THIS IS THE AGREEMENT ON STATE SPONSORSHIP - CEILING ON THE EXPENSES OF THE MUNICIPALITIES - RESTRICTIONS ON SALARY COSTS - Filenews 25/10 by Eleftheria Paizanou
Following the agreement between the Union of Municipalities and the Government on the annual state sponsorship, a bill was submitted to the Parliament which establishes the ceilings on salary and development expenditure in the annual budgets of the municipalities.
In particular, the amount of salary expenditure for all staff working in the Local Government Authorities should not exceed 40% of the total expenditure of each Municipality.
The government proposal establishes specific factors and percentages, which will be included in the calculation of 40% of the salary expenditure. That is, of the total salary expenditure, 45% will be spent on the purchase of specific services from third parties and 22% on development projects in progress during the budget year.
According to the introductory report of the bill, the specific regulations have been implemented in recent years, after consultation between the Municipalities and the Ministries of Interior and Finance.
As it is pointed out, the institutionalization of these regulations aims to provide the appropriate flexibility to the Municipalities, in order to be able to adequately respond to the increased obligations they undertook with the reform of Local Government, through the implementation of expenses related to all kinds of personnel.
The changes that will be introduced by the bill will not affect in any way the amount of state sponsorship granted to the Municipalities, but concern the distribution of the approved expenses, as provided for in the budgets of the Municipalities.
No budgetary impact
The legislative regulation, according to the estimates of the Ministry of Finance, is not expected to have any impact on the macroeconomic environment of the Republic, as the specific regulations have been applied informally in recent years.
At the same time, the legislation will contribute to providing an appropriate margin of flexibility for the expenditures of the Municipalities, in order to be able to adequately meet the increased obligations they undertook after the reform.
The formula for sponsorship
It is recalled that, based on the agreement reached by the two parties in relation to the state sponsorship, a new legislative regulation will be promoted.
Specifically, the existing fixed amount of the state grant, amounting to €117 million, is replaced by a fixed percentage of 1.52% on the ceilings of the net primary expenditures of the Republic, as included in the state budget of the corresponding year.
According to the government proposal, "net primary expenditure" means the primary expenditure of the Republic, excluding loan repayments, interest and investments, as well as defence shielding expenditure and the contribution of the Republic to the budget of the European Union.
At the same time, it is possible to grant additional amounts for the financial support of the Municipalities, when there are serious and duly justified reasons.
The funds in the state budget
In the state budget of 2027, funds of €191 million have been included. Of these, an amount of €117 million concerns the state sponsorship to the 20 Municipalities in the free areas, €5.3 million the occupied Municipalities and communities, €18.5 million the Community Councils of the Free Areas, €3 million community service clusters, €15 million. the sponsorship to the Municipalities for the maintenance of roads and €12 million the Local Authorities for the loss of revenue from the licensing of developments.
An amount of €12.1 million. It is an increase on the state sponsorship, while the salaries of community leaders, etc. are also included.
