13th Congress Plenary Session 30 May - 1st June 2006
Local Democracy in Liechtenstein
Rapporteur: Christopher NEWBURY, United Kingdom,
Chamber of Local Authorities
Political Group : EPP/CD
1. Liechtenstein is a principality with a surface area of 160 square kilometres and a population of about 34,000. It has eleven municipalities, varying in size between 1,000 and 6,000 residents, and all of these municipalities have strong historical roots.
2. The characteristics of the present municipalities and of municipal legislation in Liechtenstein date back far into the past. Even during the ‘Absolutist’ period in the second half of the eighteenth century, the village communities maintained their own rights. The present-day characteristics, borders and status of municipalities date from the early nineteenth century and were defined by the Law of 1 January 1810. With the advent of m modern political communities, the roles of municipalities as managers of municipal property and in the granting of local citizenship gradually became less important. The law of 1 August 1842 maintained the central power’s right to appoint municipal officers. This came to an end with the Constitution of 1862 and the law of 24 May 1864, which established the free election of municipal representatives. This law of 1864 served for a long time as the framework for municipal affairs, and its main underlying principles were incorporated into the law of 1959. Lastly, the law of 20 March 1996 paved the way for a modernisation of municipal legislation, drawing on the guidelines set out in the European Charter of Local Self-Government, which had been ratified by Liechtenstein in 1988.
3. Local democracy in Liechtenstein is thriving and has strong legitimacy, but it is characterised by very small municipalities and the proximity to the state (Land) level. The state itself is of a size which in much of Europe is that of a local authority, so it is small enough to deal appropriately with many local affairs.
4. On the whole, Liechtenstein has made the most of its situation and has developed a strong and well equipped municipal structure in parallel with a central government which is itself active in all spheres.
II. Constitutional basis
5. Liechtenstein’s municipalities have a solid constitutional basis.
6. Article 1 of the Constitution provides that the Principality is a union (Verband) of two regions (Landschaften), with eleven municipalities which are listed by name. This might give the impression that the state of Liechtenstein is made up of the eleven municipalities it comprises. The article should not however be interpreted as giving the principality a federative nature or as meaning that the municipalities participate in state power. They have the status merely of local authorities, and their powers are limited to those conferred on them by the Constitution or by legislation. Nonetheless, they can influence the drafting of legislation, as explained below.
7. Article 4.1 of the Constitution provides that changes to municipal boundaries, the creation of new municipalities or the merging of existing ones may take place only by virtue of a law and requires the agreement of the majority of the citizens. Article 5 of the European Charter of Local Self-Government is therefore fully complied with.
8. Paragraph 2 of Article 4 institutes a right for each municipality to leave the state union (Staatsverband). Such secession must be agreed to by the majority of the citizens of the municipality, observing a procedure laid down in the law. This power of secession was introduced in 2003, in the latest constitutional reform.
9. Under Article 110 of the Constitution, the organisation and duties of municipalities shall be laid down in legislation. The Constitution also guarantees that the mayor and other municipal office-holders shall be elected by the municipal assembly of citizens.
10. The Constitution also recognises the right of municipalities to participate in and influence the drafting of legislation:
- where at least three municipalities are in agreement, a request for the enactment, amendment or repeal of a law may be presented and must be debated at the next sitting of Liechtenstein’s legislative assembly (Landtag);
- a request to amend the Constitution may similarly be presented by a minimum of four municipalities;
- a request for a legislative referendum may be presented by a minimum of three municipalities (four municipalities in the case of a constitutional referendum);
- a minimum of three municipalities may also present a demand for the convening or dissolution of the legislative assembly;
- lastly, any resolution of the legislative assembly relating to the ratification of an international agreement must be put to a referendum if at least three municipalities so request.
11. Nonetheless, this protection afforded by the constitution is limited in certain respects: the Constitution does not formally guarantee a specific core of municipal competences, and the latter derive primarily from legislation. However, in a judgement of 1982, Liechtenstein’s Constitutional Court (Staatsgerichtshof) held that it was clear from the Constitution that the legislature must assign to the municipalities a sufficiently substantial field of competences to enable them to function satisfactorily.
