Report on the implementation of the European Charter of Local Self-Government in Italy - CPL (4) 4 Part II

Rapporteur: Claude CASAGRANDE (France)

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EXPLANATORY MEMORANDUM

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Summary

The Congress of Local and Regional Authorities of Europe decided to analyse Italy's legislation and administrative practice in the field of local self-government, to establish to what extent the European Charter of Local Self-Government is implemented in Italy. A Congress working group visited Italy several times and held talks with representatives of the government, parliament, local authorities and provincial and municipal secretaries. The group identified the following four fields likely to pose problems as regards compatibility with the Charter: the status and role of municipal and provincial secretaries, supervision of local authority activities, supervision of local authority elected bodies and the degree of autonomy enjoyed by local authorities in respect of staff management. The group also wished to examine the matter of financial autonomy, in particular at provincial level. In this report, the group has analysed these four areas point by point and presented conclusions and recommendations as regards their compatibility with the European Charter of Local Self-Government.

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Introduction

1. Italy ratified the European Charter of Local Self- Government on 11 May 1990. The treaty entered into force in respect of Italy on 1 September of the same year.

2. In its Resolution 31 (1996) the Congress of Local and Regional Authorities of Europe adopted a set of principles to guide its action for the preparation of reports on the situation of local and regional democracy in the Council of Europe member states.

3. The CLRAE working group responsible for monitoring the implementation of the European Charter of Local Self- Government proposed, in the report it submitted at the third plenary session of the Congress (CPL (3) 7 Part II, Rapporteur: Mr De Sabbata, Italy), that a delegation visit Italy, in view of the comparatively high number of local elected representatives that had been removed from office in Italy.

4. In its Resolution 34 (1996) on monitoring the implementation of the European Charter of Local Self- Government, the Congress of Local and Regional Authorities of Europe, considering the conclusions drawn up by the said working group, invited its Bureau to prepare a report on the implementation of the European Charter of Local Self- Government in Italy.

5. To that end, a working group was set up by the Bureau of the CLRAE on 9 September 1996. The group was instructed by the Bureau of the CLRAE to verify compliance of Italian legal rules, and administrative and judicial practice, with the provisions of the European Charter of Local Self-Government, more specifically Articles 3, 6.2, 7.1 and 8, and alternatively Article 9.

6. The members appointed were Mr Gerhard Engel (Chairman of the group, Mayor of Alzenau, Germany), Mr Claude Casagrande (Rapporteur, municipal councillor for Etrechy, France), Mrs Gülay Atig (Mayor of Sisli, Turkey) who was subsequently replaced by Ms Gaye Dogano_lu (Municipal councillor of Muratpasa, Turkey), and Mr Giorgio De Sabbata (Marque, Italy). The group was assisted by Professors Fernando Lopez Ramon (University of Saragossa, Spain) and Alain Delcamp (University of Aix-en-Provence, France). The working group also had access to a report dated 10 September 1996 by Mr Massimo Balducci, Professor of Political Science at the University of Florence, relating to certain aspects of the implementation of the Charter in Italy.

7. The working group had several working meetings, some of which were in Rome. On 16 and 17 December 1996, the group met in Rome to analyse the documentation prepared by the Secretariat, to examine the opinions of the various authorities and other groups concerned in Italy and to prepare its own assessment. Within the programme, the working group met the association of municipal and provincial secretaries, whose Chairman is Mr Antonio Saija (Unione Nazionale Segretari Comunali e Provinciali); a meeting was held with Mrs Adriana Vigneri, Secretary of State at the Ministry of the Interior, responsible for local authorities and, lastly, a meeting with local elected representatives brought together by the Italian delegation of the Congress, took place at the headquarters of a local authority association (Associazione Italiana Consiglio Comuni e Regioni d'Europa).

