives shall be given appropriate financial compensation for exercise of their office. Such compensation is however important to guarantee for everyone the access to elective function and the real exercise of responsibilities that go with these posts by elected representatives and not mainly by administrative structures.
Article 12.1 Undertakings
Each Party undertakes to consider itself bound by at least twenty paragraphs of Part I of the Charter, at least ten of which shall be selected from among the following paragraphs:
– Article 2,
– Article 3, paragraphs 1 and 2,
– Article 4, paragraphs 1, 2 and 4,
– Article 5,
– Article 7, paragraph 1,
– Article 8, paragraph 2,
– Article 9, paragraphs 1, 2 and 3,
– Article 10, paragraph 1,
– Article 11.
Armenia [Non ratified - Report adopted on 15 June 2021 ]
As mentioned earlier, as permitted by Article 12 of the Charter, Armenia has made a number of declarations concerning the scope of the European Charter of Local Self-Government and stated that
page 785 / 796 it does not consider itself bound by some articles. This non-ratification concerns Articles 5, 6, 7-2, and 10-3 of the Charter. 131. During the visit, the Congress delegation was pleased to note that the Armenian representatives all expressed a continuing desire to work with the Congress in maintaining and enhancing compliance with the Charter.
Azerbaijan [Non ratified - Report adopted on 17 June 2021 ]
177. As discussed earlier, Azerbaijan has made some reservations concerning the scope of the European Charter of Local Self-Government and stated that it is not bound by Article 4(3), Article 7(2), Article 9(5) and (6) and Article 10(3) of the Charter. The Congress delegation is convinced that Azerbaijan is currently failing to comply fully with these provisions of the Charter (as in the case of some other provisions) and consequently believes that the maintenance of these reservations could be justified. Nevertheless, as the proposals in this report show, the Azerbaijani authorities are strongly advised and encouraged to draw up and implement comprehensive decentralisation reforms that may lead to the withdrawal of all these reservations. 178. The representatives of the Minister of Justice informed the delegation that several state bodies had been instructed to submit proposals on the possibility of Azerbaijan’s accession of to the relevant articles of the Charter and that the matter would be considered in the near future. The rapporteurs welcome this positive information brought to their attention during the visit and will closely follow further developments in this respect. 179. At the same time, the representatives of the Minister of Justice added that it should be noted that, despite the fact that the Republic of Azerbaijan had not yet acceded to paragraph 3 of Article 10 of the Charter, certain measures had been taken towards its implementation. For example, the Law of 25 October 2011 had inserted a new paragraph into the Law on the Status of Municipalities providing for the right of municipalities and their associations, as agreed with the Ministry of Foreign Affairs, to conclude co-operation agreements with foreign local government bodies and to become members of specialised organisations of local government bodies.
Cyprus [Non ratified - Report adopted on 20 October 2016 ]
127. Since the ratification of the Charter, Cyprus has not considered itself bound by paragraph 2 of Article 7 of this convention. During the monitoring process, the rapporteurs have not received any explanation for sustaining the non-ratificaion of this provision. The spirit of the Charter requires the acceptance of all of its provisions, unless certain compelling interests exist justifying the reservation. 128. In the views of the rapporteurs, the legal status of the Charter in the domestic legal system of Cyprus makes some concern. Although the Charter, as an international treaty and according to the Constitution of Cyprus should have a legal force and a direct application, it is not seen as a self- executing legal norm. The Supreme Court, in the case of Pandelides v. Leantzi (1991) 3 C.L.R. 293 declared that the Charter, even though ratified by law, was not directly applicable, because its wording had been considered too vague to give rise to concrete rights and obligations recognized by domestic law. However, Cyprus, by signing and ratifying this convention, undertook a commitment to implement its provisions, so it cannot refer to any internal decision or specific legal interpretation to justify the non-compliance with its provisions. 129. In this regard, the rapporteurs draw the attention of the Cypriot authorities to the fact that the relevant jurisprudence of the Supreme Court declaring the Charter as a directly non-applicable legal tool violates Article 12 paragraph 1, as each signatory country under this provision undertook the implementation of all articles of the Charter, with the exceptions of reservations they made at the time of signature and ratification, and have maintained since then.
