Local Governance in Armenia

CEU eTD Collection LOCAL GOVERNANCE INARMENIA LOCAL GOVERNANCE In partial fulfilment of the requirements for the degree Supervisor: Professor Tamas Meszerics Central European University Department of Public Policy of of Master’s Public Policy Budapest, Hungary Budapest, Zaruhi Saroyan Zaruhi Submitted to Submitted (2010) By CEU eTD Collection fostering greater autonomy and financial self-sustainability localfor self-governance in Armenia. absence of well established check andbalance systems. Recommendations are providedfor Transparency local isand accountability of underthequestiongovernment the as well, dueto not fiscal for allowdependency executing does government central on decentralization. governmentauthorities persistently intervene inlocal activities. Moreover,government financial central but action plans, in isformally defined government Decentralization place. always take doesnot those of enforcement the governance, local effective for regulations necessary provides legislation though that shows research The analysis. the for used havebeen media articles and reports government as well as Bank, World the Institute, OpenSociety the Development, Unitedorganizationsthe Agency States for International inthefield,suchas operating of various and governance,analyticalProgram donor reports 2008-2012), Government data self-governance (including the Constitution of Republic ofArmenia, The Law localon self- local on legislation existing the of analysis the analysis, data Statistical self-governance. local andtransparent achieve accountable more effective, neededto providerecommendations policy to reveal theproblems inensuring and autonomous self-sustainable local governance and to reforms in spherethe in of local Armenia. Themain self-governance of researchis purpose the legal This research of political,examines andthe economic and undertaken ongoing dimensions Abstract i CEU eTD Collection eeecs...... 40 References...... 37Concluding Recommendations...... 27 ENGAGEMENT IN DECISION MAKING...... SOCIETY CIVIC SELF-GOVERNMENT: EFFECTIVE AND TRANSPARENCY ACCOUNTABILITY. III. CHAPTER CHAPTER II.ISSUES OF 12 FISCAL DECENTRALIZATION INARMENIA...... CHAPTER I.LOCAL 1 SELF-GOVERNANCE IN ARMENIA...... iii Introduction...... ii ...... TABLE OF CONTENTS i Abstract...... TABLE OFCONTENTS TABLE ii CEU eTD Collection recommendations are drawn to address issues above.described and Theproblems highlighted are recommendations to aredrawn level.government fromreports Analyzingdifferent organizations, donor NGOs,set of local issues at from and accountability dependency transparency and central government Thus, thesis the is focused on policy-making processes,lack of high quality fiscal specialists, making processes. local governments’ capacities and their financial dependency from central authorities in decision- lackof duetothe in occur discussed thesis the problems andother Tumanyan, These (D. 2006). central often government control andfinancial uses its local administrative to tools governments foundations for the establishment of democratic and transparentlocal governance; however, necessary provides legislation TheArmenian local governments. of onthe part transparency level and local democracy at to leads decentralization that accepted Itisgenerally others). international development by of arecontinuously supported reforms Most these processes. public inlocal decision-making agencies (such localfrom central to governments; thisincludes financial decentralization andof engagement as USAID, UNDP, World and issues. isinpolicy resources power Decentralization expressed decision-making transferring Bank, Urban Institutepublic important most the of became one It of decentralization. factor the contained countries and in these reforms political and economic Institutional, economies. in transition functioned longer no system hierarchical and centralized strong Soviet administration. in public difficulties former faced sovietrepublics amongArmenia other Union, After collapseof Soviet the the Introduction iii CEU eTD Collection activity. Therefore, changes in financial regulations, such as permission to open bank accounts in bank accounts to open permission as such regulations, changes infinancial activity. Therefore, into sovereignty financiallocalrevenues.local Thisputsthe question government’s budget of half of the about comprise transfers still, state But management. financial local government of on inArmeniadecentralization focused reforms strengthening capacity the were predominantly yearssubventions based equalization through grant scheme and Thefirstfiscal subsidies. of policiesare that trying toprovidein development proportionate all communities usingformula- Chapter 2,Fiscal indecentralization Armenia, analyzes budgetary system of Armenia and states will helplocal enhance capacitiesgovernment and provide quality services to community.the that recommendations provides harmony.Chapter ina always are and community (marzpets) the will require region heads’with necessary skills and knowledge about local governance, as well as legislativepositions changes which to be need is the local attention authorities.drawn equipping Particular for to authorities from state elective, so that interestsimplementfunctions ascribed to them by the law, as well as their greatoffinancial dependencyboth regionalmanage to and governors local of andskills low capacity duetothe It occurs locally-governed. governors than rather local centrally- in level, at fact, makesgovernance This processes. decision-making interveneinlocal in regional tocoordinate reality appointedpolicies by state governors the bodies have informal powers over the decision-making processes at local levels. Regional legislation formally forprovides local autonomous the governance, inreality central governing Although the inArmenia. and local self-governance legalaspects of structure governing oftheChapter 1,Local country, inArmenia,introduces territorial Self-Governance division problems. the of each for given further are improvement for recommendations and separately analyzed iv CEU eTD Collection analysis. The Concluding Chaptersummarizes recommendations provided withinframework the of this local accountable governance. of establishment the society, guaranteeing the to controller function of the government’s central making,planand designs,whichwill development community transfer planning strategic recommendationis forin empower Chapter3public andensure civic policy-to engagement main the Therefore, financial it becauseresources. of scarce the implement notoften aware do Moreover, they are not even of their aboutbeingpublic, responsibilities i.e. open to beingtransparent and accountable. aware of the requiredaware arenot most often Local governments internal for afew communities. except generally practiced and external audit. Society engagement in Decision Making. The engagement of public in isdecision-making not Those who are Civil Self-Government: and Effective Accountability, Transparency 3, Chapter of central topic Society’s in engagement makingdecision participation process, in budgeting and planning arethe for capacity self-governance. the increase and local to of governments enhancefinancial in decentralization to recommended order borrowing and are market, moreaccess to gradual grants capital banks, commercial development v CEU eTD Collection 1 levels. provided for basis publicreforms, sector including the onesatregional and local government TheIn Constitution 1995, Armeniaadopted the of Armenia Republic of byreferendum. This administration. in public changes as well as reforms institutional and economic on focus to able government tofocus on other issues until the 1994 ceasefire. Only after that the government was allow not did Azerbaijan, neighboring with issue Karabakh Nagorno warover the Moreover, deal transition, country had to the in1988. with consequences a devastativeof earthquake difficulties in administration public system.Along with economic hardshipsand problems of former faced sovietrepublics amongArmenia other Union, After collapseof Soviet the the acting at their own responsibility, to dispose of community’s property and to resolve the Law states that “LocalThe self-government government. national-level the of control the isunder remain the functions right and governmental local capacity of local self-government bodies Although Lawthe defines and the powers responsibilities Armenian localof manygovernments, self-governance. local democratic for framework legislative and atheoretical provides Armenia inAdopted 1996 andlargelybased onEuropean models, the Law on Local of Self-Government country. intourban beendate andrural divided 930 communities areaboutthere To communities. inthe have further, marzes, The Yerevan. of city the capital including (marzes) regions administrative 11 into divided been has Armenia of territory the which to according RA, the of Division Constitution of the RA, Chapter 8. July, 1995. 