6. Local Government in the Czech Republic
Karel Lacina and Zdena Vajdova
1 Overview of Local Government Reform
2 Legal and Constitutional Basis
2.1 Legal Basis of Local Self-government
2.2 The Status of the Capital City
2.3 The Introduction of Regions
2.4 Relationship between the State Administration and Local Government
3 Local Politics, Decision-making
3.1 System of Local Elections
3.2 Forms of Direct Democracy
3.3 Distribution of Power among Different Levels of Government
3.4 Internal Structure of Local Government Decision-making
3.5 Public Participation in Decision-making
3.6 Ethnic Issues, Multicultural Government
3.7 Local Government Associations and International Contacts
4 Local Administration, Service Provision
4.1 Structure and Operation of Local Administration
4.2 Local Service Delivery
5 Local Finance, Economic Development
6 Next Steps in the Transition Process
Annex 6.1: Major General Indicators
Annex 6.2: Population, Settlements and Administrative Tiers
Annex 6.3: Major Laws on Public Administration and Local Government
Annex 6.4: Responsibilities of Administrative Tiers
List of Tables
Table 6.1: State Administrative Organs Operating on the District and Regional
Levels in the Czech Republic
Table 6.2: Results of the 1998 Municipal Elections in the Czech Republic
Table 6.3: Revenue of District Offices and Municipalities in the Czech
Republic
Table 6.4: Expenditures of District Offices and Municipalities in the Czech
Republic (CZK millions)
Table 6.5: Share of Municipal Budgets in Local Government Budgets in the Czech
Republic, 1991-97
Table 6.6: Proportion of Municipal Revenues and Noninvestment Expenditures to
Total Municipal Expenditures in the Czech Republic, 1993-95
Table 6.7: Local Budget Revenues in the Czech Republic, 1993-97
Table 6.8: Local Budget Expenditures, 1993-97
Table 6.9: Structure of Municipal Expenditures in the Czech Republic, 1995
Table 6.10: Municipal Expenditures per Capita in the Czech Republic, 1993-95
Table 6.11: Development of Municipal Debt in the Czech Republic, l993-96
Table 6.12: Number of Indebted Municipalities According to Size Categories in
the Czech Republic
Table 6A.1: Czech Republic Public Budget Revenues and Expenditures (in CZK
billions)
Table 6A.2: Czech Republic Budget Balance, 1997 (in CZK billions)
Table 6A.3: Number of Municipalities in the Czech Republic by Size Category
Table 6A.4:
List of Figures
Figure 6A.1 Administrative Map of the Czech Republic
1 Overview of Local Government Reform
Local government and territorial public administration in the Czech
Republic are based on long historical tradition. The first systems containing
self-government elements were created as early as the Middle Ages in some
Czech and Moravian royal towns.
More systematic attempts to form a modern concept of local government
appeared in 1848, when the Kromìøíž Congress of the
antifeudal, democratic strata of the population lobbied for municipal
self-determination, including proposals to elect representatives freely, to
form municipal police and to inform inhabitants on municipal economic
activities. However, the Constitution of the Austrian Habsburg Empire enacted
only a limited number of these demands. The rules of municipal establishment
enumerated by the constitution proclaimed a relatively significant number of
rights for municipalities. The principle that the independent municipality
represents the basic unit of the free state was implemented step by step, but
in the 1850s, most democratic approaches were strictly suppressed until 1964,
when these rules were specified in more detail for Bohemia and Moravia.
The 1867 Constitution of the Austro-Hungarian Empire determined other
municipal competencies; local government and certain "transferred
competencies" from some branches of the state administration to the
municipalities were defined. Profit from business operations utilizing
municipal real estate, a share of state taxes, communal housing rental and
local taxes and fees were specified as revenues of municipalities.
The role of municipalities in the system of public administration was
further detailed and strengthened from 1918 to 1938.This period played a very
important role in the establishment of democratic principles of public
administration in the independent Czechoslovak Republic. Three tiers of local
government, each with its own elected bodies, were introduced: municipalities,
districts and regions. Their independence from the state administration,
competencies and duties were defined by the constitution and by different
legislative acts.
The military occupation of Bohemia and Moravia by Nazi troops and the
creation of the "Free Slovak State" from 1939 to 1945 interrupted
this long-term democratic development.
The principal aspects of the public administration system from 1945 to 1990
were the existence of local, district and regional national committees formed
in April l945 that theoretically united the activities of the state
administration and of local government. After l948, however, the local
government system in the Czechoslovak Republic was completely annihilated. The
rights of municipalities were restricted in many spheres, particularly with
respect to independent decision-making concerning financial resources. A new
democratic system of local government emerged after the dissolution of
Czechoslovakia in 1990.
2 Legal and Constitutional Basis
The European democratic traditions of local government have developed in
the Czech Republic since 1990. At that time important legislation creating the
legal framework of local government was adopted.
- Legal Basis of Local Self-government
The reform of the whole system of local government was initiated by an
amendment to the l960 constitution—then still in force—and on 4 September
1990, the Municipalities Act (Nr. 367/1990) was approved, according to which
municipalities were authorized as not only political but also economic
entities. The Czech National Council Act Nr. 425/1990 specified the role of
territorial state administration represented by district offices (seventy-two
at the time, and since 1 January 1996, seventy-three; district offices will be
discussed in sections 2.4 and 3.3). Another important act (Nr. 368/1990)
called for free communal elections on 23 November 1990. It is stressed in the
Municipalities Act (Nr. 367/1990) that the status of municipality was granted
to those territorial administrative units that existed as municipalities at
the time of the elections as well as those founded after this date. These acts
created the basis for and introduced an effective system of democratic local
government in the territory of the Czech Republic, which was further developed
throughout the l990s.
The Constitution of the Czech Republic (Act Nr. 1/1993) was adopted on 16
December 1992, stipulating that "the self-administration of territorial
self-governing units shall be guaranteed." The municipality is defined as
the principal local government units comprised of territorial communities of
citizens with the right to self-government. The constitution also guarantees
the independent administration of the municipality by its elected assembly and
council.
It emphasizes that the municipality, managed by its elected
representatives, must fulfill to the best of its ability the duties, rights
and wishes of its inhabitants. The citizens’ right to control
self-government authority as executed by the mayor and councilors (including
the ability to initiate processes leading to their dismissal) is considered to
be a firm guarantee of democratic management. At the same time there is an
overall understanding that public feedback influences the quality of
decision-making and executive processes of elected representatives.
From a legislative point of view the municipality is authorized to:
- organize elections for their representative bodies;
- engage in negotiations and agreements with other municipalities and with
the state administration to change municipal borders;
- join associations of municipalities;
- approve generally binding public notices valid in the municipal
territory.
One of the most important preconditions for the successful implementation
of local government’s role is legislation. Currently in the Czech Republic,
the municipality is considered to be a corporation established in accordance
with public law—that is, it is a community of citizens living in one
territory and exercising the right of self-government. Additionally, a
municipality is recognized as an independent economic subject. The Instrument
of Basic Rights and Freedoms (Act Nr. 2/1993) guarantees the right of
citizens, and municipalities, to ownership. It is emphasized that the rights
of all owners have the same level of protection. The Instrument stresses that
"the competence of local councils can be determined by law," meaning
that the local council must act exclusively secundem legem and not contra
legem; the law defines its competence, which may not be restricted by
ministry guidelines or government resolutions. Legislation also determines the
financial sovereignty of the municipality. Act Nr. 172/1991 is concerned with
the transfer of state property to municipality ownership; Act Nr. 576/1990 and
its amendments define the rules of municipal financial management. Hence,
local communities of citizens have the right to freely control local affairs.
In executing their self-government responsibilities, municipalities are bound
by law and by the interest of their inhabitants.
The municipalities are, of course, not only independent legal and economic
subjects but also the principal elements of the administration system of the
Czech Republic. The municipality is authorized to:
- ensure municipal development in accordance with the political, social
and economic interests of its inhabitants;
- strive to increase the value of municipality property;
- coordinate activities of the various units supporting the activities of
the municipality;
- cooperate with other municipalities, the state administration and the
private sector.
The practical implementation of these principles in the economic sphere
enables the municipality to:
- draft and approve municipal budgets and financial reports;
- freely allocate funding for services to meet public demands;
- use municipal real estate and other property to further the development
of the municipality;
- approve the membership of municipal enterprises and foundations and
oversee their financial activities;
- determine local fees.
In order to implement these tasks, the municipality may:
- own real estate;
- acquire financial resources;
- independently administer its budget;
- establish municipal budgetary organizations (so-called
"budgetary" and "contributory" organizations—see
section 5).
One of the problems remaining is territorial fragmentation, which was a
reaction to the forced amalgamation of municipalities during the 1970s and
1980s. Its results are documented by concrete statistic data: there were 4,104
municipalities in the Czech Republic in 1989 (in 1947, there were 11,641); in
1990 approximately one thousand five hundred new municipalities (previously
amalgamated by force with other municipalities) were established. On the basis
of local referendums, by 1992 another three hundred were created; by 1993,
more than one hundred; and by 1994, another thirty-six. Thus, from 1990 to the
beginning of 1994 the number of municipalities increased by 50.9 percent.
There are nearly fifteen thousand settlements on the territory of the Czech
Republic (see table 6A.1 in Annex 6.1).