12. While the Constitution refers to the autonomous management of municipal property, the administration of the local police and maintenance of a well-ordered system for the relief of poverty, it further states that these powers shall be exercised under the supervision of the government, which might indicate that there could be government interference in the exercise of such responsibilities. However, the legislature has provided that in the municipalities’ own fields of competence (eigener Wirkungskreis), the government may exercise only a review of the legality of their actions.
13. The provisions of Article 4.1 of the European Charter of Local Self-Government, on constitutional and legislative guarantees for local self-government, are complied with.
III. Compliance with the Charter by Liechtenstein’s legislation
14. Liechtenstein ratified the European Charter of Local Self-Government on 1 September 1988.
15. In Liechtenstein’s legal system, lawfully ratified international treaties are directly enforceable in the domestic courts without there being a need for a law to transpose the international treaty into domestic law. Such treaties can be directly relied on since, because of their nature, they can be considered to be self-executive. However, the view of the Liechtenstein authorities is that the European Charter of Local Self-Government is not so enforceable, as its provisions have the character of general policy.
16. This view needs to be qualified. Each of the provisions of the Charter needs to be considered separately in order to determine its scope. Several of the provisions of the Charter lay down rules which are sufficiently precise to have a direct effect. It would be wrong to view all the provisions of the Charter as general guidelines. Furthermore, Liechtenstein’s own Constitutional Court, in a judgement on 13 September 1998, accepted as admissible an application based on failure to comply with the Charter (St GH 1998/10). It agreed that Article 8.2 of the Charter, which provides that “Administrative supervision should normally be confined to the question of the legality of local authority action and not its expediency” was binding on Liechtenstein’s domestic law, though it considered that this established a general principle to which an exception could be made in duly substantiated cases.
17. The Liechtenstein authorities point out that several amendments to the Principality’s legislation were made following ratification of the Charter. The constitutional and legislative amendments since 1 September 1998 have taken account of the rules and principles contained in the Charter.
18. Nonetheless, it should be noted that Liechtenstein limited its ratification of the Charter to certain of its provisions. The country declared that it would be bound by the following provisions: Article 2, Article 3 paragraph 1, Article 4, Article 5, Article 6 paragraph 1, Article 7, paragraphs 1 and 3, Article 8, Article 9 paragraphs 1, 2 and 5 to 7, Article 10 paragraph 1 and Article 11. Such reservations are provided for in Article 12 of the Charter and cannot as such be open to criticism. However, it seems surprising that Liechtenstein has made such reservations in respect of paragraphs of the Charter with which its domestic legislation corresponds perfectly.
19. Reservations should not be made unless there are specific substantive discrepancies or incompatibilities between national legislation and the provisions of the Charter. Clearly, subscribing to international obligations which already correspond to national practice has no immediate benefit for local democracy in Liechtenstein. But accession to the Charter has a much broader scope. The Council of Europe’s member states jointly define an international guarantee of local self-government, and Liechtenstein would be making a real contribution to this if it were to accept all of the provisions of the Charter, unless there were justified objections to particular provisions.
20. While this report raises a few questions over Articles 8.2 and 9.7, it does not identify any real contradiction between Liechtenstein’s legislation and any paragraph of the Charter.
IV. Municipal competences and administrative supervision by the state
21. Municipal law in Liechtenstein, as in many other countries, and as provided for by the European Charter, differentiates between two categories of competences exercised by municipalities.
A. Own powers (eigener Wirkungskreis)
22. This includes all matters of primary concern to the municipalities which they themselves can undertake, and all activities which they intend to carry out under their own freedom and within the limits set by the law.
23. Liechtenstein’s interpretation of municipal self-government and the principle of subsidiarity is in compliance with Article 4, paragraphs 2 and 3, of the Charter. In the case of the municipalities of Liechtenstein, these responsibilities include:
- the election and organisation of the municipal organs,
- the management of municipal property and amenities,
- promoting local social, cultural and religious life,
- the protection of local public order,
- local town and country planning,
- water supply, collection of refuse and treatment of sewage,
- the granting of municipal citizenship.
24. State supervision is, in this context, limited to compliance with the law and does not include, in theory, any power to assess the expediency of the measures taken.
