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FINANCIAL MISSION OF LOCAL AUTHORITIES

Автор Доклада: 
Buryachenko A.E.
Награда: 
FINANCIAL MISSION OF LOCAL AUTHORITIES

UDK 336.1:352

FINANCIAL MISSION OF LOCAL AUTHORITIES

Buryachenko A.E., Ph.D., Candidate of Economic Sciences, Docent,
Kyiv National Economic University by Vadym Hetman

 

The issues of financial support for the development of local self-government are investigated in the article. The classical theories of local self-government are examined. The necessity of forming financial mission of local authorities is well-grounded.

Keywords: local authorities, financial mission, local self-government, local budget.

 

Yet Alexis de Тоcqueville, a prominent French political thinker, historian and political figure of the ХІХ century, emphasized the role of local self-government for the formation of democracy: «Communal institutions play the same role for the establishment of independence as primary schools do for science; they open to the people the way to freedom and teach them to use this freedom, to enjoy its peaceful character. Without communal institutions nation can form a free government, however it will not acquire the veritable spirit of freedom» [1, p. 142]. According to this utterance, we can assert that the development of local self-government is in direct dependence on the degree of maturity and development of the state. The higher the traditions of authoritarianism and centralization in the state (and they for us, unfortunately, have rather deep roots), the more dangerous the limitation of local self-government is.

The issues of the development of local self-government, and, accordingly, its financial support were studied deeply enough by such prominent western scientists-economists as K.Zimmermann [2], D. Buchanan [3], R. Musgrave [3, 4]. In the last decade some home scientists as I. Lunina [5], S. Yuriy, V. Fedosov [6] as well as the author of this article [7,8] also devoted their works to the research of possibility of increasing financial independence of local authorities.

In essence the nature of the institution of local self-government is self-discipline of population, that allows in fact to regard local self-government as the phenomenon of public life. It is an institute which is not less important than freedom of conscience and other constitutional bases of the democratic system. In conformity with two public needs - effective management and development of democracy, local self-government is created not only for the purpose of better administration or in order to provide the population with public services but also for the guarantee of individual freedom, development of civil independence and responsibility. It assists the development of self-regulation, which is the basis of stability of society and state. The theory of state and law underlines that self-government stipulates the coincidence of the subject and the object of management, in other words, the participation of citizens in taking decisions they are concerned about.

Nowadays a variety of practice of local self-government determines the theories, formed mainly in the XIX century: a theory of free community; a publicly-economic theory of management; a state theory.

The basis of the theory of free community is an idea about a natural and inalienable right of community to manage the businesses, which was adopted from the Belgian right. This theory emphasizes that community is historically primary but not state. The principles of organization of local self-government that follow from this theory are: the bodies of local self-government are the bodies of communities (local associations), not the state ones; elected by the members of community.

It is underlined that own affairs of communities are different on the nature from those of state, that governmental bodies have no right to interfere in them, they must only watch that community acts within its competence. As in the case with human rights, the role of the state is not to «endow» the community with rights but to guard and guarantee these rights.

Grounding the basic sign of local self-government, the publicly-economical theory of management put to the forefront not the natural rights of the community but non-governmental, mainly economical nature of activity of bodies of local self-government. Self-government, according to this theory is management of the affairs of local economy. At the same time this theory, as critics marked, mixed up self-governing territorial units with private associations (industrial companies, charitable organizations).

In accordance with the state theory of self-government, advanced by the German jurists, local self-government presents the form of organization of state administration at a local level. Plenary powers in the field of local self-government are given by the state, have a state power as a source. However unlike central state administration, local self-government is carried out by non- governmental officials, but through locals, who are interested in a result of local self-government. The transmission of some tasks of state administration to local associations, from the point of view of state theory, is called to take more effective decision of these questions at a local level. A state theory examines the local bodies of management, foremost, as agents of central public bodies and institutions on providing the population with services in accordance with national standards and under national leadership.

In turn the conception of dualism of municipal management interprets municipal activity as independence in purely local affairs and subordination in execution of certain state functions. It pushes a thesis about dual character of local self-government. When bodies of local self-government, carrying out corresponding administrative functions, are beyond local interests, they must operate as an instrument of state administration.

