30th Session of the Congress of Local and Regional Authorities – 22 to 24 March 2016

Debate on Post-monitoring dialogue

23 March 2016

Speech by Tengiz SHERGELASHVILI, Deputy Minister of Regional Development and Infrastructure, Georgia

Mr. President,

Ladies and Gentlemen,

I am glad to have the honor to address you from this important rostrum on behalf of the Government of Georgia. Three years ago, at the same time, in late March, when I was talking from this rostrum about the ambitious plan of the fundamental reform of local government, my European colleagues had a lot of questions and one could feel skepticism, because there was certain instability at that time in some municipalities. I think that in recent years we answered these questions not only in word, but also in deed, and now it is clear for everyone that Georgia is steadily moving forward, following the path of decentralization, in order to sustainably establish democratic mechanisms at the local level.

As you know, in Georgia, as well as in other post-Soviet countries of Eastern Europe, the local self-government tradition was severed by the 70-year dominance of communist totalitarianism. After gaining the independence, we had not only to build the mechanisms of democracy, but also to fight for breaking down the old, centralized system and transform it into modern and transparent local authorities focused on interests of the population.

In this regard, the local government reform, launched by us in 2013, has a landmark importance. At the beginning of this reform aimed at the gradual decentralization of the management system and finances, it was very useful to have the recommendations of the Congress of Local and Regional Authorities of the Council of Europe of March 2013, which served as a guide to us for outlining the main directions. I would like to express my special satisfaction to the Congress, because this cooperation, exchange of specific practical experience, is essential for the success of the local self-government reform.

At the initial stage, the main task was to create the necessary legal framework for the reform. The Ministry of Regional Development and Infrastructure, which is the governmental agency responsible for the reform, with active involvement of the non-governmental sector, developed a new law – the “Local Self-Government Code” – which was adopted by the Parliament in 2014. Thus, besides codifying in a single act various laws applicable in the field of local self-government, under consideration of principles of decentralization, subsidiarity and management effectiveness, a legal basis was created for establishing an effective management system at the local level. I would like to express special gratitude to the Department for Local and Regional Democracy and Good Governance of the Council of Europe for their invaluable assistance during the work on the Local Self-Government Code. 

Two years later, the Congress experts mentioned in the post-monitoring visit report many advantages of the new law, for instance the fact that the “Self-Government Code” determined very thoroughly and consistently the concept, rules and principles of the State supervision of municipal authorities. We have clearly prescribed how to determine the compliance of the acts, adopted by local authorities, with the legislation and constitutional precepts, as well as monitor the implementation of the functions delegated to them in such a way that it remains in proportion to the importance of the interests, which it is intended to protect.

Apart from that, other changes have been implemented in the field of refinement of the democracy mechanisms: we have modified the internal institutional arrangement system of self-government, enhanced the powers of the Municipal council, and we have drawn a clear line between the functions of representative and executive bodies; representation of political parties in Municipal councils has increased, while the threshold in proportionate elections was reduced to 4% in order to improve chances for introduction of representatives of opposition parties.

Taking into account principles of the “European Charter of Local Self-Government”, the Code has defined in detail the rules and procedures for holding consultations with local authorities and population in the course of creation and elimination of a self-governing unit, determination of its administrative center and establishment and change of its administrative boundaries. The first stage of the administrative-territorial reform was launched by complying with these procedures, when, since 2014, seven more self-governing cities joined the already existing 5 ones. This process was carried out in a transparent and systematic manner.

In 2013, the Congress gave us a recommendation to discuss the issue of direct elections of Mayors, taking into account the experience of the capital-city, where the Mayor used to be elected by direct vote since 2010. We have taken even more drastic steps towards increasing the level of independence of municipalities, and, since 2014, not only Mayors of the cities, but also every first person of municipalities is elected by universal and direct elections.

In 2014, the local elections were held against the background of the substantially improved election legislation, in a calm environment, and in compliance with democratic principles. In most districts, the candidates failed to overcome the 50% threshold set for the first round of the Mayors’ and Governors’ elections, therefore, it became necessary to hold the second round. This was an unprecedented occasion in the history of elections in our country, and this fact has confirmed the redemption of the government’s promise that unlike the predecessors, the governmental resources would no longer be used for elections. Thereby, the population’s confidence to the legality of the election process and fairness of its results has increased.

