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Auditor Addresses Local Governments' Funding Conundrum

Auditor General Mihkel Oviir
Auditor General Mihkel Oviir Source: Photo: ERR

Auditor General Mihkel Oviir has cautioned that local governments could file judicial challenges to next year's state budget if the state does not better specify how public services should be divided on national and local levels.

Oviir, speaking in Parliament on May 16, mentioned a Supreme Court decision from last spring which criticized the state for the fact that local government functions were not divided up as national and local responsibilities, and for lack of a state financing system that distinguishes between national and thus state-budget-funded functions.

Oviir said local governments and the public should be involved in the discussion regarding what functions the local governments should perform.

"Should all local governments fulfill the same types of functions? And how to ensure that enough funding is allocated for the purpose?" said Oviir.

"I think the government should shine light on these questions much more than it has."

Otherwise, he said, the making of budgetary decisions next year could move from the chamber of Parliament to the judges' chambers. 

But Minister for Regional Affairs Siim Valmar Kiisler said a black-and-white line could be drawn between "national" and "local."

"The funding is guaranteed. Naturally for the recipient of the funds, it always seems that there is little money and the payer always wants to pay less, that the amounts are very large. As we know, money is always hard to come by."

At a local government roundtable held in Parliament on May 16, leaders mentioned the constraints.

"The arrangements for performing the functions imposed on local governments is not optimal and local governments lack a stable and constant revenue base; financial autonomy is non-existent," said the managing director of the rural local government union, Ott Kasuri.

Chairperson of the Praxis Center for Policy Research Annika Uudelepp said the solution is to discuss the demand for services that people must receive regardless of where they live. This, she said, would help overcome differences between services provided in various regions.

 

Kristopher Rikken

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