The development of public administration in the Czech Republic partly
proves that the existence of a large number of very small municipalities does
not favor the principles of effective local government. These municipalities
(with fifty inhabitants and more) are unable to perform true self-government
functions, as they do not have sufficient material resources and the necessary
number of qualified elected representatives and civil servants. The solution
to this situation is to unite small municipalities with less than three
thousand inhabitants into associations that can provide services to citizens
in a more effective manner. The experience gained by the municipalities in the
1990s proves that the decision-making process of such associations is more
efficient than that of individual municipalities.
2.2 The Status of the Capital City
The capital, Prague, has a unique position within the Czech local
government system. The rights and duties of Prague’s assembly, council and
office as well as the smaller offices of individual parts of the city are
defined by the Czech National Council Act Nr. 418/1990 (amended by Act Nr.
439/1991); Act Nr. 90/1993 and Act Nr. 152/1994 concerning municipal
elections. Prague currently is divided into fifty-seven parts; many of them
are formerly independent municipalities that have united with Prague’s
territory. From a legislative point of view Prague as a whole is considered to
be one municipality. However, a great number of district and former municipal
offices execute public administration. Prague’s municipal office executes
both local government and state administrative functions.
2.3 The Introduction of Regions
As emphasized above, positive steps taken since 1990 have been codified by
the constitution of 1 January 1993. The constitution assumes a two-level
system of local government represented by the municipality and the district.
The idea of an intermediate tier that aimed to further decentralize rights and
duties of public administration was emphasized in several proposals prepared
between 1992 and 1996, such as the Instrument of Basic Rights and Freedoms
(Act Nr. 2/1993); more detail is specified on this issue by Constitutional Act
Nr. 347/1997), which created fourteen higher territorial self-governing units
(thirteen regions and Prague). The new issues and tasks that follow from this
were discussed in 1998 and 1999; proposals for the new Municipalities Act,
specifying the competencies and the role of district offices from 2000 and for
legislation relating to relevant financial issues currently are being drafted
for parliamentary approval. All are due to come into force on 1 January 2000.
When assessing the development of public administration reform in the
period from 1990 to 1998, it should be emphasized that important steps have
been taken to strengthen the democratic principles of public administration in
everyday practice. Nevertheless, one of the most significant features of this
reform has been its excessive centralization. From l993, this tendency
inspired reformers to assure vertical deconcentration of the state
administration to territorial self-government both by establishing the
regional tier and by strengthening the competence of municipalities. Another
important feature is the horizontal concentration of territorial state
administration through a reduction of the excessive number of specialized
state administrative authorities on both the district and the regional tiers.
Local government based on the principles of decentralization,
deconcentration, delineated competencies, subsidiarity and citizen
participation exists in the 6,244 Czech and Moravian municipalities,
accompanied by the introduction of regional level government. The new regions
will have their own financial resources, and their dependence on the state
budget will be minimal. The regions will be responsible for the preparation of
plans for and implementation of economic and social development.
Although some problems have emerged due to the rapid implementation of
public administrative reform, the creation of the current democratic local
government system in the Czech Republic is generally considered to be the
necessary basis for democratization of political and social life. One of the
results of such decentralization is increased municipal economic activity. The
leading political forces of the country as well as private organizations have
generally agreed on the clear specification of the rights, duties and sources
of revenues of municipalities, future regional entities and state
administrative bodies. It is also accepted that the budgets of these
institutions must be independent from the state budget in order to achieve
true decentralization.
2.4 Relationship between the State Administration and Local Government
Currently there are two types of structures in the Czech government system.
The first is representative of the central government (ministries and other
central organs) and the various territorial bodies subordinate to it. The
second is local self-government. One of the specific features of the Czech
state administration is the existence of "deconcentrated" and
"detached" organs of the central authorities that act on the
district and regional levels on behalf of central government bodies, including
the ministries. Some examples of central authorities that are represented at
the local government level are described in table 6.1.
Table 6.1
State Administrative Organs operating on the District and Regional Levels
in the Czech Republic
______________________________________________________________________
Ministry Authorities
______________________________________________________________________
Ministry of Finance 8 regional financial directorates
223 financial offices
2l regional customs offices
l35 lower customs office
______________________________________________________________________
Ministry of Industry and Trade 7 inspection
authorities of the Czech Energy Inspectorate
l3 inspection authorities of the Czech Trade
Inspectorate
Hall-mark Authority
License Authority
________________________________________________________________________
Ministry of Transport 3 regional offices of the
Railways Administration
offices of State Railway Inspection
offices of State Navigation Administration
Board
_________________________________________________________________________
Ministry of Agriculture 84 offices of the State
Veterinary Administration
8 inspection authorities of the Czech Agriculture
and Food Inspection
Czech Inspectorate for Improvement and Breeding
Authorities
________________________________________________________________________
Ministry of Environment l6 regional inspection
authorities of the Czech Inspectorate of Environment
24 protected landscape regions
national parks
_________________________________________________________________________
Ministry of Health 8 regional Hygiene Office authorities
__________________________________________________________________________
Ministry of Education, Youth and Physical Training
85 school offices
Czech School Inspectorate district authorities
___________________________________________________________________________
Ministry of Labor and Social Affairs 85 offices of
the Czech Administration of Social Welfare
85 Labor Offices with l35 branches
The relationship between the state administration and local governments has
some specific features. Field administration is represented by two levels:
district and local. On the local level municipal administrations carry out
some state functions on the basis of "transferred competence" under
the supervision of the state district administration. Currently, 383
municipalities have been extended transferred competence by the state
administration. Large towns with more than 100,000 inhabitants (Prague,
Ostrava, Brno, Plzeò) also execute state administrative tasks that
generally fall under the competence of district offices.
The execution of such transferred competence is implemented in accordance
with specific legislation. When executing transferred competence,
municipalities are bound both by law and by central government decisions and
guidelines. The Municipalities Act and the Act on District Offices regulate
the relationship between local governments and territorial public
administration.
District offices also serve as appellate bodies for citizens who disagree
with decisions made by municipal authorities. The municipality is required to
forward all decisions made by its elected bodies to the district office, which
is responsible for ensuring adherence to existing legislation of all legal
decisions made in the territory of the district. The district office suspends
inappropriate or illegal municipal legislation. Decisions of municipal
authorities may be subjected to revision on the basis of an appeal by the
court, which may be contested by complaint to the Constitutional Court of the
Czech Republic.
The head of the district office is also responsible for initiating
proposals to parliament to disband a municipal assembly that does not meet
within a period of six months. Such proposals must always originate from the
district office.
A special role in local government of the Czech Republic is played by
"statutory towns," of which there are thirteen, according to the
Municipality Act (Brno, Ostrava, Plzen, Olomouc, Opava, Ceske Budejovice,
Karlovy Vary, Usti nad Labem, Liberec, Hradec Kralove, Pardubice, Zlin and
Havirov). Statutory towns are granted extended execution of transferred
competence by the state administration due to their size and their economic,
social and cultural importance to their regions. Statutory towns are further
divided into two groups: the first (Brno, Plzen and Ostrava) simultaneously
fulfill the rights and duties of municipalities and district offices. As a
result, citizens must lodge complaints against decisions of these authorities
directly with the central organs of the state administration; citizens of the
second group of statutory towns express their objections to district offices
that serve as appellate authorities.
The status of statutory town does not convey any specific functions to the
local authorities. Some statutory towns are further divided into subunits in
accordance with the municipal statutes. For this reason relevant legislation
currently being drafted will replace the term "statutory towns" with
the term "towns of special status."
The Supreme Audit Office, an independent supervisory organ invested
authority by the constitution, plays a specific role in the Czech legal
system. It monitors expenditures and revenues of the state budget and the use
of financial and material resources, and enforces laws dealing with economic
and financial issues and public administration. The Supreme Audit Office
reviews the annual report of the state budget and draft acts and regulations
pertaining to financial issues and procedures. It is authorized to impose
penalties on authorities and individuals that are subject to its supervision—central
authorities, state enterprises and organizations and legal persons that
receive funding from the state budget.
3 Local Politics, Decision-making
3.1 System of Local Elections
The members of municipal councils are selected by direct, equal elections
by secret ballot using a proportional electoral system . Every citizen of the
Czech Republic over eighteen years of age has the right to vote and to run for
municipal office. The term of a municipal council is four years
The number of councilors in each municipality is proportionate to its
population, as determined by law:
- up to 500 inhabitants—five to nine councilors;
- from 501 to 3,000 inhabitants—seven to fifteen councilors;
- from 3,001 to 10,000 inhabitants—eleven to twenty-five councilors;
- from 10,001 to 50,000 inhabitants—fifteen to thirty-five councilors;
- from 50,001 to 150,000 inhabitants—twenty-five to forty-five
councilors;
- over 150,000 inhabitants—thirty-five to fifty-five councilors.
Each municipal council determines the exact number of its councilors.
Electoral parties, which register candidate lists for local elections, are
defined by the law as:
- political parties and political movements;
- coalitions of political parties and political movements;
- independent candidates;
- unions of independent candidates;
- unions of political parties and political movements and independent
candidates.
Voters may choose to vote for a list of candidates or for individual
candidates from any list that had been submitted.