Denmark [Non ratified - Report adopted on 31 October 2013 ]
page 786 / 796 Estonia [Non ratified - Report adopted on 29 March 2017 ]
115. Estonia has not given notification of any reservations or declaration with respect to the Charter provisions. 9. THE ADDITIONAL PROTOCOL 116. On 16 November 2009, Estonia signed and on 20 April 2011, ratified the Additional Protocol to the European Charter of Local Self-Government on the right to participate in the affairs of a local authority (CETS No. 207), which entered into force on 1 June 2012. The Supreme Court has in different judgments accepted the Additional Protocol as a valid legal basis for controlling the constitutionality of Estonian laws.97
Greece [Non ratified - Report adopted on 26 March 2015 ]
226. As noted above in various paragraphs, the Instrument of Ratification of the Charter by Greece was deposited on 6 September 1989. The Charter entered into force in respect of that country on 1 January 1990. On the ground of Article 12, paragraph 2 of the Charter, Greece declared itself not to be bound by: Article 5 Article 7, paragraph 2; Article 8, paragraph 2; Article 10, paragraph 2 of the Charter. 227. Moreover, while an explicit declaration according to Article 13 of the Charter is not included in the ratification instrument, as indicated above, Article 2 of Law 1850/1989 establishes that the implementation of the Charter is restricted to local authorities of the first tier. 228. In the written answers to the rapporteurs’ questions the Ministry of the Interior informed the rapporteurs that, for the time being, it is still not possible to ratify all the above mentioned provisions. The only provision on which the reservation could be lifted, according to the competent Directorate of the Ministry of Interior could be Article 8, para. 2, as control, which is strictly limited to their legality and not to their expediency, is exercised over local government actions. 229. Regarding the other provision, the Ministry of the Interior pointed out that: “- Art.5 Any change of the administrative boundaries of a municipality may take place under certain conditions provided for in articles 2-5 of the Law 3463/2006 (“Code of Municipalities and Communities”), Articles 10-13 of the same law, and Article 5 (redefinition of boundaries of municipal communities within municipalities of over 100.000 inhabitants, transfer of a local community to a neighbouring municipality) and Article 6 (establishment of a local community from a settlement which is defined in the census as independent) of Law 3852/2010 (“the Kallikratis reform”), with different regulatory acts, as the case may be, and based on the opinion of the local authorities involved. Holding local referendums is provided for in Article 216 of Law 3463/2006; however, in practice, referendums have not been held, pending the issuance of a Presidential Decree, which will provide for legality and other organisational issues; - Article 7, par.2: The Law 3852/2010 (article 92 in relation to municipalities and article 181 in relation to regions) and provisions which settle specific issues are mainly issued on the initiative of the Ministries of Finance and of Labour. Α payment is provided for the heads of the regions, the deputy heads of the regions, the mayors and the deputy mayors, as well as representation allowances are provided for the presidents of local and municipal communities. However, such payments or allowances are not provided for the municipal or the regional councillors. For any loss of profit or fees in respect of services provided, court action should be taken; […] - Article 10, par 2: The possibilities for municipal authorities to engage in international co-operation are provided for in Articles 219-221 of Law 3463/2006 and in Articles 99-101 (inter-municipal or intra-level cooperation, contract plans, and networks of municipalities and of regions) of law 3852/2010. Articles 202 (networks) and 203 (international co-operation at the regional level) of the same law provide for such cooperation possibilities especially for the regions. However, at both tiers of local government , networks are set up in Greece in accordance with the provisions of the Civil Code (obligatory establishment of a non-profit partnership under civil law ) while any kind of international co- operation is subject to the approval of the special inter- ministerial committee in accordance with law 3345/2005. This special committee is set up on a joint decision of the Ministers of Interior and of Foreign Affairs. Concerning the collective organs of the two tiers of local government, respective
page 787 / 796 international co-operation possibilities are also provided, without the terms provided for in Law 3345/2005 (Article 2 of the Presidential Decree 74/2011 on the Union of Regions and article 1 of the Presidential Decree 75/2011 on the Regional Unions of Municipalities and the Central Union of Municipalities of Greece).” 230. The Ministry confirmed as well that “in relation to Recommendation 247 (2008) and the ratification of the Charter of Local Self-Government, we note that according to Article 2 of Law 1850/1989, the scope of the Charter does not concern the second tier of local government.” 231. In consequence, this report would recommend the Greek authorities to consider revisiting the advisability of reviewing some of the declarations made at the time of ratification. For instance, the withdrawal of the declaration made in connection with Article 5 and Article 8, para. 2 of the Charter should not represent a serious problem. 232. In addition, the rapporteurs recommend the Greek authorities to extend the scope of the Charter to the second tier of local government (regions) as after the Kallikratis reform no doubts remain on their nature of self-government authorities, as we will point out below.
