Financial decentralization, along with financial globalization, are currently two of the phenomena that concern professionals involved in reforming the local government finance and accounting systems, that are trying hard to become a language of communication for those interested in knowing the position and financial performance of local communities in Romania, as well as internationally. To meet the need of informing the taxpayers interested in knowing the methods of incorporation and usage of resources, of training financial creditors in administering their capacity for repaying any loans, as well as all the interest parties (including central government), local communities have turned to instruments they have at hand: budget and accounting.
In the last years we witnessed the continuous growth of local public resources, while public authorities from territorial-administrative units diversified their structures in order to achieve all the tasks that have been transferred. As a result, the position of subordinated public institutions was strengthened by increasing their number and volume of resources developed by them. In this paper we propose to highlight the features of the financial management of public funds by public institutions of local subordination in the context of decentralization in Romania.
Tatiana Moșteanu, Carmen Maria Lăcătuş, Mirela Anca Postole
This paper work aims to identify the issues of Romanian local public decentralization, recommending measures to streamline the public finance circuit. The reorganization of the public government in three levels, the growth of the financial independence of local authorities and public administration’s decisions’ transparency next to a better information of citizens, coupled with their empowerment and involvement in public affairs, all these represents key points for the discharge of decentralization of public finances: to increase social welfare.
The primary purpose of this chapter is to review global trends in decentralization, that is, the transfer of decision-making power and responsibilities from central to local authorities, along with changes in public finance, in the past decade.1 In highlighting common features in the process of decentralization, the secondary objective is to spot linkages in policy and practice that have relevance for local economic development (LED).
Decentralization is a mechanism by means of which the local administration authorities receive the authority and the resources allowing them to make decisions concerning the provision of public services. The balancing of the local budgets in Romania is the consequence of the financial decentralization, according to which the local communities were entrusted with/allotted their responsibilities and then they were entrusted with/allotted their resources as well. The separation of the attributions of the central and of the local administration conditions the way the revenues and the expenses were distributed between the two levels. This process depends on the degree of regional development, on the concentration of the population on its welfare degree, on the tasks each community has to face, on the possibility of financing the foreseen expenses from local resources.
The research theme is important for the local economy and financial literature on local public finance. It is known that the tax base of the territories is quite uneven and providing quality public services is impossible based on their own sources. The support for less developed local public administration from the financial point of view requires fiscal decentralization and involves financial equalization procedures or other similar measures aimed at eliminating the effect of unequal distribution for potential funding sources. Financial equalization is a group of financial actions made in order to overcome economic and fiscal disparities between territories. The purpose of financial equalization is the additional funding of less developed territories in order to reduce regional disparities. Key words: financial equalization, fiscal decentralization, inter-budgetary
Cultural policy in Europe is deeply rooted in the Welfare State doctrine that has been prevailing during the last half century. Its implementation has gone along with the invention and rise of educational policy, social policy and health policy. This paper sketches its evolution as a four phase move towards what has been emerging as the central dual content of the current public cultural policy: preserving and promoting heritage, and bringing the creative industries at the core of the so-called knowledge society. The general evolutionary trend shows four distinct phases: 1) the creation of a systematic cultural supply policy based on a limited definition of culture suitable for public financing and based on a vertical concept of democratization by conversion; 2) the gradual decentralization of public action, which leads to an increasing disparity in its aims and functions, and which challenges the initial universalist, top-down egalitarian model; 3) a revision of the legitimate scope of public action, which declares symbolically obsolete the founding hierarchy of cultural politics, that which would oppose high culture, protected from market forces and entertainment culture and governed by the laws of the industrial economy; 4) an increasing tendency to justify cultural policy on the basis of its contribution to economic growth and to the balance of national social diversity, which legitimises the regulatory power of public action as well encouraging the expansion of the creative industries and the demands for the evaluation of procedures and results. The last section of this paper moves away from the state centered perspective and focuses on the city as the incubator of cultural generativity, in order to suggest how a city-centered approach to cultural development challenges the state-centered doctrine of cultural policy.
Without a real change, the Romanian education system and especially the preuniversity system will not be able to overcome its instability and provisional character. The reforms that started in 2000 must continue. The success of the decentralization of the pre-university system, as a basic component of the reform, greatly depends on the manner in which the financing of preuniversity education must be carried out in accordance with the number of pupils, and the funds must be assigned to place the pupil in a flexible and facile environment.