The first municipal elections were held in November 1990. The most recent
was held in November 1998, during which 173 electoral parties submitted lists
totaling 179,609 candidates. Voter participation was forty-five percent. In
total, 62,412 councilors were elected.
Table 6.2
Results of the 1998 Municipal Elections in the Czech Republic
|
Electoral Party |
Votes (%) |
Mandates (%) |
|
Unions of independent candidates |
11.0 |
41.1 |
|
Independent candidates |
2.6 |
13.7 |
|
Christian Democrats |
10.6 |
11.4 |
|
Communist Party |
13.6 |
9.2 |
|
Civic Democratic Party |
24.3 |
9.1 |
|
Social Democracy |
17.5 |
6.8 |
|
Union of Freedom |
5.5 |
1.1 |
Results of local elections vary according to the size and region of the
municipality:
- in small municipalities, independent candidates are the most successful,
even if they are on the candidate list of a political party, movement or
coalition;
- in a few small municipalities only one candidate list was submitted, and
all candidates were elected to the council;
- in small municipalities the political party that most frequently
registered a candidate list for municipal elections was the Communist
Party;
- the greater the size of the municipality, the larger the role of
political parties in municipal elections; despite this, political parties
often place nonmembers on their candidate lists; the figures show how many
mandates were received by the members of political parties or political
movements: Communists, 7.1 percent; Christian Democrats, 4.9 percent;
Civil Democratic Party, 4.7 percent; Social Democrats, 3.1 percent; and
mandates for candidates without political membership, 76.9 percent.
- Christian Democrats continuously receive strong support in Southern
Moravia, and Communists in Northern Bohemia.
Thus, local politics in the Czech Republic is best described as
community-based; the influence of political parties is rather weak at the
local level. The results of a recent survey show that the mayor’s political
affiliation is not important; strong morals, knowledge of local affairs and
needs and the ability to resolve conflicts were indicated as the most
important characteristics for mayoral candidates. Pragmatic and technocratic
issues are more apparent than political ones in local politics.
3.2 Forms of Direct Democracy
Local referendum is the only device of direct democracy on the municipal
level, as indicated by Act No. 298/1992, which may be enacted to decide issues
in the sole competence of the municipality. Affairs that cannot be decided by
referendum also are stated by the act—municipal budget, fees, election to
and dismissal of the mayor and the division of a municipality that results in
a unit smaller than three hundred inhabitants. The right to vote in
referendums is granted to Czech citizens over eighteen years of age. A
referendum may be held in a municipality as a whole or in one of its
divisions.
A citizen may propose a referendum with the support of a petition signed by
a predetermined number of individuals. Such proposals are submitted to the
municipal board, which decides upon the proclamation of referendum. The
referendum decision is valid if at least one-fourth of the electorate
participates.
3.3 Distribution of Power among Different Levels of Government
The Act on Municipalities distinguishes two types of municipal competence.
- Independent competence is the sphere in which the municipality is bound
to fulfill specified public duties by acts and by legal regulations;
decisions taken in this sphere cannot be overturned by any organ of the
state administration (district offices may only suspend such decisions)
with the exception of the Constitutional Court and Parliament;
- Transferred competence includes functions delegated by the state
administration to the municipality, the performance of which is supervised
by the district office.
State administration is performed by the district office, which is
supervised and controlled by the central government. The responsibilities of
various central government agencies are addressed through the district office,
which is headed by a chief appointed and relieved by the central government.
Some affairs of the state administration on the territorial level are
administered by special district agencies that are not subordinate to the
district office, particularly those dealing with education, financial affairs
and employment. Several territorial branches of some ministries exist to
address problems concerning areas larger than the districts, such as
environmental protection.
The district assembly is the representative body of municipal councils in
the district. Municipal councils elect their representatives—usually the
mayor or a deputy mayor—to the district assembly. The duty and right of this
body is to approve the district office budget. The chief of the district
office consults the assembly concerning the distribution of state grants.
According to the results of a public survey of citizens and local political
elites, the bodies with the greatest influence in local affairs are local
representative authorities—the municipal council, municipal board and mayor—followed
by the municipal office, district office and central government. Political
parties, businesses and civic organizations are viewed to have the least
influence.
3.4 Internal Structure of Local Government Decision-making
The municipal council is the highest authority of the first tier of local
government. It is a representative body elected directly by citizens of the
municipality. Each municipal council is comprised of five to fifty-five
councilors proportionate to the number of inhabitants of the municipality. Its
decision-making authority is limited to issues that are within its independent
competence. The council exercises its authority through council meetings,
which must be held at least once every three month; such sessions are open to
the public. The municipal council establishes its own rules of procedure.
The municipal board is the executive body responsible to the council. Its
membership—five to eleven persons—includes the mayor, deputy mayor(s) and
other members who are elected by the council from among its members. The mayor
calls municipal board meetings as necessary and is responsible for preparing
documents for board discussion. Board meetings are closed to the public, but
the minutes of its meetings are public documents. The council has the right to
dismiss the board.
The mayor is elected by and responsible to the council, chairs the
municipal board, heads the municipal office and is chief of the municipal
police. In small municipalities where a board is not elected, the mayor
performs the duties of the board; where the position of chief administrative
officer is not established (see below), the mayor performs these functions as
well.
The municipal board established committees. Membership is approved by the
board and is not limited to council members but may include any citizen of in
the municipality. Financial and control committees are obligatory for every
municipality and are responsible to the board. Upon approval of the district
office, the mayor may invest duties of transferred competence to committees,
which are then subordinate to the district office.
The municipal office is the executive administrative body of the
municipality, headed by the mayor and including the deputy mayor(s), chief
administrative officer and other officers. It implements independent
competencies assigned by the municipal board and council as well as delegated
functions of the state administration, for which it is subordinate to the
district office. The position of chief administrative officer (CAO) see
definition of secretary on page 12; same office? exists in municipalities
in which the board establishes at least two departments within the municipal
office. The municipal board appoints the CAO upon approval of the district
office chief; he or she cannot be a councilor. The CAO is responsible to the
municipal board and the mayor concerning the execution of duties of
independent competence and to the mayor concerning duties of transferred
competence. The CAO has the right to attend council and board meetings as an
advisor. There are 381 municipal offices with special status—"commissioned
municipal offices"—that have enlarged transferred competence. The
district office determines the territory upon which the commissioned municipal
office performs such delegated functions.
3.5 Public Participation in Decision-making
Municipal elections are the regular device of public participation; local
referendums are an exceptional device. Continuous participation in
decision-making is enacted by three methods:
- active participation through committee membership, attendance at regular
council meetings and consultations with the mayor or councilors;
- personal initiatives such as petitions, use of the local media, filing
complaints or objections to the municipal office;
- involvement in nongovernmental organizations.
3.6 Ethnic Issues, Multicultural Government
Since the population of the Czech Republic is quite homogeneous, no special
local government measures exist to address ethnic issues. All ethnic
minorities are treated according to the principles of civic equality in
maintaining their cultural and historical identity.
For a long time, ethnic conflict existed between the majority population
and the Roma. The government and the civic sector have taken steps to address
this problem through various projects targeting research, education and social
issues both nationally and on the local level that aim to promote mutual
understanding and improve interethnic relations.
3.7 Local Government Associations and International Contacts
Simultaneous to the proliferation of new municipalities that began in 1990,
partnership of autonomous municipalities spontaneously developed. Associations
and unions of municipalities are unique in aim, organization and financial
resources.
The Union of Towns and Municipalities of the Czech Republic was founded in
1990 as a mediator between central authorities and municipal governments. In
1997 its membership included 1,168 towns and municipalities. Membership fees
finance the union. Committees fulfill its functions according to the same
model as municipal board committees. The congress of the union is held every
two years. The union has an important role in negotiations with parliament and
the central government.
Most regional associations address problems that exceed the abilities of
one municipality; such issues often include recreation, energy resources,
environment and transportation. Other associations join municipalities with
special interests with the intention of standardizing operations on a
nationwide level, such as the Association of Historical Settlements and the
Association of Spa Towns. Approximately twenty-five such organizations
currently exist in the Czech Republic. The Regional Development Council
represents regional associations on prevalent economic issues. Additionally,
regional professional associations exist for mayors, district office chiefs
and chief administrative officers.
Transnational associations also exist that cooperate with bordering
countries of the Czech Republic, such as Egrensis, Nisa and Labe.
4 Local Administration, Service Provision
4.1 Structure and Operation of Local Administration
The effective everyday execution of local government in municipalities is
based upon the widely accepted principles of political pluralism and
democracy. In the Czech Republic, as in the vast majority of European
countries, the municipality has not only the right but also the duty to
administer and manage its affairs in order to address public needs and the
competencies conferred upon it by law. The municipality creates its own
elected bodies comprised of its citizens.
The tasks and duties of local government are executed by the municipal
board, council, mayor and deputy mayor(s). The committees of the council and
the municipal office also play an important role. Members of the board and the
council are elected for four-year terms. The staff of the municipal office
fulfills the tasks and duties of the local government.
Citizens are authorized to take an active part in the management of
municipal affairs, especially through meetings called regularly by the council
that are open to every inhabitant of the municipality. They may express their
opinion concerning proposed changes to the territorial plan of the
municipality and are allowed to raise questions and objections concerning the
preparation of municipal budgets. Another important instrument of democratic
local government is the referendum, which is used to help decide the most
important questions of municipal development.