Hungary [Non ratified - Report adopted on 12 February 2021 ]
173. Hungary has no declarations or reservations in respect of the Charter, having withdrawn, on 8 March 2002, the declaration previously formulated in respect of Article 13 of the Charter upon ratification.
Iceland [Non ratified - Report adopted on 29 March 2017 ]
195. Iceland ratified the Charter without reservations.
Ireland [Non ratified - Report adopted on 31 October 2013 ]
161. The Charter was ratified in Dáil Éireann on 20 March, 2002 and the instrument of ratification (with declarations) was deposited by Ireland on 14 May 2002, the treaty entering into force in Ireland on the 1 September 2002. The declaration attached to the ratification instrument stated that “Ireland considers itself bound by all the paragraphs of Part I of the Charter” (the substantive provisions of the Charter) and that “Ireland intends to confine the scope of the Charter to the following categories of authorities: county councils, city councils, town councils.” 162. The Congress outlined its understanding of the position of dualist States, including Ireland, in relation to the Charter in a memorandum at the 21st Session of the Chamber of Local Authorities on 28 September 2011. It accepts that Ireland is a dualist state and that the Charter does not have direct effect and consequently a direct application in domestic law without a further legal instrument. 163. It stated this of the Charter’s binding effect: “32. The Charter was conceived as an instrument with binding effects, entailing commitments under international law (and not domestic law). Countries signing and ratifying the Charter undertake to abide by it in that they will not only refrain from future adoption of domestic law provisions at variance with the Charter, but also amend any provisions which conflict with the Charter. 164. In the opinion of the rapporteurs, the expected commitment of Ireland to adopt all the principles expressed in the Charter into domestic legislation was partly reflected by the contents of the LGA 2001, but no further effort was made to harmonise or amend all the provisions of national legislation which conflict with the Charter after 2001. The rapporteurs maintain that there is no direct “conflict” between Irish legislation and the provisions of the Charter, although several important gaps exist in the legislation. 165. The rapporteurs welcome the publication of the Policy Paper “Putting People First” in October 2012. This document re-invents, so to speak, issues of local democracy in Ireland after more than a decade of non-realised proclamations (all the important points of this Policy Paper are discussed in topical parts of the report). A major programme of local government legislation is expected to proceed in 2013 to provide for the extensive reforms set out in the Action Programme. Assuming that legislative proposals will be adopted by the Parliament, the
page 788 / 796 reflection of the spirit of the Charter in Irish public policy is expected to improve. 166. Some of the recommendations dating back to 2001 are still valid: Local authorities in Ireland still cannot be said to “regulate and manage a substantial share of public affairs”; the principle of subsidiarity is still not a primary concern in the allocation of public responsibilities. Local authorities’ discretion is still highly circumscribed through the use of statutory instruments and regulations to supplement laws, and the need to secure sanctions and prior approvals from national government for many activities. Consultation of local authorities over new legislation or financial decisions is not systematic. Local authorities are not provided with adequate or sufficiently diversified resources which are commensurate with the responsibilities of local government. Specific or earmarked grants still make up a significant proportion of central government transfers. 167. The rapporteurs had the opportunity to discuss with Minister Hogan the possibility of the signing and ratification of various Council of Europe legal instruments related to local democracy such as the Additional Protocol to the European Charter of Local Self-Government on the right to participate in the affairs of a local authority (CETS No.: 207), the Additional Protocol to the European Outline Convention on Transfrontier Co-operation between Territorial Communities or Authorities (ETS No. 159), and the Convention on the Participation of Foreigners in Public Life at Local Level (ETS No. 144). 168. They were informed that, it is intended to give consideration to the issue of ratification of the Additional Protocol to the European Charter of Local Self-Government on the right to participate in the affairs of a local authority as soon as possible in the context of implementation of the Action Programme. As regards the signature of the Convention on the Participation of Foreigners in Public Life at Local Level, the rapporteurs were given to understand that providing separate rights and arrangements for new-comers would run contrary to Ireland’s national policy, which is consistent with the European Common Basic Principles of Integration (established by the Council of the EU and the Governments of the Member States in 2005). Consequently, no development is to be expected on this particular point.