8. A delegation of the working group, consisting of Mr Engel (President of the working group), Mr De Sabbata (member of the group) and Mr Locatelli (from the Secretariat) visited Rome on 27 January 1997. The delegation met the leaders of the National Association of Italian Municipalities (Associazone Nazionale Comuni Italiani, ANCI): Mr Caggiani, adviser in local self-government, Mr Melilli, Secretary General and Mrs Galvi, responsible for European affairs. The main aim of the visit was to meet Mrs Rosa Russo Jervolino, Chair of the Chamber of Deputies' Committee on Institutions, which is due to examine the Bassanini bill on the simplification of administrative rules relating to local democracy (bill passed by the Senate on 24 October 1996, No. 1034, awaiting reading by the Chamber of Deputies under No. 2564) (see paragraph 9 below).

9. The working group met in Strasbourg on 10 February 1997 and, at the close of the debate, reached provisional conclusions on the recommendations to be made in its report. On 25 February 1997, the Chairman of the working group, Mr Engel, sent a letter containing the provisional conclusions to the Chair of the Chamber of Deputies' Committee on Institutions, Mrs Jervolino.

10. The group held a final meeting in Rome from 15 to 16 April 1997 . Members of the group met with representatives of the National Association of Italian Cities (ANCI) and with Mr Diego Novelli, MP, rapporteur on the "Bassanini" bill.

11. The Rapporteur wishes to express his sincere gratitude to Professor Fernando López Ramón for his excellent contribution towards the preparation of this report.

Questions examined

12. This report is being drawn up at a time of transition in the structure and operation of Italian local authorities. In 1990, with Law no.142 of 8 June, the Italian legislator aimed to implement constitutional principles more fully in local self-government. Six years later, steps were taken to breathe new life into that reform. These steps consisted mainly of a bill to amend Law no.142, presented among others by the Minister responsible for the Civil Service and Regional Affairs, Mr Bassannini. This report takes account of legislation and practice in the field of local self-government and of the reform initiatives presented. However, the group has not examined any other initiatives in progress in territorial administration, in other words regional reform, a subject which is not included in the group's terms of reference.

13. This report is based on Italian legislation and reform bills as they stood on 15 April 1997. The last piece of legislation on local government enacted before publishing this report is Law number 59 of 15 March 1997, whose Articles nr 2 and 4.3.a) define and apply the subsidiarity principle. The Rapporteur wishes to point out that, as far as he knows, this is the first piece of domestic legislation which defines this principle, and it does so in a manner which benefits the level of government which is closest to the citizen. For these reasons the Congress should study it in depth in due course.

14. The information examined at its meetings has enabled the working group to identify a series of issues that may pose a problem of incompatibility with the principles of the European Charter of Local Self-Government:

a. the status and role of communal and provincial secretaries;

b. supervision of local authority activities;

c. supervision of elected bodies;

d. autonomy in staff management;

e. local financial autonomy.

Status and role of municipal and provincial secretaries

Legislation, reforms proposed and opinions submitted to the working group

15. The regime governing municipal and provincial secretaries is set out in Sections 52 and 53 of the Law no. 142 of 8 June 1990, amended in part by the Act of 28 December 1995. Under this regime, the secretaries of local authorities are civil servants whose appointment and promotion are determined by competition. The prefect is responsible for assigning secretaries to a local authority although in practice the prefect abides by the opinion of the mayor. They may be dismissed only by the Minister of the Interior for serious dereliction of duty. The secretaries are not subordinate to anyone in the hierarchy since they are at the top of the bureaucratic structure of each local authority. They supervise and co-ordinate the duties of the management bodies, ensure that decisions are executed and participate in the meetings of the committee and council of local authorities. In particular, they are required to report on the lawfulness of any decision submitted to the assembly or council of the authority for which they work.

16. The Bassanini bill plans to amend the rules applying to municipal and provincial secretaries. Responsibility for their appointment and dismissal would fall to the mayor or president of the province. Candidates would be chosen from among those appearing in an official list kept by an autonomous agency, whose board would be made up of local authority elected representatives, municipal secretaries and representatives of the State. Moreover, they would no longer be called upon to produce a report on lawfulness    1. Staff management could be placed under the responsibility of a director general.

