Decentralization Processes of Local Government Sector in Poland

Iwona Otola[1]

Abstract:

Describing the process of public sector decentralization is a aim of the article. Increasing the responsibility and competence of local government units is aimed at a taken of decentralization process of the sector of the public finance. Thanks to granted competence, the local authority together with the community take decisions concerning the path of the development of given local government unit. In the article tasks and competence of government units on different level were discussed. Also critically, issues connected with financial resources of local government units and the connection of these resources with the expenses side were presented.

  1. Decentralization - the Notion and the Nature

In the majority of countries with are members of the European Union a phenomenon of the progressing decentralization of public authorities is observed and a process of creating and strengthening regions is one of the most dynamic elements of this decentralization. The decentralization of the public sector which is a complex process is supposed to lead to effective and rational managing with public means. The decentralization is perceived as the process of handing decision-making rights over into the lower part of organizational hierarchy, while the centralization consists getting rights back from the lower level and situating of them on levels higher and highest (Czerminski et all. 2002). It is worthwhile in this place quoting the definition given to the decentralization through Oates, according to which the common goods should be fulfilled by this level of the government which is most appropriate with representative of the community profiting from services delivered to it (Oates 1972). About the need of the decentralization also a subsidiarity principle of European Union tells. According to this principle, the responsibility for taking action should be on the lowest administrative level. Handing over the greater responsibility to the local authority is perceived as the road to breaking the kept inspection through the central planning and the mismanagement, thwarting attempts of poorer nations for establishing the own path of the growth (Oates 2001). And so the decentralization is a mechanism allowing for the development of the policy which in the greater degree reflects local needs and involves the community in the process of democratic governing.

Considering essence of the decentralization one should mention multifaceted character of this phenomenon. The full decentralization should be examined in three dimensions and include the political, administrative and financial decentralization. Political decentralization consists in equipping units of the local government with democratically chosen representative organs and such a public-legal status which provides with the political independence from state (Ruskowski 2004). Granting the local government units of appropriate competence as well as instruments for the accomplishment of these tasks means the administrative decentralization. Financial decentralization, called also a fiscal decentralization, means equipping of the local government units with appropriate, public financial resources and handing the control over to them for administering these sources. In the literature on the subject the financial decentralization is often identified with the decentralization of the public finance.

A. Potoczek thinks, that three main mechanisms of the political and territorial realization of the implemented reform in Poland are (Potoczek 2001):

  • decentralization - understood as statutory handing over competence and tasks on the government administration to organs of the local government;
  • delegation -determined as moving rights and tasks to units of the lower level as part of the government administration and by analogy as part of the local government;
  • the deconcentration - comprehended as excluding certain matters from the regulation of the public administration and handing over them to nongovernmental institutions.

The local government acts for needs of the local communities and on the level of the local communities is connected with such notions as decentralization, democracy, autonomy, independence and deconcentration. Amongst mentioned notions, decentralization is the widest and containing remained. Although one should notice, that term decentralization isn't in the literature on the subject defined explicitly. In the dynamic expression, decentralization means handing over of tasks and funds of their accomplishment from higher to lower organizational units, while static expression of this term means the status equipments of lower than central organizational levels into tasks and funds of their realization (Ruskowski 2004).

According to N. Gajl the decentralization should cover at least three problems (Gajl 1993):

  1. handing over determined tasks and competence to local bodies by the central stage;
  2. using by local bodies the appropriate property and legal rights, guaranteeing their independence and the possibility of deciding matters of the land;
  3. having by local bodies appropriate financial means with aim of the realization of the own policy.

S. Owsiak pays attention that in deliberations above the decentralization of the public finance one should consider the following problems (Owsiak 1999):

  1. division of competence, duties and tasks between the local and state authorities;
  2. determining the scope of the tax control according to individual levels of public authorities;
  3. presenting principles of the financial power supply for individual levels of public authorities.

The term delegation covers mainly technical aspects of dispersing tasks delegated to lower, specialist levels of managing. Delegation leads for delegating determined tasks to stages, on which these tasks can be effectively realized. Its aim is to reduce the bureaucratization of managing, to bring closer to the local community the task as well as to lower costs of administration.

In the literature on the subject at decentralization targets counts (Zeman – Miszewska 1996, Swianiewicz 2002, Owsiak 1999):

  • effectiveness of managing public means;
  • guarantee of the financial independence of individual units of the local government;
  • putting in order territorial organization of country;
  • building bases for developing by civil;
  • adapting the public measure to tasks of local government units granted them by the Constitution and acts;
  • necessity to adapt Polish territorial structures for standards of the European Union, in the context of using mechanisms worked out by it of supporting local initiatives and supra-border cooperation.

II. Place of local government in the public sector

Fulfilling needs in a public sphere is a duty of state and local government. It extorts, appropriate activity of both state and local government in the field of economics, consisting in expending and collecting financial means. This activity is an object of the public financial economy.