1 In December 1995, Armenia has adopted the Law on the Administrative and Territorial and Administrative Lawon the the has Armenia adopted 1995, December In CHAPTER I. LOCAL SELF-GOVERNANCE INARMENIA CHAPTER I.LOCALSELF-GOVERNANCE 1 CEU eTD Collection 3 2 intomandatory voluntary Mandatoryand powers. responsibilities tolocal-level relate functions administration. Own authorities arefundedlocal by budget. the Own responsibilities are divided tax aslocal such functions, national-level of implementation the to and budget relate state by arefunded the by state the delegated Authorities authorities. and delegated of consist own prescribed tothem andresponsibilities law.by authorities bodies Local the self-government itshelp community staff of and other Local organizations. bodiesself-government execute state implementsbody local who self-governmentof decisionsthe community of the with the council is community executive the The headof the authority. is arepresentative council The community and issues budgeting at local level.community inthemanagement intervene in marzpets practice However, legislation. with the in accordance public property. making,decision formulation, budget expenditure assignment spheres, as well as in controlling in of local terms level at power wield greater bodies self-government local administration, According to the Law on Local Self-Government of RA and other legal acts related to the public country. president of the governmentand the by areappointed the regions.governors Regional Theregovernment. arealsoregional governingbodiesin representing central government the self- local and government state levels; two has Armenia in system administration Public bodies. executive central of activities regional the coordinate and policy regional government's the implement to government central by the areappointed provinces theArmenian of (marzpets) The governors problems of community importance with a view to improve the well-being of population.” improvethe of the well-being importancewith a view to problems of community Ibid. Law on Local Self-Government of the RA. 1995. 3 From legal perspective everything seems clear and local authorities should act should authorities and local seemsclear everything legal From perspective 2 2 . CEU eTD Collection Court. This change Constitutional the of decision the by only community the inof head the dismiss legislation now can officials was a positive in constitutional 2005central government the inArmenian to reforms However according step, however the pyramid of decisionif their programsmaking and priorities contradict with the ones of a marzpet. have freedom to exercise their functions and contribute to the community at their own discretion not do council of head community community and As the aresult, community. headof the the of require a power to dismissal marzpet TheLawgives government. by is central appointed whothe asisquestioned latter in the interested with of complying an instructions the marzpet, official the bodies is local autonomy government the of Therefore, from regional the governors. dependence in heads them adirect of putting limits community head.This activities community the the provides with marzpets apply authority the to theto central governmentrequiring resignation of of the community and the community council. However, the Law on Local and self-government, of i.e. governing body the of problem. head community the the community, elect the Residents from him is head’s dependence apersistent and community marzpet authority informal of the that, for provisions necessary states legislation the Although Armenia. in practiced efficiently not are communities the of andsovereignty autonomy the becan arguedthat law.the It it islocal other than over by prescribed enjoysthe power government theexcessive government One of the core issues of the itwhich funding.has adequate Armenian public administrationfor voluntary responsibilities, local governments can choose to carry out any type of activities for systemAs health, andenvironmental protection. public including education, tosocial related security, is the functions basically are These factimplement. to governments local for that“mandatory” are literally that the state 3 CEU eTD Collection 4 National Assembly of the Armenia adopted a Law on Local Government in Yerevan City. Under andhas been it by governed Mayor by the appointed In central the government. 2008 the ofmarz a Yerevanoriginally hasWith LawGovernment, Local been status granted on 1995 the region. administrative of in this particular status changes the fixed herehas been with for thecapital partially problem The Yerevan. of city regions, except local is for This all ignorance exhibit Armenian problem the rational towards true governance. and marzpet havenot the over do in apower members, turn, their Community performance. not interested they are appointed, rather centrally but officials, in elected locally beingmarzpets not that assumes communities sum, public In local governance. of needs, effectiveness the andenhance process decentralization since the durationChange in perceptions asfurtheras newwell changes and inlegislation improvereforms the can of their term does decentralized democratic. and than rather authoritarian, not depend on Community the andmembers local governmenttake public administration as highly andcentralized times. sovietlegacy of the perceptions are These local government. the authority over hasa marzpet, by still asan an people thinkthat who central appointed the official government, local iscontrols theactivity the government.Obviously aproblem with of perceptions of there who as an official acts hence, and, is perceived still marzpet inlegislation changes Despite relationship central in of andshould becollaborative local governments andcooperation reality. fact, regional governors often use administrative tools to control local government, while the longernobacked it In is legislation). by a poweroverthehead the community (although the of marzpetstill iswhichthrough government has appointed same.This astructure still the remains D. Tumanyan, Local SelfGovernment in Armenia , Noyan Tapan, Yerevan 2006. 4 4 CEU eTD Collection 5 community community memberscouncil inArmenia have donot incentives proper participate in to any based only not meritson residence and on education/professionalism. or Therefore the shall be provided.” career prospects and remuneration training opportunities, adequate this end to competence; and employees permit besuch shall as to recruitment high the staff of thebasismeritquality of on local government of service of “The conditions that Article 6provides Charter, The European atlocal levels. governance the on effect hasit adirect that realize would they since more carefully, choices maketheir will and governors local from accountability of level higher demanding elections, in local participate more actively will local residents As aresult, processes. in governing interest society’s the members or at least by the community council community beelectedbythe shall Theheadof region the (marzpet) Local on self-government. (as in case of Yerevan). It can possiblyfurther precedentfor in changesThe inof can beagood theLaw thestatus amendmentYerevan increase will contribute to agreater autonomy of governing bodies at local level. dismissed from his position. Therefore, switching from appointed system towards an be he can him,since body the appointed that in interests of elective the casecontradict wouldany not one mayor appointed an is that here argument main The government. central from mayor Yerevan to independence extent some to gave change This mayor. city Yerevan elect turn, in their who, isof longer noYerevan official. an appointed now Citizens electmembers council community law, mayor Accordingthat to the a local government. from a marzto beenchanged has Yerevan the Law on Local Governance and Regional Governance in the City of Yerevan, the status of 5 EuropeanCharter on LocalSelf-Government, Strasburg, 1985. 5 However, the requirement for the election of local government bodies is 5 CEU eTD Collection 6 and only with local rarely work government. most of field trainingsthe is in mostly NGOs,this bythe provided who level act on grass-root priorities managersisThough top the for qualifiedhighly of one government, the availability of major prerequisite forproviding high quality community of service. is a servants municipal qualified of availability the Nevertheless, ineffective. and hard very process makes teaching equipments, wellastechnical as andmaterials, methods lackteaching of poorinstitutionalthe incapacity of terms professional andresources technical standards.The There are problemsin re-training and qualification raising of municipal servants conditioned by andresources notonly strategic planningisanissuefor wholeforlocal the republic, government. In general, lackthe individuals of managerial with experience,financial andtheabsenceof of leader.the implementation developmentandof economic onthe highlydepends programs professionalism and budget of management community successof an effective the knowledge. Thus, and skills necessary acquire to short is too period 4-term the and experience or education level of certain demand functions Allthese qualificationsfor that. having without adequate of municipalof budgetary supervision procedure of servants andrecruitment expenditure, population, the of behalf the on making decision the as functions important such given been have to the Law on Local-Self Government and Law on Municipal Service these elected members according Nevertheless community. of members elected on qualifications educational impose to educational educational ortrainings onlocalprograms governance. Sara Petrosyan, Transparent local self-government , Article. 