17. The local elected representatives that the groups spoke to tended to complain that the provincial and municipal secretaries no longer fitted in with the real needs of modern administration. The cities often assigned them a manager. Conflicts that arose between a mayor or president of the province and a municipal or provincial secretary were very difficult to resolve. A system was recently adopted in the south Tyrol autonomous province whereby the traditional link with the state has been severed without causing any problems. The municipal secretaries are appointed by the municipal council in accordance with the opinion of a technical committee which examines applications on the provincial register. By making their appointment and dismissal the responsibility of the municipal council, minorities can be taken into account and the secretary is not regarded as the mayor's private secretary.

18. However, the association of municipal and provincial secretaries explicitly demands that they have technical and management responsibility, which they consider to be separate from and on the same level as political powers assigned to representatives who are elected by universal suffrage. They propose the setting up of an independent national agency with the participation of the secretaries, elected representatives and government representatives, which would be responsible for managing the list of candidates to posts of municipal and provincial secretary.

19. The Secretary of State Mrs Vigneri recognises that the system of municipal and provincial secretaries is a vestige of the old supervision system of local authorities which has lost much of its original purpose. Nevertheless, it is difficult to reform this office radically mainly for practical reasons of organisation. The solution proposed by the Bassanini bill amount to a transition solution in her opinion. One of the parties in the government, the PDS, apparently agrees to support the option of an independent professional agency.

20. The Chair of the Chamber of Deputies' Committee on Institutions, Mrs Jervolino indicated that in the informal discussions and especially in the prior consultations that took place, there was a degree of consensus that could lead to the link between municipal and provincial secretaries and the state being severed. Moreover, there is a trend towards dividing municipalities into two categories, those with fewer than and those with more than 10,000 inhabitants. In both cases, the secretary would no longer be a civil servant but a professional linked to the national agency which would be set up. In small municipalities however, emphasis would be placed on the stability of the secretary, since he or she is often the linchpin of municipal administration, and sometimes the only member. For that reason, in small municipalities, the appointment of the secretary would not be related to the length of the mayor's term of office. However, in municipalities with a population of more than 10,000 people, the secretary would be appointed by the mayor for the duration of the electoral mandate. One way or another, a solution must be found to the problem of mobility of municipal and provincial secretaries.

Legal analysis of the system's compatibility with the Charter

21. The Charter confers the exercise of local self-government on elected representatives by imposing the democratic management of local affairs. Under Article 3.2 "this right shall be exercised by councils or assemblies composed of members freely elected by secret ballot on the basis of direct, equal, universal suffrage, and which may possess executive organs responsible to them". The Charter therefore provides that elective organs shall have the right to appoint, sanction and dismiss civil servants of the corresponding local authorities. It should be stressed however that under the Charter the rights of local bodies over their staff are not discretionary. On the contrary, the Charter guarantees in Article 6.2 that "the conditions of service of local government employees shall be such as to permit the recruitment of high quality staff on the basis of merit and competence". Therefore the rights of the elective bodies to appoint, sanction and dismiss civil servants and local employees must be exercised in the context of the guarantees established by the law, having regard to aspects of competence and procedure and to the rules ensuring the recruitment of high quality staff.

22. The system of municipal and provincial secretaries is difficult to reconcile with the requirements of the Charter that have just been explained. The lack of any hierarchical supervision by local elected bodies over the municipal and provincial secretaries as it emerges from Section 52 of Law no. 141 of 1990, means that the elected bodies of local authorities are not able to exercise their right to regulate and manage the affairs for which they are responsible. The secretaries constitute a state body whose appointment, sanction and dismissal are decided by the Ministry of the Interior. In addition, the function of reporting on the lawfulness of decisions submitted to the assembly or council of the local authorities in which they work, under Section 53 of Law no. 141 of 1990, reflects their institutional position as linchpins in the state's supervision of municipalities and provinces.