We are grateful that the Council of Europe sees and appreciates the steps taken by us towards decentralization, for which the post-monitoring implementation is very useful. I would like to remind you that when the post-monitoring issue was raised, Georgia welcomed the introduction of this format. We consider it very important for young democracies on their way towards changes, so that, when needed, amendments can be timely made, and we become better secured against errors through discussions and recommendations received from you.

In 2015, the Congress speakers highlighted in the post-monitoring document the fact that they had seen the real political will of the Government of Georgia to fulfill the recommendation of the Congress regarding the local and regional democracy.

We want to achieve that the relationship between local authorities and the central government is based on partner cooperation. This is especially true for the governors’ institute, the state authority standing closest to the central government bodies at the regional level. Having taken into account the recommendation of the Congress regarding the need for continuing with the efforts towards the regional development, as well as the prospects provided by the Association Agreement signed with the EU, we took steps towards the establishment of institutional mechanisms for participation of local authorities in the process of the regional development planning and policymaking.

At the regional level, with participation of the Governor and higher officials of the local self-government authorities, a new institutional mechanism was developed - the regional advisory councils designed to discuss issues of the regional development planning and regional projects. This mechanism made it possible for the local self-government to influence the central government in order to ensure that their interests are taken into account in the regional development process of the country.

Having shared the recommendation of the Congress to improve by all means, including through the tax base expansion, the chances for local self-government bodies to obtain their own financial resources, we have taken the first step towards the fiscal decentralization, tax base expansion of municipalities, and provision of local budgets through their own revenues. In particular: in previous years, the income tax was fully transferred to the central budget, while since January 1, 2016, its certain types are transferred to municipal budgets, which amounts to more than 15% of the entire income taxes mobilized in the country. At the same time, we are working intensively to even more significantly expand the tax revenue base of local budgets and improve the financial equalization procedure, beginning in 2017.

The post-monitoring document contained a recommendation to take the necessary short-term measures aimed at the improvement of financial position of local self-governments, and a task was set to allocate additional resources to the local self-governments in a transparent manner.

I would like to notice that capital grants constitute a significant component of the municipal budgets, which are basically issued from the regional fund to finance specific projects. By the time as we came to power, no regulations of this fund had existed; the spending of monies was of no systematic nature and depended only on considerations of the central government.

We started to establish a transparent system, which provides indispensable consideration of essential needs and opinions of the municipalities. In February 2013, the government approved the selection procedures and criteria for the projects to be financed from the fund. A democratic procedure was introduced, under which the infrastructure projects represented in the fund must first be endorsed by the municipal council, and only then the Ministry will evaluate their technical aspects.

Based on the spirit of the commitments made under the Association Agreement concluded with the European Union in the field of regional development, since 2015, reflection of the projects, represented in the fund by municipalities, in the 3-year action plan of the socio-economic development strategy of the regions has become a mandatory precondition for their financing, while the development of this very plan takes place in the regional advisory boards, the composition of which includes mayors, chairmen of municipal councils, and their deputies. This is done in accordance with the procedures clearly defined in the guidelines, approved by the government last year. It gave us a chance to make the selection of project proposals much more objective and focused on the implementation of the objectives provided in the strategies, increasing at the same time the coordination of the plans set by the State and municipalities, as well as their transparency and opportunities of public involvement in their development.

Our task is, on the one hand, to fulfill our commitments made under the Association Agreement regarding the enhancement of multi-level governance and intensification of local stakeholders’ involvement, and, on the other hand, to comply with the principles of the Charter in this process, to promote the broader autonomy of the municipalities, as well as their proactivity. Thus, as a result of the system startup, the municipalities will have sufficient own funds to implement small-scale infrastructure projects, while resources of the Regional Fund will be spent on the co-financing of major and inter-municipal projects.

Concerns were expressed in the Congress recommendations of 2013 regarding the fact that our “sectorial” laws contradict sometimes the Organic Law, while the post-monitoring recommendations implied also a more precise specification of competences of the local authorities - for the purpose of more proper and relevant allocation of funds. The new Code clearly delineated powers between different authority levels, unequivocally defining the guarantees of independence for the municipalities in exercising their exclusive powers, as well as the terms and conditions of delegating these powers. Under this new law, the municipalities’ own competencies were expanded and new areas were added to them, such as: water supply, management of natural resources of local importance, provision of shelter to homeless persons, etc.

