Cyprus Mail 15 March 2025 - by Iole Damaskinos
The restructuring of local government hit another snag on Friday as municipalities threatened to halt payments if their budgets are not approved by the end of the month.
The interior ministry, however, attributed the delays to municipalities failing to submit their budgets in the required format.
Speaking on CyBC’s morning programme, head of the union of municipalities Andreas Vyras warned that municipalities would stop payments on obligations by Monday and suspend payroll by the end of the month if their budgets remained unapproved.
This decision was reached during Thursday’s meeting between representatives of 11 municipalities, their boards, and the heads of the five local administrations (EOAs). Vyras stated that local leaders, including community councils, were in unanimous agreement.
He added that the situation was causing significant issues, particularly in awarding contracts for public works. “Not only have we failed to achieve the financial and administrative autonomy we aimed for, but the situation is getting worse,” he said, adding that the time credit given in good faith for a “transitional period” had run out.
Vyras argued that making further payments without an approved budget would put local bodies in the position of acting illegally.
A further concern is the ministry’s decision to cut subsidies for municipalities with a surplus, a move Vyras deemed unreasonable without considering additional factors.
He also highlighted that the new local bodies had inherited degraded infrastructure, with no clear funding source for promised repairs.
Meanwhile, municipalities have requested control over their own policing, which would require legislative changes.
For his part, Interior Minister Constantinos Ioannou, said he had been caught off guard by the vehemence of the municipalities’ announcement as the extent of the restructure and the wide swath of issues to be regulated necessitated “constant communication”, which had been the case.
He said the municipalities and EOAs had failed to correctly submit their budget proposals, forcing the ministry to hold “seminars” for local accountants – something he noted was outside its normal responsibilities.
According to Ioannou, budget submissions only began in February, with four applications still outstanding. Of the remaining 16, two had already been approved, and 14 were expected to be greenlit within the month.
As for the EOAs, discussions towards streamlined submission requirements had been underway since December but the budgets received to date were not yet the finalised documents.
Another bone of contention centres around the municipalities’ request to autonomously set their own service fees, which the ministry, after consultation with the attorney-general’s office, had capped at a 35 per cent maximum increase for this year (up from 12-14 per cent previously).
If the municipalities wish to dispute this, they must take the matter to the House interior committee, Ioannou said.
Vyras, however, argued that the ministry’s cap would cement existing discrepancies between municipalities, creating “serious long-term issues.”
Additionally, there is disagreement over the rule requiring 40 per cent of municipal revenue to be allocated to payroll. While local bodies claim the ministry has disputed this percentage, the ministry maintains the disagreement lies in defining which administrative expenses should be included under that category.
Vyras accused the ministry of indecision and unclear instructions, leading to budget proposals that, he claimed, “had nothing to do with the law.”