23. The amendments planned in the Bassanini Bill meet the requirements of the Charter: the appointment and dismissal of municipal and provincial secretaries and the removal of their power to draw up a report on lawfulness shall henceforth be decided by the local bodies. There are too many automatic components in the system through the direct link between secretaries and the mayor or the president of the province, who are responsible for exercising powers of appointment and dismissal. Nevertheless, by imposing objective rules on the power of appointment which will ensure high-quality staff and the intervention of the municipal or provincial assembly for matters of dismissal, means that this system is not in breach of the Charter. The fact that the secretaries continue to be answerable to a degree to the state, through a national qualification system, could be regarded as a guarantee of the quality and career prospects which are requirements under Article 6.2 of the Charter.

24. Among the alternatives for regulation proposed during the meetings, the demand for separate technical responsibility for municipal and provincial secretaries is contrary to the Charter. A concept placing technical responsibility on the same level as political powers is clearly not compatible with Article 3.2 of the Charter, which recognises the exercise of local self-government for representatives elected by universal suffrage and not for civil servants. In this sense, any possibility of supervision by secretaries of the system of access, even if it is exercised through an independent agency, should be treated with caution. However, the setting up of a national training institution for secretaries is an idea which complies fully with the requirement for "adequate training opportunities" found in Article 6.2 of the Charter.

Supervision of local authority activities

Legislation, reforms proposed and opinions submitted to the working group

25. The system of supervision of local authorities' activities is governed by Article 130 of the Constitution and Sections 42 to 50 of Law no. 142 of 1990. Each region has a regional supervisory committee made up of five experts, who include not only lawyers but accountants and representatives of other professions, four of whom are appointed by the regional council and the fifth by the government commissioner (prefect of the region). All decisions adopted by municipal and provincial councils on matters within their competence are subject to preventive supervision by the relevant regional supervisory committee to verify their lawfulness. The same preventive supervision can be applied, at the request of a given number of members of the council, to decisions of the municipal and provincial councils which relate either to particular matters or present serious defects. The purpose is to verify conformity with the law; Section 46.2 of Law no. 142 of 1990 explicitly limits supervision to "verification that the act complies with the regulations in force and the statutory regulations of the body, notwithstanding any other review undertaken in the general interest". Supervision is a priori and there is a maximum time limit of 20 days within which the act can be nullified. Supervision entails the power to nullify an act but not to replace it. Local authorities can appeal against the decisions of the supervision bodies through the courts.

26. Many criticisms of this preventive supervision were put to the working group. In theory, since 1990 such supervision only concerns compliance with the law. But in actual fact, it also involves expediency. This is a considerable waste of time for the local authorities, especially as the supervision is regarded as ineffective, piecemeal and incompatible with modern management needs. Judicial redress is possible but in practice can only be applied for by large municipalities with the necessary means. Moreover, it has been noted that the supervision exercise by the regional supervisory commissions has been the subject of political interference. Unnecessarily strict supervision has also been observed in connection with the local authorities' activities in the area of European co-operation.

27. With regard to the budget and annual accounts, there are a number of major differences as compared with the general system of preventive supervision to verify the lawfulness of local authority activities. There are more extensive powers of supervision in these matters since, under Section 46.11 of Law no. 142 of 1990, verification of lawfulness includes verification that the documentation is consistent and that the accounting figures match the data contained in the decisions and supporting documents. The annual accounts may be modified by or placed under the responsibility of auditors. Mrs Vigneri, the Secretary of State, admitted that budget supervision was cumbersome and might in practice concern expediency, but in her opinion this was difficult to prevent because it was enshrined in the Constitution. A similar opinion was expressed by the Chair of the Chamber of Deputies' Committee on Institutions, Mrs Jervolino.

28. The above system is to be modified in part by Section 4 of the Bassanini Bill. The most significant change relates to the reduction in the number of activities which are subject to preventive supervision of lawfulness: these would be restricted to the council's statutes and rules of procedure, and the management accounts and budget.

Legal analysis of the system's compatibility with the Charter

29. The European Charter of Local Self-Government lays down strict limits for admitting supervision by other administrative bodies of the activities of local authorities. Under Article 8, such administrative supervision must be exercised according to the law, must concern only lawfulness, except in the case of delegated powers, and must respect the principle of proportionality.

