Local Authorities: Under the knife of optimization

Summary

The last year was marked by a broad re-organization of the primary level of administrative and territorial structure (ATS) of the country within the general process of budget cuts on administration. Nevertheless, the effectiveness of national policy in regions is falling. The rising number of unpopular measures is working out negatively on the degree of trust of the population in local authorities. Despite this fact the Belarusian officials are not taking any measures to raise the authority of local councils and executive councils, except the administrative units of the lowest level, i. e. village councils.

The national authorities are trying to solve problems of managing the regions by traditional methods: i. e. by staff rotation and threats of criminal persecution. This does not stimulate the local administrations to manage the regional economies effectively. Besides, the regional manpower policy hinders creation of ruling clans that could pose a threat to the presidential power. Nevertheless, the allocation of regional budgets shows that the bureaucratic establishment has strengthened its group interests in the regions.

Trends:

• The state optimizes budget expenses on regional administration by re-organizing administrative units;
• Regional and local authorities are less effective and controllable in implementation of the national programs and decisions of the Minsk centre;
• The regional and local administrations are rotated to prevent formation of strong bureaucratic groupings;
• The deputy corps of local councils are reduced to strengthen control over the election procedures, the self-government bodies are becoming more and more closed for the control of the local population.

Re-organization of local councils: the ‘upper classes’ want it, the ‘lower classes’ cannot do it1

The Belarusian authorities realize the necessity of changing the existing system of administering territories, especially in rural areas, and in 2013 they undertook more active measures of reducing the number of village councils. This decision remains quite unwelcome among the people that are still not ready for such measures. But the re-organization of administrative units on the primary level is not a part of the long-term strategy of the Belarusian authorities of reforming the system of public administration. The reduction of village councils is the result of the general policy of optimizing budget expenses on the state apparatus.

The Belarusian authorities mulled the possibility of closing all local councils of the primary level by converting them into local administrations. It is worth mentioning that village councils have far less potential to influence the social and economic development of the territory than agricultural enterprises. The majority of the village councils are dependent in their financial issues on the budgets of the higher level. Moreover, their powers and functions have reduced over the last years. Meanwhile, the structure of the population has changed drastically in favor of cities over a few decades. The number of population in some village councils has dropped to 500 people. This lead to the situation when many village councils cannot perform their functions because of insufficient financing and staffing. The following are recommendations of the presidential administration on the re-organization:

• The borders of the village councils should coincide with the borders of agricultural enterprises, which can facilitate practical help to local people, especially the elderly;
• The population of the administrative unit should be over 2,000 people, which is the lowest number necessary for public services to be offered at the expense of the budget.

Nevertheless, not all regions followed these guidelines. The greatest changes of the ATS of the primary level took place in the central and the two western regions (see Table 1). Viciebsk, Homiel and Mahiliou regions were less responsive to the Minsk initiative, although the density of the rural population is lower in these regions than in western ones. In Mahiliou region local authorities decided to set 1,000 people as the minimal number for the rural council to be preserved. But even this level was not reached.

In the majority of regions the national policy of re-organization was opposed by the local population and some functionaries. The village councils in Homiel and Viciebsk regions practically saw no changes, despite that they did not comply with the requirements of the population minimum and borders of agricultural enterprises. Despite that these measures were opposed by the rural population, the latter took no significant action to defend their interests. All in all, in 2013, 152 village councils were dissolved, and 31 township councils were turned into village councils.

It should be noted that this re-organization was in line with the national policy of reducing the state machinery, announced by President Lukashenko in late 2012. The national leader did not back the initiative of some functionaries to dissolve village councils. The initiative to substitute village councils with administrations appointed by the district authorities was lobbied by the Central Election Committee. This is because of the difficulties that it faces organizing elections to the local councils because of limited powers of the latter and low political activity of the population. During the last local election campaigns the number of elected deputies compared to the number of mandates increased, peaking in 2010. Out of 21,303 posons in the councils of all levels one deputy was not elected to a district council, one – to the township and 12 – to village councils (see Table 2). This was achieved by reducing the number of deputies and dissolving councils.

For the local elections of 2014 the number of constituencies was reduced to 18,816, which is by 11.77% fewer than in 2010 and by 23.41% fewer than in 1999. The number of deputy corps has changed not only because of re-organization of councils of the primary level but also as a result of reduction of positions in district councils. Hence, by reducing the deputy corps the central authorities facilitate the election process in regions and filter disloyal representatives in local councils.

For the local elections of 2014 the number of constituencies was reduced to 18,816, which is by 11.77% fewer than in 2010 and by 23.41% fewer than in 1999. The number of deputy corps has changed not only because of re-organization of councils of the primary level but also as a result of reduction of positions in district councils. Hence, by reducing the deputy corps the central authorities facilitate the election process in regions and filter disloyal representatives in local councils.5

Local elections: bureaucratized councils

A range of unpopular measures of local administrations in 2013 worked out negatively on their authority among the population. For the first time the level of trust in local authorities before the last election campaign has fallen below 30%. (see Table 3).

Besides, the majority of deputies of local councils of the 26th convocation, especially those of primary and regional levels, are directors of different institutions and local administration. Over the last decade self-government bodies have practically isolated themselves from the public opinion: only the candidates approved by the power vertical can be elected into them. This generates mistrust both of the local councils and the power vertical. In the rural areas many self-government bodies have faced another threat: the increasing political absenteeism and the critical downfall of the number of politically active citizens. Local authorities find it more and more difficult to find candidates, many refuse to become ‘popular representatives’. This stimulated the authorities to take a number of actions to increase the power of the councils of the primary level. The Council of cooperation of the local self-government bodies with the Council of the Republic developed respective amendments to the laws on the status of the deputies of local councils and on local government and self-government, as well as amendments to the Budget Code. They provide extra guarantees for the deputies of village councils and strengthen the local budgets. For example, the deputies suggested redirecting taxes paid by communal enterprises from district budgets to the budgets of village councils.