Italy [Non ratified - Report adopted on 18 October 2017 ]
177. As noted at point 1 of this Report, the Italian Republic ratified the Charter without formulating any reservation, or with no territorial or organic restriction on its scope of application. The “declaration” annexed to the Instrument of Ratification clearly states that Italy is bound by all the articles of the Charter.
Liechtenstein [Non ratified - Report adopted on 28 March 2018 ]
61. When it ratified the Charter in 1988, Liechtenstein decided not to ratify some of its provisions, namely Article 3 paragraph 2, Article 6 paragraph 2, Article 7 paragraph 2, Article 9 paragraphs 3, 4 and 8, and Article 10 paragraphs 2 and 3. The spirit of the Charter requires the acceptance of all its provisions unless certain compelling interests justify a reservation. In the rapporteurs’ opinion, the situation in Liechtenstein is in compliance with the Articles of the Charter which were not ratified by Liechtenstein, and they would therefore like to recommend that the Liechtenstein authorities consider the possibility of ratifying all the non-ratified provisions.
Montenegro [Non ratified - Report adopted on 21 October 2015 ]
127. As already mentioned, Montenegro became a member of the Council of Europe on 11 May 2007. Montenegro signed the European Charter of Local Self-Government (ETS No. 122, hereinafter "the Charter") on 24 June 2005 and ratified it on 12 September 2008. The Charter entered into force with respect to Montenegro on 1 January 2009. The commitment to observe the Charter was restricted to Articles 2; Article 3 paragraphs 1 and 2; Art. 4 paragraphs 1, 2, 4 and 6; Article 5; Article 6 paragraph 1; Article 7 paragraphs 1 and 3; Article 8 paragraph 1; Article 9 paragraphs 1, 2, 3, 4, 5,
page 789 / 796 6, 7,and 8; Article 10, paragraph 1,2 and 3; Article 11. Consequently, Montenegro is not bound by Article 4, paragraph 3 and 5, Article 6 paragraph 2; Article 7 paragraph 2; Article 8 paragraph 2 and 3. 128. In the context of its international obligations as well as its internal legislation, Montenegro is a very young country. The institutions are still faced with a situation in which not many routines in the exercise of the legal framework have been established. This might, for example, have an impact on the need for supervision. It can be expected that in the context of further consolidation, the different provisions of the Charter might be seen in a different light. During its visit, the delegation received the impression that there is a very serious intention to live up to the standards of the Charter without restricting the provisions that Montenegro is formally bound by. 129. The delegation of the Congress was told that the ratification of the paragraphs of the Charter that Montenegro has not ratified so far is considered as a realistic option. It seems that the respective legal acts will be under discussion in the context of the reform legislation that is being discussed at present (2015). The delegation also has reason to believe that Montenegro will be able fulfil the requirements of the rules that it is not bound by to date. Even if the law might not express some of the rules explicitly, the state institutions generally seem to accept them in practice. 4. Conclusions and further steps of the monitoring procedure 130. Since the last monitoring visit in 2010, Montenegro has continued to demonstrate a firm willingness to comply with the Charter and other international standards, which served as a catalyst for various reform processes. The legal framework relating to Local Self- Government is in constant flux, particularly in regard to the on-going public administration reform (AURUM), which suggests a promising legal evolution for the state of local democracy in Montenegro. At the outset, the rapporteurs state that the constitutional and legal foundations, as well as the actual concept of local self-government, are duly in place in Montenegro (Article 2, 3). Moreover, the situation in regard to Articles 5, 7, 8 and 11 is overall in compliance with the Charter. In the light of those positive observations, there are nevertheless some issues that would require closer attention. 