30. The Italian system described gives rise to incompatibilities with some of the requirements of the Charter. The problem could arise in practice if the general supervision of the lawfulness of local authority activities was to become a supervision of expediency, as a result of the excessive number of local activities subject, simultaneously and within a short space of time, to preventive supervision by the regional supervisory committees, bodies which are not made up principally of lawyers. In addition, account must be taken of the difficulties inherent in appealing through the courts against the supervision decisions, especially for small municipalities which are unable to meet the stipulated deadlines or afford the cost of proceedings. This could lead to the supervision of legality provided for in legislation becoming supervision of expediency, either as result of the lack of defined criteria in selecting the activities nullified by the regional supervisory committees, or the impossibility in practice of taking legal action to establish whether the reasons for the activities being nullified were based on lawfulness or expediency.

31. In such circumstances, there would be an infringement of the general prohibition on supervision of the expediency of local authority activities contained in Article 8.2 of the Charter. Furthermore, the very fact of there being preventive supervision of an excessively large number of acts could be considered contrary to the principle of proportionality between the extent of supervision and the importance of the general interests at stake, as required by Article 8.3 of the Charter.

32. The above problems could be resolved if the number of activities subject to preventive supervision of lawfulness were to be reduced as proposed by the Bassanini Bill. Be that as it may, the requirements of Article 8 would still be infringed as far as the budget and the annual accounts were concerned, given that the arrangement for supervision of these activities, both under Law no. 142 of 1990, and in the Bassanini Bill, amount to unwarranted supervision of expediency. Moreover, this supervision of expediency on the budget and annual accounts weaken the right of local authorities to "dispose freely" of their financial resources, as guaranteed by Article 9.1 of the Charter.

Supervision of elected bodies

Legislation, reforms proposed and opinions submitted to the working group

33. Italian legislation provides various types of machinery for supervision of local authority bodies.

a. First, the state has the power to dissolve municipal and provincial councils, under Section 39 of Law no. 142 of 1990. Supervision is a function of the President of the Republic, on a proposal from the Minister of the Interior, who must inform Parliament immediately of the dissolution decree. Dissolution entails the appointment of a commissioner in place of the council pending the next elections. There may be various reasons for dissolution, which include reasons linked to the person of the Mayor or President of the province, whose resignation, long-term absence, removal from office or death results in the dissolution of the corresponding municipal or provincial council. Dissolution may also result from what might be considered generic reasons such as unconstitutional acts, persistent and serious violations of the law and serious reasons of public order. The prefect has the power to authorise provisional suspension. According to the information available, however, it does not appear that excessive use has been made of the generic reasons for dissolution; in the period 1990-94 only eight municipal councils appear to have been dissolved on these grounds.

b. A second aspect of administrative supervision of local authority bodies can be found in the anti-mafia legislation (Law no. 221 of 22 July 1991). In the period between 1991 and 1996, a total of 90 municipal councils were dissolved on the grounds of involvement with or interference from criminal organisations such as the mafia. The Secretary of State, Mrs Vigneri, said that Italy's anti-mafia legislation was under consideration in the Constitutional Court, which had declared some of its provisions unconstitutional because removal from office was possible even in cases in which criminal proceedings were still in progress. She considered that this legislation was ineffective and should be strengthened, especially because the administrators of "infiltrated" municipalities did not co-operate with elected councillors after dissolution. It should also be pointed out that the local elected representatives encountered did not think that this special legislation posed a problem or entailed a violation of local self-government. On the contrary, some of them thought that it was a good initiative. The Chair of the Chamber of Deputies' Committee on Institutions, Mrs Jervolino, said that where a criminal organisation was involved it even now appeared absolutely essential to the progress of investigations that removal of a Mayor of dissolution of a council should continue to be possible. Experience had shown that as long as removal from office or dissolution had not been decided, potential prosecution witnesses did not dare to give evidence for fear of being confronted with the accused when they were still in power. She added that most dissolutions and removals from office had taken place in Sicily, Calabria and Campania, where the phenomena of the mafia and the camorra were encountered.