Local authority financing is currently at the heart of the political debate. All the states are faced with the challenge of reconciling the need to control and reduce public spending with greater financial autonomy in local government; they are accordingly seeking ways of achieving an equitable distribution of financial resources among the different levels of government in a context of budgetary cutbacks at every level of public administration. If strengthening democracy means strengthening local selfgovernment, this in turn means establishing systems of financing for local authorities which are at once efficient, fair and consistent with the state's economic imperatives. In other words, the principle of subsidiary, decentralization and local finances are all interdependent.In Romania this process started in 1990 and it is on the move even today. This paper is trying to find, by using economic instruments, what is the degree in which we succeed to create a real local financial selfgovernment.
The aim of the present work consists in the methodological study of the instruments for the equalization of the local public incomes in the administrative-territorial structures for the elaboration of some measures for the effectiveness increase of the local public expenditures modality and for the improvement of the public services quality. The research theme is important for the local economy and financial literature on local public finance. It is known that the tax base of the territories is quite uneven and providing quality public services is impossible based on their own sources. Financial equalization is a group of financial actions made in order to overcome economic and fiscal disparities between territories. The applicative value of work consists in the research of the public services financing modality for the improvement of their quality, scientific argumentation of the necessity of the incomes equalization at the territories. As for findings, I consider that the support for less developed local public administration from the financial point of view requires fiscal decentralization and involves financial equalization procedures or other similar measures aimed at eliminating the effect of unequal distribution for potential funding sources. The purpose of financial equalization is the additional funding of less developed territories in order to reduce regional disparities, and in this lies the value of the hereby study.
This paper presents the significance of the issues related to the activity of territorial self-government for the social and economic development of Ukraine. The efficient operation of self-government in any country is unfeasible without financial resources. Polish experience in the development of territorial self-government is particularly valuable in relation to the reform of Ukraine’s self-government. The paper outlines the differences in the structure and operation of territorial self-government in both countries. The paper is concluded with numerous observations on the direction of selected reforms of Ukrainian self-government. It shows the weaknesses of local self-government in Ukraine, which result from the lack of decentralization of finance and the small amount of state-collected taxes. The conclusions end with the observation that a consistent development of the Ukrainian state is required for Poland to develop well.
Alina Profiroiu, Tudorel Andrei, Marian Nica, Elena Daniela ŞTEFĂNESCU
The reform process of the state and implicitly of the public administration was a priority for the past governments of Romania. During 2004- 2009, within the reform process, the main actors involved in the coordination, implementation and monitoring of reform measures were: the Prime Minister, the Superior Council for Public Administration Reform, Public Policy Coordination and Structural Adjustment, the Ministry of Public Finance, the General Secretariat of Government, Ministry of Administration and Interior (renamed for a short time Ministry of Interior and Administrative Reform), the Central Unit for Public Administration Reform, National Institute of Administration, the National Agency of Civil Servants, and the National Modernizers Network. For evaluation of aspects related to the reform process it was designed a selective research within the members of the National Modernizers Network, for assessing their perception of the public administration reform undertaken by the institutions presented above. Evaluating their opinion can be an important point in the revitalization of the area of the administration reform process. Also, the research conducted aimed at assessing the degree of modernizers’ involvement in activities related to important aspects of the reform process: strategic planning, formulating and evaluating public policies, financial management, human resources management, decentralization, introduction of new information and communication technologies and administrative simplification.
This study is intended to examine the influence of the current worldwide financial and economic crisis on financial decentralization process in Bulgaria and identify the answers of the central and lo-cal governments to the critical situation in the context of specific conditions of the national economy and the stage of financial decentralization reform. Analysis is focused on dynamics of the main mac-roeconomic indicators, based on fact figures for the period 1990–2009 and forecast for the period 2010-2011, and its impact on the public finance. The most important actions, taken by the national government to consolidate the crisis are described and evaluated on the base of their effects on the lo-cal finance. A comparison is made between the loss of Bulgarian economy in the beginning of transition (1991-1993), during the financial crisis in 1996-1997, caused by credit crunch and series of bank bankruptcies, and the current financial and economic crisis. Finally, some conclusions and pol-icy recommendations are outlined, intended to improve crisis management in Bulgaria both on the national and local level.
Decentralization of decision-making on the availability of essential public goods for regional and local level raises questions regardless of ability to ensure or guarantee the supply by the small municipalities. It affects the delicate problem of fiscal decentralization and own limits of decentralization process. In this paper, we deal with problems concerning primarily the development of small municipalities as independent public corporations, their ability to play the self-government role and to ensure the availability of essential public goods and services. The main criteria for defining small rural communities are the population and the status of municipality in the settlement structure, which is a predetermined by range of services provided at territory of municipality (market services, public services) to its citizens and residents of surrounding villages. We deal with problems of financing small communities, their participation in the distribution of revenue from shared taxes, the availability of other resources. We monitor the factors that enter into models of reallocation of public resources. We base their findings mot only on information from literature, but also from terrain research, which not only confirmed some previously published facts, but allowed to reveal the factors that significantly affect the financial situation of small municipalities. This led to the determination of parameters, the key mechanism for setting the allocation of public resources. On the basis of the investigation, we analyze the parameters, the key mechanism for setting the allocation of public resources. In conclusion, the authors summarize the main issues and articulate the principles that should be respected in the formulation and adjustment of the budget determination.