131. In regard to Article 4, it can be concluded that even if local authorities are mostly consulted on matters which are of immediate interest to them, this process requires further improvement in practice. In particular Article 4, paragraph 2, which affords local authorities the full discretion to exercise their initiative with regard to any matter which is not excluded from their competence nor assigned to any other authority, needs special attention by the national authorities. Likewise, closer attention should be given to Article 4, paragraph 6, according to which local authorities must be consulted, as far as possible, in due time and in an appropriate way, in the planning and decision- making processes for all matters that concern them directly. This primarily refers to the application of this principle in practice, since legal framework and mechanisms are established. 132. Concerning the administrative structure and resources for the tasks of local authorities (Article 6), the rapporteurs emphasize that human capacities remain insufficient, thus leading to the conclusion that there is only a partial compliance with this article. They see as a positive development the provisions of the draft Act on Changes and Amendments to the Law on local self-government that concern the development of new solutions which will introduce a system of merits and reward of staff members who are ready to provide quality services to citizens. Yet, the rapporteurs are concerned that operational capacities and management of the local level encounter great challenges. In this respect, they consider that a development and rationalisation of the local administrative capacities in the next period has to be a priority for the Government. 133. Furthermore the situation in Montenegro does only partly comply with the requirements of Article 9 of the Charter. Particular attention needs to be paid to paragraphs 1, 2, 3 and 6 of Article 9. During the visit, the rapporteurs were able to grasp the fundamental differences in financial, administrative and economic capacity. In fact, a large share of Montenegro’s municipalities does not dispose of adequate financial resources of their own and lack commensurate funding for implementing additional activities assigned to them (Article 9 paragraphs 1, 2). With regards to paragraph 3 of Article 9, the general assessment of the financial situation is that a majority of municipalities are in a difficult financial situation which is characterised by a high level of debt and unsettled liabilities, causing numerous problems in their functioning and fulfilment of duties under the law. Globally, the criteria used in distribution of funds of the Equalisation Fund may be assessed as correct and the fund does indeed serve as an
page 790 / 796 indispensable tool for many municipalities, particularly in the economically weaker north of the country (Article 9 paragraph 5). Nevertheless, further legal solutions should ensure a higher level of funds of the Equalisation Fund, whether by introducing a new form of income into its structure, or by increasing the percentage of allocation of existing revenues constituting the fund. Lastly, there is a need for a further improvement in the consultation process regarding the allocation of redistributed resources in Montenegro (Article 9 paragraph 6). 134. Generally, the rapporteurs can conclude that the requirements of Local Authorities’ right to associate, as specified in Article 10 of the Charter are met by Montenegro. Nevertheless, they invite the Government and the legislature of Montenegro to reconsider the rules which describe the role of the central level in the creation of institutionalised forms of co-operation between municipalities. In particular the conditions that have to be met in order for the municipalities to receive the necessary permission should be clearly stated in the law and in the light of the Article 10, paragraph 1 of the Charter. In this sense, the fact that the requirement of governmental consent might be abolished altogether seems to be a positive step. The rapporteurs intend to follow closely the legislative developments of the Law on local self- government and its impacts on this issue. 135. As for the non-ratified provisions, relating to Article 4, paragraph 3 and 5, Article 6 paragraph 2; Article 7 paragraph 2 and Article 8 paragraph 2 and 3, the Congress delegation was informed that the ratification of those paragraphs constitutes a realistic option, as they will be under discussion in the context of the reform legislation that is discussed at present. The delegation also has reason to believe that Montenegro will be able fulfil the requirements of the rules, to which it is not bound by to this date. Even if the law might not express some of the rules explicitly, the state institutions generally seem to accept them in practice.
