Strasbourg, 22 January 2013                                                              CDLR-Bu(2013)10

Item E.1 of the agenda

BUREAU OF THE

EUROPEAN COMMITTEE ON LOCAL AND REGIONAL DEMOCRACY

(CDLR)

POLICY RESPONSES TO CHANGING

ECONOMIC FORTUNES ON LOCAL BUDGETS

(KYIV GUIDELINES)

Secretariat Memorandum

prepared by the

Directorate of Democratic Governance

Democratic Institutions and Governance Department

This document is public. It will not be distributed at the meeting. Please bring this copy.

Ce document est public. Il ne sera pas distribué en réunion. Prière de vous munir de cet exemplaire.

Introduction

As the financial (debt) crisis enters its 6^th year in 2013, the impact on local government finances continues to be felt across Council of Europe member states.  In a time of precarious economic circumstances and sustained downward pressure on public finances, it is crucial that local and central government coordinate policy effectively to enable sustainable growth and sound fiscal outcomes.

The CDLR has played an important role in helping develop a coherent Council of Europe response to the impact of the crisis on local budgets.  The Council of Europe publication “Local Governments in Critical Times: Policies for Crisis, recovery and sustainable development”, prepared by the CDLR and the Open Society Foundation, represents an important initiative and is recognised by the Congress as a valuable resource for local and regional authorities.  The OECD has also acknowledged that their work on the crisis complements and reinforces existing Council of Europe standards.

Current situation

At the 1156^th meeting of the Committee of Ministers on 28 November 2012, as a follow up to the Kyiv Ministerial Conference of November 2011, the Deputies instructed the CDLR to:

·         Analyse the impact of changing economic fortunes on local budgets and develop proposed policy responses on the basis, as appropriate, of the “Kyiv Guidelines”.

For its part, the Congress has already begun the process of analysing the impact and developing policy proposals by commissioning Professor Ken Davey to prepare a policy-oriented report to be presented at the Congress plenary session in March 2013.

Possible action

The CDLR could offer to participate in the Congress debates on the report by Prof. Davey and also invite Prof. Davey to present the report at the 51^st meeting of the CDLR in April.  Furthermore, as the financial analysis in the Congress report is based on EUROSTAT data and therefore covers the EU27, the CDLR could prepare a draft questionnaire to ask members to provide financial data for 2012.  The CDLR could then develop the report and draw out some policy proposals to be adopted at the 52^nd Plenary session and submitted to the Committee of Ministers by the end of 2013.

Other possible activities

The Centre of Expertise for Local Government Reform is setting up a task force to assist local authorities in financial difficulty, using its good governance tools and expertise.  A new version of the “Benchmarking for Local Finance” Toolkit, adapting the toolkit to better respond to the implications for local and central authorities of the current financial crisis, is close to completion and could be tested in local authorities in countries such as Spain, Portugal, Greece and Italy.  The CDLR could explore ways of promoting and adapting the Toolkit to other member states as a means of compiling examples of best practice and case studies.

Indeed, the CDLR could continue / resume regular financial monitoring of local budget performance over the course of 2013 with a view to giving a clear up-to-date picture of the situation to the Committee of Ministers upon the expiration of the current Terms of Reference of the Committee and with a view to extracting guidelines or policy proposals.

The CDLR could also look at ways of updating and promoting the Handbook on Finance at Local and Regional Level and the “Kyiv Guidelines” as a useful reference point to help prepare member states to better respond to and anticipate the ongoing crisis.

Action required

The CDLR Bureau is invited, in the light of the suggestions above, to give guidance to the Secretariat on possible action to be developed in response to the Committee of Ministers decision so that a report can be drafted and submitted to CDLR for consideration at its next meeting.