B. Delegated powers (übertragener Wirkungskreis), or state responsibilities delegated to the municipalities by specific laws
25. With regard to these delegated powers, the state has the authority to review both lawfulness and expediency (Sachprüfungskontrolle). This power of intervention by the state in municipal decisions taken under delegated powers is, however, exercised with restraint and gives rise to little or no criticism by municipal officers.
26. The distinction between own and delegated powers, and the consequences in terms of supervision, are in compliance with the provisions of the Charter, and in particular with Article 8. However, it is perhaps surprising that the law provides for government supervision of matters falling under the municipalities’ own powers, such as the management of municipal property.
27. In addition, Liechtenstein’s legislation provides for some dual responsibility in certain sectors which are nonetheless classified as falling under the municipalities’ own powers. As a result, state intervention in this field goes beyond mere review of lawfulness. It applies in particular to town planning and social welfare.
1. Town planning
28. In the matter of town planning and the granting of building permissions, there is joint action by the municipality and the state. The municipalities complain less about inordinate state intervention in this sector than about a cumbersome bureaucracy which can lead to what are seen as excessive delays in the taking of decisions.
29. Under Section 3 of Liechtenstein’s Town Planning Act, municipalities draw up zoning plans and building regulations, which are then submitted for government approval. Litigation has established (St GH 1998/10) that this power of approval is not merely a review of lawfulness but also amounts in part to a review of expediency. The court took the view that this exception to the principle whereby in the fields falling under the municipalities’ own powers the state may exercise only a review of lawfulness was justified by the need to attach greater weight to the state’s general interests than to the particular interests of municipalities in an especially sensitive area.
30. Furthermore, building permission applications have two stages: an initial stage of consideration and authorisation by the municipal authorities, followed by a second examination by the government office responsible for construction (Hochbauamt). Only the latter has the power to approve the plans submitted as complying with the relevant legislation (the law on development control and subordinate legislation , local plans, energy regulations, fire prevention laws, etc.).
31. This division of responsibilities gives rise to a number of difficulties and is not completely satisfactory, in view of the objective laid down by the Charter (and shared by the Liechtenstein government) of having a clear allocation of powers and well-defined responsibilities. However, only the larger municipalities seem interested in a complete transfer of powers to decide on town planning matters and development control applications. The smaller municipalities see that they are not equipped to take on this final responsibility and that their close proximity to applicants could lead to difficult pressures.
32. In other countries, one solution has been a system which distinguishes between large and small municipalities. Full power over town planning matters and development control could be delegated to municipalities which have established adequate departments, subject to conditions laid down by law. For others, the final decision-making power could remain at the state level. It could be worthwhile for Liechtenstein to consider such a solution. The risk that this form of devolution could have an adverse effect on the uniform interpretation of town planning and building regulations could be prevented by appropriate mechanisms.
33. The experience of other European states has shown that a strengthening of local powers in town planning matters and development control, or even the granting in this field of full competence is possible even for small municipalities, provided that the legislative and regulatory framework is clear and precise. When such a framework is too loose and leaves too much room for interpretation, this can lead to excessive inconsistencies.
34. Liechtenstein’s legislative assembly adopted a Regional/Spatial Planning Act (Raumplanungsgesetz) but this was rejected by a referendum. As a result, there is a gap in the instruments governing the municipalities’ spatial policies, which the government is seeking to fill by drawing up a master plan for the Land (Landesrichtplan).
2. Social welfare (Fürsorge)
35. Here, too, there is a complex combination of responsibilities between the municipalities (social welfare falls under their own powers) and the state, which has taken on an ever greater role in the social field in order to guarantee equal welfare conditions throughout the Principality.
36. The Social Welfare Committee (Fürsorgekommission) comes under the responsibility of the municipality, whereas the Social Services Department (Amt für Soziale Dienste) is a Land body. Social welfare expenditure is shared equally between the municipality and the Land. Care and retirement homes are run by a foundation. The majority of the members of the board of such foundations are councillors, but the costs of funding investment and covering operating deficits are shared equally between the municipalities and the Land. In accordance with the principle of subsidiarity, the government proposed that responsibility for the operation and maintenance of care and retirement homes should be fully handed over to the municipalities, but the parliament decided that the Land should continue to meet half of any deficits in the running costs. Under the terms of Articles 25 and 110 of the Constitution, greater responsibility could be allocated to the municipalities. However, the municipalities welcome the half share paid by the Land. It is also argued that the role played by the Land in this sphere is justified by the small size of the municipalities, the increasing mobility of people and the desire to ensure uniform standards in welfare provision.