Netherlands [Non ratified - Report adopted on 26 March 2014 ]
127. As noted above in various paragraphs, the Instrument of Ratification of the Charter by the Netherlands was deposited on 20 March 1991. The Charter entered into force in respect to the Netherlands on 1 July 1991.The said Instrument contained several “declarations” to different articles of the Charter, on the ground of Article 12, paragraph 2 of the Charter: namely, that the Netherlands will not consider itself bound by the following provisions: Article 7, paragraph 2; Article 8, paragraph 2; Article 9, paragraph 5; Article 11 of the Charter. 128. Moreover, and in accordance with Article 13 of the Charter, the Netherlands declared that it intended to confine the scope of the Charter to provinces and municipalities and that the Charter would apply to the Kingdom in Europe (on the ground of Article 16 of the Charter).32129. During the consultation process, the Minister of the Interior and Kingdom Relations informed the rapporteurs that, for the time being, it is still not possible to ratify the above mentioned provisions. 130. On the other hand, and in a letter from the Permanent Representative, dated 20 March 1991, handed over to the Secretary General at the time of deposit of the instrument of acceptance on the same day, the Netherlands filed the following “declaration”: “With regard to Article 6, paragraph 2 of the Charter, the Government of the Kingdom of the Netherlands takes the view that, in the framework of the Charter, only Article 9 of the Charter has any bearing on the financial resources of local authorities. This means that local authorities may not take any financial claims on central government based on the provisions of Article 6, paragraph 2, of the Charter. In the opinion of the Government of the Kingdom of the Netherlands, Dutch legislation is in accord with both the wording and the purport of Article 6, paragraph 2, of the Charter.” 131. The rapporteurs were told that, at the time of the promulgation of the Charter Ratification Act, the government committed itself to try to ratify the other provisions where possible. In its third review of inter-administrative relations (see supra) the Council of State stated that the non-ratified provisions to the Charter were still not signed, and that the previous recommendations of the Congress had not been respected. 132. In consequence, this report would recommend the Dutch authorities to consider revisiting the pertinence of reviewing some of the declarations made at the time of ratification. For instance, the withdrawal of the declaration made in connection with Article 7 para.2 of the Charter should not represent a serious problem in the light of the present legal situation. 133. The same can be said in relation with Article 8 para.2, since the current system does,
page 791 / 796 in practice, seem to satisfy the requirements of that provision. The withdrawal of the declaration made in respect of Article 11 represents more difficulties in the light of the above described situation, but Dutch authorities are warmly encouraged to introduce the appropriate changes in the present legal scheme so as to conform to that provision.
Portugal [Non ratified - Report adopted on 28 September 2020 ]
Portugal has not formulated any declarations or reservations, or has it so far signed the Additional Protocol to the European Charter of Local Self-Government on the right to participate in the affairs of a local authority (CETS No. 207).
Slovak Republic [Non ratified - Report adopted on 24 March 2016 ]
102. As noted in the Introduction to this report, the Instrument of ratification of the Charter that was first deposited by Slovakia contained several declarations or “reservations” to the Charter. Once the ratification process was fully culminated in 2007, there are no longer reservations, and this international instrument is fully applicable and binding on Slovakia. As compared to the practice of other countries, the Slovak approach must deserve a positive appraisal, and fully complies with Art. 12 of the Charter.
Switzerland [Non ratified - Report adopted on 20 October 2017 ]
129. Switzerland signed the European Charter of Local Self-Government on 21 January 2004 without ratifying Articles 4.4, 6.2, 7.2, 8.2, 9.5 and 9.7. The rapporteurs nevertheless believe that compliance with the requirements arising out of these articles would not pose any major problems if the articles were ratified, since the current situation of local self-government in Switzerland is likely to meet these requirements fully, albeit with the (partial) exception of Article 7.2, which provides that local elected representatives shall be given appropriate financial compensation for exercise of their office. Such compensation is however important to guarantee for everyone the access to elective function and the real exercise of responsibilities that go with these posts by elected representatives and not mainly by administrative structures.