The activity of the public finance as the instrument of the state depends on historical conditioning, but first of all from social and economic doctrine dominating in the given country and the time (Ziolkowska 2000). The model of state being in force in the given country has been developed over the centuries. Arisen theories of the public finance determined the role of the state in the scope of the tax control, expending public revenues or also fulfilling needs of communities. Public sector in Poland called also the sector of the public finance became defined in the Act from the day 26 November 1998 on the public finance. To elements of the public sector rank among others organs of public authorities, organs of the government administration, bodies of the national control and the protection of the law, courts and tribunals as well as units of local government and their bodies and associations, earmarked funds, state higher education institutions, scientifically – developmental units and enterprises belonging to the Treasury, units of local government and their associations.

The division of the public sector according to the legal form allows to distinguish the subjects of the public sector and organizational units. Subjects of the public sector have the legal personality and function as independent institutions while organizational units don't have the legal personality and act in the name and for the account of the public legal person. It is possible to assign institutions of the public sector to state government sector or to local government sector (Graph 1).

Graph 1

Scheme of Public Sector

State sector / Local government sector
Entities of public sector /
  • Treasury
  • High schools
  • State institutions of culture
  • Government agencies
  • State earmarked funds having legal personality
  • National Insurance Institute
  • Different state legal person
/
  • Units of local government
  • Associations of local governments units
  • Local governemnt institutions of culture
  • Local government earmarked funds having legal personality

Organizational units /
  • State budget units
  • State budget institutes
  • State earmarked funds not having legal personality
  • Office of the Agricultural National RetirementInsurance
  • National Forests
  • Different units
/
  • Local government budget units
  • Local government budget institutes
  • Local government earmarked funds not having legal personality

Source: Malinowska and Misiag 2002.

Two competing approaches are in a contemporary theory of the local government: - natural – suggesting that the local government is an inherent part of the community lives and functional which finds that the local government should exist in such a degree, in which it helps for state, as wholes, better functioning (Swianiewicz 2002). In the literature on the subject three main principles of the local democracy are mentioned:

  1. Freedom (autonomy) – meaning the existence of the local government as protection before the concentration of political power in one centre and taking all sorts political choices into consideration in different localnesses;
  2. Participation (democracy) – meaning that the existence of the local government lets the community to have a large shares in the autonomy;
  3. Effectiveness - meaning the ability of the local government for more effective delivering of different services.

The „self-government” notion means a connection of citizens bound with place of living and constituting autonomous and self - responsible group of businesses, having the own, separate organization and the legal personality (Zeman – Miszewska 1996). The local government is defined as the chosen locally and by law, democratic organization below the level of state and the region, providing services of the public sector for the society in the area of its jurisdiction (Bailey 1999).

Conception of local government is also included in the European Charter of Local Self-Governmentand denotes the law and the ability of the local communities, within determined with law, for managing and administering the fundamental part of public affairs to their own responsibility and in the interest of their inhabitants. Some authors describe local government as decentralized, not subordinated hierarchically to the central government part of the public administration, with the own elective legislative and executive authorities (Kosek-Wojnak and Surowka 2002). Such interpretation of local government leads to singling out it from structures of public administration, granting municipal property and determining its tasks, competence but first of all own revenues.

Each countries of the European Union chose the different path of the development of local government. It is possible to distinguish four groups although assigning countries to each of these groups is liable to more further discussion (OECD 2002):

  1. the group of federal countries - the state government tier has constitutionally guaranteed entitlements and the level of the sovereignty (Austria, Belgium, Germany);
  2. group of countries with relatively strong local government which a lot of function was granted for executing and with a large degree of autonomy (Denmark, Finland, Sweden);
  3. group of countries with relatively weak local government, of which functions as well as the autonomy are limited (Greece, Ireland, Portugal);
  4. group of countries in which granted functions or the autonomy for the local government are between countries with the strong local government represented by the second group and countries with the weak local government represented by the third group (France, Italy, Luxembourg, the Netherlands, Spain, Great Britain).

The local government in today's understanding this institution existed and exists in Poland:

  • in the II Republic of Poland in years 1918 – 1939;
  • directly after II World War 1945 – 1950;
  • at present beginning from 1990 year.

In years 1951 - 1990 local government in Poland didn't exist. In exchange national councils of the fundamental as well as regional level functioned and they were written down into the structure of the organs of state government. National councils were subordinated to the central administration and executed issued by superior tasks. However the property of self-government was in hands of the state.The distribution of revenues between individual levels of the budget was in fact somewhat artificial because all profits were a state revenues (Sochacka-Krysiak 1995). At that time it wasn't possible to talk about functioning of local government. The centralized model of national councils didn't notice businesses of the local communities but state business took into consideration. Also centralizing financial means collected in regions was a weakness of this model and the anti-effectiveness redistribution of them relying on leveling shares or combining the size of the subsidy with the cogency of regions, not necessarily appointed by actual advantages of their business activity (Zeman – Miszewska 1996).