37. Nevertheless, there should be an effort to foster the responsibility and initiative of municipalities in those areas where proximity and direct contact are essential.
38. Clarification of the distribution of responsibilities between the Land and the municipalities is currently being addressed by a Bill in the legislative assembly (Aufgabenentflechung zwischen Land und Gemeinden). This Bill concerns only a relatively small proportion of local powers. In areas where there are shared responsibilities between the municipalities and the state, it aims to specify sole competence for one of the tiers, in the interests of greater clarity, efficiency and economy. On the whole, this realignment should not substantially affect the scope of the municipalities’ powers and their financial obligations.
39. All municipalities have expressed their support for this Bill, except with regard to the provision of care for the elderly (retirement homes, etc.) where total transfer to the municipalities is seen as too great a financial burden. Here, then, the proposed way forward is to continue with a system of management by a foundation financed by both municipalities and the state.
40. To sum up, the competences assigned to local authorities are in compliance with the European Charter.
V. Control by the municipalities of organisational and administrative arrangements
41. The municipalities have broad powers with regard to organising municipal services and managing municipal staff. There are no state regulations governing local authority staff; such matters are left entirely for municipal regulation. The municipalities lay down salary levels, organise training for their staff and take their own decisions on any dismissals. Teachers are classified as state employees, but the municipalities contribute half of their salaries.
42. The municipal police are classified as local authority staff and come under the authority of the mayor.
43. It can therefore be concluded that the provisions of Article 6 of the European Charter concerning determination by the municipalities of their internal organisation and staff are fully complied with.
VI. The status of local elected representatives
44. The status of local elected representatives is guaranteed by the Constitution and the provisions of the Municipalities Act. Any incompatibilities are set forth in legislation.
45. Local elected representatives report no material or financial difficulties in discharging their office.
46. Article 7 of the Charter is therefore complied with.
VII. Municipal finances
47. On the whole, the financial situation of municipalities is excellent and would even appear to be better than that of the state, which currently has to cope with a deficit. Most municipalities have resources beyond their current needs, enabling them to build up their reserves.
48. The municipalities’ income is a substantial proportion of all public sector income: from year to year, it varies between 35 and 40% of that of the state.
49. A large proportion of municipal resources (over 80%, and more than 220 million Swiss Francs in 2004) derives from taxes, viz.:
- a supplement on wealth tax and on income tax: municipalities can collect such a supplement which they can set at between 150 and 250% of the state’s proportion (in practice it is between 160 and 200%). This represents approximately 35% of the income of Liechtenstein’s municipalities from taxes;
- two thirds of the tax on real-estate profits; and
- 50% of the capital tax and the tax on profits.
50. In 2004, these resources represented an average income of 4,500 Swiss Francs per inhabitant. The municipalities’ self-financing rate stands at an average of 144%, which means that generally speaking the municipalities (with the exception of Gamprin) are able to cover their expenditure without borrowing, and they have reserves which on average amount to 280% of their annual operating costs.
51. In order to achieve a degree of equalisation in the municipalities’ financial resources, there is a redistribution of part of the income from taxes levied by the Land. The total amount of this financial compensation in 2004 came to 65 million Swiss Francs. There are plans to review the rules governing this redistribution to take greater account of the financial needs of the less well-off municipalities.
52. The municipalities levy other local taxes of less importance, such as a dog tax.
53. Few municipalities in Liechtenstein have to resort to borrowing. Only one would appear to have opted for this form of financing and was able to do so unhindered.
54. It is possible that the organisation of municipal finances could be further improved by reducing the grants earmarked for specific projects in favour of more general grants. Article 9.7 of the Charter stresses that “excessive recourse to such [earmarked] grants will severely restrict a local authority’s freedom to exercise its discretion with regard to expenditure priorities”.
55. The Law of 3 July 1991 on the payment of the state grant has maintained a significant grant system, in addition to the overall grants for smaller-scale projects (pauschale Investitionskostenbeitrag). These grants cover between 30 and 85% of the cost of the subsidised operations. The way these grants are allocated gives the state a significant influence on the operations in question. It is for this reason that grants of this type are viewed as entailing a restriction of municipal autonomy.