Article 13 Authorities to which the Charter applies
The principles of local self-government contained in the present Charter apply to all the categories of local authorities existing within the territory of the Party. However, each Party may, when depositing its instrument of ratification, acceptance or approval, specify the categories of local or regional authorities to which it intends to confine the scope of the Charter or which it intends to exclude from its scope. It may also include further categories of local or regional authorities within the scope of the Charter by subsequent notification to the Secretary General of the Council of Europe.
Denmark [Non ratified - Report adopted on 31 October 2013 ]
page 792 / 796 Article 14 Provision of information
Each Party shall forward to the Secretary General of the Council of Europe all relevant information concerning legislative provisions and other measures taken by it for the purposes of complying with the terms of this Charter.
Article 15.3 Signature, ratification and entry into force
In respect of any member State which subsequently expresses its consent to be bound by it, the Charter shall enter into force on the first day of the month following the expiration of a period of three months after the date of the deposit of the instrument of ratification, acceptance or approval.
Article 15.2 Signature, ratification and entry into force
This Charter shall enter into force on the first day of the month following the expiration of a period of three months after the date on which four member States of the Council of Europe have expressed their consent to be bound by the Charter in accordance with the provisions of the preceding paragraph.
Article 15.1 Signature, ratification and entry into force
This Charter shall be open for signature by the member States of the Council of Europe. It is subject to ratification, acceptance or approval. Instruments of ratification, acceptance or approval shall be deposited with the Secretary General of the Council of Europe.
page 793 / 796 Article 16.1 Territorial clause
Any State may, at the time of signature or when depositing its instrument of ratification, acceptance, approval or accession, specify the territory or territories to which this Charter shall apply.
Article 16.2 Territorial clause
Any State may at any later date, by a declaration addressed to the Secretary General of the Council of Europe, extend the application of this Charter to any other territory specified in the declaration. In respect of such territory the Charter shall enter into force on the first day of the month following the expiration of a period of three months after the date of receipt of such declaration by the Secretary General.
Croatia [Non ratified - Report adopted on 20 October 2016 ]
Monaco [Non ratified - Report adopted on 28 March 2018 ]
Article 16.3 Territorial clause
Any declaration made under the two preceding paragraphs may, in respect of any territory specified in such declaration, be withdrawn by a notification addressed to the Secretary General. The withdrawal shall become effective on the first day of the month following the expiration of a period of six months after the date of receipt of such notification by the Secretary General.
Croatia [Non ratified - Report adopted on 20 October 2016 ]
page 794 / 796 Article 17.1 Denunciation
Any Party may denounce this Charter at any time after the expiration of a period of five years from the date on which the Charter entered into force for it. Six months' notice shall be given to the Secretary General of the Council of Europe. Such denunciation shall not affect the validity of the Charter in respect of the other Parties provided that at all times there are not less than four such Parties.
Croatia [Non ratified - Report adopted on 20 October 2016 ]
Article 17.2 Denunciation
Any Party may, in accordance with the provisions set out in the preceding paragraph, denounce any paragraph of Part I of the Charter accepted by it provided that the Party remains bound by the number and type of paragraphs stipulated in Article 12, paragraph 1. Any Party which, upon denouncing a paragraph, no longer meets the requirements of Article 12, paragraph 1, shall be considered as also having denounced the Charter itself.
Croatia [Non ratified - Report adopted on 20 October 2016 ]
Article 18 Notifications
The Secretary General of the Council of Europe shall notify the member States of the Council of Europe of:
a any signature;
b the deposit of any instrument of ratification, acceptance or approval;
page 795 / 796 c any date of entry into force of this Charter in accordance with Article 15;
d any notification received in application of the provisions of Article 12, paragraphs 2 and 3;
e any notification received in application of the provisions of Article 13;
f any other act, notification or communication relating to this Charter.
In witness whereof the undersigned, being duly authorised thereto, have signed this Charter.
Done at Strasbourg, this 15th day of October 1985, in English and French, both texts being equally authentic, in a single copy which shall be deposited in the archives of the Council of Europe. The Secretary General of the Council of Europe shall transmit certified copies to each member State of the Council of Europe.
Croatia [Non ratified - Report adopted on 20 October 2016 ]
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