6 http://hetq.am/am/society/elec-usum/ 6 In a democratic setting, it is not possible not is it setting, ademocratic In CEU eTD Collection experience exchange. include on countries, role-games andif the casestudies of purpose different with trips possible programs formunicipal servants. To improve the outcome of the seminars, the curricula needs to skills. Therefore, this aspectshould into be taken consideration in makingcurricula for retraining publicimproving by only legislations without to on servant training giving their professional set upan isintheir impossibleto practicalservice efficient issues.Itpublic dealingwith skills improve to noattempts been act, therehave in needsto which one legislation rule game, of the where they got only a theoretical knowledge on their work. While itis important to know the topubliclawsin related were administration, trainings Whatbasically they taught these were municipalwereready nor forlocal process. this servants trainings neither these government, completion of the upon Nevertheless, municipalfor servants. seminars trainings conducted and NGOs international and local donors, international with together Armenia of Government for an is service effective very administration. important their because officers, municipal train to essential also is It activities. their in professionalism inundertake Communitiesupgrading the haveto that effort educational the partof one authorities. Itshouldbe further emphasized that the training of Community is councilors only voluntarily.councilors work who that purposes funding For extra localneededfor would be formoney educating for spending noprovisions existingthe are budgetallocations there Yet, there is noin these programs any attempt toupgrade the level of efficiency of councilors. In Usually,programs, by these development adopted Communities, aim addressingat public needs. 7 CEU eTD Collection they they can comprise links of chainthe for some types of production andensure try to sustainable same, the not are communities of situation andeconomic ifdemographic Even economy. and demographics similar with communities in the important especially is cooperation community working inthefield, between cooperation which communities.the provides Coordination of is AssociationEstablishedArmeniain third of NGO Communities of 1997,the Republican the cooperating many with international organizations. other actively been also has CFOA The communities. some in and budgeting community for With supportof foundation, inputthe Eurasia Association software introduced the developed and andorganizations. bodies local with international government aswellcooperates processes, role in fordeveloping legislation local government, supports communities in budgeting active plays Association The in 1998. founded is Association Officers Finance Community The The AMCA legislation. government various with international cooperates also organizations. in exchange between develops andfor reforms local communities, proposals the presents toexperiencecouncils of intheterritory Republicandinformation of Armenia,the contributes Founded in Association1998, the of Municipal Councilors ofArmenia coordinates activities of governance,local and training supportingbodies: government in local supportingovernance, strategic andfinancial planning and local developmentof legislation of ontheimprovement in Armenia working NGOs local government There arethree - - - Republican Association of Communities of Armenia (RACA). Armenia of Communities of Association Republican (CFOA); Association Officers Finance Community Association of Municipal Councilors of Armenia (AMCA); 8 CEU eTD Collection administration 7 reflected in the Armenian government’s main strategic documents: Government Program Program Government 2008- main in documents: strategic reflected Armenian government’s the The notion consolidationof communities’ is Constitution by provided Armeniaisthe andof of consequences a merger. the with dissatisfaction of source the been have and consequences political serious have provide areseen to infrastructure restoredeteriorating fundingby some,as benefits to butcan land useeconomicplanning or development. Equity of service delivery broadening and atax base regional centralized such benefits, as or has already provided functions specific of consolidation the that shows The practice place. take to needs communities some of consolidation them by the to functions ascribed delegated fulfill their cannot lack conditions these that Thus, communities law. To equallynot through communitiesthe distributed geographical dueto ensure conditions of country.the proportionate and Theland base neededcapital is andproperty self-sustainability. development for tax assets increase allpurpose to possessenough efficiency the self-governance. Not of communities the development communities with forprovides “The amalgamation the of GovernmentProgram 2008-2012” of communitiescountry. the throughout of spreading their effect spillover programs of interms the organizations of limited capacity these and the by explained is This communities. the of marzes,many out reach not do donors international of the communities in the country), cooperation efforts of NGOs and economic development programs here is that from inhigher governmentwhichwill the sovereignty result and quality services. The problem given the largedevelopment. Through economic community development, can reachfinancial independence number of the Armenian communities (currently there are 926 Marc Holzer. Marc . May 2009. Analysis Related to Municipal Government Consolidation. School of public affairs and 7 9 CEU eTD Collection and Public Service Reform Initiative. Yerevan, 2008. Yerevan, Initiative. Reform Service Public and 8 Government. formation and legal aspects of inter-community unions are provided by the Law in Local Self- sustainability development,and proportionate assisting low communities with capacities. The formingpush Government on unions ensure needsto inter-community and community to communitiescooperates in that providing and electricity, professional water education. provision, professional education. Thereisalsoan Inter-Community Council of 262 in field inter-community cooperate of unions care andgovernments’ health the social security local management.In fireFinland, andwaste service public transport, on cooperate Inter-community In in Europe. formedUnited Kingdom,unions areWestern unions these expenses and allows for more effective use of the financial resources. obvious and unequivocal proves that consolidation does lead to a reduction of administrative there are however consolidation, success of the of studies enough not are While there efficiently. more scale of economies achieve and efforts joint with communities in different problems sharing andfinancial problems. By forming community itisunions, possible tosolve same experience the solve partially can communities of Consolidation addition, In services. community quality better of provision tothe be can directed resources These expenses. for administrative and free Consolidation further previously community can services. used somefinancialresources improvement of social-economicincluding situation, publichigher health, quality of education of communities can potentially lead toconsolidation financialof and humanresources, Ministry any Territorial direction.of took Self-Government steps toward that nor the government neither However, the Strategy 2008. Reduction 2012 and Poverty Program A pilot program of communities’ consolidation: (Aragatsotn Marz) 10 . Published by CFOA and Local Government 8 In fact, the merger Infact, the CEU eTD Collection until until custom the and tradition of public managementwill be adoptedatlocal levels. period for atransitional least at bodies elected for the requirements mandatory be certain should there choice, the freedom of the Despite bemust adopted. country the to specific approaches of governance, provision necessary of services. Thus, reforms shall be ongoing andnew completed. Though Lawthe imperfections providesbackground in thereare necessary fieldthe Local-self government reforms and decentralization inprocess Armeniaisfar being from 11 CEU eTD Collection 11 Journal of Developing Areas, Vol 37, No1, 2003. 10 9 Armenia ratified the European Charter on Self-Government on Charter European the ratified Armenia utilities, such as water, sewerage, various forms of energy distribution, library and so on. local areas, such maintenance theconstruction city of andmaintenance, as and roads, public local their mainly benefit which from services provide typically governments local contrast, central responsibilities seen as are also income distribution and stabilization macroeconomic Policies so on. affecting and are reflectedservices include education,health, postal services,highways, defense, environmental issues, and in government’s PovertyCentral Reductiongovernment Strategy provides is withCurrently Armenia andlocal government state a self-governments. two-tier central Plan. services In that have spill-overand systems. neweconomic environment effect beyond by developmentinlocaland citizen governance participation political changing weredictated the local area. Thosegovernments’ fiscal and budget practices and tax administration, promotion of regional economic local system. Thehierarchical systems, improvementSoviet of change regional management of faced states, collapse upon the newlyindependent andstrongly other of extremely centralized among Armenia, which issue policy core a became Decentralization decentralization. fiscal marketeconomy. a to command from oftransition isakeystep decentralization Fiscal establishment. its for precondition important is an self-government local of sustainability 9) (Article Self-Government Local of Charter European the to According European Charteron Local Self-Government, Strasburg, 1985. European Charteron Local Self-Government, Strasburg, 1985. Paul Smoke, Paul CHAPTER II. ISSUES OF FISCAL DECENTRALIZATION INISSUES OFFISCALDECENTRALIZATION CHAPTER ARMENIA II. Fiscal Decentralization in Developing Countries: A Review of Current Concepts and Practice 12 11 , which requires a high degree of 9 , securing financial 10 In2001 . CEU eTD Collection 14 13 Russia, May 19-21, 2005. 