“What we need is strong and competent local government. It is essential to Russia’s successful development and to opening the vast potential of all its territories.” Vladimir Putin At a meeting of the Presidium of the Presidential Council on the Development of Local Government in Pskov
Transcript of the meeting:
Vladimir Putin: Good afternoon, esteemed colleagues,
We are meeting today in Pskov, one of the oldest cities in Russia, which has a long history and unique tradition of self-government. However, today I would like to speak about the present and the future, and to discuss how we can ensure the rapid development of the regions and regional centres, provincial cities and regional capitals, as well as strengthen the potential and opportunities of local governments...
“What we need is strong and competent local government. It is essential to Russia’s successful development and to opening the vast potential of all its territories.”
Vladimir Putin At a meeting of the Presidium of the Presidential Council on the Development of Local Government in Pskov
Transcript of the meeting:
Vladimir Putin: Good afternoon, esteemed colleagues,
We are meeting today in Pskov, one of the oldest cities in Russia, which has a long history and unique tradition of self-government. However, today I would like to speak about the present and the future, and to discuss how we can ensure the rapid development of the regions and regional centres, provincial cities and regional capitals, as well as strengthen the potential and opportunities of local governments. As Alexander Solzhenitsyn said, people’s everyday life is 80% dependent on local issues rather than national ones, and, therefore, they depend on local government.
The cities you govern are landmarks of your regions and represent the hearts of regional economies, culture, and education. Nearly 54 million people, which is fully a third of the Russian population, live in regional capitals. Their well-being and quality of life are directly dependent on the effectiveness of your work. I would like to repeat that what we need is strong and competent local government. It is essential to Russia’s successful development and to opening the vast potential of all its territories.
I would like to start with the most crucial issue, which is, of course, funding. In the course of the reform of local government, we clearly defined areas of supervision and sources of funding and how they are to be divided between the [federal and regional] levels of government. I know that we still have many problems with this and that not everything is going as well as we would like – there are still a lot of issues to be addressed. Perhaps, many of them require approval and amendments. But, in general, we have tackled the key questions of allocation and the division of supervisory areas and funding between different levels of government.
Consequently, in the past five years, the urban districts’ revenues have almost doubled. I would like to stress that I am not only talking about the administrative centres but also about small towns. In its turn, this will help almost double practically all types of spending, including on social policy, housing and public utilities, and culture and education. However, it is well known that despite this increase in revenue, there is not enough money for current needs and for promising new projects. Even cities with more than one million residents draft their budgets with a deficit. For example, Novosibirsk has a budget deficit of 1.7 billion roubles, Nizhny Novgorod – 1.4 billion roubles, Rostov-on-Don – 1.2 billion, and Samara – 0.5 billion roubles.
At the same time, the population of major cities is growing. Since the 2002 census, it has grown by more than one million. Accordingly, the scale of issues is expanding because urbanisation requires conceptually new approaches to urban development, above all in regional capitals. Meanwhile, interbudgetary transfers account for almost half of the cities’ budget revenues. This often puts municipalities in the position of supplicants and, most importantly, does little to create incentives for their initiative.
At the federal level, we have devised a unified approach to providing financial aid to the Russian regions. This issue has been resolved, but the interaction between regional authorities and municipalities has not yet been streamlined. All regional authorities act as they deem appropriate. Meanwhile, regional authorities prefer to use targeted subsidies rather than so-called unrestricted aid to balance out their budgets. Naturally, it is easier to supervise subsidies, but this method weakens the financial autonomy of local governments. I believe that it would do no harm for municipalities to have greater freedom in using regional funding, provided that they act with correspondingly greater responsibility.
As for targeted subsidies, they should above all be set aside for co-financing investment projects rather than spent on the current needs of various agencies, let alone those of the local authorities themselves. I believe it is necessary to draft amendments to the Budget Code entailing a unified procedure for providing funding to municipalities. We need a mechanism that will help balance out budgets and catalyse urban development. Certainly, municipalities should primarily rely on fiscal revenues. I know that suggestions have been voiced to revisit the issue of tax distribution. We can look into it. Meanwhile, our laws already provide for the regional authorities’ right to pass some regional taxes and duties on to municipalities. I believe that regional authorities should use this measure more actively.
As for revamping tax distribution, there are certain risks, and you, ladies and gentlemen, are aware of them. These are risks that we cannot ignore or neglect for a number of reasons both geographical and economic in nature. The development of Russia’s regions and individual municipalities is sometimes very disproportionate.
For reference, ten Russian regions accounting for slightly more than a quarter of the country’s population generated 60% of the federal budget’s tax revenues last year. As for the municipalities, 65% of local budget revenues are generated in major cities.
At the same time, I agree that the municipalities that work actively and ambitiously should have additional incentives and resources to see their plans through. Let’s proceed from this principle.
Amendments to the Tax Code will soon be adopted. Revenues from patents will be almost completely passed on to municipalities – some 90% of them, to be exact. According to preliminary estimates, efficient use of the patent system can help local authorities attract billions of roubles, which is tens or even maybe hundreds of times more than what they currently have. So, municipalities will receive a powerful tool with which to replenish their budgets. Naturally, how it will be used depends upon municipal leadership. Isn’t it the municipalities who should work most actively to develop small and medium-sized businesses? We need to make sure that people have a secure foothold [in local economies], and then the revenues to city budgets will come.
In addition, real estate tax can soon become a significant, if not primary, source of local budget revenues. However, we first need to thoroughly consider the limits of tax rates and exemptions, so that socially vulnerable groups are not adversely affected. We cannot tolerate a situation in which pensioners and people with limited means and disabilities have to spend their entire pensions or social benefits on real estate taxes for their flats or modest garden patches.
There is something else I would like to point out. Greater financial freedom and additional sources of revenue will do nothing for municipal development without quality management and strong budget discipline. It is clear that the efficiency of urban management cannot be ensured merely through endless inspections by federal agencies.
more to be posted soon...
источник новости: http://premier.gov.ru/eng/events/news/15312/