Popularity of any of these theories in every country always depends on the great number of reasons of historical and national character, on the general democratic or autocratic orientation of the political system. The distinction between theories is not always speculative, but effective, administrative, because carrying out any reform of local self-government requires the choice of one of the theories as its conceptual basis. This choice always has a world view character, and that is confirmed by the history of formation of local self-government in the world.

The bodies of local self-government are a minimum unit of power, but, nevertheless, the unit, the nearest to people, to public needs, the principles of work of which are directed, in the end, to the execution of power in the name of people, being a subject and the only source of this power. This is the main mission of bodies of local self-government. The introduction of a concept a «mission» for understanding of activity of local administrative structures allows to emphasize their long-term realization of constitutional rights of citizens and their guarantees. In the end the establishment and realization of a clearly strategic aim becomes a part, a sense and content of administrative activity both for public bodies and governmental and municipal officials. Fundamental constitutional principles form a background which allows to find out the nature and the content of financial mission of local self-government:

а) the nature of mission of local governmental institutions is of nationwide importance,
b) the content of financial mission of local self-government depends in a great deal on their self-regulation, as state laws do not formulate the tasks for municipal power to full extent, that, for one thing, complicates the process of development, and for another - allows quickly and adequately to react to the needs of society.

Mission is a primary purpose of organization, the highest concept in the hierarchy of aims. Although a correctly determined mission has always general philosophical sense, nevertheless it necessarily carries in itself something that makes it unique in its way, characterizing exactly that organization where it was drawn out. It is necessary to mark that mission is core, but not the only element of hierarchy of aims of organization. Such concepts as «vision», «values», «aims», «indexes of effectiveness», «having a special purpose indexes», «key factors of success», «competences» are closely connected with a concept «mission». All these concepts are formulated on the basis of mission.

For realization of the financial mission local authorities must provide adequate financial support. Really, the proper place is taken by local finance in realization of common national aims, determined in the documents of development of society. They are as follows: improvement of life of people, increase of competitiveness in the global system, strengthening of bases of democracy. A central institute of the system of local finance is local budgets which are the instrument of financing of government spending, which is directly related to solving the problems of economic and social development of areas. A large part of government spending, coming from local budgets, spends on housing and communal services, health care, education, physical culture and sport, culture, art and mass media, social security and public welfare, transport, communication service and information technology.

Almost 80 % of all financial resources of local budgets go on social needs, namely: social security and public welfare of population, maintenance of establishments and objects which belong to social and cultural spheres. Local budgets play a considerable role in financing of social expenditures, which in the difficult transitional period, are necessary for solving social conflicts and problems which arise up because of sharp stratification of society, the growth of unemployment, the necessity of defense of socially unprotected layers of population - children, single mothers, pensioners. Local budgets nowadays to a great extent predetermine the level of public welfare, and, accordingly, are one of the main sources of satisfaction of wants and needs of individuals.

Approximately 20 % of finance of local budgets in Ukraine is used for the development of the economy of administrative and regional units and renders assistance so that industry, agriculture, transport and communal economy can function properly. Budgetary resources provide the development of strategically important regions and areas and make it possible to carry on structural reorganization. As experience shows, sponsorship of certain commercial enterprises is most effective exactly at a local level, as it creates possibilities for reasonable financial approach and for better control over the available expenses.

Local self-government is a key factor of democratization of a society. If to examine government activities locally and to separate them from the duties of representatives of local authority, it will be clear that all people’s wants and needs (their social employment, health, education, salary and housing) are within the competence of local authorities. Local authority, as a difficult multilevel open system, is characterized by a variety of aims, corresponding to the needs of surrounding reality. Local self-government, thus, is the most fast changing category of state power, optimization of which leads to strengthening of power in the country on the whole. Local self-government allows to open out the bodies of state power to society, makes them interdependent. The dynamic and open nature of this level of power allows to optimize the relations of all branches of power in place, strengthens an authoritative vertical line at a state level, being not only its smallest unit, as was mentioned above, but its basis.

