Financial decentralisation: the path to greater autonomy for Bulgarian municipalities

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Home / News / Financial decentralisation: the path to greater autonomy for Bulgarian municipalities

Financial decentralisation: the path to greater autonomy for Bulgarian municipalities

On 26 September 2023, the Citizen Participation Forum held a discussion on “Developing fiscal decentralisation and improving local financial management in Bulgaria”. Participants in the discussion were representatives of Bulgarian civil society organizations, the National Association of Municipalities in the Republic of Bulgaria (“NAMRB”), the Foundation for Local Government Reform (“FLGR”), the Ministry of Regional Development and Public Works (“MRDPW”), representatives and experts of the Council of Europe’s Centre of Expertise for Good Governance from six countries.

The meeting was held in two parts. In the first part, the representatives of the civil society organizations discussed the topic and formulated recommendations for solving the problems related to fiscal decentralization with the help of the expert on the topic – Prof. Dr. Stefan Ivanov.

Mihail Vassilev, State Expert at the Directorate of Territorial Planning and Administrative and Territorial Planning of the Ministry of Regional Development and Regional Development, presented the objectives of the fiscal decentralization project, referring to the analysis prepared by Mr. Gabor Peteri and emphasizing the need to improve the political conditions for more open and inclusive local decision-making.

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Prof. Stefan Ivanov, PhD, presented the state of financial decentralization in Bulgaria and justified the changes that should lead to a balance at the local level between service provision, decision-making rights and resources for financing services. The conclusions drawn were that local democracy is lacking in Bulgaria, the degree of decentralisation of public services is low, and municipalities depend mainly on central government. The objectives pursued in order to reach a high level of financial decentralisation are:

  • To achieve a share in the provision of public services by Bulgarian municipalities that is roughly equal to the average for EU countries;
  • Increase the area of municipal self-government to meet the definition of local self-government in the European Charter for Local Self-Government (ECLG).

To achieve these specific goals, according to Prof. Stefan Ivanov, the following changes need to be implemented:

  • Expanding the scope of services provided by municipalities;
  • Transfer of some of the delegated services to the group of local services (municipal administration, kindergartens and nurseries, social services, excluding those with disabled clients, some of the cultural services, etc.);
  • The costs of the above services to be financed by revenues from the Personal Income Tax (20-30% of all tax revenues);
  • Changes in the legal framework and in the practice of local authorities – more powers for village mayors, implementation of decisions of local referendums;
  • Increasing the role of the civil sector in the implementation of the reform towards decentralization.

During the discussion that followed, representatives of civil society organizations gave examples of the need for effective dialogue with civil society, the need to increase the capacity of local administration to work with citizens, the creation of municipal funds to finance civic initiatives in all municipalities, etc.

In the second part of the meeting, the discussion was joined by the representatives and experts of the Council of Europe’s Centre of Expertise for Good Governance, who listened to and commented on the recommendations formulated by the participants, which were grouped into 3 groups – to national institutions, to local authorities and to civil society organizations.

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Recommendations to national institutions aimed at striking a balance at the local level between service delivery responsibilities, decision-making rights and resources to fund services are:

  • Review and analyse the services provided at local level and transfer to the municipalities those that meet the principle of subsidiarity and those that do not meet the criteria of “delegated” to the group of local services;
  • Increase the transparency of information provided by the Ministry of Finance on the financial performance of municipalities so that comparisons and analyses can be made;
  • To organise information and media campaigns by the Ministry of Regional Development and Public Works to increase citizens’ awareness and understanding of financial management at local level;
  • Adopt amendments to the Electoral Code to introduce a majority voting system at local level (excluding Sofia, Plovdiv and Varna);
  • Adopt amendments to the Personal Income Tax Law to transfer 20% of the tax to municipalities.

Recommendations from civil society organizations to local authorities aimed at improving local democratic governance are:

  • To present the municipal budget report and the draft municipal budget in a language that is understandable and accessible to citizens;
  • Establish municipal funds to finance civic initiatives in all municipalities;
  • Work to increase the capacity and motivation of local administration to work with citizens;
  • Introduce tools and approaches to improve the quality and effectiveness of public consultations and deliberations;
  • Take steps to move towards a programme budget;
  • Discuss their plans and intentions with citizens and involve them in the development and implementation of local policies;
  • Periodically inform citizens about municipal activities and results.

Recommendations to CSOs themselves to enhance their role and participation in the decentralisation process:

  • To work closely with local communities to understand and recognise common interests and to defend them within the law;
  • Inform citizens about the powers and opportunities of local authorities to address local issues and realise local priorities and interests;
  • Explore the needs of citizens and seek to involve them with local authorities in deliberations on municipal intentions and plans and in the development and implementation of local policies;
  • To monitor and analyse the activities of local authorities and to monitor the appropriateness of the spending of municipal budgets;
  • To support and participate in initiatives for legislative changes aimed at giving municipalities more powers and resources to solve local problems and improve the quality of life of citizens;
  • To initiate public forums and discussions on issues and problems important to local communities;
  • To organise information campaigns, research and disseminate good practices and actively participate in advisory bodies at local level.

After listening to the recommendations, representatives from the Council of Europe Centre of Expertise for Good Governance presented their experiences and shared good practices from their countries.

Project ‘Developing fiscal decentralisation and improving local financial management in Bulgaria’ supported by the European Commission (DG REFORM) through the Technical Support Instrument (TSI) and by the Council of Europe, and implemented by the Centre of Expertise for Good Governance of the Council of Europe. The author is solely responsible for the content of this document. The opinions expressed do not necessarily reflect the official policy of the European Union and the Council of Europe.

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