LOCAL GOVERNANCE IN ROMANIA IN THE LIGHT OF THE RECENT LAWS ON DECENTRALIZATION AND LOCAL PUBLIC FINANCES

Natalia Cuglesan*

AbstractGood governance is a key objective of the actual, modern society and is strictly related to the decentralization of decision-making and public participation for the resolving of the important problems of the community.The paper presents a few results of the legislative acts from Romania that were adopted in 2006 having as an aim the increase of the administrative capacity of the local public authorities, the assertion of the local autonomy through administrative decentralization and the transfer of the financial resources, inclusively a stronger involvement of the citizens at local level decision-making. The paper is based on the analysis of the stipulations of law 195/2006, the framework law of decentralization and law 273/2006 on local public finances, corroborated with some results regarding the increase of the annual revenues of the local public authorities at communal, city and county level, necessary for meeting the budgetary expenses.The adoption and implementation of law 195/2006 reveals the recognition of the exclusive character of some competences that were attributed to the local authorities (county councils, local councils and mayoralties) and their broadness show a consolidationof the local autonomy compared with law 215/2001 that settled this situation. The comparative analysis of the weight of the own revenues from the total budgetary revenues at 2004 and 2007 level, indicate the increase at national level for more than 40% in 2007, while in 2004 it was under 30% and the reduction of budgetary state allocations from 70-75% to about 45%. Stronger increases in the weight of the own revenues have been identified in the case of county residence(up to 73-75%), while at commune and small city level, the percentage of the own revenues was more modest. The public participation at decision-making, settled through law 52/2003,was higher in the number of citizens proposals(increase with 54, 79%) and they were included in normative project proposals (37, 23%), butit was limited to citizens consultation. The implementation of the two laws, 195/2006 and 273/2006 has allowed the increase in independence of the local public authorities towards the central administration, but has lead to the aggravation of the financial situation in the case of the poorer communes through the application of the mechanisms of budgetary trimming. It is considered to be necessary the amendment of law 273/2006 in the sense of improving the allocation criteria and procedures of the sums allocated by the government and county councils.

Keywords: local governance, decentralization, exclusive competence, public participation, decision-making

1. Background

Local governance involves the participation of public and private actors in order to solve the problems at local level. In the academic literature, the concept of local governance is used with the aim of underlining the responsibilities of the local public administration towards the citizens that it represents and their cooperation with the civil society and private sector. The concept has recently entered in the academic literature, because the concept of local government is better known and it involves on one hand, the fact that the local public authorities are elected directly, are the main actors at local level and are invested with responsibilities, and on the other hand, the concept of local government is also defined by the European Charter of Local Autonomies, that underlines that the state has to acknowledge and apply the principles consecrated in the Chart with the aim of increasing the efficiency of the administration and respecting the rights of the citizens.

1.1 The concept of governance and its connection with decentralization

A first definition of the concept of governance is given by the World Bank[1], and it underlines the link between power and the prosperity of the country[2]. This definition is assumed by the majority of the UN organisations, but in the academic literature, the definition of J. Kooimans[3] has imposed, which makes reference to the relations between those who govern and those who are governed[4].This approach of the concept of governance is very interesting, because it allows the researcher that studies the relations between those who govern and are governed to observe the existing asymetry in the distribution of power and ressources between the centre and perifery, namely, between those who hold the power and society.

More than that, the asymetry is estended also to the relations between the sub-national actors, like the ones between the regional authorities and citizens from a commune, or the ones between two communes. J.Kooimans and his colleagues admit that governance implies the carrying out of an entire process where not only governmental but also non-governmental organisations participate. In their conception, governance represents the new relations that have been established between the authorities and civil society, in general, situation that has appeared at the end of the 80’s, when due to the economic liberalisation, the role of the state as a unique responsible actor for the implementation of the policies has dimished.There is a close connection between local governance and decentralization, if we analyse it from the perspective of the principles written in the Euorpean Chart of Local Autonomies. From this point of view, the unitary states have to assure a transfer of competences towards the local authorities.

The approach of the decentralization process in the academic literature consists in the acknowledgement of the importance of the decentralization process from the central level to the sub-national level. The decentralization process is regarded as a fundamental strategy, through which responsibilities are tranfered from the central to the sub-nationals levels. Through decentralization, a fundamental change of the institutional framework occurs,regarding the elaboration and adoption of the political, economical and social decisions. A relevant and syntetical definition of decentralization was defined by D.A. Rondinelli in a paper from 1980: „ the transfer of responsibilities regarding the planning, management, allocation and capitalization of the resources, from the central administration towards: a) branches of the ministeries or governmental agencies; b)subordinateunits or levels of government; c) semi-autonomous public authorities or corporations; d)regional or functional authorities; e)NGOs/PVOs[5]. Decentralization is the main instrument for the local authorities to overcome the disadvantages provoked by the control exercised by the central authority. Decentralization can be performed through the transfer of comptences and resources towards the regional and local level, or to both levels.

