How much revenues – thus much responsibilities

Reaction of Coalition KUM to the draft Law on Local Self-Governments Financing

Coalition for transparency and fight against corruption at the local level (KUM) commends decision of the Government of Montenegro to finally systematically deal with local finances via new Law on Local Self-Government Financing, but warns that the draft that is currently up for a public discussion will not significantly improve the level of transparency and responsibility of municipalities towards citizens’ money.

Namely, the draft Law has remedial nature that reflects in transferring a part of revenues to municipalities. However, it does not deal with substantial problems that prevent financial stability of municipalities: irrational spending and problems on expenditure side.

Koalicija KUM

Draft Law continues to confirm privileged treatment of the Capital City and the Old Royal Capital in regards to amount of part of revenue on personal income which belongs to them, although Cetinje has its own multi-million development fund, and Podgorica has already an opportunity to collect higher revenues than all others. On the other hand, revenues of municipalities which belong to the coastal region, which also have problems with financial stability, and some of them are beneficiaries of the Equalization fund, will be reduced for approximately 3,6 million EUR due to change that revenues as per compensation for utilization of coastal zone should in their entirety be a revenue of the Public Enterprise for Coastal Zone Management of Montenegro.

Changes in the manner of allocation of funds from Equalization fund may be able to reduce injustice and favouring of certain municipalities, but draft law does not go into details of utilization of these funds, which instead of stimulus for development and overcoming underdevelopment still remain a revenue for patching up budget holes.

Norm that the right to withdrawal of funds from the Revolving fund, which is to be established, has municipality which signed contract on project implementation with donors or leading partner, should acknowledge also other modes occurring in the practice, such as pre-contract, decision on approval of funds for project implementation and similar.
On the other hand, draft does not contain more significant novelties in regard to accountability and transparency. Introduction of penal provisions is rendered meaningless if supervision over implementation of laws is left as a responsibility of non-existent budget inspection of Ministry of Finances.

This testifies that Ministry of Finances gave in under pressure of local self-governments which wish to resolve all problems with financial stability by new cession of revenues from central level, with no further efforts to collect source revenues, with no responsibility towards their citizens regarding the manner of spending of their money and with no intention to rationalize expenditure.

Coalition KUM points out that Draft Law on Local Self-Governments Financing will not achieve greater level of responsibility of municipalities or more rational management of the money that they already have, nor will it resolve black holes in data accessibility and transparency of operation of municipalities, neither of institutions and public enterprises at the local level. With no reforms in the manner in which municipalities spend the money, accompanied with strong and effective control mechanisms, there will be no financial sustainability either, no economic progress, and thus, no balanced regional development.

Coalition for transparency and fight against corruption at the local level (KUM) is comprised of 15 CSOs as follows: Centre for Civic Education (CCE), Centre for Monitoring and Research (CeMI), UL-Info from Ulcinj, Institute Alternative (IA), Za Druga from Petrovac, Centre for Development of Non-Governmental Organisations (CDNGO), Juventas, Bonum from Pljevlja, Active Zone from Cetinje, Democratic Centre of Bijelo Polje, Centre for Investigative Journalism of Montenegro (CIJ MNE), Union of Medical Doctors of Montenegro, Centre for Security, Sociological and Criminological Research ‘Defendology’ from Niksic, Monitoring Group Ulcinj – MogUL and Centre for Political Education from Niksic. The Coalition was formed within the framework of project ‘Let’s Put Corruption into Museum’, implemented by the CCE in cooperation with partners and with the support of EU Delegation to the Montenegro.