56. The Liechtenstein authorities might wish to consider whether this aspect of local authority financing could be reviewed.
57. Further to the reorganisation of responsibilities, there are plans to reform the municipal financing system (Finanzausgleich). When doing this, it would be worthwhile to examine the possibilities of further reducing the system of specific grants by replacing it with a global allocation system.
58. Notwithstanding the above comments, it may be concluded that the provisions of Article 9 of the Charter on the financial resources of municipalities are complied with.
VIII. Municipal institutions
59. Municipalities in Liechtenstein are organised in line with three key institutions:
- direct democracy: the main organ of the municipality is the municipal assembly (Gemeindeversammlung) made up of all the electorate in the municipality. It has the power to appoint the other organs, adopt municipal regulations, establish municipal institutions, participate in consortia of municipalities, and organise municipal elections (the election of the mayor, the municipal council and the committee responsible for monitoring municipal finances and administration (Geschäftsprüfungskommission). A referendum or an initiative can be called if one sixth of the electorate so requests;
- the municipal council (Gemeinderat) is the administrative and executive body of the municipality. It comprises the mayor and between six and twelve other members. It is responsible for:
· dealing with administrative matters
· planning and managing the budget
· producing estimates and determining any municipal tax surcharge
· approving the municipal accounts and discharging various bodies
· authorising building and local planning permits
· awarding public work and delivery contracts
· appointing and paying the salaries of municipal staff
· drawing up municipal regulations and concluding contracts
- and may delegate some of its less important powers to committees.
- the mayor (Gemeindevorsteher) is in charge of the administration of the municipality, enforcing the decisions of the municipal council and applying laws. In all, the system for managing the Liechtenstein municipalities is well-balanced and dynamic. The mayor has a very strong role in the organisation of the municipality. It is a full-time post, even though some municipalities are very small. The mayor has broad administrative powers (he is able, for example, to decide alone on expenditure up to 30,000 Swiss Francs).
- the Geschäftsprüfungskommission is responsible for the day-to-day monitoring of the administration and municipal spending. It reports to the municipal council on its findings and applies for approval of the municipal accounts and the discharge of various bodies.
60. This municipal organisation into three institutions is in compliance with the Charter. It should be pointed out that while the Charter insists that municipal affairs shall be conducted by elected councils or assemblies, it formally acknowledges recourse to forms of direct democracy (Article 3.2). The responsibility of the executive organs referred to in Article 3.2 of the Charter means that mayors must report on their activities, with the councils having a power of verification, which is the case in Liechtenstein.
61. The importance attached to direct democracy is to be welcomed and encouraged, even though many decisions taken by the municipal assembly (Gemeindeversammlung) are arrived at by traditional ballot-box voting (Urnenabstimmung), developments in modern life leading to a strengthening of forms of indirect democracy.
IX. Consultation of the municipalities
62. It is customary for the municipalities to be consulted on all matters of direct concern to them, in accordance with Article 4 of the Charter, even though such consultation is not systematically provided for by law.
63. The very close link between the municipal and state levels guarantees that such consultation takes place and is heeded. In order to engage in consultation, the authorities can use the Conference of Mayors (Gemeindevorsteherkonferenz), a representative body.
64. It is also normal practice for any legislative Bills which affect municipalities to be submitted to them.
65. With regard to measures that affect municipalities more specifically, such as boundary changes or the merging of municipalities, the local authorities are not only consulted, but have to give their consent.
66. Lastly, municipalities are able to take the initiative in examining a state decision of direct interest to them by submitting proposals to the Landtag.
67. It can therefore be concluded that the provisions of Article 4.6 of the Charter are satisfactorily complied with.
X. Co-operation between municipalities
1. Internal inter-municipal co-operation
68. Section 7 of the Municipalities Act guarantees communes the right to form consortia of municipalities. This possibility has been used for water supply, sanitation, treatment of waste (see below), management of hunting, forest affairs, and so on.
69. In a some cases, an inter-municipal body includes all of the Liechtenstein municipalities (for example, bodies for waste and sanitation). A foundation set up by the Land and all of the municipalities maintains retirement homes for the elderly.