12 the Central Bank of Armenia and to the National Assembly of the Armenia. toJudicial Authorities, drafts are submitted budget for of fiscal year. Copies coming process the by inception out budgeting of of Finance on of basis decree on the Ministry Minister’s Prime the report on implementation.report on budget for drafting, adopting discussing, andimplementingof annual budgets and confirming the annual implies activitiesBudgeting the legally and process local state of agencies regulated government budget Armenia. Republic of the consolidated of constitute expenditures and budget budgetrevenues and community country. The state andBoth arebuiltstate community unifiedmonetary budgets fiscal, upon and tax policy the of Armenia’s budgetary system is atwo-tierstate budget system: andlocal budget. (community) in andYerevan. its regions territorial with the offices of Armenia. The treasury system operates as a subdivision of the Ministry Financeof of Armenia arefulfilled system and treasury budgets the through community Fiscal state underthe functions from highertiers theremay eventhe of beinterference government. budgets though local whichaccording local to officials responsibleof and execution noware preparation elected for place, take to decentralization Armenia budgeting also required of decentralization Territorial in atlocal level. general and, particular, Organization budgeting of intransition showscountries ofthe democratization degree society in Law on Budgetary System of RA. Law on Budgetary System of RA. D. Tumanyan, LocalGovernment Budgeting in Armenia 14 The development of the draft of the state budget is budgetcarried state the of draft the of Thedevelopment 12 13 . The 13 th NISPAcee Annual Conference, Moscow, Conference, Annual NISPAcee 13 CEU eTD Collection 15 economic and functional classification; specify the major directions of community development; community of directions major the specify classification; functional and economic breakdownthe budgetrevenuesof and classified according articles the expenditures to of Prior toadoption of community the budget head of the community submitshall budget with the no bond has been issued so far in any community. community’s reservefund, or bonds issued by the community. Itis worth to mention though that the of expense the at financed be shall which surplus) (or a deficit having allow amendments butrecent be zero, shall budget of community thatthebalance RA states System of Budgetary percent of 30% of revenues to revenues.percent of operating budgetbudgetcapital and budgets mayhave Community infrastructure community facilities). fund a of reserve 5-20 of maintenance operation and finance costs, (to administrative budgets and projects) operating tofinance comprise (used budgets acquisition capital budgets and Community repair of capital necessary to amendments communitythe forapproval.council submita budgetand head draft can alaw,thecommunity formally andbecame approved delaysthe budget inthe adoption by state of Nationalthe Assembly. statebudget Before is subventions). In some casesthe development budgetcommunity may of be delayedbecause of provides onofficial data (financialtransfers equalization othersubsidies, subsidies and basedcommunity budgetforprogram four-year budget thecommunity. on development State localdevelop with headthe draftof andfinancedepartment administration together the budgetapproval by community the council. budget the state is Once community approved,the Community withbudgeting starts headthe of community drafting the budgetand ends with the Law on Budgetary System of RA. 14 15 The Law on CEU eTD Collection to the community head. Communitymaking headhas oneweekfor and changes amendments. After the discussion, the community council should submit awritten proposal for the draft budget Other 4. incomeNon-tax 3. 2. State duties and fees budgets. f)fines and penalties for breaches land of and legislationsproperty tax collectable tocommunity e) environmental fees deductions; d) profittax deductions; c) incomedeductions; tax community; of the borders within administrative the located fortheproperty tax: b) property of Government); the decrees respective the under payments make tax who payers, centralized the (save of community the borders theadministrative within landslandfor the located a) tax: 1. Tax Revenues: Community budget income forms from followingthe sources: years. thepast for analysis and comparative salary of payments total employees, administrative local of number the on information budget; state from on transfers information plan, development four-year upcoming for the forecast the accompaniedby structure, debt of year’s analysis existingthe previous the and trends, situation 15 CEU eTD Collection 16 local self-government has been adopted. Thehas law:local beenadopted. self-government In 2002, in cooperationcollection. tax through locally andis raised rest the with subsidies; of form in the the government assistancecentralized of the Urban Institute and USAID 50% very budgetsare budgetof Community comes from limited -about a local the government’s a new law on marzpets intervenein management andthe budgeting issues local on community levels. Independence of headcommunity and community budget in reality is aformality. In practice financial of operations. the performance and legitimate fortheaccurate responsible have manage full to ownfinancialright Theheadresources. of iscommunity personally The head of is community forthe execution responsible the andlocal of budget, the authorities will budgetthe be by passedfor acceptable thehead amendments the community.the of end the at as amendments, required than rather recommendations mere are changes for proposals council’s fact, In formality. is a process in budgeting role council’s community that means This resignation, then community budgetis considered approvedwith head’s the amendments. budget, thehead of communitythe may resign. If councilfailsthe todecide onhead’s the approve not does council if the Government, Self LawonLocal the to According allocation. year’s previous madebased are on fiscal year,expenditures budgetthe beginning beforethe of by If majority The shall be council community not approve vote. the the adopted draftdoes of National Statistical Yearbook of Armenia, 2009. - - - Required all meetings of be meetingsof public,Requiredto councils community to the open all Provided for collection of land and property taxes by local governments, Granted local governments the status of legal entities, 16 16 CEU eTD Collection exchange forrate US 1 dollar was equal to 363.28 Armenian drams. 19 18 UrbanInstitute, May 2003. 17 unrealistic andunsustainable. is local budgets means low, are often very for which and tax budgetpreparation collection that local the government capacities within local administrative technicaland However, governments’ duties not beshall changed during the fiscal year. provided by the Law on Local Dutiesdetermined by the central government. Theand same is true for local feesFees. and payment rates. This is The same Law also collectionprovides that the fees and of transfer The the fiscal enjoy discretion. limited local only laws, governments government of taxes was inself- thenewlocal autonomy for the theprovisions reforms and However, despite budget. a positive step, but local tax bases as well as rates continue to be local budgets unions.Amendments alsoprovided100% ofland be that taxes paidtothe andproperty wereto property ownership rights and the autonomy developto local budget andform community Thus, amendmentsprovided the adefinition a communityof as a legalentity, which had a Statistical Yearbook of Armenia, 2009. According to 2009 data by the Armenian Statistical Service the average the Service Statistical Armenian by the data 2009 to According 2009. Armenia, of Yearbook Statistical Previously, 95% of land and property tax were paid to local budgets. 5% was sent to state budget. Armenian Local Government Project. Final Closeout Report - Required sale municipalof assets at a market value. in mln. AMD in mln. Fees andFees Duties Land Tax Tax Property 18 , while with the old legislation 5% of those taxes were transferred to the state 19 2004 895.3 2341.6 5016.5 2005 994.7 2316.5 5742.4 17 , prepared by Samuel L. Coxson, Chief of Party, the 2006 1222.6 2727.6 6617.2 17 2007 2060.1 3274.6 7467.9 2008 1753.7 3702.0 7926.0 CEU eTD Collection 23 22 21 2005. Bratislava, 20 changed much yearsover being 1.3%in 2000 and in 1.7% 2007. 