Open access
Regional Development and Policy
Polish socio-economic development
Hungarian Social, Economic and Educational Studies
Improving quality and efficiency in providing public services by accelerating the decentralization process represents one of the fundamental premises of a democratic, rule of law state that is oriented towards achieving performance in public services for its citizens. Bringing public decision-making closer to the citizen, improving quality in providing public services to citizens, as well as reducing their costs, are but a small part of the advantages brought about by public services decentralization, with the major role in decentralization being played by both education institutions, and local public authorities. In this context, the study focuses firstly on approaching empirically and epistemologically the decentralization of Romanian public education system, which presupposes transfer of authority, responsibility and resources concerning decision-making, and of general and financial management towards education institutions and local community. What is also revealed in this study is the premises and stages of Romanian public education decentralization, the advantages but also disadvantages and limitations of decentralization, as well as the education public service prospects from the perspective of decentralization. Last, but not least the study approaches the subject from the viewpoint of related public policies and legislation; the research puts emphasis on the fact that in accordance with the present Romanian legislative framework, the entire patrimony of public schools- land and premises- is public property and belongs to communes, cities and municipalities, and it is managed by the respective local public authorities. Furthermore, it is local budges that finance schools, and school patrimony and funds are currently being handled by local councils. Insufficiency of financial resources on the part of local communities may represent a serious drawback in the way of achieving efficient and effective decentralization in Romania, thus indicating a need to identify feasible solutions for finding the resources necessary for the conclusion of this process.
Open access
Education, Management, Technology, Human Resources
This paper examines the financial crisis in light of the local economic development and sets out some policy recommendations. Local economic development is a process in which the local authorities cooperate with the public sector, business community, and NGOs, in order to create more appropriate environment for economic development and for unemployment decreasing. The last months saw the world economy facing to the worst financial crisis in history, causing unprecedented drop in demand and sales and record‐breaking unemployment levels worldwide. No country can escape certain economic and social consequences from the global financial crisis. The main research question is the following: How does the gobal crisis affect local governments? The local governements are facing several problems such as: higher unemployment and social needs at the community level, pressure for increased spending, difficulties of investment financing, need of deferring maintenance. Then, the paper sets some policy recommendations adressed to the following aspect‐ what should and can local governments do? The crisis offers some chances for change in the context of strengthening the role of local governments.The central government will rely on local governments to bring policies rapidly to bear on the economy. This could and should intensify the intergovernmentaldialogue and it could also lead to strengthening fiscal autonomy of municipalities. Improving the competitiveness at the local level and developing a strong local economy can help the country cope with the effects of the global economic slowdown. Local government units should improve their competitiveness to attract more investments and to develop their local economy. Given that the responsibility of assisting the national government in mitigating the impact of the crisis through stimulation of the local economy are given to local governments, this paper aims to discuss issues related to enhancing local economic development and fiscal decentralization as a means of improving overall service delivery in the country, in the context of global economic and financial crisis. Local governments may also be succesful in the promoting productivity locally in order to enhance the country’s competitiveness in anticipation of a greater role in global trade during the recovery in the next few years. The special focus of this paper has been given to the case of local economic development in the Republic of Macedonia.
Open access
Regional Development and Management Studies
Regional Development and Policy
Hungarian Social, Economic and Educational Studies
- This paper reviews main motivations behind the constitution of local councils partnerships as they serve to devise decentralization pitfalls in order to the optimal dimension of government. To this aim, the paper focuses on one of such partnership, namely Unione di Comune (UdC). Some stylized facts are derived with regard to dimension, functions and finalities of Italian UdC and structural characteristics of associated councils. The financing issue has been analyzed under the heading of both ensuring adequate funding to promote partnerships and avoiding pressure on the national government's budget and public finance in general. Theoretical considerations and empirical experience from abroad, such as inter communality in France, show that the assignment of an autonomous tax proves to be more efficient compared to una tantum or annual transfer or tax sharing. Finally, the paper offers an insight into the way UdC provides administrative functions and public services by mean of the Marche Region case study.
The ways in which public education is financed and delivered varies greatly throughout the world. Many developing countries have highly centralized government administration of education and other public services. Decentralization is one of the most important phenomena to have affected educational planning in the last years.