70. This approach of “joint consortia” comprising the state and the municipalities is also to be found in other countries and can prove to be a practical solution to deal with certain matters which are preferably left under municipal responsibility but which municipalities find difficult to carry out on their own.
71. More generally, given the small size of the municipalities in Liechtenstein, recourse to inter-municipal co-operation is essential to enable certain tasks to be undertaken satisfactorily at municipal level. Ideally, therefore, inter-municipal co-operation should be further encouraged. This could involve pooling certain management activities (such as information technology and staff training).
72. However, there would appear to be some reluctance to setting up inter-municipal arrangements, as this takes the activities concerned further away from the direct control of the citizens. All the same, inter-municipal management remains, even in Liechtenstein, closer to the citizens than state-controlled management and, moreover, the functioning of the inter-municipal bodies can be arranged so as to ensure that the residents of the municipalities concerned and their representatives retain an effective means of influence.
73. Mention should also be made of the positive role, as far as inter-municipal co-operation and the defence of common interests are concerned, of the Conference of Mayors. There is no provision for this body in the texts, but in practice it plays a very useful role as a forum for dialogue and voicing municipal concerns.
2. Cross-border inter-municipal co-operation
74. The participation of Liechtenstein’s municipalities in cross-border activities (primarily with Switzerland, which is just on the other side of the Rhine), is a good thing and a practical reality. All of Liechtenstein’s municipalities belong to a cross-border inter-municipal body to deal with the disposal of refuse.
75. Nonetheless, it would be preferable if the legal bases for such cross-border activities were formulated more clearly. While Liechtenstein has ratified the Outline Convention on Transfrontier Co-operation between Territorial Communities or Authorities, it has not ratified the protocols to that Convention nor adopted any provisions in its domestic legislation enabling municipalities to take part in cross-border or international activities in their fields of competence. This legal framework could, therefore, be improved.
76. Notwithstanding these observations, Article 10 of the Charter is appropriately applied.
XI. Channels of appeal open to the municipalities
77. The Liechtenstein municipalities have remedies available to them if they wish to challenge decisions taken by the state which interfere with their rights derived from the principle of municipal autonomy and free administration. These remedies take the form of an appeal to the Administrative Court and, where necessary, to the Constitutional Court.
78. The Administrative Court is competent to exercise a full review of any government acts which challenge municipal autonomy. The recent Constitutional Court Act now enables municipalities to lodge an appeal before the Constitutional Court (Staatsgerichtshof) if they consider a law to be contrary to the Constitution.
79. In contrast, with regard to regulatory acts, it would appear that municipalities may simply request a decision on their compatibility with higher-ranking legislation (konkrete Normenkontrolle): when challenging an individual act taken on the basis of a regulatory act, a municipality may claim that the regulation is incompatible with the Constitution; the procedure is then suspended until the Constitutional Court rules on the matter.
80. These provisions comply with Article 11 of the Charter.
81. Liechtenstein has a high proportion of foreign residents (about one third of the whole population of 34,000, and more than half of the population of the capital, Vaduz). However, many of these foreigners are “neighbours” (Germans, Swiss, and Austrians) who have little or no difficulty with integration.
82. There are various measures to help foreigners of other origins to integrate, particularly with regard to learning German. The Liechtenstein municipalities play a major role in this respect. The system of local advisory boards is also accessible to foreigners. While there have been no specific measures taken to involve foreigners in local public life, (such as a foreigners’ consultative council, or the right to vote in local elections for foreigners of long-standing residence) it does not appear certain that such measures are really necessary in the context of Liechtenstein.
83. In conclusion, the situation of Liechtenstein’s municipalities is, in many respects, remarkable and enviable. The spirit as well as the letter of the European Charter of Local Self-Government is fully complied with.
84. The Charter calls on signatory states to be attentive to developments in local self-government, to ensure that it remains alive despite the trends towards uniform life-styles and a movement upwards of decision-making powers. To this end, it is constantly necessary to seek to offset the losses in municipal action in the sectors exposed to globalisation by transferring new powers to municipalities. Consequently, the law on clarifying the distribution of responsibilities between the state Land and the municipalities (Aufgabenentflechung zwischen Land und Gemeinden) could be usefully supplemented by considering the possibility of further devolution of powers to the municipalities, so that local self-government can be maintained and renewed.