This transfer of competences, responsibilities and resources allows the sub-national authorities to elaborate economic and social development programs, according to the needs of the regions/communities. Through decentralization and reallocation of the tasks of the governmentalofficials towards the regional and local levels, it is aimed at increasing the knowledge level on the problems and needs of the communities that they represent, so that they will be able to elaborate realistic and more efficient programs for the economic and social development.

Simultaneously, with the extension of the responsibilities of the sub-national level, the possibility of increasing the public participation is created and the interests of different groups(political, religious, ethnical) are promoted through their involvement at decision-making, which can be translated through a more just allocation of the resources and investments in these territories.

1.2 Local governnace and public participation

The local authorities have legitimacy because they are elected democratically. Elected through direct, universal vote on a period of 4 years, the local public authorities have the interest to maintain the confidence granted to them by the electorate. The elections represent not only a consultation of the public but also a legal way to sanction the non-fulfilment of the previous engagements.Public participation is considered to be an indicator of democracy through which the citizens express their opinions on issues that affect them, directly or indirectly.Public participation is defined as an important instrument in the decision-making process regarding the local development or it can be defined as an open, continous, doubled character, formal and informal communication form between the public authorities and representatives of the private sector and of civil society[6]. But what are the benefits of public participation for the local public authorities? The first benefit that emerges, is represented by the increase in transparency of decision-making and the growth in credibility. The second benefit consists in the possibility of choosing the best solution when more options are available. The solutions can be the result of the work of experts outside the local institutional framework or of the citizens that have the necessary qualification in the respective field. The third benefit that arises, consists in the accretion of the knowledge and understanding level of the promoted levels and opinions of the citizens on the ways to solve the local interest problems. Consultation of the citizens or NGOs, enables the adoption of the best decision.The responsibility of the local public administration for the taken decisions is apparent and must be assumed for the achieved results. The controversies on the limited public participation have here their point of origin. Public participation can be seen in terms of improving the quality of the services delivered to the citizen.

In Great Britain, for example, during the conservatory government, the public participation was promoted especially in the direction of increasing the quality of the services, mainly, in the direction of satisfying the demands of the consumer, considered to be sovereign in relation with the services provided by the supplier[7]. The authorization of the citizen-consumer as a sovereign towards the delivered services was regarded as an instrument to discipline the sector without touching the interests of the politicians. The Romanian governments after 1989 have learned very late the benefits of public participation, especially, under the form of the aid granted to the governmental organs, that were charged with the control and inspection of the local administration. It has to be mentioned, in first instance, law 544/2001on the free access of persons to information of public interest, law that implements one of the „fundamental principles of the relations between the citizens and public authorities”[8].

In the second place, law 52/2003, on transparency in decision-making, has opened the possibility for the citizen to participate at the debates on projects that affect directly or indirectly the community or certain groups.In art.1, the law mentions that only minimal procedures have been foreseen in order to assure the transparency of the local and central public authorities, elected and appointed. The literature on this topic is very extensive and questions interesting aspects. What is the aim of citizen’s participation? Who participates at the debates? How many participate? How often? What is the number of the debates that have been organized? Also, the following questions are justified: What is the interest of the public administration to stimulate the participation of the citizens? Is it limited to the minimal stipulations of the law? What kind of benefits can the public administration report as an efect of citizen’s participation? Let’s not overlook the question: are the Romanian local public authorities ready to stimulate the public participation and involvement of civil society at decision-making?

1.3The provisions of the European Chart and the implementation in the Romanian law

The European Charter of the Local Autonomies foresees that the local authorities have the right to own resources and the right to dispose freely of them in order to carry out the competences confered through law. More than that, art.9(1) imposes the condition that these resources should be sufficient , otherwise they would depend on the central actors. In this acceptation, art.9(2) imposes a harmony between the exercited competenecs and the financial resources of which the local authorities dispose of. In this section, I will present the own revenues of the local public authorities according to the settlements and will evidentiate the situation from the last years in Romania. Between the total expenses of the local authorities and the own resources there should only be small differences, as an expression of the autonomy degree that they dispose of. One of the income sources of the local authorities consists of local taxes. The local public authorities must have the competence to establish the level of these taxes according to the legal limits. There is however a problem related to the different economic development of the administrative-teritorial units. In this sense, it must be noticed the existence of some Romanian backward regions, where the local resources can not be assured for the complete financing of the public services at the same qualitative level as with the region that were economically developed.