The mayor is both political and administrative head of the local authority
who represents the municipality in all contacts with other institutions. The
mayor and deputy mayor(s) are elected by and responsible to the council. The
mayor signs all legal acts and decisions of the municipality and is the chair
of the council and board.
The mayor manages the office, decides all principal matters and makes
recommendations on the internal organization of the office. In municipalities
that do not appoint secretaries, the mayor appoints staff members and
exercises employer’s rights in relation to the staff.
The secretary of the municipal office is responsible to the council and the
mayor. In the execution of tasks of transferred competence he or she is
responsible only to the mayor. The secretary exercises employer’s rights in
relation to the staff.
The municipal office is formed by the mayor, deputy mayor(s), secretary (in
municipalities where the council forms at least two departments) Is the
secretary the chief administrative officer? See page 10. and the staff.
The council is authorized to form departments of the municipal office. The
office is responsible for the execution of resolutions and decisions made by
the municipal board and the council. Simultaneously it is responsible for
performing state administrative functions delegated to municipality.
The number of departments of the municipal office depends on the size of
the municipality and on the decisions of the council. The most frequent
departments in Czech and Moravian municipal offices address budgets, local
territorial planning and municipal development, organization and management,
entrepreneurial activities, human resources and public relations.
The municipal budget department is responsible for proposing the annual
budget to the board for approval and controls the implementation of all
decisions related to the budget. Another duty of this department is to prepare
the final municipal account report providing information about the
implementation of duties and tasks that were adopted with the budget.
The department of local territorial planning is responsible for the
balanced development of the municipality as a whole and its individual
territorial parts in accordance with priorities determined by the long-term
municipal plan. The department plans the building and reconstruction of
municipal infrastructure and the development of educational, social and
cultural activities and services. It aims to achieve the most effective and
efficient economic activities of the municipality.
The activities of the organization and management department are
predominantly oriented to the improvement of the knowledge and skills of
elected representatives and the municipal office staff. Other tasks include
maximizing the efficiency and cost-effectiveness of municipal office
activities.
The department of business activities assists the economic and social
development of the municipality through cooperation with the private sector.
Both internally and through cooperation with private consultants, it prepares
and assesses the effectiveness of services based on detailed analyses of their
financial and other affairs. In larger towns, this department is also
responsible for attracting foreign capital investment.
The main duty of the human resources department is the recruitment and
assessment of staff, the organization of professional development courses and
seminars and the organization of seminars in which specialists from the public
and the private sectors participate. This department is also authorized to
collaborate with citizen groups and associations and to investigate and
evaluate public needs and opinion.
The public relations department publicizes council decisions and municipal
office and department activities. It cooperates with the human resources
department in surveying citizens’ interests, needs and opinions. As it
enables regular contact with different groups of the municipality’s
inhabitants, this department plays an important role in improving citizen
participation.
There are no special statutes on local government employees in the Czech
Republic. The municipality hires officials and other laborers, and their
everyday problems are addressed by the secretary of the municipal council, the
mayor and other members of the municipal board.
Concerning the decision-making process of the municipality, staff members
of the municipal office draft decisions and recommendations for proposal to
the council. Such proposals are prepared with the assistance of committee
members who negotiate draft versions of resolutions. The elected bodies—municipal
board, council and mayor—are almost without exception the most influential
with regard to municipal decision-making. After discussing issues in
committees, decisions are adopted during the sessions of the municipal board
or the council.
Great attention is also paid to cooperation with other municipalities,
especially through the activities of the Union of Towns and Municipalities.
Such cooperation is governed by the Civil Code. According to the Municipality
Act, local governments are authorized to form voluntary unions. Their
creation, functions and activities are regulated by the act.
Cooperation among local governments is considered to be important both in
resolving concrete legal and administrative problems and in providing public
services. The significance of such cooperation is reflected by the necessity
to solve problems of an unprecedented nature, such as privatization, and to
identify funding for service provision. There is lack of qualified specialists
to resolve many tasks, especially in small municipalities; cooperation of
local governments therefore is one way to find effective solutions to common
problems.
4.2 Local Service Delivery
Czech and Moravian municipalities are responsible for the delivery of a
number of services, some of which are mandatory and others of which are
voluntary. As specified in the Municipalities Act local government in the
Czech Republic generally is responsible for satisfying the needs of
inhabitants through public services. The cost of such services has increased
throughout the 1990s, which particularly affects small municipalities. Some
are finding the necessary financial resources for service provision through
the privatization of municipal property, bank credits and state grants. This
is however only a temporary solution, and small municipalities must
investigate more effective methods to allocate financial resources now and in
the near future.
Services provided by municipalities can be "mandatory" or
"facultative" voluntary?noncritical?. Mandatory services are
prescribed to the municipality by the Municipalities Act. They are
distinguished as "public services," financed mainly on the principle
of public need, and "technical services," financed through user
fees. The most common mandatory services include the maintenance of local
streets and roads; administration of municipal institutions providing
educational services; social services, including care for the elderly and the
disabled; health services, through both municipal hospitals and private
doctors; public safety through municipal police in large towns and cooperation
with the state police in other municipalities; and fire brigades.
In addition to these public services, several technical services are
prescribed to municipalities, including waste management, water supply, waste
water disposal, public transport and maintenance of public parks.
All services are provided by communal enterprises (budgetary institutions),
in cooperation with the private sector and through municipal associations.
Cooperation with private entrepreneurs is implemented on the basis of
contractual agreements.
Technical services that are required by the majority of citizens are
supported by the municipal budget. An important precondition for such service
delivery is the number of qualified specialists available. The most common
facultative services are cultural, including the maintenance of municipal
libraries, local cultural institutions, and recreational facilities.
Considering these facts, it is understandable that more facultative services
are delivered in large towns with greater financial resources.
There are several regulations for mandatory service delivery in the Czech
Republic. All must be provided consistently; in emergencies, the municipality
is obliged to mobilize reserves and/or to implement alternative solutions to
address the problem. Additionally, the provision of services must respond to
changing public needs; thus, for example, services must be provided to all
inhabitants, including new housing estates areas.
As mentioned, public services must satisfy the basic needs of all citizens
living in the particular community. Technical service delivery is based on a
"client system," which is applied for services that can be
quantitatively measured. If the clientele fails to provide remuneration for
the service, it may be discontinued. The basic criteria for determining the
prices of technical services are the effectiveness of the service in relation
to the extent and quality of delivery and the real need to satisfy the
interests of the majority of the population (for example, local street and
road maintenance, public transport).
The extent of service delivery is influenced predominantly by several key
factors, including:
- demographic situation of the municipality—birth and death rate, number
of permanent inhabitants and number of owners of vacation homes, number of
school-age children, number of pensioners, et cetera;
- number of people requiring social welfare;
- economic situation (the cost of particular services; capacity of local
public transport, number of telephones and other means of communication,
et cetera; extent of public use; and quality of the service delivered),
- level of public satisfaction with the service.
These criteria are not utilized fully in all municipalities, but in general
they play an ever-increasing role, especially in large towns. In small
municipalities, they tend to indicate the need to create associations of
municipalities aimed to address the more effective and efficient provision of
services.
The state provides grants to municipalities for the execution of some state
administrative tasks of transferred competence, such as birth and death
registration, issuing licenses for the construction and reconstruction of
houses, et cetera.
One of the most characteristic features of service delivery in and by
municipalities in the Czech Republic in the 1990s is the ever growing
participation of the private sector in the sphere of municipal economic and
social life. Many municipalities have accumulated experience from cooperation
with the small and medium-sized enterprises that are their principal partners
in service delivery. Such relationships are contractual and are based on the
results of public competition organized in accordance with the Procurement Act
approved in December 1994.
Municipal enterprises—or budgetary institutions—are financed from the
municipal budget. As these enterprises were not considered to be very
effective in providing service delivery in the past (this was often proven in
the 1970s and the 1980s) great attention is focused on increasing the
self-sufficiency of such enterprises, reducing the number of employees to a
more efficient level and implementing other steps aimed to improve the
effectiveness of their activities. These enterprises are active mainly in
public transport and in the maintenance of streets and public parks.
Municipal enterprises continue to operate in many municipalities (in a more
efficient manner in comparison to the previous period). They play a
stabilizing role in the economy by creating jobs, which is appreciated
especially in regions with high levels of unemployment; enterprises have been
found to create jobs more rapidly and effectively than other entities in the
public sector. Most are relatively flexible and are able to adapt to rapidly
changing economic conditions. Municipalities provide incentives for them, such
as guarantees on bank credits, low rent of municipal real estate and local fee
reductions. The owners and managers of such enterprises are active in local
political and cultural life. Among other contributions, they sponsor cultural
and sporting activities. Several large towns cooperate with private
entrepreneurs to foster business activities.
The main sphere of public-private partnership on the municipal level is the
delivery of services such as waste management, water supply, waste disposal
(municipalities usually hold shares in such companies), street cleaning,
municipal lighting systems, utilization of natural resources, communal housing
and maintenance of the municipal infrastructure.
5 Local Finance, Economic Development
The public budget of the Czech Republic is composed of:
- local budgets (municipalities and district offices);
- budgets of state funds approved by parliament.
The revenues and expenditures of public budgets in the Czech Republic from
1993 to 1997 are shown in tables 6.3 and 6.4.