60%. around of level low the on remains still tax land of collection feesproperty local beenimplemented by tax state and had the andduties 90%,while around and base of property tax is localized and cannotbe hidden by a “shadow economy”. The collection of in monetary terms remains collection tax Armenianin regions, poverty widespread due tothe However, collection process. very low, except of a property and local tax administration. local processes, of budget tax. This is mainly andstrengthening the computerization Bank supported ModernizationWorld program, the Sector because the tax Public the Under finance officers. for community and training foradministration tax software and computers, byprovidingassistance, Unions technical communities andIntercommunity theprocesssupported of fiscal decentralization in communities, district Yerevan large rural Under Municipal the Service System andStrengtheningEstablishment Program, UNDPhas Community budgetCommunity expenditures 1-2%ofcountry’s comprise GDP. subventions. and subsidies state on depend highly still and enterprises or government central the theirprovideinstitutional didn’tgovernments formerly boost to by capacities services provided 21% of in20% of GDP in 2000, about GDP 2007 and 26%of in about GDP local 2009), activityWhile public sector was very low andremainedlow over time (expenditures areabout comprise less than 30% of total budgetcommunity income. National Statistical Service, Statistical Yearbook of Armenia 2009. Statistical Yearbook of Armenia 2009. Fiscal Decentralization in Transition Economies: Case Studies from the Balkans and Caucasu www.armstat.am 18 20 This substantially improved tax 23 22 This indicator has notbeen 21 Overall, taxes and fees s, UNDP,s, CEU eTD Collection 24 property tax tax collections. property budgetscommunity is an set to lessamountnot than total 25% of income tax,land and tax real level-up subsidiestocommunity budgets. The total forappropriation level-up subsidies to To ensure the harmonic of developmentcommunities, budget state the appropriations include budget. state from (official)received state transfers on highlydepend still budgets Community Share of official in transfers community the budget’s total income in mln2004-2007 (in AMD) 2008. hadinlocal47% in bellow. of budgets from risen to42.7% Theshare transfers 2004 to official is are rule-based.official localCommunity budgets given tothe transfers The trend of Budget unconditional Annualsubsidies are Law. By by Budget eachyearandapproved State contrast, the negotiated is subventions of allocation Thesizeand the specific purpose. the for given capital transfers transfersequalizationscheme grant subventions through andsubsidies. Subventions areconditional of generalThis law defines mainthe intergovernmental mechanismtransfer formula-basedusing purpose. Equalization. Financial on Law RA in the is stipulated The into for consideration.taken extending The community level-up procedure subsidies budgets to size and are governments by local self procedure, statutory with in the accordance granted, exemptions the allocation of subsidies to the Law on Budgetary System of RA. 24 On calculating state budget level-up subsidies to community budget level-up budget subsidies to Oncalculating state 19 CEU eTD Collection market. Themarket. Law on Budget System Lawand on the Local have such Self-government national credit to haveaccess shall communities Article 9.8, European Charter, to According optionsforLocalGovernment More financing local governmentrecommendations from are: of independence state our government is restrictedprograms development local of implementation if fully be enjoyed cannot self-government Local by the use of not second tierdoes exist. of government financial definedpowers framework as oflocal by and law,narrow the self-government the becomes the funds. their of majority implement cannot communities capacities Thusrelevant lacking and weak small, to ensureplay Many not within assignedrole. the financial communities, population does equalization and effective inequality of level high and growth economic unbalanced Armenia’s of Because infull. powers self governmentfulfill community donotenable to budgets their communities to The currently ascribed revenues and Armenia Statistical of Source: Yearbook 2009. 20 CEU eTD Collection 26 25 Capital development grants local partnership, canmatchgovernment some funds from local budgets. with localthe governmentin solving economic andissues. development With public-private government. it local undervalue notdoes to theextent that therole of (government guarantee) government for theloan thecollateral from be or can aletter Theguarantee of independence communities. gradual borrowing access marketmayto lead tomore financial and decision-making and grants development capital more banks, in commercial accounts bank open to Permission loans. communities and central financinggovernmentprefer through ratherthan subsidies and grants communities, attracted on contractual basis or through issue of community bonds. issuecommunity of through basis or contractual on attracted communities, in developmentthe ininfrastructure investments carry necessary out to are resources by for end the financing fiscalthe year,of of specific orexpenditures. programs concessional terms from the state budget to local self government agencies, subject for repayment interestfundsloansmaturity. servicingof on Budget arethe extended and repayment, terms the on entities other and agencies government local self to budget state the from extended budgetsmay community alsoreceive and budgetcredits Budgetcredits are thefunds loans. is that it mentioned Particularly, communities. orother i.e. budget, government central state marzpetthe approvedby and Ministry Finance.the of Onthe sidelimited itisother from strictly by be recommended must borrowing as is constrained however, borrow, to right The provisions. Law on Budgetary System of RA. Local Self-Government Reforms n Armenia 2007-2008 This will gradually lead to the situation, where private sector will step in will andwork sector step the situation, lead private where Thiswillgradually to . Ed. By D. Tumanyan, Yerevan,Noyan Tapan2009. 21 25 Budgetloans 26 However, CEU eTD Collection 27 The taxesimposed in RepublicofArmeniathe following:are the implemented by the local authorities. According to the draft, Article 3, on Taxes Law the to “Amendments on theRA theLawof of draft the of over discussions are there Currently RA. These amendmentsChanges in new local tax proposedfor governments also isinfrastructure supported alsoby UNDP, World Bankand organizations. other state thatThe theidea evaluation of orrenovationpayments for real bought in previousproperty years. capital of similar or service for debt be available tax not shall funds These unavailable. space otherwise basedevelopment shallreduced occupancy consolidationcosts, continuity or of office oraccess locations, to aunique be such as local (community) operations, tothe government benefits some purchase should provide grantsmake which investments further will into incometurn saving. generatingA or real property as Provisiona mechanism of capital development acquisition meanstransportation of (27%). grants towill enablepromoteand (42%) of andequipments tools share involved considerable Acquisition assets capital of local governments to which: andconstruction (66.8%) acquisition capital (22.7%). expenses capital of assets securelocal a property or communities. During 2007the 59.9% oflocal capital government expenses were capital investments, of in investments becameonly ofnew 2007incertain acquisition dominant Capital capital. fundsmainly Due tocommunity go tothe existingof repairsmall budgets rather fund than Ibid. 27 22 CEU eTD Collection 28 implications. Suggestionsimplications. bellow. areprovided hotel tax andto a Law. Thattax was the reason thaton the Nationalparking Assembly passedThesenew tax forms represent only conflicts of special2 interests,of whichthe will make it proposed difficult pass to it taxes:lots. It is suggested to modify some of the taxes and their b) Local Taxes above. mentioned taxes asfor a replacement taxes simplified and payments The lawpresumptive may specify Taxes State a) The Law of the RA on “Amendments to the Law on Taxes of RA”. Draft, November 28, 2008. ------Tax on parking lots Tax onunprocessedlands agricultural structures Incomplete Tax on Sale Tax Hotel Tax Land Tax Tax Property Value Added Tax Excise Tax Tax Income Tax Profit 28 23 CEU eTD Collection administrative expenses. administrative minimum with implemented be can policies these law, in tax changes the of adoption Upon budget. The of purpose this taxis separate to a share localto the budget. local government to taxes those from definea share to be wise it would Instead, Assembly. interests. To pass this type directed tolocal not The budgets. people of owners hotels or the have who areoligarchs special of law that imposes additionalHotel Tax taxes would be difficult inpay would have to tolocal taxes budget. National timeline for the constructions. Those owners, who would fail to complete it within timeline, audit be time Ourrecommendation the andset to would income frame local the for government. Certificate of Completion and formally are not underhave exploitation. not do owners This whose means foregone structures many are tax there Currently, taxation. to subject not structures Tax onincomplete budgets and will developmentprogramssupport in communitythe VAT and allow local governmentto levy sales Thistaxes. will ensureinflows more localto social security of worsen andwould on consumer low-incomeimposed are that taxes indirect are These tax. sales additional population.subventions. of Thehigh however,allowVAT,rate not will local governmenttocharge Instead, it would subsidies or itstate getpartof bethrough budgets budgetandstate community to directed better to lower the are taxes collected of salestax,however the role the is VAT performing in Armenia Currently, rate for the Sales Tax : There is tax forhotel services. However those taxes in form of profit tax and VAT are : In some countries sales tax are imposed on sales and directed to the local local tothe budget. onsalesanddirected salestaxareimposed : Insome countries : According to the Law on Property Tax, incomplete structures are structures incomplete Tax, Property Lawon the According to : 24 CEU eTD Collection and other documentation. other and the annual account budget, of draft to the community members access the community of facilitate inlocal budget the it presentation local presswithin after councilaswell threeas of days to community publishdraft careto shall take head community of the that state