c. The third aspect of supervision is the possibility for state authorities of removing local elected representatives from office, under Section 40 of Law no. 142 of 1990. By presidential decree, on a proposal from the Minister of the Interior, a Mayor, President of a province, members of a council or assembly and other local elected representatives may be removed from office for a number of generic reasons : unconstitutional acts, persistent and serious violations of the law, or serious reasons of public order. The prefect has the power to authorise provisional suspension in cases of serious and urgent necessity. Since Law no. 142 came into force in 1990, 288 local elected representatives have been removed from office, including eight in 1996.

d. The fourth aspect of supervision results from the effects of criminal trials, under Section 15 of Law no.55 of 19 March 1990, amended by Law no. 16 of 18 January 1992. Non-final convictions, even for relatively minor offences, results in destitution of the right to election and immediate suspension of local elected representatives. In the current situation, elected representatives may be removed from office for being sentenced to pay fines of as little as 180,000 lire. In a parliamentary initiative, a bill was tabled to limit removal from office to cases of final convictions or convictions at first instance that are upheld in appeal, where the sentences are of more than six months imprisonment (Bill dated 19 June 1996, No. 1551, Chamber of Deputies). But the State Secretary Mrs Vigneri said that the Government had not yet examined this question.

Legal analysis of the system's compatibility with the Charter

34. The question is whether the systems described above are in violation of the right of local elected representatives to "free exercise of their functions" as guaranteed by Article 7.1 of the charter.

a. The state's powers to dissolve municipal and regional councils for reasons which are regulated but unconnected with the local elected representatives themselves (such as those relating to the Mayor or the President of the province) or for generic reasons of public order should be considered as contrary to the Charter. In the first case, there are no reasons which would justify the dissolution of a council for reasons affecting only the Mayor or the President of the province.

In the second case, the vagueness surrounding the reasons for dissolution compromise elected representatives' free exercise of their duties. However the small number of councils which have been dissolved on the grounds of public order point to a prudent exercise of the power granted to the administration which, moreover, has the added safeguard of being exercised by the President of the Republic and having to be submitted to parliament; clearer definition of the reasons for dissolution could strengthen the guarantees of the system.

b. The administrative supervision of local bodies provided for in the anti-mafia legislation is a very special case since the fight against mafia crime could be considered as justification for greater powers in this field. The fight against the mafia is an exceptional phenomenon which could warrant exceptional measures. In this sense, the problem should not be tackled as a local self-government question but examined as a human rights issue.

c. However, the possibility of removing elected representatives from office on generic grounds of lawfulness and public order compromise the right to "free exercise of their functions". The high number of removals from office, invariably for unspecified reasons, is perhaps an indication that the power in question is incompatible with the Charter.

d. Regarding the law on ineligibility, the system is excessively severe in that local elected representatives are suspended on the basis of non-final convictions or minor convictions. Such severity is clearly contrary to the exercise of elected representatives' functions. Suspension for convictions which are not yet final should only be acceptable if such suspension is imposed by the judicial organs for reasons related to the investigation. The situation governing suspension for minor offences should be modified, as suggested in Bill No. 1551.

Staff management autonomy

Legislation, reforms proposed and opinions put to the working group

35. There are various restrictions placed on local authorities with respect to staff.

a. First, municipalities and provinces suffering from "structural deficit" problems must submit for prior examination to the Ministry of the Civil Service the method adopted for assessing staff needs (Section 3.5 of Law no. 537 of 1993).