Table 6.3
Revenue of District Offices and Municipalities in the Czech Republic (CZK
millions)
|
Indicator |
1996 |
1997 |
1998 |
1999 |
|
Tax Revenue, including: |
72,670 |
76,421 |
83,320 |
90,200 |
Income Tax from Natural Persons
|
50,818 |
54,503 |
58,581 |
65,700 |
Income Tax from Legal Entities
|
14,138 |
13,361 |
16,232 |
15,600 |
Administrative Fees
|
2,134 |
2,190 |
1,625 |
4,200 |
Fees for Environmental Pollution and for Exploitation of Natural
Resources
|
– |
1,047 |
728 |
700 |
Other Taxes and Fees from Selected Criteria and Services
|
1,331 |
1,360 |
2,031 |
– |
Real Estate Taxes
|
4,018 |
3,943 |
4,108 |
4,000 |
Other Tax Revenue
|
– |
15 |
– |
– |
|
Nontax Revenue, including: |
21,333 |
23,218 |
24,708 |
25,600 |
Revenue from Activities and Levies of Subsidized Organizations
|
14,624 |
8,428 |
9,620 |
– |
Revenue from Leased Real Estate
|
– |
7,285 |
7,477 |
– |
Revenue from Interest
|
1,317 |
1,885 |
315 |
– |
|
Capital Revenue |
7,234 |
9,872 |
13,342 |
9,500 |
|
Subsidies Received, including: |
60,290 |
37,559 |
40,430 |
35,484 |
Noncapital Grants from State Budget
|
53,348 |
23,274 |
24,999 |
– |
Capital Subsidies from State Budget
|
4,877 |
9,948 |
10,806 |
– |
Subsidies from National Funds
|
2,065 |
1,772 |
916 |
– |
|
Other Revenue |
154 |
0 |
– |
– |
|
Total Revenue |
161,681 |
147,070 |
161,801
totals 161,8772 |
163,284
totals 160,784 |
Source : Statistická
ročenka České republiky ‘98 (Statistical
yearbook of the Czech Republic ’98), (Prague: 1998), 173; Statistical
Yearbook of the Czech Republic ‘99, 166. 1999 estimate from R. Prokop,
Prediction of Local Government Budget in 1999, State Administration and
Local Government 13: i-iv.
Table 6.4
Expenditures of District Offices and Municipalities in the Czech Republic
(CZK millions)
|
Indicator |
1996 |
1997 |
1998 |
|
Current Expenses, including: |
117,702 |
100,231 |
106,937 |
Wages, Salaries of Employees and Other Payments
|
12,178 |
13,014 |
13,778 |
Obligatory Insurance Paid by Employer, Purchase of Material, Water,
Fuel, Energy, etc.
|
41,000 |
39,784 |
47,173 |
Interest and Other Financial Expenditures
|
1,725 |
2,682 |
2,335 |
Noncapital Subsidies to Enterprises
|
7,163 |
8,860 |
9,046 |
Noncapital Transfers to Subsidized Organizations
|
17,171 |
17,695 |
17,487 |
Noncapital Transfers to Households
|
31,324 |
5,877 |
7,151 |
|
Capital Expenses, including: |
53,423 |
51,606 |
53,409 |
Investment Expenses
|
45,035 |
43,463 |
42,723 |
Investment Transfers to Enterprises
|
3,595 |
3,265 |
4,643 |
Investment Transfers to Subsidized Organizations
|
4,091 |
3,872 |
4,175 |
|
Total Expenditure |
171,125 |
151,837 |
160,346 |
|
Revenue/Expenditure Balance |
-9,444 |
-4,767 |
1,455 |
Source: Statistická
ročenka České republiky ‘98 (Statistical
yearbook of the Czech Republic ‘98) (Prague: 1998), 174; Statistical
Yearbook of the Czech Republic ’99, 167.
The estimated expenditure of local governments as a total for 1999 is CZK
165,709 million; thus, the revenue-expenditure balance is estimated to be CZK
-2,425 million.
Table 6.5
Share of Municipal Budgets in Local Government Budgets in the Czech
Republic, 1991-97 (%)
|
Year |
1991 |
1992 |
1993 |
1994 |
1995 |
1996 |
1997 |
|
Revenues |
41.8 |
56.4 |
83.6 |
84.7 |
84.3 |
84.5 |
82.4 |
|
Expenditures |
39.7 |
53.7 |
84.1 |
85.3 |
79.2 |
85.1 |
83.3 |
Source: Moderní obec 5 (1996); and author’s calculations.
As previously stressed, councilors are accountable for the maximum
effective utilization of municipal mandatory service delivery and additionally
must ensure revenues for the provision of facultative services.
Today, 6,244 municipalities in the Czech Republic operate on the basis of
independent budgets, each supporting between fifty and 1.2 million
inhabitants. Due to such drastic differences in size, it is difficult to
determine the best revenue base for each, as income from taxes and grants is
so diverse; as a result, the quality and quantity of service provision also
varies greatly. The Municipalities Act and its amendments grant municipalities
great flexibility in the creation of their budgets and in the organization of
economic activities within their territories.
As a rule, all municipalities must prepare current budgets annually.
Additionally, approximately one-third of Czech municipalities, generally the
largest, has the capability to draft capital budgets for an extended period of
time. Such budgets foresee and plan for large investments, especially to
support tasks such as the construction of local roads and streets, water
pipelines, waste water purification systems, school buildings and communal
housing.
Table 6.6
Proportion of Municipal Revenues and Noninvestment Expenditures to Total
Municipal Expenditures in the Czech Republic, 1993-95 (%)
| |
1993 |
1994 |
1995 |
|
Average |
67.66 |
71.31 |
70.7 |
Source: Jitka Peková, Místní rozpoèty
(Prague: The School of Economics in Prague, 1997), 60.
The preparation of the annual budget (1 January to 31 December) in Czech
and Moravian municipalities plays a decisive role in municipal life and
results from broad discussion between elected representatives and active
citizens. It fulfills especially the following principal tasks.
- The budget is the principal financial plan that ensures the long-term
development of the community. Revenues and expenditures are assessed based
upon expected income, including existing financial reserves (if any) as
well as bank credits.
- The municipal budget is the instrument through which priorities in the
quality and quantity of service provision are determined. Thus, an
especially important role is the allocation of funding in order to address
public needs. Budget revenues are predominantly used for providing
mandatory services.
- After determining and satisfying the basic needs of the populace, the
municipal budget also ensures the allocation of financial resources
necessary for infrastructural development, such as the construction of
Prague’s underground; construction and repair of cultural, athletic and
educational facilities; maintenance of public parks; reconstruction of
communication systems; et cetera.
- The rate of real estate tax and local fees are determined.
- Finally, the preparation of the municipal budget provides objective and
complete analysis of the financial situation of the municipality, which is
crucial for the mayor and other elected representatives who manage
everyday municipal activities. Thus, it serves as an instrument for
increasing the effectiveness and efficiency of municipal financial
operations.
The preparation of the municipal budget is a long process that usually is
divided into several stages. The first is the preparation of the basic
framework of the budget, reflecting real economic growth or decline of the
municipality. This stage is followed by an assessment of expected revenues and
expenditures, including those of municipal companies financed from its budget
(so-called "budgetary" and "contributory" organizations,
which will be discussed below). The preparation of the first draft of the
municipal budget is accomplished by the finance department in large towns and
by the whole office in smaller villages. Discussion on this draft by the
municipal office is the third stage of the process. The budget proposal is
completed in cooperation with other departments of the municipal office and
then is discussed by the council and by the public. Afterwards, the municipal
council adopts the budget.
The municipal board is responsible not only for budget preparation and
adoption but also for evaluation of the utilization of budgetary resources
from the previous fiscal year. Audits are conducted either by private auditing
companies at the expense of the municipality or by the district office, in
which case the audit is free of charge.
The preparation of the municipal budget also involves the allocation of
resources to support the activities of enterprises established by or working
on behalf of the municipality. Small and medium-sized enterprises particularly
provide technical services and are financed either fully ("budgetary
organizations") or partly ("contributory organizations") from
the municipal budget. The revenues and expenditures of such organizations are
component parts of the municipal budget and thus must be specified in detail
during the budgeting process. In part, resources to support such enterprises
are created by their own business activities. The municipal board and council
during the budgetary process must approve decisions concerning the financing
of budgetary and contributory organization activities.
The percentage of municipal revenues and noninvestment expenditures to
total expenditures is reflected in table 6.6. Many financial resources are
acquired through taxation. Taxes in the Czech Republic are imposed only by the
central government; their revenues compose a major portion of the state and
local budgets. The rights of municipalities to affect the rate of real estate
tax are limited. Recently, however, they have been granted authority to
determine several local taxes and other fees, such as central heating use and
rent for communal housing, which were previously fixed by the state.
First, the collection of personal income tax paid from "dependent
activities" (wages and salaries) represents the main source of revenue of
municipal budgets. According to the new rules the municipal share of personal
income tax is thirty percent, and the state share, forty percent. The
remaining thirty percent is allocated to district offices to finance the
activities specified by Act Nr. 425/1990 and its amendments. Specific rules
determine the share of statutory towns that execute both local government and
substantial transferred competence of the state administration. Their share is
seventy percent, and that of the state budget, thirty percent. Other important
revenue of municipal budgets are (1) tax paid by entrepreneurs, which is
collected by the state and allocated in full (100 percent) to the
municipality; (2) tax on real estate, which is determined and collected in
individual cadastral territories districts? and then transferred to
municipalities in full (100 percent); and (3) ?legal subjects income tax?,
twenty percent of which remains with the municipality and eighty percent with
the state.