Intensive work is being done currently to delegate even more powers from the center to the municipalities, which implies the harmonization of the sectorial legislation with the European Charter of Local Self-Government and the new Code. For this purpose, more than 20 laws have been amended, and amendments to about 170 sectorial laws have been prepared, which are currently under governmental review and will shortly be submitted to the Parliament for approval. This is an overwhelmingly important process in terms of decentralization, because, in most cases, harmonization of legislation with a self-government code is no provision of technical compliance, but rather implies the comprehension of the process and development of the policies of sectorial decentralization. As a result, in the next 2-3 years, certain powers will be delegated to the municipalities in the fields of secondary education, culture, social area and etc.

At the beginning of the reform, the effectiveness analysis of the municipal government revealed that the issue of improvement of human resources management and raising the level of competence of municipal employees is highly relevant. The state had no systemic vision in this regard…

In 2014-2015, the new procedures for hiring and evaluation of civil servants have been introduced, which made this process more objective. These changes are entirely implemented in the scope of the public sector reform process; the new law on “Public Service” is already adopted and will enter into force from 2017; thus the system of public administration will be further improved.

We have developed, and the government has approved a continuous training system concept for public servants of local self-government, as well as its implementation plan. We have integrated the supporting mechanisms for employees’ retraining and professional development in the Code itself; for example, the municipalities are obliged to spend for this purpose no less than 1% of the total volume of the budget allocations envisaged for labor remuneration. These funds, along with the funds raised from donors, will be used to provide the functioning of the continuous training system of local self-governments. In order to attract qualified personnel to the work in the municipal bodies, stimulation through a remuneration system is needed, therefore we have provided greater autonomy to the municipalities in this regard, and the wage rate amounts of local officials are now determined by the municipalities, which previously fell within the scope of the presidential powers.

Ladies and Gentlemen,

I would like to reiterate in your presence that the government of Georgia has a strong political will to continue and accomplish the decentralization and democratization process of local self-government. In this regard, the Association Agreement with Europe was a great incentive to us.

The post-monitoring document contains an important recommendation, stating that Georgia is to join paragraph 6 of Article 4 and paragraph 6 of Article 9 of the Charter in 2017. We express our readiness to join these paragraphs, and the government of Georgia has already launched the relevant legal procedures. We have already taken up the matter with the Ministry of Foreign Affairs, and we hope to accomplish these procedures as soon as in this year, rather than in the coming one. By the full ratification of the Charter, we would like to emphasize once again the special attention paid by the Government of Georgia to the development of local self-government, as well as its importance for the country.

As for the implementation of the recommendation of the Congress regarding the reflection of the principle of subsidiarity in the Constitution of the country: this issue is being considered in a package of major constitutional amendments. The constitutional commission, established in the Parliament, failed to accomplish the process, and discussions on constitutional changes will have to be held by the new composition of the Parliament, which is to be elected by the population in October 2016.

Last year, taking into account the principles of the Supplementary Protocol of the European Local Self-Government Charter regarding the participation of citizens in local self-government affairs, we drafted and the Parliament approved the Law on additional forms of citizens’ participation in self-government, by which the relevant chapter of the Self-Government Code was substantially changed. ...... Now, together with civil society organizations, we work on its implementation and on the introduction of different forms of citizens’ participation in the work of the municipalities.

Last year, when the Government of Georgia was signing the Guide with the Congress of Local and Regional Authorities of the Council of Europe, we were stating that all the principles provided in the Supplementary Protocol of the European Local Self-Government had been reflected in the legislation of Georgia by that time, except for one of the mechanisms mentioned in this Protocol - the local referendum mechanism, which, pursuant to the national legislation,  is permissible to be held only throughout the country’s entire territory. Thus, we are ready to fulfill the recommendation of the Congress of 2013 and join the Supplementary Protocol of the European Charter of Local Self-Government, with the reservation of impossibility of its application to the occupied territories. In the near future, we’ll launch the relevant legal procedures. 

In conclusion, on behalf of the Government of Georgia and Georgian people, I’d like to thank the Council of Europe for its contribution to the local democratic development in Georgia. Moreover, the Government of Georgia always attentively listens to the recommendations of the Council of Europe and expresses its willingness to their full and timely implementation. In this regard, we consider it important to assess the situation at the post-monitoring stage, and we hope that other states will also share this positive experience. We are counting on the support of the Congress of Local and Regional Authorities on our path of European integration.

Thank you for attention.