Govt approves bill introducing task-based local council financing

Hungary’s government has approved a bill that would limit local council financing to covering tasks that are not taken over by the central government, state secretary for local government András Tállai said at a press conference on Thursday.

The bill aims to restructure the system of local government in Hungary, because under the current system local council tasks lack transparency and the roles of the state and local governments have become entangled, resulting in local governments’ indebtedness, Tállai said.

The bill would establish a task-based system of financing for local governments from January 1, 2013, he said, explaining that local governments could carry out only those tasks for which they have the financing. Already from the beginning of 2012, conditions for issues of municipal bonds and local council borrowing would be tightened and a new system of legal oversight introduced, he added.

Tasks that would remain with local councils include running pre-schools in the area of education and providing basic medical care in the area of healthcare, Tállai said. A big part of public administration as well as catastrophe protection tasks would be taken over by the central government, thus the state will take over fire departments, he added.

The bill would allow independent local governments only in communities with 2,000 or more residents. Smaller communities must ally with their neighbors or join with another local government.

The distribution of tasks between the Budapest local council and the local governments of the capital’s districts would become clearer and more transparent under the bill, Tállai said.