Communal bonds guaranteed by the municipal assets represent another source
of municipal budgets. Several large towns issue municipal bonds to raise funds
for investment and to support service provision. The capital, for example, has
issued bonds for the improvement of public transport.
Municipal levies have not played more important role until now. The
value of total revenue in the whole Czech Republic per capita was CZK 150
(approximately USD 5) in 1993, CZK 138 in 1994, and CZK 116 in 1995. Income
from administrative fees paid by citizens to municipalities per capita was CZK
145 in 1993, CZK 179 in 1994, and CZK 203 in 1995.
Block grants from the state budget transferred to local budgets represent a
very important part of municipal budgets. They are provided particularly for
financing and maintaining homes for the elderly, child care centers and
specialized social and health service institutions. Other grants from the
state budget support fire brigades, local public transport and kindergartens
and elementary schools. The total amount of state subsidies to municipalities
was CZK 28.005 million in 1993 (27.64 percent of total municipal revenue), CZK
28.424 million in 1994 (25.61 percent of total municipal revenue), and CZK
32.293 million in 1995(25.01 percent of total municipal revenue). Subsidies
for local public transport in the Czech Republic as the whole, for example,
totaled CZK 460 million (USD 15.35 million) in 1996 and about CZK 800 million
(USD 26.66 million) in 1997.
The structure of the local budget revenues is shown in table 6.7.
Table 6.7
Local Budget Revenues in the Czech Republic, 1993-97
|
Revenues |
1993 |
1994 |
1995 |
1996 |
1997 |
| |
CZK billions |
% |
CZK billions |
% |
CZK billions |
% |
CZK billions |
% |
CZK billions |
% |
|
Taxes |
39.0 |
38.5 |
56.5 |
50.9 |
70.8 |
54.7 |
72.7 |
45.0 |
75.3 |
51.3 |
|
Nontax Revenues |
17.3 |
17.0 |
18.2 |
16.4 |
18.5 |
14.3 |
28.5 |
17.6 |
34.2 |
23.2 |
|
Transfers |
24.3 |
24.0 |
30.1 |
27.1 |
34.9 |
27.0 |
60.3 |
37.4 |
37.6 |
25.6 |
|
Other Revenues |
20.7 |
20.5 |
6.2 |
5.6 |
5.1 |
4.0 |
0.2 |
– |
– |
– |
|
Total |
101.3 |
100.0 |
111.0 |
100.0 |
129.3 |
100.0 |
161.7 |
100.0 |
147.1 |
100.1 |
Source: Státní správa a samospráva
(State administration and local government) 51-52 (1997).
Expenditures are used predominantly for:
- maintenance and repairs of municipal kindergarten and school buildings;
- local public transport;
- repair of local roads and streets;
- construction of sewage systems and waste water purification plants (very
often in cooperation with several municipalities);
- construction of social care facilities;
- construction, repair and maintenance of some health services facilities;
- contributions to cultural establishments;
- fire brigades and local police;
- payment of interest on long-term credits and loans;
- salaries of officials and other municipal laborers including payment of
social and health service insurance.
The structure of expenditures of Czech and Moravian municipalities is shown
in tables 6.8, 6.9 and 6.10.
Table 6.8
Local Budget Expenditures, 1993-97 (in CZK billions)
| |
1994 |
1995 |
1996 |
1997 |
Index?
95/94 |
Index?
96/95 |
Index?
97/96 |
|
Current Expenditures |
69.7 |
81.4 |
91.1 |
100.2 |
116.8 |
111.1 |
110.0 |
|
Capital Expenditures |
42.4 |
50.9 |
54.0 |
51.6 |
120.0 |
106.1 |
96.6 |
|
Total |
112.1 |
132.3 |
145.1 |
151.8 |
118.0 |
109.6 |
104.5 |
Source: Moderní Obec (Modern municipality) 5 (1996); Obec
a finance (Municipality and finance) 2 (1998); and author’s
calculations.
Table 6.9
Structure of Municipal Expenditures in the Czech Republic, 1995 (%)
| |
Municipalities by Size (number of inhabitants) |
|
Expenditures |
0-200 |
200-500 |
500-1000 |
1000-5000 |
5000-
10,000 |
10,000-50,000 |
50,000-100, 000 |
100,000-500,000 |
500,000+ |
|
Internal Administration |
35.3 |
25.5 |
20.6 |
16.5 |
13.8 |
12.2 |
11.0 |
12.9 |
11.1 |
|
Water Economy |
22.7 |
24.2 |
21.5 |
18.9 |
11.6 |
– |
– |
9.4 |
6.1 |
|
Local Economy |
11.5 |
11.3 |
12.1 |
15.2 |
19.8 |
27.8 |
23.0 |
10.1 |
– |
|
Local Public Transport |
10.1 |
– |
– |
– |
– |
– |
15.8 |
23.7 |
41.6 |
|
Construction |
6.2 |
10.4 |
11.8 |
11.5 |
– |
– |
– |
– |
– |
|
Education |
– |
8.9 |
17.3 |
16.6 |
13.4 |
14.4 |
14.3 |
9.1 |
7.4 |
|
Social Care |
– |
– |
– |
– |
18.3 |
10.6 |
– |
– |
– |
Source: Moderní obec (Modern municipality) 5 (1996).
Table 6.10
Municipal Expenditures per Capita in the Czech Republic, 1993-95 (CZK
thousands)
|
Municipalities by Size (number of inhabitants) |
Total Expenditures per Capita |
Index of Expenditures |
| |
1993 |
1994 |
1995 |
1994-93 |
1995-94 |
|
0-200 |
3.30 |
4.86 |
5.59 |
1.47 |
1.15 |
|
200-500 |
3.28 |
4.82 |
5.95 |
1.46 |
1.23 |
|
500-1,000 |
4.06 |
5.98 |
7.12 |
1.47 |
1.19 |
|
1,000-5,000 |
5.75 |
7.68 |
9.05 |
1.33 |
1.17 |
|
5,000-10,000 |
7.16 |
9.14 |
10.76 |
1.27 |
1.17 |
|
10,000-50,000 |
7.00 |
8.86 |
10.14 |
1.26 |
1.14 |
|
50,000-100,000 |
7.07 |
8.61 |
9.57 |
1.21 |
1.11 |
|
100,000-500,000 |
9.83 |
11.94 |
15.21 |
1.39 |
1.27 |
|
500+ |
13.94 |
17.64 |
19.53 |
1.26 |
1.10 |
Source: Moderní obec (Modern municipality) 5 (1996).
One of the key principles of municipal budget preparation in the Czech and
Moravian municipalities is balanced revenues and expenditures, but this
presupposes the accumulation of relatively large financial reserves. In the
current situation, however, a growing number of municipalities are becoming
indebted, especially small and medium-sized villages. This is one of the most
topical problems in local government not only in the Czech Republic but also
in other European countries. Tables 6.11 and 6.12 reflect the current
situation.
Table 6.11
Development of Municipal Debt in the Czech Republic, l993-96 (in CZK
millions)
|
Indicator |
1993 |
1994 |
1995 |
1996 |
|
Credits |
2,485.3 |
4,914.1 |
8,656.2 |
11,598.9 |
|
Communal Bond Issuance |
26.2 |
7,643.2 |
8,540.1 |
11,906.9 |
|
Other Small Municipalities Debt |
324.4 |
494.7 |
918.9 |
1,381.7 |
|
Financial Assistance from District Offices and State Budget |
– |
– |
1,804.3 |
2,896.5 |
|
Loans from State Fund of the Environment |
109.0 |
1,094.5 |
2,774.3 |
4,399.6 |
|
Total |
2,944.9 |
14,146.5 |
22,693.8 |
32,183.6 |
Source: Moderní obec (Modern municipality) 5 (1997).
Table 6.12
Number of Indebted Municipalities According to Size Categories in the Czech
Republic (1 January 1996)
|
Size Category (number of inhabitants) |
Number of Municipalities in Size Category |
Percentage of Total Number of Municipalities |
Number of Indebted Municipalities in Size Category |
Percentage of Total Indebted Municipalities |
Percentage of Indebted Municipalities to Number of
Municipalities in Size Category |
|
0-100 |
571 |
9.2 |
125 |
4.9 |
21.9 |
|
101-200 |
1,160 |
18.6 |
251 |
9.9 |
21.6 |
|
201-500 |
2,025 |
32.5 |
648 |
25.5 |
32.0 |
|
501-1,000 |
1,217 |
19.5 |
572 |
22.3 |
47.0 |
|
1,001-2,000 |
645 |
10.3 |
390 |
15.3 |
60.5 |
|
2,001-5,000 |
348 |
5.6 |
300 |
11.8 |
86.2 |
|
5,001-10,000 |
135 |
2.2 |
126 |
5.0 |
93.3 |
|
10,001-20,000 |
65 |
1.0 |
64 |
2.5 |
98.5 |
|
20,001-50,000 |
44 |
0.7 |
44 |
1.7 |
100.0 |
|
50,001-100,000 |
16 |
0.3 |
16 |
0.6 |
100.0 |
|
100,000+ |
7 |
0.1 |
7 |
0.3 |
100.0 |
Source: Ekonom (Economist) 11 (1997).