b. Secondly, the resources which local authorities may allocate for staff expenditure are limited to a maximum of 50% of the budget (Article 45 of Legislative Decree 504 of 30 December 1992). Furthermore, local authorities whose staff expenditure goes beyond this limit must request permission from a national committee, on which they are represented, before they can hire any additional staff. According to Mr Balducci, if municipalities are regarded as service providers, human resources should represent more than 50% of expenditure; the measure claims to force the privatisation of services. The elected representatives consulted said it was not so much the 50% limit which bothered them - this limit is also regarded by credit institutions as a threshold for sound management - but the other restrictions which prevent local authorities from paying their staff adequately in return for individual performance. The representatives of the Association of Local Secretaries shares that view. In addition, the Secretary of State, Mrs Vigneri thought this measure was dictated by "an outdated philosophy" practised when local finances depended chiefly on state transfers (which is no longer the case for municipalities but continues to apply for provinces and regions).

c. A third supervision measure sets the ceiling for staff expenditure at the level of 31 August 1993 for each local entity (Section 1.9 of Law No. 549 of 1995). Section 19 of the Bassanini Bill provides that the restrictions on recruitment as at 31 August 1993 are to be lifted in all municipalities and provinces which do not have a "structural deficit".

d. The Bassanini Bill also provides for nationwide negotiations on staff salaries. The negotiations should be conducted by a national agency receiving directives from the Prime Minister. The Secretary of State, Mrs Vigneri, explained that this national agency had been created in 1993 to monitor staff expenditure by local authorities, an important source of public debt. She says that in actual fact there is supervision of public spending in general, which extends to the local authorities and violates their management autonomy. The government is aware of the situation and of the need to introduce greater flexibility, but for the time being no measures are planned in this area.

Legal analysis of the system's compatibility with the Charter

36. Article 6.1 of the Charter recognises the freedom of local authorities to "determine their own internal administrative structures". On the other hand, under Article 9 local authorities may "dispose freely" of their own resources. Such freedom covers decisions relating to staff. Nevertheless, the state must be able to limit that freedom for macro-economic reasons, such as curbing public expenditure. Such limits would be acceptable if they are imposed by law, they are reasonable, they are non-discriminatory in respect of state authorities, and they are temporary.

37. The measures taken to limit expenditure on staff to a maximum of 50% of the budget, or the setting of a ceiling on staff expenditure to the level in place on 31 August 1993 appear to comply with those conditions.

38. However, the need for local authorities facing a "structural deficit" to submit the staff management method to the government may be regarded in practice as supervision of expediency contrary to the freedom of organisation stipulated in Article 6.1 of the Charter and the prohibition of supervision of expediency, under Article 8.2 of the Charter. It would also run contrary to local authorities' right to "dispose freely" of their own resources under Article 9.1 of the Charter. On the other hand, the imposition of centralised collective bargaining for the working conditions of local authority staff runs contrary to local authorities' right to determine their own internal structures, under Article 6.1 of the Charter.

Local financial autonomy

Legislation, reforms proposed and opinions submitted to the working group

39. Although initially financial autonomy was not a component of the study, the working group's attention was drawn by local elected representatives to the very poor level of financial autonomy, particularly for the provinces. The working group therefore sought information on the matter.

At municipal level, the situation is on average as follows:

Year

1991

1992

1993

1994

Own resources

38%

44%

46%

57%

Transfers from the state regions

55%

50%

48%

35%

40. The municipalities administer 22% of public expenditure. For current expenditure, transfers are global and therefore the principle of autonomy is respected as regards their use. These figures may be regarded as satisfactory and show real progress in own resources since 1991, which has been consolidated in recent years.

41. The situation is totally different for the provinces:

Year

1990

1991

1992

1993

1994

Own resources

5.05%

6%

7.12%

7.70%

7.70%

42. Even though the share of own resources has improved slightly since 1990, it remains less than 10%, which is a very low level. Moreover, the 90% which consists of transfers are made up essentially of specific subsidies.

43. Even though long and complicated machinery exists which allows the provinces to reassign specific appropriations for other uses (the following year), it can be said that financial autonomy of the provinces is hardly consistent with the Charter of Local Self-Government.

44. The supervision of the budget and the fact that the subsidies allocated constitute a highly excessive proportion of resources entail constraints that have a considerable impact on the financial autonomy of local and especially of provincial authorities in Italy.