however,System, publica large at of should alsobudgetary the bepart discussions. TheLaw on Budgetary is in process by While notdirectly budget participation law,community the regulated residents’ community development programs. They are more comfortable with the official transfers. of fund inprojects seek forand community notbudgetthe to sources doalternative the drafting Besides, the same study states, that more often head of community do not consider development community. the of development the to lead unequivocally will budget the of implementation 31 30 29 by later headof community. the thebudget the of presentation many byoral approved council. thecommunity council In cases isinalways draft discussion marzes even budgetto the not2008, the community the to presented program implemented by “Investigative organization the of Journalist”in 60 communities 5 of requires community budgets to be presented tolocal communities. tobe presented budgets requires community and to enhance the transparency of the public administration system. administration public the of enhance transparency the and to highlights expansionProgram among “Government the 2008-2012” To increase governmenteffectiveness, priorities of civil society participation ProcessCommunity engagementinBudgeting in governance and awareness of the system, S.Petrosyan. Law on Local Self Government of the RA. Government Program 2008-2012. Yerevan2008. Transparent Local Government 31 Having this in mind, there is a little to state that the that state to little is a there in mind, this Having , Source: http://hetq.am/am/society/elec-usum/ 25 30 According to the study 29 National legislation National CEU eTD Collection in the community rather than discretional ambitions of the head of community. implementation development identified specifically willsupport with priorities which programs inpublic engagement budgetary the will process ensure more realistic budgetdrafting and the result, a As year. in coming implement to going aren’t and going are they activities the of it to shall be sothat publicin“humanthe language”, presented they apicture can grasp and create andunderstand publicformulasof theirbudgeting Thus, language the can’t process. rights, also publicparticipate and in allow community to discussions.information Besidesthe lack of on a are open to councils that only fewcommunity state that isit to clear situation, the Examining 26 CEU eTD Collection RISD, 2001. 33 September2002. 32 a written into has entered marzpet cases,wherethe In particular Administration). Territorial according annualthe by tolegal plan established highest the body supervisory Ministry (the of in powers delegated marzpet legaltermsexerts of professionalism. The control and professional legality of the execution and interms of ownpowers the marzpet execution the of controls Article of Armenia, of According 77.2 of LawonLocal Republic to the the the Self-government creditworthy. more be will developments and reforms ongoing the on reports the and government local of actions the control and supervise will process decision-making and inpolicy-making community the of Engagement transparency. the ensuring stakeholders all of collaboration and interactions investment. private to conductive a climate of creation the enables and behavior fiscal government local in the discipline bring will system bringis structured unless inplace not appropriate Decentralization that will development the others. Specific types of imbalance map intospecific forms of government failure. distort in cannot one in and actors a balance, – are civil and economic –political, elements three implementing programs for local local and accountable have officials budgetprocess, express local priorities the and budgets in participate become involved, whenlocal communities andexists is achieved Decentralization in a cost-effective way. Good government results when Paul Smoke, Paul Jean-Paul Faguet, Jean-Paul CHAPTER III. ACCOUNTABILITY. TRANSPARENCY ANDEFFECTIVE SELF- TRANSPARENCY CHAPTER III.ACCOUNTABILITY. GOVERNMENT: CIVIC SOCIETY ENGAGEMENT IN CIVIC DECISIONMAKING SOCIETYENGAGEMENT GOVERNMENT: Fiscal Decentralization in Developing Countries: A review of current concepts and practice.UN Governance from bellow: A Theory of Local Government with Two Empirical T 33 That favorable climate is possible to create through active 27 ests. London, ests. 32 CEU eTD Collection and Practices 36 35 and Practices. 34 mandatory or there is a simple lack of the capacity to implement an is audit. to implement lack capacity or asimple the there mandatory of is audit internal arenotthe aware meaningless,internal others is audit perceivedas that municipalities in some vary: municipalities in urban audit internal the performing not for Reasons on basisincommunities. usual the is conducted nor external auditinternal neitherHowever, by is stated LawontheTreasury the of Armenia.System Republic the of forframework introduction the internalin of an municipalitiesaudit and municipal organizations Armenia requires that the audit service must exist within the municipalities. the within exist must service audit the that requires Armenia exercise such law by to authorized bodies, by government central the control executed external an There isalso control. Article 69municipality’s units andinternal auditunit. of the Law on municipality’s activities is executed by municipalhead,the together with heads Local of the the over Self-government control general and Permanent auditor. external an of services the engage also ofcan It perform control. effective its membersto from among a commission shouldform council the Republic of internal municipalcontrol activitiesover are theheadand municipality. council of the The of main bodies The control. external and mandatory internal to aresubject activities Municipality’s included in annual the plan. not activities implement also can it Administration, Territorial of Ministry the with agreement Knarik Arabyan of RA. Self-Government on Local Law The Knarik Arabyan . Audit in the Local Self-government System of the Republic of Armenia: Legislative Frameworks . Audit in the Local Self-government System of the Republic of Armenia: Legislative Frameworks 34 28 36 35 The legal CEU eTD Collection and Practices. 40 average exchange rate for1 US dollar was equal to 363.28 Armenian drams. 39 38 37 There should be serious steps towards educating and empowering communities to talk and work totalk communities educating and empowering towards steps be serious There should public servicesstrengthening through the relationshipbetween the citizens and the government. Empowermentof memberscommunity will influence the quality, efficiency and accountability of shouldthere whichcanbe bemechanisms doneby developed members. community empowering transparent and accountable governments local hold To audit. external and internal implement to resources human and capacities financial possess local nor governments neither state Currently performance expenses municipalities’ comprise only revenues of budget 0.22% municipalities,in audityet urban On average, not its purposes. transparency, serve does important External audit,municipalities’ tool asanforof improvement the accountability the and municipalities itrangesAMD from 200,000(USD551)toAMD 4,500,000(USD12,387 8,203),AMD (USD AMD whereasvaries 2,980,000 indistrict from 150,000(USD413)to According 2005and to 2006study, average the price of inexternal audit urban municipalities conclusion. session should bediscussed inlight andapproved of a professional auditing organization’s Lawthe onBudgetary annual the Systems, of statementbudget performance in council the the municipal council can contract an independentauditing service. cancontract municipal council the performance, budget of control the implement effectively and constantly to in order government, Law on Budgetary AccordingArticlesSystems. 68and to 69of Lawthe onLocal Self- and the Self-government Local Lawon the audit: external the to laws pertaining two There are The Law on Budgetary Systems of RA of RA Self-Government Local on Law Knarik Arabyan exchange rate is calculated based on 2009 data by the Armenian Statistical Service according to which the which to according Service Statistical Armenian by the data on 2009 based calculated is rate exchange 38 . Audit in the Local Self-government System of the Republic of Armenia: Legislative Frameworks 29 37 According to Article 35 of . 40 39 ). CEU eTD Collection 41 reforms in the democratization process of Armenia have not recorded any serious achievements. any recorded serious Armenia have not of process inreforms democratization the issues,including communty public. related However, open formation budgeting to process, and representative defines thediscussions andmakes of bodies local executive government’s system, self-governmental local for foundations legal provides clearly Armenia of legislation The institutions andpartnerships. transparent and accountable socially and a stronger to lead will it since initiatives, development carry out their and roles responsibilities. issustainable Thus,engagement thekeyto community identify hold to requiredholders areabletoaccountable communities them andof action power isincreased whereby increasedvoice accountability sought, information, Through and dialogue, atall.done work wasno there that stated respectively, 52.4% “good”, or while as“excellent” its activities assessed respondents the implementedoperations 3.7%of council. bythecommunity 0.9%and of wereassessments Far poorer whatsoever. done hasbeen work no was there that stated respectively, andthe remaining 58.8%assessed itas“satisfactory”including andlower, 6.5% mayor wasassessed“excellent” and “good” by 10.9% and30.3%of respondents, the of the work the that showed 1000 opinions recorded municipalself-government. local about the find issues, theto opinion Among of Gyumri poll. wasmade anattempt out population other In July-August 2008AsparezClub NGO ofReporters (Gyumri) a has initiated public opinion services. the performancebasicwith officialsservice of governmentabout and governmentproviders D. Tumanyan. 