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WCER Problems of Reforming Local Self Governance Consortium for Economic Policy Research and Advice WCER Canadian Association Institute Working Academy International of Universities for the Economy Center of National Development and Colleges in Transition for Economic Economy Agency of Canada Reform Problems of Reforming Local Selfgovernance: Structural and Financial Aspects Moscow 2005 УДК 352+336.132.11 ББК 65.050.2+65.261.8 P93 Problems of Reforming Local Selfgovernance: Structural and Financial Aspects. M.: IET, 2005. P. 421. Agency CIP RSL Team leader – I. Starodubrovskaya Authors: Chapters 1, 6–7, Introduction, Conclusion – I. Starodubrovskaya; Chapter 2 – I. Starodubrovskaya, M. Slavgorodskaya, T. Letunova; Chapters 3, 4 – M. Slavgorodskaya; Chapter 5 – I. Starodubrovskaya, M. Slavgorodskaya; Chapter 8 – I. Starodubrovskaya, N. Mironova; Chapter 9 – E. Slack, Consulting Inc., Canada; Chapters 10, 12 – H. Kitchen, Department of Economics, The Trent University, Canada; Chapter 11 – G. Gaboury, F. Vaillancourt, Department of Economics, The University of Montreal, Canada. The paper considers territorial models of local selfgovernance that had emerged in Russian regions prior to the reform and their impact on various aspects of municipal establishments' activities. The authors evaluate the regional law in the area of local selfgovernance and interbudgetary relations and consider issues associated with the rise and emergence of territorial foundations of the institute in question until 2003. The authors also analyze reforms undertaken in RF regions in 2004 that addressed the problem of a new territorial structure of local selfgovernance. Individual chapters highlight on international experiences in the area of organization and financing of local administrations. JEL Classification: H11, H70, H77, K10. Editors: Glavatskaya N., Mezentseva K., Serianova S. Page setting: Yudichev V. The research and the publication were undertaken in the framework of CEPRA (Consortium for Economic Policy, Research and Advice) project founded by Canadian Agency for International Development (CIDA). ISBN 5932551747 5, Gazetny per., 125993 Moscow, Russia Tel. (095) 6296736, FAX (095) 2038816 EMAIL – [email protected], WEB Site – http://www.iet.ru Content Part 1. Local Selfgovernance in Russia: Structural and Financial Aspects..............................................9 Introduction............................................................................ 10 Chapter 1. Territorial Organization of Municipal Power: Theoretical Aspect ................................................................. 14 1.1. Territorial Organization – Factors Determining the Choice .............................................. 14 1.2. New Legislation on Territorial Fundamentals of Local SelfGovernance in the Context of International Experience ..................................................... 23 1.3. Basic Hypotheses and Methods of Research ..................... 31 Annex 1.1. Requirements to Organization of Municipal Services that Affect Generation of Economies of Scale ............................................................ 34 Chapter 2. An Empirical Analysis of the Territorial Structure of Municipal Entities ............................................... 39 2.1. Constraints to the Conducted Analysis and Description of Database ................................................... 39 2.2. The Data Employed.......................................................... 41 2.3. The Quantitative Analysis Methodology ............................. 45 2.4. Results of Quantitative Analysis......................................... 49 2.5. Main Conclusions ............................................................ 59 Annex 2.1. Classification of Regions ........................................ 60 Annex 2.2. Indicators that Characterize Division of Powers between the Municipal and Regional Levels, 2000–2003, averaged by the sample of regions, as % ..................................................................... 64 Chapter 3. Regional Legislative Framework in the Sphere of Local Selfgovernance ................................. 65 3.1. General Description of the Legal Framework...................... 65 3.2. Territorial Organization of Local Selfgovernance ............... 79 3.3. Scope of Competence of Local Selfgovernance................ 88 3.4. Local Governments........................................................ 100 3.5. Municipal Property ........................................................ 103 3.6. Territorial CommunityBased Selfgovernance................. 106 3.7. Unions and Associations of Municipal Entities .................. 112 3.8. Conclusions .................................................................. 113 Chapter 4. The Rise of Territorial Fundamentals of Local SelfGovernance..................................................... 115 4.1. Milestones of the reform of territorial fundamentals of local selfgovernance ....................................................... 115 4.2. The Rise of Territorial Fundamentals of Local SelfGovernance in Pilot Regions .............................. 119 4.2.1. Novgorod Oblast ..................................................... 119 4.2.2. Kaluga Oblast.......................................................... 120 4.2.3. Tyumen oblast......................................................... 123 4.2.4. Leningrad oblast...................................................... 128 4.2.5. Astrakhan oblast...................................................... 133 4.2.6. Tver Oblast.............................................................. 136 4.3. Conclusions .................................................................. 138 Chapter 5. Regulation of the Financial Fundamentals of Local Selfgovernance in Pilot Regions ........................... 140 5.1. Legislative Framework ................................................... 140 5.2. Assignment of the Standard Rates of Allocation of Shared Taxes to Local Budgets ......................................... 148 5.3. Regulation of Local Budgets’ Expenditures ...................... 158 5.4. Financial Aid to Local Budgets ........................................ 168 5.5. Structure of Revenues of Municipal Entities in Pilot Regions .................................................................... 176 5.6. Conclusions .................................................................. 178 Chapter 6. The Results of an Analysis of Different Models of the territorial structure: Specifics of Local Selfgovernance ..................................................... 180 6.1. Classification of Models of Territorial Structures of Municipal Entities ............................................................. 180 6.1.1. Classification and Comparative Characteristics of Different Types of Municipal Structures. .......................... 180 6.1.2. Development of Local SelfGovernance in Municipal Entities of Different Types ............................... 196 6.1.3. Theoretical Model of Local SelfGovernance and Administrative Staff (the Economies of Scale Problem)) ............................................................ 203 6.2. Territorial Model of Local SelfGovernance and Economic Development of Municipal Entities ................... 209 Annex 6.1. Powers Vested in Rural Administrations in Municipal Entities of the Town of Borovichi and the Borovichesky District of the Novgorod Oblast, Dzerzhinsky District of the Kaluga Oblast, and Zavodoukovsky District of the Tyumen Oblast................... 213 Annex 6.2. Sizes of the Staffs of Local Administrations in Municipal Entities of the Settlement Type of the Kaluga and Tyumen Oblasts......................................... 225 Chapter 7. Results of the Analysis of Different Models of Territorial Structure and Organization of Public Services Delivery ................................................... 226 7.1. Territorial Model of Local SelfGovernance and Delivery of Public Services.............................................. 226 7.2. Territorial Model of Local SelfGovernance and Introduction of New Approaches to Municipal Services Delivery............................................... 232 Annex 7.1. Characteristics of District Municipalities of Novgorod Oblast in 2002................................................... 245 Chapter 8. An Analysis of the Progress in Preparation for Implementation of the Newly Amended Law “On General Principles of Organization of Local SelfGovernance in the Russian Federation” ....................... 247 8.1. Legal Regulation of Transformations ............................... 247 8.2. Demarcating Borders and Designing Municipal Entities’ Status: Practices and Challenges.............................. 251 8.3. ReAssigning Powers and Property: New Approaches.................................................................. 262 8.4. Casting New Financial Mechanisms ................................ 266 Conclusion .......................................................................... 272 References.......................................................................... 277 Part 2. Organization and Financing of Local Selfgovernance: Foreign Experience.................................. 281 Introduction.......................................................................... 282 Chapter 9. Models of Government Structure at the Local Level.................................................................. 285 9.1. Criteria to Evaluate Different Models of Government Structure ...................................................... 285 9.1.1.
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