The task of state importance is to provide a guaranteed minimum of citizens’ current needs that must be secured at public cost and it does not matter whether there is a local government or not. Since local self-government is an authority, created by municipal population from people who know all needs and problems of the area, it is objectively the most effective power from the point of view of ability of decision-making of local importance under specific circumstances in a separately taken area and acts for the benefit of its population. It is the countries of Western Europe that have the same approach to the problem of local self-government and make the reforms of decentralization, which stipulate the transfer of the power, on providing for the wants and needs of individuals, to a municipal level, although local budgets are often formed getting 40-70% from state subsidies.

Analyzing the experience and the approaches relating to distribution of functions among the levels of power, it is can be seen that, as a rule, distribution takes place «from top to bottom». That is: the higher governmental body independently makes decision concerning what functions to give «downward», and what to keep to itself. But it is necessary to remember that political interests and actions are formed on the basis of people needs and social processes but not vice versa.

The main aim of a local governmental body is to provide high level living standards for all members of a society. However in practice and in many researches, devoted to the problems of municipal administration, the significance of members of association in achievement of common social goal on improving living standards is almost not taken into account. A leading role in achievement of common social interest is taken by the bodies of self-government. In such a situation citizens play role of observers, supplicants, complainants in front of the bodies of self-government. As a result, local self-government turns into continuation of the vertical line of state administration, and, accordingly, loses its real essence [9, p.24].

Local authority must maximally satisfy the needs of population and enterprises of corresponding area providing them with proper services. The experience testifies that any system can not start its activity or develop, if it does not have a clear plan of activity. The bodies of local authority in their activity must follow the plans of work or services. It is impossible to provide services, not defining their necessity, or not estimating the possibilities (economic potential). Otherwise local self-government stops being an effective instrument of development of areas. It fails to satisfy needs and interests of its habitants and loses its essence in solving the problems of local importance.

The main criterion of efficiency of local authority must be the ability of taking decisions of local importance, foremost from the point of view of maximal satisfaction of habitants’ interests of corresponding area. Hence the necessity to build local self-government as power, close to people arises. Nobody knows individuals’ actual needs better than a man who lives in a particular area and enjoys the welfare benefits which help to maintain his vital activity. Not always a man is able to provide himself with all welfare benefits to a full degree. In such a case he searches for a performer of functions (services), who will be able to supply them with a maximal utility. To sum up, the main financial mission of local authorities is to meet these needs.

It is necessary to add, that besides the rights and duties it is financial resources that must be transferred along the vertical line of power and to be in volumes sufficient for high-quality implementation of their functions so that local authorities would be able to take competent decisions to report back to citizens of the area as well as to the state. Therefore for the distribution of authoritative powers among the different levels of state administration there is a necessity to adhere to the principle of expediency, according to which the performance of a certain duty is entrusted to that level of power, which will execute it better and as economically and efficiently as possible.

 

Literature:

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  2. Циммерманн X. Муниципальные финансы: Учебник: Пер. с нем. — М.: Дело и Сервис, 2003. — 352 с.

  3. Buchanan J.M., Musgrave R.A. Public Finance and Public Choice: Two Contrasting Visions of the State. – Cambridge (Mass.), London: The MIT Press, 2000. – IX, - 272 p.

  4. Classics in the Theory of Public Finance / Ed. by R.A. Musgrave, A.T. Peacock. – London etc.: Macmillan; New York: St Martin’s Press, 1967. – XIX, - 244 p.

  5. Луніна І.О. Державні фінанси та реформування міжбюджетних відносин. — К.: Наук, думка, 2006. — 432 с.

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  7. Буряченко А.Є. Децентралізація соціальних зобов’язань держави // Формування ринкової економіки: Зб. наук. праць. Вип. 23. – К.: КНЕУ, 2010. – С. 373-381.

  8. Буряченко А.Є., Соломенко Н.О. Правові домінанти фінансової самостійності органів місцевого самоврядування // Проблеми законності: зб. наук пр. / Відп. ред. В.Я. Тацій, - Х.: Нац. юрид. акад. України, 2010. – Вип. 109. – С. 148-155.

  9. Оніщук Г.І. Проблеми розвитку міського комплексу України: теорія і практика. – К.: Наук.світ, 2002. – 506 с.

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