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At the same time, certain specifics of local government in the Leningrad oblast created problems in the implementation of the municipal reform. For instance, the existence of several urban settlements (including rather small ones, such as towns of Svetlogorsk and Kommunar) as independent municipal entities was doubtful in the situation of the reform of the territorial structure. The uneven economic development of the territory made the political component a more important factor as concerns the issue of municipal boundaries.

Bobrov I. V., Lyubushkina Ye. V. Daite nam istochnik dokhodov i Gatchina ne ustupit Versalyu // Munitsipalnaya vlast, 2002, No. 1.

In this situation, the administration of the Leningrad oblast demonstrated the following approaches to the problems of territorial organization of local governments.

First, the adopted decisions did not envisage any changes in the boundaries of the existing municipalities at the district level. According to a representative of the oblast administration, it is also going to follow this approach in the future. As concerns the boundaries of the existing territorial units (volosts, settlement, etc.), the approaches should be different. For instance, in the Vsevolzhsky district municipalities at the settlement level were created within the boundaries of existing volosts, while in the Vyborg district territories were enlarged: the number of settlement municipalities is by 8 less than the number of volosts. At the same time, in both cases the sizes of settlements are rather large: the average population of one settlement in the Vsevolzhsky district is 8 thousand, while in the Vyborg district 13 thousand. Only in few settlements of the Vyborg district the size of the population is below 10 thousand, in the majority of settlements population makes from 10 to 20 thousand residents (80 thousand in the town of Vyborg).

Second, the new territorial structure was primarily formed from the top. Basing on the information provided by districts, the oblast administration worked out its own variant of the territorial structure and agreed it with district administrations. The representatives of settlements and public did not participate in this process. It may be assumed that this approach prevented optimization of the territorial structure, since the specifics of individual settlements were not taken into account. For instance, representatives of certain volost administrations proposed variants of enlargement of territories different from those envisaged in the law, however, they had no institutional possibilities to voice and support their opinions. Therefore, alternative variants were taken into account only in the case they were presented personally to the oblast leadership.

Third, in the two districts included in the law there were formed no urban okrugs. All previously independent municipal entities (towns of Svetlogorsk and Sertolovo, as well as the Koltushskaya volost) were included in the composition of districts as urban and rural settlements. At the same time, no effort was made to obtain their agreement. Moreover, according to representatives of the oblast administration, similar policies will be pursued with respect to larger towns Gatchina, Volkhov, etc. This position seems rather doubtful, especially in the light of the legislation currently in force. Article 84 (3) of the law On general principles of organization of local governments in the Russian Federation envisages that urban settlements, which had the status of municipal entities on the day this article entered into force should be urban okrugs in the case the law of the RF subject (as established by the provisions of section 2 of article 11 and section 7 of article 13 of this federal law) did not set forth other arrangements as on February 1, 2005. at the same time, section 7 of article 13 envisages that the population should express its agreement with such changes. However, this approach was approved by the Leningrad oblast Procurators office, which did not found any infringement on the legislation in this case.

The similar approach to the towns also rises certain questions. In the modern world, exactly towns are the centers of economic growth and one of the objectives of the municipal reform should be the creation of conditions facilitating increase in towns competitive capacities. It seems doubtful if the inclusion of towns in the composition of districts answers this objective. These actions may negatively affect the investment climate in urban centers, since investors have to deal with an additional bureaucratic tier at the level of districts.

Besides, this model may constrain introduction of innovative approaches to municipal administration which often (although not always) concentrates in towns. The real problem faced by the towns of the Leningrad oblast and deteriorating their investment attractiveness is the lack of free territories necessary for investment.

However, it is still doubtful that this problem may be settled by inclusion of towns in the composition of districts.

As concerns the assessment of the financial consequences of the reform of the territorial structure of local government, this work is underway, however, already after the decision on formation of municipalities at the settlement level had been taken. In the process of decision making, financial consequences of different variants of territorial organization are not taken into account. At present, the financial assessment of the consequences of reforms is available only for the Vsevolzhsky and Vyborg districts.

The methodology of assessment of financial consequences of the reform is of considerable interest. The specifics of this methodology is that financial calculations are not strictly linked to the local budget standards set forth by draft Tax and Budget Codes, since these standards may be changed in the process of discussion of these drafts in the State Duma. Alongside with the assessment of consequences of assignment of these standards there is carried out the calculation of the so called revenue potential for each municipal entity. The revenue potential includes all tax revenues collected within a given territory with the exception of amounts due to the federal budget, i.e. the total amount of tax revenues, which may be divided between the oblast and local budgets. This indicator demonstrates the maximal possible level of tax assignment, which may be achieved at the regional level.

Alongside with the calculation of the revenue potential, there was also carried out the evaluation of the average oblast per capita expenditures across municipalities of different types: settlement, municipal district, an urban okrug. The comparison of the consequences of assignment of sources of financing in accordance with the amendments made to the Tax and Budget Codes, the estimated potential per capita revenues, and the average oblast budget security level at the settlement level was carried out as concerns settlements in the Vyborg district (see Figure 1). The data for year 2003 were used for the calculations.