41 Local Self-Government reforms inArmenia, 2007-2008 30 . Yerevan2009. CEU eTD Collection requirements and outcomes. receive requirements outcome of and the experience the from latter. benefit will and organizations other or NGOs by region Thein the out carried knowledge transfer arrangements programs willavoid of overlap provided Local thus, the services. government, development should be set upcommunity to communicate development. ifleada process, tothe can fears into this engagement and residents beno Engagementwill inengaging there of NGOs and other localbewould apriority civic of orother effectiveness of the government organizations NGOs players will improve performance tobe elected for aslongthe values ascommunity his/her leadership. In situation,this quality of in head thatthe of This be terms. consecutive interested community provides the shall forunlimited with elected4-year term now are council community the community and of head the Self-Government, Local on Law in the hence, and Constitution, in the amendments recent yearsthe With each. terms,3 consecutive only for betwo elected heads could community by the short-term interests.governance and Thewas driven Lawprovided that personal his about headcommunity was concerned Before of constitutional in2005,the amendments policy-making might process improve currentsituation. in involvement the that think even not does and one, local the to than rather government state the to expresses community services’ quality, the provided over The concerns services. accountable local government.Citizens and thethey placeswherelive need and work locally sensitive and to community members remains one of the obstacles for the success of local democratizationlocallevel. government capacity Low localof provide government to quality community service and the at reachdemocratization to failed andNGOs international organizations of efforts Continuous 31 CEU eTD Collection and Practices. 43 42 usually use the right given them by the Law on Freedom by given onFreedom usually use them right Information.of Law the the not do and massmedia of NGOs representatives Thepopulation, decision-making processes. in the be akey-player to needs also society a aconsumer, being from Apartprocess. that in beinvolved of stages to needs society all fair, the and is ensure feedback objective that to order rights. On the other hand, not all local government bodies fulfill their obligations and conduct and obligations their fulfill bodies government local all not hand, other the On rights. and their procedures processes, of the aware is not end.The society that towards registered to date werenoreal steps there However, making in process. decision participation community for public Thelegislation betweenstipulates of Armenia cooperation two. the continuous and long-term through built be can public and authorities the between trust The authorities…” establishment of civil “The Government’s Program sustainableaims atthe by of andsecuredevelopment state, the society, formation of an atmosphere of a new formation the council. of trust between withinmonths of two community program ofbeingelected or threewithin months development the public and the contribution and the interests of all stakeholders. According to the law,mayor develops a draft of the account into aswell as take to, are delegated rolethey play mustthe actors All the and feedback transparency government of received. local of part the on accountability This deteriorates local by government. the often controlled Government of Armenia Republicthe in of its “Government Program for 2008-2012”. the of priorities the among mentioned been has control effective their for feedback ensuring local level, the publicas services aswell into at quality provided increase the Considerable of Republic of Armenia, Knarik Arabyan . Audit intheLocal Self-government System of theRepublic of Armenia: Legislative Frameworks Government Program 2008-2012 32 . Yerevan, 2008. 43 Moreover, media is 42 Yet, in CEU eTD Collection support of OSI World and Bank. Yerevan2006. 44 hearings and discussions public, open to asoppose whatisto provided bythe law. local authorities accountable and not only for the sake of transparency. The society needs to feel needs to society The of forsake transparency. not the only and accountable local authorities The for engagementargument in process isdecision-makingnot important foronly holding the only members,community butalso municipal servants. The ideal situation would beif beneficiariesthe of public services and trainings would be not Civil society organizations andNGOs should: arebeingandseminars forgotten developed arenot further. of the aftermakings. results the thecloseout, engagementof Moreover, indecision public not through in engagementthe makingdecision These process. not programsmuch do do for the programs, development economic and in community engagement through members community of The their isproblem rights. programs those that are mainlyfocused on empowering the aware not are and governance local in participate not do hence, and understand, fully not do still World Armenia Vision However, andothers. despite various programs seminars, and citizens DFID, UNDP,GTZ,USAID, Union, the Open Institute, European the Society organizations: by majority followingof topic onthis weremainly organizedand supported trainings donor the The participation. civic of importance the highlight and processes these on members community the toeducate initiative took the andstarted groups andvarious interest organizations, NGOs Isolated and Aging Villages - - - Provide trainings financialon management. networking, and coordination on assistance Provide local andOrganize trainings on education self governance, , Journal of articles, Hetq Investigative Journalists Association. Published by the 33 44 International CEU eTD Collection planning team should be carefully selected in order to avoid planningbe important selected to in major carefully team on should disagreements order NGOsandingovernment, interest the groups region.other ofthis Themembers strategic citizens, representatives local of including and state allstakeholdersengage intheprocess becomeneeds to managementmodel. apartof a professional planningwillneed Strategic to subsidies and donations anddonotthink of generating new sources. Formal strategic planning providing state with areusually happy authorities the Local government in manner. aproactive mode than rather crisis ina reactionary from to crisis operate currently Many local governments members. society evaluatingfeedback updating needs basedon and thedevelopment by local plan andthe the results, impact achieved of the the assessing plan, of implementation periodically that of goals tobe achieved as well its achievementas plan. The community council should be in charge the state should clearly will It public. the of local needs and reflect andaccurately realistically be itshould planned plan the development of success evaluate the tobe ableto In order electedcommunity officials. or appointed of the preferences onthe than rather focuses community wants A properly head onwhatthe strategic plan the and designed council. provides localwith government a collaborative, comprehensive planguide to the community planning Strategic criteria. measuringwrong valuable the may resources waste local government criteria, goals its achievement and stated plan,clearly with strategic awell Without designed policy-makingimportant budget,master such community plan, community documents, etc. as strategic planfor community the which shoulddevelopment, bedeveloped among other within the community. needs The community toparticipate in and development design the of makingprocesses policy for localfeel responsible andpart of governance animportant itself 34 CEU eTD Collection budget expenditure, which is usually the case, but itencourage measuresalsobut to is take should which case, budgetexpenditure, the usually supervisionlocal The state belimited the over should government not “investigation the to supervision. and control the for mechanism theirbusiness cooperation plans.The reasonablebetweencommunities timeline isanother and progress of their efforts. the on Communitiesconstituents to back report to needs also at proximity government local The government. need next the also to tie together their strategies and designed in a way that current government tries to reach those during its term and notpass it onto reasonable timeline for desired outcome shall be defined. The timeline shall be realistic and their supervisorsstaff is the one who responds General staffmembers levels from beshall different includedin Usually, planningprocess. the toof citizen the inquiries issues and complaints,and informal leaders. Theirinput may be valuablein researchthe stage of strategicthe planning. and so they areconcerns more awareexperience intheareaand studies,community itshave formal know already conducted priorities, than citizens whohaveadequate with can be together done NGOs need assessment and situation political were community intohave input planningthe Baseline process. study of community’sthe economic raising.strategic