Czech and Moravian municipal debt is caused predominantly by relatively
high interest rates on credits, communal bonds and bank guarantees. The
growing debt of small municipalities in the Czech Republic especially reflects
the fact that they generally do not have sufficient resources for investment.
Thus, these municipalities have resorted to selling municipal real estate.
This approach of course has a long-term negative impact on the balanced
development of these entities. The effective acquisition of necessary
resources for development is a great challenge for this category of
municipalities in the Czech Republic. Although some positive steps have been
taken in large municipalities, the lack of investment funds will continue to
be a problem in the future.
Taking these facts into account, the experiences of municipalities in other
European countries are studied intensively by a growing number of municipal
councils, senior officials of large towns and consultative and advisory
companies. There is consensus in striving towards achievement of the most
effective financial activities. The determination of "global expenditures
ceilings," separate assessments of income and expenditure and their
balance and determination of the limits of municipal expenditures are
important principles that have been acknowledged by councilors and officials
who are responsible for the long-term development of municipal economic
activities. The real implementation of this approach however is complicated,
especially in small municipalities that have limited financial resources and
often lack knowledge and experience.
6 Next Steps in the Transition Process
The contemporary period may be characterized as the stage of accelerated
implementation of public administration reform in the Czech Republic. The most
important tasks currently are creation of the regional system of local
government, increasing efficiency of the state administration at the regional
level and approval of the Civil Service Act and the Act on Service in Local
Governments.
The implementation of reform is impossible without amending existing acts
to reformulate the execution of local government and territorial state
administration. For this reason a number of new proposals are being drafted
for parliamentary approval, the most important of which follow:
- an act on the establishment of regions;
- an act creating and executing state administrative tasks on the regional
level;
- a new municipalities act;
- amendment of the act determining rules of municipal council elections;
- a new act on district offices, the role of which will need to be more
clearly defined after the creation of regions;
- an act specifying the forms of regional development support.
Of urgent necessity is the preparation and approval of legislation defining
the property and financial resources of regions and municipalities. In
particular, such need includes budgetary rules, defining municipal and
regional shares of taxes collected by the state; the transfer of property to
regional local governments; and a clarification of municipal taxes. Last but
not least, an act on elections to regional local government bodies will need
to be developed.
Publications on Czech local government in English?
Contacts for more information?
Annex 6.1
Major General Indicators
Sources: Statistical Yearbook 1998; Statistical Yearbook 1997;
Yearbook of Economic Newspapers 1997.
Size of territory 78,866 square kilometers
Population density 131 inhabitants per square kilometer
Population 10,299 thousand
Age of population
0-14 1,795 thousand
15-59 6,647 thousand
60+ 1,857 thousand
Major ethnic divisions (3 March 1991)
Czechs, Moravians and Silesians 94.7 percent
Slovaks 3.1 percent
Poles 0.6 percent
Germans 0.5 percent
Roma 0.3 percent
Per capita GDP USD 5,045
Proportion of national budget to GDP 33.8 percent
Proportion of local budgets to GDP 6.8 percent
General government budget (public budget)
National budget 83.4 percent
Municipal budgets 16.6 percent
National budget
Transfers to inhabitants 32.3 percent
Public consumption of the state 38.7 percent
Subsidies to local budgets 5.3 percent
Table 6A.1
Czech Republic Public Budget Revenues and Expenditures (in CZK billions)
| |
1993 |
1994 |
1995 |
1996 |
1997
budget |
Index (%)
1996-93 |
|
Revenue-State Budgets |
358.0 |
390.5 |
440.0 |
491.0 |
549.1 |
137.2 |
|
Revenue-Local Budgets |
64.1 |
81.7 |
95.8 |
100.3 |
111.6 |
156.5 |
|
Revenue-Public Budgets |
422.1 |
472.2 |
535.8 |
591.3 |
660.7 |
140.1 |
|
Expenditures-State Budgets |
329.9 |
350.8 |
399.5 |
465.8 |
520.1 |
141.2 |
|
Expenditures-Local Budgets |
90.2 |
112.1 |
132.3 |
125.5 |
138.3 |
139.1 |
|
Expenditures-Public Budgets |
420.1 |
462.9 |
531.8 |
591.3 |
658.4 |
140.8 |
|
Grants to District Offices and Municipalities |
27.0 |
29.3 |
33.3 |
25.2 |
29.0 |
93.3 |
|
Balance |
+2.0 |
+9.3 |
+4.0 |
0.0 |
+2.3 |
- |
|
State Budget Balance |
+1.1 |
+10.4 |
+7.2 |
0.0 |
0.0 |
- |
|
Local Budgets Balance |
+0.9 |
-1.1 |
-3.2 |
0.0 |
+2.3 |
|
Source: Jitka Peková, Místní rozpoèty
(Prague: The School of Economics in Prague, 1997), 64.
Table 6A.2
Czech Republic Budget Balance, 1997 (in CZK billions)
| |
1996 Estimate |
1997 Budget |
Index 97/96 (%) |
| |
CR Territory |
State Budget |
District Offices and Municipalities |
CR Territory |
State Budget |
District Offices and Municipalities |
CR Territory |
State Budget |
District Offices and Municipalities |
|
TOTAL TAX REVENUES
- VAT
- consumption tax
- legal subjects income tax
- phys. subjects income tax
- customs
- road tax
- real estate tax
- property taxes
- highway and roads fees
- other taxes and fees
- local administrative fees
SOCIAL INSURANCE AND GOVERNMENTAL POLICY OF EMPLOYMENT CONTRIBUTION
share of old-age pension insurance
TOTAL NONTAX REVENUES
- income of chapters
- interests received
- revenues from governmental credits
- supplementary revenues
- incomes from property sales
- other incomes
Subsidies from State Funds |
360.2
111.2
61.5
63.0
82.3
20.3
4.3
3.8
4.3
0.9
5.1
3.5
179.9
137.5
48.2
18.8
3.4
7.7
5.3
5.2
7.8
3.0 |
286.4
111.2
61.5
47.9
30.9
20.3
4.3
4.3
0.9
5.1
–
179.9
137.5
24.7
5.8
3.4
7.7
–
–
7.8
– |
73.8
–
–
15.1
51.4
–
–
3.8
–
–
–
3.5
–
–
23.5
13.0
–
–
5.3
5.2
–
3.0 |
403.1
127.8
65.4
71.7
96.3
19.6
4.2
3.8
4.5
0.9
5.3
3.6
205.5
157.2
48.7
17.5
3.0
8.9
5.3
5.2
8.8
3.4 |
318.6
127.8
65.4
55.0
35.9
19.6
4.2
–
4.5
0.9
5.3
–
205.5
157.2
25.0
4.3
3.0
8.9
–
–
8.8
– |
84.5
–
–
16.7
60.4
–
–
3.8
–
–
–
3.6
–
–
23.7
13.2
–
–
5.3
5.2
–
3.4 |
111.9
114.9
106.3
113.8
117.0
96.6
97.7
100.0
104.7
100.0
103.9
102.9
114.3
114.3
100.9
93.1
88.3
115.8
100.0
100.0
111.9
113.3 |
111.2
114.9
106.3
114.8
116.2
96.6
97.7
–
104.7
100.0
103.9
–
114.3
114.3
101.0
74.4
88.3
115.8
–
–
111.9
– |
114.5
–
–
110.6
117.5
–
–
100.0
–
–
–
102.9
–
–
100.9
101.5
–
–
100.0
100.0
–
113.3 |
|
Total Revenue |
591.3 |
491.0 |
100.3 |
660.7 |
549.1 |
111.6 |
111.7 |
111.8 |
111.3 |
|
CURRENT EXPENDITURES
Subsidies to entrepreneurial subjects
Transfers to inhabitants:
- employment
- state balance contribution
- sickness benefits
- other subsidies
- rents
- state social support subsidies
Public State Consumption
- education
- medical care
- culture
- defense
- police and security
- other chapters
Debt Service
Transfers to Abroad
II. CAPITAL EXPENDITURES
Subsidies to entrepreneurial subjects
Public Sector Costs
III. GOVERNMENT CREDITS |
496.9
34.1
189.8
2.7
0.6
21.9
7.7
130.6
26.3
257.8
61.7
7.9
7.6
20.6
20.2
139.8
14.2
1.0
90.3
8.5
81.8
4.1 |
410.4
28.0
184.8
2.7
0.6
21.9
2.7
130.6
26.3
182.4
51.2
3.7
2.8
20.6
20.2
83.9
14.2
1.0
51.3
5.3
46.0
4.1 |
86.5
6.1
5.0
–
–
–
5.0
–
–
75.4
10.5
4.2
4.8
–
–
55.9
–
–
39.0
3.2
35.8
– |
557.0
35.2
217.8
3.1
0.0
24.4
7.8
150.5
32.0
288.1
67.1
8.6
8.1
22.1
22.9
159.3
14.4
1.5
97.7
9.2
88.5
3.7 |
460.4
29.0
212.5
3.1
0.0
24.4
2.5
150.5
32.0
203.0
56.2
4.2
3.1
22.1
22.9
94.5
14.4
1.5
56.0
5.8
50.2
3.7 |
96.6
6.2
5.3
–
–
–
5.3
–
–
85.1
10.9
4.4
5.0
–
–
64.8
–
–
41.7
3.4
38.3
– |
112.1
103.3
114.7
117.0
0.0
111.5
106.0
115.2
121.9
111.7
108.8
107.7
106.2
107.3
113.1
113.9
101.9
150.0
108.3
108.2
108.3
90.9 |
112.2
103.7
115.0
117.0
0.0
111.5
90.8
115.2
121.9
111.2
109.9
111.0
109.6
107.3
113.1
112.7
101.9
150.0
109.3
109.4
109.3
90.9 |
111.6
101.6
106.0
–
–
–
106.0
–
–
112.8
103.8
104.8
104.2
–
–
115.9
–
–
106.9
106.3
106.9
– |
|
Total Expenditure |
591.3 |
465.8 |
125.5 |
658.4 |
520.1 |
138.3 |
111.3 |
111.7 |
110.2 |
|
Funds of budget chapter for district offices and municipalities
Revenues-Expenditures difference |
0.0
0.0 |
-8.4
16.8 |
8.4
-16.8 |
0.0
2.3 |
-10.5
18.5 |
10.5
-16.2 |
0.0
– |
124.7
– |
124.7
– |
|
State Budgets Grants for district offices and municipalities |
0.0 |
-16.8 |
16.8 |
0.0 |
-18.5 |
18.5 |
0.0 |
109.9 |
109.9 |
|
Total Revenue-Expenditure Difference |
0.0 |
0.0 |
0.0 |
2.3 |
0.0 |
2.3 |
– |
– |
– |
Source: Jitka Peková, Místní rozpoèty
(Prague: The School of Economics in Prague, 1997), 63.