Re-establishing the local government followed in 1990. A dualistic model of administration consisting of the central and local government tier was formed. The voivodship aimed at executing tasks of government administration out and didn't get the self-government status. The Act from the day 8 March 1990 on the local government regarded only a municipality as the basic unit of local government. Since then municipalities have been equipped with property, have the legal personality and on their own they keep the financial economy on the basis of every year passed budgets.On 1 January 1999 district (powiat) were introduced as a second tier of local government and voivodship as a third tier. At present in Poland 16 voivodships function, 308 districts, 65 town districts (cities on laws of districts- they execute tasks of districts as well as municipalities) and 2489 municipalities. Three-tiers division of the local government means the new formula of the organization and new principles of financing the all public sector.
According to the author's the local government in Poland from the moment of the reactivation evaluated from the group of countries with relatively weak local government to the group of countries, being among the strong and weak local government.

III. Competence of the local government

Together with the reform of the administrative system of the country, authorities of local government received the autonomy and the freedom of making a decision what gives great abilities in steering with local economy. However the freedom of making a decision concerning the directions of development of local government must be connected with fulfilling tasks predicted in acts. According to A. Sztando the scope of competences of local authorities are a set of public affairs which in the statutory way were entrusted for local government (Sztando 1998). Nowadays it is hard to distinguish competences which belong to local bodies and central. Competence and tasks often interpenetrate.

In the literature on the subject it is possible to meet the view that certain tasks are domain of state, whereas other belong to activity of the local authorities. To tasks having central character belong tasks connected with the defense and the national security, the foreign policy, the central administration department, the judiciary and administration of justice. Public transport or maintenance the cleanness (the waste disposal, the sewage system, cleaning public places) are counted to typical tasks having local character.

Trying to generalize tasks, it is possible to notice, that municipal, district and voivodship governments carry out tasks on the scope of:

  • public education;
  • social welfare;
  • health cares;
  • cultures;
  • pro-family policy;
  • of environmental protection and the water management, including flood protections;
  • transportation and public roads;
  • physical culture and tourism;
  • public order and local public security;
  • property management;
  • maintenance and administration of public utility buildings and facilities;
  • promotion;
  • cooperation with non-governmental organizations.

In spite of common scope of tasks however it is possible to distinguish exclusive tasks for each tier of local government (see table 1).

Table 1

Exclusive Tasks of Different Tiers of Local Government

Exclusive tasks of local government / Exclusive tasks of district government / Exclusive tasks of voivodship government
Water supply
Sewage, waste disposal
Electricity and gas supply
Maintenance of public utility buildings
Municipal housing
Maintenance of market place
Maintenance of public parks
Maintenance of cemeteries
Lightening of local public road / Agriculture, forestry and inland fishing
Handicapped supporting
Geodesy, cartography and the cadastre
Administration architectural -building
Guaranteeing to execute tasks determined in acts and competence of managers of district inspection and the guard
District centre for the family help
Counteracting the unemployment / Determining the strategy of voivodship development aiming at among others stimulating the economic activity, raising the level of the competitiveness of voivodship economy
Carry on the voivodship development policy, which consists of among others creating conditions of the economic development, supporting the development of the science of both technological progress and the innovation, the maintenance and the expansion of the social and technical infrastructure about regional meaning

Source: author’s based on Ruskowski and Salachna 2007.

Own tasks of the local government can be compulsory or optional tasks. Local government must execute compulsory tasks, however it can carry out optional tasks if recognizes them as advisable (on account of real needs and owned funds) (Ruskowski 2004). Municipality can carry out also tasks which are in competence of the district as well as voivodship on the basis of the agreement with these units.It results from an economic point of view that determined tasks should be realized by this unit of the local government which is able to carry them out into the effective way (Borodo 2000). Municipal authorities have best recognizing local needs, therefore, tasks connected with existential conditions of inhabitants should be realized by the lower tier of the local government. The most important tasks of municipality are the tasks having local character, of which a direct recipient is every citizen -inhabitant of described unit of local government (Otola 2003). These tasks consist in serving about common, property or decision-making character. In competence of the municipality is to assure for inhabitants the basic services is in the scope of the technical infrastructure, the health care, sport, the education, the social welfare. Also meaning of remaining action connected with the policy of the development of the given unit is growing.Commissioned tasks consist mainly in spending administrative decisions, as well as on activity connected with the social welfare. The difference between commissioned tasks and own tasks consists in the fact that for the realization of commissioned tasks the local government receives financial means. Nowadays a way of achieving the revenues by local government, which are assigned for financing the tasks is a crucial problem for local government.