In the case the average oblast budget security level is assumed to be the level, to which the budget security of settlements should be equalized, a thorough analysis may be of considerable interest for the further formation of the system of interbudgetary relations. The analysis embracing all municipal entities in the oblast permits to answer a number of principal questions, i.e.:

1) What municipal entities will need subsidies at any level of assignment of sources of financing to local budgets (apparently, in the Vyborg district there will be 4 to 5 such settlements out of 14);

2) If there is the possibility to assign sources of financing of local budgets at the regional level in addition to those envisaged by the federal legislation (if we proceed from the data on the Vyborg district, this possibility is apparently available, however, in this case it is necessary to analyze the totality of settlement municipalities in the oblast).

At the same time, such an analysis (which is preliminary and not detailed) can not answer the question what concrete additional taxes should be assigned to municipal entities.

Figure 1.

Possible spread of budget revenue security levels of settlement municipal entities in the Vyborg district of the Leningrad oblast depending on the assignment of the sources of financing.

20000,15000,10000,5000,0,Budget security as per draft amendments to the RF Tax and Budget Codes Maximal possible budget security (revenue potential) Average budget expenditure security across the settlements of the Leningrad oblast (estimates) In the framework of the generally interesting approach used in the Leningrad oblast for assessment of financial consequences of the reform of the territorial structure of local government, there are certain controversies. For instance, it is difficult to understand why expenditures are compared only to tax revenues, and not all own revenues of municipal entities. The methods employed to find out the average oblast per capita expenditures of municipal entities of different types give rise to doubts, since in the result the expenditures of urban okrugs (Rub. 3971.3 per capita) are significantly below the amount of expenditures of settlements and districts (Rub. 2802.5 and Rub. 2137.3 per capita respectively). Moreover, the revenue potential is calculated basing on the indicator of marginal withdrawals an analogue of a negative transfer, where the actual budget security of municipal entities is compared with the average oblast expenditure security, the economic nature of which is difficult to understand.

Budget security, Rub. per capita However, certain (mainly technical) flaws do not overweight the significant advantages of the methodology, which ensures, first, an objective measurement of the revenue potential independent of the concrete standards (which have not been set forth as yet), and, second, orientation towards single average criteria and not specific expenditures of each municipality.

I. Starodubrovskaya, M. Slavgorodskaya, I. Bobrov Issues discussed at the meetings held by the Government of the Russian Federation on May 13, 20, and 27 of The most interesting documents reviewed in the course of the meetings held by the RF Government in May were the draft law On measures aimed at the establishment of accrual mortgage system ensuring provision of housing for servicemen and their family members (the meeting held on May 20), the report of the RF Minister of Economic Development and Trade German Gref On the forecast of the level of prices (tariffs) on the products (services) of natural monopolies in 2005 (the meeting held on May 27), and the draft federal law On the placement of orders for procurement of goods, works, and services for state and municipal needs presented at the meeting held on May 13. This draft law is aimed at the systematization of the RF legislation concerning the state and municipal procurement and its harmonization with the international legislation and international practices. Many recommendations worked out by the IET in the sphere of streamlining of the institute of state and municipal procurement, in particular those presented in the paper Improvement of the system of procurement of goods, works, and services for state needs (IET Working Papers Series, issue No. 66) were reflected in the final version of the draft law presented by the Ministry of Economic Development and Trade (MEDT).

The meeting of the RF Government held on May 13 of 2004.

At the meeting of the RF Government held on May 13, 2004, A. V. Sharonov, the acting RF Minister of Economic Development and Trade presented the draft federal law On the placement of orders for procurement of goods, works, and services for state and municipal needs. The considerable merit of the draft law is the fact that it embraces procurement of all products carried out in the RF territory at the expense of respective budgets and extra-budgetary sources of financing at the federal, regional, and municipal levels. We believe that this will allow to exclude gross infringements on the competitive principles of procurement at the level of RF subjects. Besides, the draft law introduces a number of positive innovations, for instance:

- closed tenders may be held only in the case the object of state or municipal contracts is procurement of goods, works, and services for state or municipal needs constitutes state secret, what expands the sphere for open tenders;

- the draft law establishes publicly accepted criteria of assessment of tender bids and determination of tender winners;

- it envisages the possibility to appeal against the actions (failures to act) on the part of the customer in the course of application of procedures governing the placement of orders for procurement of goods for the state and municipal needs to the authorized federal executive authority vested with the responsibility to control the procedures governing the placement of orders (in the course of placement of orders for procurement for federal needs), or the respective authorized agency of the RF subject (in the course of placement of orders for procurement for the needs of the RF subject), or the respective authorized agency of the local government (in the course of placement of orders for procurement for municipal needs). At the same time, the procedure governing the protection of rights does not exclude the possibility to take legal action. This provision of the draft law should employ more operative methods of protection of tender participants as compared with the court proceedings;

- the draft law envisages the state support for enterprises of the penal system and public associations of invalids in accordance with the international practices;

- it determines the price limits for small scale procurement below which the placement of orders for procurement of goods, works, and services for state and municipal needs may be carried out without organization of tenders (procurement from the single supplier (contractor). This limit corresponds to the cap set forth by the Central Bank of Russia as concerns cash payments made between legal entities in the framework of one transaction (at present this cap is at Rub. 60 thousand);

- the draft law ensures that agent organizations should have the access to participation in tenders for procurement of products for state and municipal needs on the condition they answer certain qualification requirements;

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