Unemployment rate 5.23 percent
Inflation rate 8.5 percent
Annex 6.2
Population, Settlements and Administrative Tiers
Average population of municipal government 1,659 inhabitants
Average number of municipalities in a district 81 municipalities
Table 6A.3
Number of Municipalities in the Czech Republic by Size Category (1 January
1994)
|
Size of Population |
Number of Municipalities |
% |
Cumulative % |
Total Number of Inhabitants |
% |
Cumulative % |
|
0-199 |
1,699 |
27.2 |
27.2 |
209,043 |
2.0 |
2.0 |
|
200-499 |
2,061 |
33.1 |
60.3 |
667,366 |
6.5 |
8.5 |
|
500-999 |
1,215 |
19.5 |
79.8 |
850,216 |
8.2 |
16.7 |
|
1,000-1,999 |
646 |
10.4 |
90.2 |
892,741 |
8.6 |
25.3 |
|
2,000-4,999 |
345 |
5.5 |
95.7 |
1,049,579 |
10.2 |
35.5 |
|
5,000-9,999 |
135 |
2.2 |
97.9 |
934,377 |
9.0 |
44.5 |
|
10,000-19,999 |
66 |
1.1 |
99.0 |
931,461 |
9.0 |
53.5 |
|
20,000-49,999 |
42 |
0.7 |
99.7 |
1,216,863 |
11.8 |
65.3 |
|
50,000-99,999 |
17 |
0.3 |
100.0 |
1,168,930 |
11.3 |
76.6 |
|
100,000+ |
7 |
0.1 |
100.1 |
2,413,437 |
23.4 |
100.0 |
|
Total |
6,230 |
100.0 |
100.0 |
10,334,013 |
100.0 |
100.0 |
|
Source: Malý lexikon (Obce Èeské
republiky, 1994). |
Employees in the public sector
Total 1,167,799
Government 748,495
Central 501,786
Local 239,378
Social security funds 7,331
Subnational government expenditure as percentage of GDP (1998) 11.4 percent
Subnational government expenditure as percentage of general government
expenditure
1997 23.6 percent
1998 23.2 percent
Source: The Statistical Yearbook of the Czech Republic 1999.
Figure 6A.1
Administrative Map of the Czech Republic
Annex 6.3
Major Laws on Public Administration and Local Government
The following laws regulate public administration and local government in
the Czech Republic:
- Constitutional Act Nr. 294/1990 Col.
- Governmental Decree Nr. 163/1990/VI 6/Col. on Terminating National
Committees of All Degrees Existing to Date of Local Elections
- Act of the Czech National Council Nr. 367/1990 Col. on Municipalities,
amended as 410/1992
- Act of the Czech National Council Nr. 425/1990 Col. on District Offices,
the Regulation of the Sphere of Their Activities; amendments to Acts of
the Czech National Council Nr. 266/1991, Nr. 542/1991, Act Nr. 21/1992,
Act Nr. 403/1992 and Act Nr. 254/1994
- Act of the Czech National Council Nr. 418/1990 Col. on the Capital
Prague
- Act of the Czech National Council Nr. 368/1990 Col. on Municipal
Elections, in wording of Act Nr. 298/1990 on Municipal Elections and Local
Referendums in Municipalities
- Act of the Czech National Council Nr. 565/1990 Col. on Local Fees,
amended by Act Nr. 48/1994
- Act of the Czech National Council Nr. 576/1990 Col. and its amendments,
defining rules of municipal finances management
- Act of the Czech National Council Nr. 55/1991 Col. on Municipal Police
- Act Nr. 152/1994 Col. on Municipal Elections and on the amendment of
other acts
- Act of the Czech National Council Nr. 455/1991 Col. on Entrepreneurial
Business Activities
- Act of the Czech National Council Nr. 368/1992 Col. on Administrative
Fees Collected by the Administrative Offices of the Czech Republic
- Government Decree Nr. 397/1992 on the Relationship of Police of the
Czech Republic to the Municipal Authorities
- Act of the Czech National Council Nr. 124/1993 Col. on Offenses
- Act of Parliament of the Czech Republic Nr. 72/1994 Col. regulating
co-ownership of flats, supplementing other acts
- Act of the Czech National Council Nr. 172/1991 Col. on Property Transfer
from the Czech Republic to Municipalities
Annex 6.4
Responsibilities of Administrative Tiers
Municipalities address self-government issues and represent the state
administration; districts solely represent the state administration.
Table 6A.4
|
FUNCTIONS |
Municipalities |
District
Office |
Regional Offices of Central Administration |
|
EDUCATION |
|
|
|
|
1. Preschool |
|
|
|
|
2. Primary |
x |
x |
x |
|
3. Secondary |
|
x |
x |
|
4. Technical |
|
x |
x |
|
5. Other (special care) |
|
x |
x |
|
SOCIAL WELFARE |
|
|
|
|
1. Nurseries |
x |
x |
x |
|
2. Kindergartens |
x |
x |
x |
|
3. Welfare Homes |
x |
x |
|
|
4. Personal Services for Elderly and Handicapped |
x |
|
|
|
5. Special Services (for homeless, families in crisis, etc.) |
x |
|
|
|
6. Social Housing |
x |
|
|
|
7. Other |
|
|
|
|
HEALTH SERVICES |
|
|
|
|
1. Primary Health Care |
|
|
|
|
2. Health Protection |
|
|
x |
|
3. Hospitals |
x |
x |
|
|
4. Public Health |
|
x |
x |
|
5. Other |
|
|
|
|
CULTURE, LEISURE, SPORTS |
|
|
|
|
1. Theaters |
x |
x |
|
|
2. Museums |
x |
x |
|
|
3. Libraries |
x |
x |
|
|
4. Parks |
x |
|
|
|
5. Sports, Leisure |
x |
|
|
|
6. Maintaining Buildings for Cultural Events |
x |
x |
|
|
7. Other |
|
|
|
|
PUBLIC UTILITIES |
|
|
|
|
1. Water Supply |
x |
|
|
|
2. Sewage |
x |
|
|
|
3. Electricity |
x |
|
|
|
4. Gas |
x |
|
|
|
5. Central Heating |
|
|
|
|
6. Other |
|
|
|
|
ENVIRONMENT, PUBLIC SANITATION |
|
|
|
|
1. Refuse Collection |
x |
|
|
|
2. Refuse Disposal |
x |
|
|
|
3. Street Cleaning |
x |
|
|
|
4. Cemeteries |
x |
|
|
|
5. Environmental Protection |
x |
x |
x |
|
6. Other |
|
|
|
|
TRAFFIC, TRANSPORT |
|
|
|
|
1. Roads |
x |
x |
|
|
2. Public Lightning |
x |
|
|
|
3. Public Transport |
x |
x |
|
|
4. Other |
|
|
|
|
URBAN DEVELOPMENT |
|
|
|
|
1. Town Planning |
x |
x |
|
|
2. Regional/Spatial Planning |
|
x |
|
|
3. Local Economic Development |
x |
|
|
|
4. Tourism |
x |
|
|
|
5. Other |
|
|
|
|
GENERAL ADMINISTRATION |
|
|
|
|
1. Authoritative Functions (licenses, etc.) |
x |
x |
|
|
2. Other State Administrative Matters (electoral register, customs
inspection, environment, special facilities, etc.) |
x |
|
x |
|
3. Local Police |
x |
|
x |
|
4. Fire Brigades |
x |
x |
|
|
5. Civil Defense |
|
x |
|
|
6. Consumer Protection |
|
|
x |
|