planningteam.concept Theimportant ismake to sure all stakeholderskey inthe In strategic of needs servetothe to community from the volunteers engaging or representatives, organization plan, Otherinput. includeoptions using businesscitizen and focus leader’s community groups, the for community as maybe basis andthe the used beconducted results asurvey considered, can were interests public ensure that meetimportant needsof notdoes community. To that same time shouldgroups all interest be asit involved can in result designthe a strategicof plan policy issues allow to for speedy and effective reaching consensus and making.decision Atthe 35 CEU eTD Collection will result in fostering autonomy and effective management of local government. local of management effective and autonomy in fostering result will which community the to control and supervision of functions some transfer to government central participate actively in planning anddevelopmentprocesses. These will efforts eventually enable has to society The candidate. for aparticular vote andhow to why and make a choice to forwill necessary thesuccess The of society provide ground learnneedself-government. to how is more gradual It undoubtful transparency of toward andempowerment society the that reforms transparency governmentthe of spending public hold and allows to government the accountable. the enhances initiative This mode. in interactive budget the of implementation process, website the introduced has It initiative. heard takeninto and government the OnMay consideration. launched of Armenia31, 2010, new are opinion public and the transparency the in governmentwhere ademocratic only achieved These events should become traditions pushing forward social and political morality. This can be heads of communities towardinitiatives toget publicthe in participation making public policies. www.e-gov.am 36 where citizens can follow the budgeting the follow can citizens where CEU eTD Collection allowlocal engage to publicgovernment in anddecision-making budgeting provided processes goal. isnotthe should itself Decentralization Fiscal decentralization fiscal of decentralization. on which Charter In 2001ArmeniarequiresSelf-Government ahighdegree ratified European the marzpet. the of ambitions and real community need of the the between imbalances consultancy and intervene in managing and budgeting processes of communitythe causing result, the regional appointed by governors, beyond central the government, often go the help with consultancy and trainings. Trainings are usually refused by community councils. As a issues in management and financial budgeting process and central government is stepping in to level of education and professionalism of these bodies. Most of the communities are having autonomy assigned to bodies. self-governmentthe However, the Law doesn’t require specific improve the well-being of the population.” The Law also states the responsibilities and community’s property and resolve to theproblems of community withimportance a view to capacity localof self-government bodies acting at their own responsibility, todispose of isand right the “Local that self-government Lawstates The local self-governance. democratic for framework legislative and theoretical which of provides Armenia, Local Self-Government Lawon inthe onLocal1996Armeniaadopted Charter Based European the Self-Government, on Law on the Administrative and Territorial Division of the RA. which basis for reforms. publicprovided sector InDecemberArmenia 1995, the has adopted reforms. In1995,Armenia The adopted Constitution of Republicthe of Armeniaby referendum independenceAfter in 1991, Armenia a adopted series of economic, structural institutionaland Concluding Recommendations 37 CEU eTD Collection self-government: local andself-sustainable toachieve accountable Following aretherecommendations efficient and Decentralization basis forprovides transparentlocal accountable self-government. that is central on degreeof high.economic the and political not dependence government 9. 8. 7. 6. 5. 4. 3. 2. 1. Mandatory development of strategic plans to ensure that community has a vision and Raising awareness of publicthe onlocal self-governmentprocesses which will empower Community engagement in to Budgeting Process ensure realistic budgetdrafting and Changes in new tax forproposed local governments to provide new revenues for Access tonational market which credit helpwill toengage more financing and decrease Capital grants increasedevelopment to fundcapital of communities andprovidemore Regular training, teaching seminars and programsfor exchange local bodiesgovernment Changes in the Law on Local Self-Government that will require specific education and the to lead will that Self-Government Local on Law in the changes officials: elected More mission not just aset of problems to solve the society to actively take part in decision-making process and to make rational choices community budget implementation identifiedwith priorities to support developmentprograms in the community budget government dependencefrom central the revenues for resources experience positionsthe of headof community community, the council. election of marzpet. the 38 CEU eTD Collection transparent local local self-government. transparent long-term establishing for of areguarantee andrecommendations success autonomous inengagement policy-making and decision-making process the through provided Continuous reforms and changesin institutions,legislation and perceptions of society, society’s In Armenia, goal the local hasof creating notbeen self-governments autonomous achieved. Thus, the development of autonomous local self-governments is critical to establish democracy. 10. Engagement of civil society and NGOsin anddecision-making implementation processes which lead will toaccountable local eventually government. 39 CEU eTD Collection References 11. 10. 9. 8. 7. 6. 5. 4. 3. 2. 1. European European Charter Local on Self-Government, Strasburg,1985. Doane, J. Doane, Dixon, J and E.A. Rose, 2001. Plan to Plan. Promoting the practice of Planning .In Davey, K. ed. Constitution of Republicthe ofArmenia, 5July 1995. Community Consolidation in Armenia. Initial Study, Prep. By CFOA, Yerevan 2008. Civil Code of Republicthe of Armenia. Bussmann, W. Amendments of Constitutionthe Armenia,of 27November 2005. A pilotprogram ofcommunities’ consolidation: (Aragatsotn Marz). “Hamainq” March 2000. Communist Europe proceeding of ANZAPSproceeding 13-15September,Auckland. of Conference. The World BankInstitute World BankInstitute’s Decentralization Program, WBIEvaluation ES02-54. No. Studies, and Local andGovernment Public Service Reform Initiative. Yerevan, 2008. Baseline Study for Armenia. Local Baseline StudyforArmenia.Government Local Program official newspaper of Community Finance Officers Association, #92008 Making Government Accountable. Local Government AuditinPost- Fiscal Decentralization inanEraof Globalization . OSI, Budapest, 2009. . OSI,Budapest, 40 : An Evaluation of the of An Evaluation : , The Urban Institute, Urban The , Published byCFOA CEU eTD Collection 23. 22. 21. 20. 19. 18. 17. 16. 15. 12. 14. 13. Law on Chamber of Control of the Republic of Armenia. Armenia. Republicof of the System Budgetary Law on Performance. Auditing Law on Arabyan. Knarik S; Khachikyan, Khachikyan, S.; C.N.Raadschelders Jos UnionsandTaxPolicy Inter-community GovernmentProgram Yerevan 2008-2012, 2008. Fiscal Decentralization inTransition Economies: Case Studiesthe from Balkans and Gordon, G. andaDecadeofGerman Unification Changes Finance, Moscow, 2009. 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Law on Local Self-Governmentof RA, 2002 Law on Legal Acts of the Republic of Armenia. Law on Freedom of Information of the Republic of Armenia. Law on Financial of Equalization RA, 2010. research 2007. affairs and administrationaffairs Integration inGermany . Vol . Vol 16 Number 4198 Decentralization Analysis Relatedto Municipal Government Consolidation. Schoolof public Mutual Decline –Town planningandthe publicinterest. UrbanPolicy and Development of financial equalization mechanismsinArmenia Development offinancial Institutional Transfer. To the Political Logicof the Administrative . Wolfgang/Benz, Arthur/Mäding, Heinrich . May . May 2009. , Yerevan, 2007. 42 , Yerevan CEU eTD Collection 46. 45. 50. 48. 47. 44. 43. 49. 42. 41. 40. 39. 38. 37. www.armenianow.com Tumanyan, D.,Local BudgetingGovernment in Armenia. The 13th NISPAcee Annual www.cfoa.am www.avagani.am www.armstat.am Tumanyan, D. Tumanyan, D. www.caa.am Tumanyan, D. Tumanyan, D.and V. Movsisyan. D. Tumanyan Blackman. Tim Service of The Basis Municipal A. Shah Conference Russia, Moscow, May19-21,2005. 2009. Government Studies System, project Budgeting” 2004 Problems, andthePromise Yerevan, 2006. Fiscal Decentralization inDevelopingand Transition EconomiesProgress, (CAA) (CFOA) Training materials the for “Operational andCapital Planning and Local Self-government in the Local Self-government inthe Republic of Armenia in Government Reforms Local SelfArmenia Local SelfGovernment in Reforms Armenia 2007-2008 Towards evidence-based localgovernment:Theoryandpractice,Local (RAMCA) (RTI/LGP3, CFOA).2007. , 1743-9388, Volume, 1743-9388, 24,Issue2, 1998. , World BankPolicy Research Working Paper3282,April , textbook, Yerevan,, textbook, Or-Dar, 2009. Performance BudgetinginLocalSelf-governmentPerformance 43 , Yerevan, 2000. , Yerevan, 2006. , Book 3, Yerevan, 3, , Book CEU eTD Collection 59. 58. 57. 56. 55. 54. 53. 52. 51. www.worldbank.org www.undp.org/europeandcis www.parliament.am www.mta.gov.am www.minfin.am www.logincee.org www.hetq.am www.gov.am www.e-gov.am 44