At the end of last year, the councils of Põlva and Räpina municipalities, as well as the Tartu City Council, appealed to the Supreme Court, arguing that the additional obligation arising from the care reform to finance general care services on behalf of the service recipient or their dependents is a state responsibility. However, the central government had not provided funds for this. The councils believed this violated the constitutional guarantee that local governments have the right to full funding from the state budget for state duties imposed on them by law.

The municipalities pointed out that following the reform, they had to partially cover the costs of care home bills for all clients, regardless of the financial status of the individuals needing the service or their relatives.

Given the significant societal weight of the issue and the potential long-term impacts on the principles of local government financing, the Constitutional Review Chamber of the Supreme Court referred the case to the full assembly of the Supreme Court, which includes all justices.

In its ruling issued on Friday, the full assembly of the Supreme Court clarified that organizing social welfare, including general care services, is a local government responsibility, as it is closest to its residents in need. Since organizing general care services is not a state duty, the state was not required to cover the associated costs from the state budget. These costs must be financed by the local government from its budget.

The full assembly of the Supreme Court emphasized that local governments still have the option to demand additional funds from the state through administrative court if the current local government funding arrangements are insufficient. They can demonstrate how much existing costs have increased due to the new obligation and how much the state has increased funding or reduced other duties and obligations. If it turns out that the allocated funds are insufficient to cover the additional costs, the local government may have the right to demand an increase in funding.

Moreover, the Supreme Court explained that although organizing social welfare is a local responsibility, the funding system for local governments must be stable. In this case, the Riigikogu passed the legislative amendment in December 2022, just before the start of the new fiscal year. Those who appealed to the court may not have had a reasonable opportunity to prepare for fulfilling the obligation imposed by the state. If the 2023 budget expenditures of local governments increased due to the amendment and they were unable to reasonably adjust their budget, they have the right to file a complaint with the administrative court to enforce their rights, according to the Supreme Court ruling.

Eight justices dissented in this case. They argued that this is not a local but a state responsibility, which the state must finance from the state budget.

The court's decision can be viewed on the Supreme Court's website. Additionally, two dissenting opinions are available: one written by Julia Laffranque, Kaupo Paal, Paavo Randma, Kalev Saare, Juhan Sarv, and Urmas Volens, and the other by Hannes Kiris and Heili Sepp.

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