Local finances: change of priorities

In 2013, the amount of expenses on social policy, public health and education was reduced for the benefit of housing and communal services, residential construction, national economy and sport.7 But the level of subsidies to regions and districts has practically not changed since 2012. The total amount of subsidies to local budgets was BYR 39.84 trillion, or 32.7% out of the total national budget, whereas in 2012 – BYR 27.51 trillion, or 29.7%.

Out of 118 districts, 115 are subsidized. Only Minsk, Hrodna and Salihorsk districts did not receive any subsidies. The smallest amount of subsidies is received by Minsk region, whereas the budget of Minsk is self-sufficient. At that, the subsidies to 53 districts exceed 50% of the revenue part of their budgets. At the same time, 79 districts fall behind the average regional level of development.

The budgets of the primary level are gradually becoming financially independent. In 2010, there were 33 non-subsidized village councils, in 2011 – over 240, and in 2012 there were 288 of these.8 These are usually located near big cities, industrial centers and replenish their budgets by selling land and realty at auctions. The majority of such village councils are in Minsk district – 20.

The keys sources of budget revenues are profit tax from the communal and private organizations, income tax, net worth tax and deductions from the value added tax.

The key expenses of local budgets are on education, health care and subsidies for local housing services providers. At that, there is a tendency to decentralize management of the housing sphere and tariffs for housing and communal services (HCS). According to the Program of development of housing and communal services until 2015, powers to establish certain tariffs were transferred to the regional authorities. These changes have been made with the view that HCS tariffs will be brought up to cost in the future. At present, regional executive councils and Minsk city executive council are entitled to regulating tariffs on maintenance, overhauls, water supply, water disposal, use of elevators and living space. The government intends to change the ownership of joint stock ventures specialized in repair and maintenance of elevators from the national to the local level.

It should be noted that the authorities are no longer able to finance low HCS tariffs and sufficient maintenance services solely from the budget. To increase the share of the population in financing communal services, new institutions—committees of territorial self-government (CTSG)—are formed with introduction of self-taxation. For example, in 2013 the number of CTSGs in Minsk increased to 128 compared to 110 in 2012. In 2013, local budgets received BYR 3.4 billion from self-taxation.

Regional economy: exhausted mechanisms of development

As some regions face structural economic problems, local authorities take prompt measures to prevent social tension. At the same time, besides raising salaries, the local authorities fall behind the majority of indicators of regional social and economic development and national programs. Last year all regions failed forecast indicators of gross regional product (see Table 4). For the year 2014, these indicators were reduced in all regions by 2 to 3 times, which shows that mechanisms of regional development are exhausted.

It should be noted that local authorities failed the program of modernization of regional gross-product forming enterprises. Firstly, despite large investments from the national and local budgets, the competitiveness of Belarusian produce on external markets has not increased. Moreover, local administrations reported negative results of the program for social stability in the regions: the modernization leads to workforce cuts and increased unemployment. Secondly, the largest investments into wood processing demonstrated that the management of the public enterprises, together with local authorities, was absolutely incapable of managing these projects.

The program of housing construction, which is of critical importance for the current leadership, is stalling in the regions as well. During the year, the expenses of regional budgets on HCS and residential construction were significantly increased, nevertheless, chairperson of the State Control Committee A. Yakabson reported that in 2013 in all regions, except Hrodna region, 77 residential buildings were overdue, despite that the local authorities had promised to finish them in time. The State Control Committee also recorded ineffective measures of energy saving that resulted in estimated losses of BYR 328 billion.

At the same time, the interests of regions and Minsk sometimes clash. In early 2013, local authorities were entrusted with the task to regulate presence of major retail chains, which, in the majority of cases, represent foreign businesses. In late 2013, A. Lukashenko was very displeased with the rising share of foreign retail chains in the regions and Belcoopsoyuz (consumers’ cooperatives of Belarus), the main state monopolist, being ‘squeezed out’ from the market.

The key response of the central authority to the rising problems in regions remains traditional: staff rotation and threats of criminal persecution. The majority of the functionaries hold their positions for 3 to 5 years. Before each presidential campaign the head of state substitutes the least popular functionaries in the regions, to put all the blame for bad social and economic development on them. The heads of regional and city councils are appointed from candidates originally from other regions and districts, local professionals are usually debarred from the administrations. Besides, the country’s head often resorts to the anticorruption discourse and threatens criminal persecution for local functionaries, which, in the majority of cases, remain a matter of words. The existing power vertical secures social and political stability in the regions, which is sufficient for President Lukashenko.

Conclusion

In view of reducing resources, the central authorities are giving the local authorities more powers to replenish budgets and create new means for that. The state authorities are also trying to shift financing of local expenses onto the population. On the other hand, they are hindering the popular control over the distribution of local finances as the operations of self-government bodies are closed for the public. At that, both the local bureaucratic establishment and the central authorities are content with the status quo. The state leader regarded the local elections in 2014 as “an exam for the state authority” before the presidential campaign in 2015 and did not want any representatives of the opposition even on the local level. The directors and the establishment that dominate the local councils want to keep the process of budget allocation closed. As a result, the deputy corps of the councils of the 27th convocation will remain as bureaucratic as the previous ones, with a scanty amount of non-system representatives on the periphery. The main beneficiaries of the closed functioning of local authorities are representatives of the housing and communal sphere, residential construction and agriculture, as budget expenses on them are growing most rapidly. To balance that, the local authorities will be forced to carry on with the optimization of governing bodies in the rural areas, despite their unpopular character.