The reform of Local Government does not seem to have fully achieved its purpose, or at least as much as the parties and the Parliament were trying to convince the citizens that it would succeed, when they decided not to follow the studies that provided for fewer municipalities and chose, instead, to increase them.
The Parliament and the parties were warned at the time that, if the studies were not followed, citizens would face tax increases and municipalities would be financially suffocated.
The parties reassured society, arguing that the Local Government should be given time to function in the form in which they had voted and that they were ready to make corrections, when and if this was deemed necessary.
Today, more than two years after the implementation of the reform, on 1 July 2024, not just individual problems have been identified, but significant deviations from the original targets. The numbers clearly reflect the results of the decisions of the Parliament and the parties and the consequences have already been passed on to the citizens.
State sponsorship doubled
Under normal circumstances and based on the objectives of a successful reform, municipalities should be financially robust. The calculations and available data, however, present a completely different picture.
According to the data, the total amount of the state grant, before the reform, remained unchanged for ten years, at €70.8 million.
The state is now called upon to raise the state grant to 144 million euros (from the €117 million originally agreed for the reform and from the €70.8 million that were in force before the reform), based on the calculation of the annual state grant to the Municipalities, rejecting, at the same time, the request of the Union of Municipalities for an even larger amount.
Increases in increases
With the reform, which was implemented on 1 July 2024, the total amount of the state grant was set at €117 million, recording an increase of 65.3%. The increases, however, did not stop there.
Specifically, from 2014 to 2023, before the reform of Local Government, the state sponsorship to municipalities amounted to approximately €71 million per year.
Following the implementation of the reform and with the latest developments, the total amount has doubled and exceeds €144 million per year. Even if various individual funding has been incorporated into it, the final result does not show a smaller, but a greater contribution from the state.
The data of the Ministry of the Interior clearly reflect the picture. The total amount of €144 million includes the state grant of €117 million, €15 million for road maintenance and €12 million as compensation for the loss of revenue from permitting.
However, even these tens of additional millions do not seem to be enough to meet the needs of the municipalities, which are asking for a new increase in sponsorship, citing the rise in prices.
The picture is also confirmed by the state itself, which disagrees with the justification of the Municipalities. As stated in a letter from the Ministry of the Interior to the Union of Municipalities, "it is pointed out that the total state grant to the Municipalities increases from €70,890,200 in 2023 to €147,888,000 in 2027, i.e. by approximately 108.6%, a percentage which significantly exceeds the cumulative increase in the Consumer Price Index for the period 2023-2027, which is around 15%".
To all this is added the additional state funding for urban projects in the municipalities. In particular, it is estimated that from 2024 to 2029 the state will allocate more than €240 million. for these projects.
Fees increased
The municipalities are asking for increased state sponsorship. Such a request could be considered partially justified if the loss of revenue was due to a lower burden on the citizens. This, however, does not seem to be the case either.
After the reform of the Local Government, various municipal taxes were increased. These fees are decided by the municipal councils, to which the Parliament has granted the relevant competence. Therefore, in most cases, citizens not only did not see a reduction in their fees and expenses, as promised, but were faced with increases.
At the same time, the level of services offered by the Local Government does not seem to justify the increases either. One of the main conditions of the reform was the provision of better services to citizens. Instead, complaints are increasing, with many citizens believing that services have not only not improved, but in some cases have become even worse.
All this does not include the District Local Government Organizations, which, under normal circumstances, must be financially independent and viable through revenues from water supply and sewerage. Citizens, however, are now required to pay different fees to two separate organizations, the municipalities and the NNCs.
The distortion came and stayed with us
The problems with the reform in local government, in fact, do not seem to be temporary, but have turned into permanent ones, as the municipalities ask for new increases every year. This shows that the financial suffocation of the municipalities and the burden on the state, taxpayers and citizens are not only not being addressed but will be widened every year.
Such a distortion could possibly be considered to be expected in the early stages of the implementation of the reform. Two years later, however, and based on the positions of the Union of Municipalities, it is no longer a temporary malfunction that needs correction, but increases that are considered justified.
The burden on citizens is double
It would not be an exaggeration to say that the reform of Local Government has not achieved its purpose. The first and foremost reason is that neither the fees for the citizens have been reduced, nor the services have been improved to the extent they should have been, nor has the state limited its spending on the municipalities.
On the contrary, the fees have increased, the services are still facing problems and the state is paying the municipalities more money than in the past.
Citizens pay fees for the expenses and services offered by their municipality. At the same time, as taxpayers, they pay again through the state sponsorship, which is used to financially support the municipalities.
At the end of the day, it should be made clear that, whether the municipalities pay or the state pays, the money comes from the taxpayers. So, when the municipalities, the parties and the Parliament argue that citizens should not bear additional costs and that the state should contribute, they must explain exactly what they mean.
Are they interested in not increasing household expenses further or not being the ones who will increase the fees, in order to avoid the political cost? Because, whether these are called fees or taxes, the citizens still pay. The difference is in who imposes them and not the burden on households.
If the first was true, the line would be clear. Municipal taxes should be reduced, their services should be corrected and state sponsorship should be limited and the Municipalities should proceed with the consolidation of their finances.
From the evidence that emerges, clear answers should be given as to whether the Parliament managed to do what it wanted and promised. Because if two years later and after successive requests from municipalities for increases in fees and state sponsorship, the Parliament insists that it has succeeded, it will have to admit what the real goal was.