The European Charter requires the solving of such cases by setting up of financial trimming procedures or other equivalent measures. But what does financial equalization mean? Art.9(5) stipulates that financial trimming has the role to correct the effects of the unequal distribution of the financial resources. The problem that has to be analysed in this case is, if this measures have any influence upon the local autonomy degree of those regions that benefit from the redistribution procedure from the center. Will the local autonomy of the these authorities be diminished? In the European Charter is mentioned that the measures undertaken by the central authority shouldn’t limit the freedom of choice of the local public authorities in their area of competence. What does this obligation practically mean for the central authority? I think that the central authorities should not set up a tutelage upon the budgetary expenses of the local public authorities and impose certain restrictions on the level and area of expenese.Another problem approached in the European Charter of the Local Autonomies is the procedure through which the redistributed resources are assigned. The Charter specifies the proper consultation of the local authorities on the assessment manner. In order to cover the budgetary expenses, the local authorities receive also state subventions. It has to be cleared up, if the subventions have to be granted for certain specific projects or if the allocation of the resources should be in the exclusive responsibility of the local authorities.The European Charter anticipates that the best solution should be the restriction, as possible, of the specific projects, nominated on purpose by the central authorities when the subventions were granted. In my opinion, here intervenes the problem of the responsibility of the local authorities to engage themselves in budgetary expenses in interest of the collectivity, that should not be necessary but adequate.

As an example of unadequate usage of the resources, it can be presented the case of some mayoralties that spent large sums of money for the embellishment of the city center(green spaces, artesian-wells, etc.) but have neglected the sector of social security, where the situation was more delicate. How can these engagements be fulfilled in the election campaign by the mayors and local councils, if the own financial resources of the collectivities are insufficient? Can the local authorities resort to the national market of the capitals in the conditions admitted by the law, if the law allows it? The European Charter demands the signatory parts to grant to the local and regional authorities the right to have access to the capital market and to settle the access in a manner that should stimulate the rural and urban development. In order to guarantee the right to administrative and financial local autonomy, the local public authorities have to dispose of the right to address to the judicial court anytime their competences are affected by the intervention of the central authority.

Art.11 from the European Charter anticipates this right of the local public authorities. The Romanian law maker has included the provisions of the European Charter in the texts of the law on local autonomy with the mention that in the place of the regional authorities, in Romania, in consideration should be taken, the county councils. The European Charter of Local Autonomy was ratified together with the adoption of law 199/1997. After 26 November 1997, when it was published in the Official Monitoring, the Romanian Parliament has adopted several laws regarding the financial resources of the local authorities[9] and competences of the local public authorities[10], inclusively through an emergency ordinance on local taxes[11].

2 The competences of the local public authorities settled through law 195/2006

Law 195/2006 has introduced new concepts and demarcation criteriaof the competences of the local public authorities, in relation with the central authorities. The law has defined and classified the competences[12] according to the regime or actors that perform it.There have been defined also, the meanings of the new introduced concepts, like the administrative capacity[13], the exclusive competences, the shared competences or delegated competences. Law 195/2006 distinguishes two categories of local public authorities, from the point of view of administrative capacity: category I, which have the necessary administrative capacity to carry out the transfered competences and category II, which do not posess the administrative capacity and in consequence, they won’t be granted competences, only when they will have administrative capacity, as art.10(2) states. The exclusive competences present greater importance from the point of view of local autonomy, as it is mentioned in the European Charter of Local Autonomies. Through exclusive competence it is understood, that the local authority decides alone on the organization and performance, beeing the sole responsible for the achievement of the aimed objectives. In order to analyse the degree of the local autonomy of which the local authorities dispose of, relevant are the extension and importance of the exclusive competences, the financing manner of their activities and the share of their own financial resources of the total annual revenues of the respective local colectivity. In this sense, also the law on community public services[14] establishes that the local public authorities have exclusive competences in the field of organizing and performance of services of public utilities[15]. In exchange, through shared competences, are defined those competences which are performed by the local public authorities toghether with other authorities, situated at an other administrative unit(county, central...). According to art.23-26, the local authorities at communal, city as well as at county level, can perform shared competences together with the county and central authorities.