Péter Halmai, Viktória Vásáry, Halmai, Peter, Vasary, Viktoria
Is the Common Agricultural Policy unsustainable? Is agricultural spending a major distorting factor in the EU economy and an obstacle to the implementation of the Lisbon agenda? To answer these complex questions, detailed analysis is required along the following lines of thought: 1. Exploration of factors justifying Community level intervention. – Is the ’theory of decentralization’ applicable to budgetary issues and the common agricultural policy? Our hypothesis suggests that it is. 2. Assessing CAP as it currently exists, including its ability to generate public goods at the level of the Community (multifunctional elements which are indeed cross-border externalities) and its ability to create added value at the level of the Community. 3. Making an attempt to redefine the Community’s agricultural policy by identifying goals which can be achieved more effectively at the supranational level rather than by involving secondary levels of decision making. – Making an attempt to outline a Common Rural Policy, a new policy intended to promote the creation of public goods required by the society by means of targeted and decoupled economic policy measures. The concept of the new policy – a new policy requiring both national and Community funding – is in line with the requirements of sustainable development, i.e. sustainable agricultural activities such as sustainable land use, food and feed production, biofuels, forestry and fishing. Additionally, the new policy we outlined may also be an effective approach to meeting challenges arising from globalisation, trade liberalization, climate change and structural reform issues. ----------------------------------------- Fenntarthatatlan a Közös Agrárpolitika? Torzítják a mezőgazdasági kiadások az EU gazdaságá¬nak fejlődését, gátolják a Lisszaboni stratégia végrehajtását? Ezekre a bonyolult kérdésekre a követ¬kező pontok részletes elemzésével adhatjuk meg a választ: 1. A közösségi szintű beavatkozást igazoló tényezők feltárása, rendszerezése. – Alkalmazható a „decentralizációs elmélet” a költségvetési kérdések, illetve a közös agrárpolitika vonatkozásában? Hipotézisünk szerint: igen. 2. A KAP értékelése – figyelembe véve az EU-szintű közjavak (a multifunkcionális elemek va-lóban határokon átnyúló externalitások) és EU-szintű hozzáadott érték előállítására vonatkozó képességet. 3. Kísérlet az EU agrárpolitikájának átalakítására annak segítségével, hogy felmérjük, mely cél-kitűzések valósíthatóak meg eredményesebben szupranacionális szinten, és nem pedig másodla¬gos döntési szintek bevonásával. – Kísérlet a Közös Vidékpolitika körvonalazására, amely új poli¬tika célzott és szétválasztott szakpolitikai intézkedések segítségével járul hozzá a társadalom által megkívánt közjavak előállításához. Az új politika koncepciója – annak az új politikának a koncepciója, amely mind nemzeti mind Kö¬zösségi szintű finanszírozást is igényel – összhangban van a fenntartható fejlődés – azaz a fenntart¬ható mezőgazdasági tevékenységek: fenntartható földhasználat, élelmiszer- és takarmány-előál¬lítás, bioüzemanyag, erdészet és halászat – követelményeivel. Továbbá az általunk felvázolt új po¬litika megfelelően kezelheti a globalizációval, kereskedelem-liberalizációval, klímaváltozással és strukturális reformmal kapcsolatos kihívásokat.
Open access
Regional Development and Policy
Hungarian Social, Economic and Educational Studies
The process of gradual administrative and political decentralization in Bulgaria started in 1991 with the adoption of the Local Self-Government and Local Administration Act, but the real financial decentralization process started in the beginning of 2003 with the adoption of a comparatively clear expenditure assignment and introduction of a transparent and predictable intergovernmental transfer system. Basically, a key issue in the design of fiscal federalism is the financing of subnational governments. Because of the advantages of taxation at the central level and spending at the decentralized level during the transition period Bulgaria has often ended up with vertical and horizontal fiscal imbalances. In most of the fiscal years the decentralization of expenditures was not accompanied by equivalent revenue-raising responsibilities and the taxable base was unevenly distributed within the country territory. The purpose of this paper is to study and critically analyze the financial decentralization reform in Bulgaria, outlining the key achievements and basic weaknesses of the local taxation and the intergovernmental fiscal relations. Key words: financial decentralization, local finance, intergovernmental fiscal relations, local
The work paper highlights the evolution of the public financial decentralization in Romania, based on analysis of legislative changes that occurred after 1991.These changes have had an important impact on local budgets and on local government responsibilities. In the context of increasing local financial independence, local authorities had to demonstrate their ability to take on the tasks of local interest from central government powers. The effect is prompt and timely response to citizen needs.
This book explores the system of financing local governments in selected countries of Central and Eastern Europe. Using evidence from the last two decades, the authors, experts on their particular countries, describe the development of the current local government finance system in each nation, and the major challenges and policy options they face. The contributions in this book provide comprehensive coverage of a transitional Europe that encompasses both modern local public finance theory and specific applications in the target countries.