45. As regards loans, the municipalities have been allowed to issue cash vouchers. Also, a new financial law permits the use of private capital for investment expenditure on certain projects (creation of quasi-public corporations). This constitutes progress, but in fact only cities benefit because, in reality, towns and municipalities do not have access to these facilities.

46. However, reform was discussed in late 1996.

47. The new law No. 662 of 23 December 1996 on measures to rationalise public finance instituted a new provincial road tax on all vehicles and this should increase the share of the provinces' budgets derived from their own resources; that share had previously not exceeded 7.7% of the provincial budget, although the working group does not have estimated figures available in this respect.

48. Finally, local authorites deem that, in general, whenever new duties are transferred to them, the financial resources required to implement them correctly do not follow. Paradoxically, if this situation did not change, the new Law nr 59 of 15 March 1997 could make things worse insofar as the number of tasks for which local government is responsible could increase substantially.

Analysis of the system's compatibility with the Charter

49. The working group does not have any major problem with the level of municipal finances.

50. However, it is clear that the financial situation of the provinces is in contradiction with Article 9, paragraphs 2 and 7, of the Charter.

51. The fact firstly that the share of subsidies is too great and secondly that those subsidies consist essentially of specific subsidies to the provinces, is not in compliance with Article 9 paragraph 1 and Article 9 paragraph 7 of the Charter respectively. However, given the improvement made by Law no. 662 of 23 December 1996, the working group instructs the group responsible for monitoring the European Charter of Local Democracy which has just discussed the matter of Article 9, to monitor this situation closely.

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Conclusions

52. The status and role of municipal and provincial secretaries

a. The system of municipal and provincial secretaries is contrary to the requirements of democratic management of local self-government imposed by Article 3.2 of the Charter.

b. The local bodies should be entitled to appoint and dismiss the municipal or provincial secretary albeit with due regard for the statutory guarantees.

c. The municipal and provincial secretaries should not depend on the government, given that supervision powers over local authority staff lie with democratically elected councils or assemblies.

d. Municipal and provincial secretaries may not be regarded as a technical authority on the same level as political authority.

e. The Bassanini Bill appears to comply with the requirements of the Charter in respect of the status and role of municipal and provincial secretaries.

f. The setting up of a national training centre for municipal and provincial secretaries complies with the requirements of Article 6.2 of the Charter, provided that no monopoly on training is established.

53. Supervision of local authority activities

a. The system of supervision of local authority activities is contrary to the requirements of supervision of lawfulness under Article 8 of the Charter since in practice, it becomes supervision of expediency no longer in proportion to the public interest involved.

b. The Bassanini Bill establishes new conditions for developing a system for the supervision of local authority activities that is more in keeping with the requirements of the Charter, notwithstanding conclusion (c).

c. The system in force and the system proposed under the Bassanini Bill, as far as supervision of the budget and annual accounts are concerned, amount to unwarranted supervision of expediency, contrary to Article 8.2 of the Charter and to the right of local authorities to dispose freely of their own resources, as guaranteed by Article 9.1 of the Charter.

54. Supervision of elected local authority bodies

a. The supervision of elected bodies of local authorities is, to a large extent, contrary to the right of local elected representatives to "the free exercise of their functions", as guaranteed by Article 7.1 of the Charter.

b. The possibility for state authorities to dissolve, for external or generic reasons, municipal and provincial councils or remove elected representatives from office, may also be regarded in practice as contrary to the Charter.

c. The suspension of local elected representatives subject to non-final convictions or minor convictions may also be regarded as contrary to the Charter.

d. The administrative supervision of local bodies provided in the anti-mafia legislation exceeds the scope of local self-government and does not therefore call for a conclusion.

55. Autonomy in the management of local authority staff

a. Restrictions on staff management autonomy may be acceptable, without compromising the management freedom of local authorities' internal structures recognised in Article 6.1 of the Charter, if they are imposed by law, are reasonable, are not discriminatory in respect of state authorities and are temporary.

b. The obligation of local authorities to submit the method for managing their own staff to the Ministry of the Civil Service is contrary to the management freedom guaranteed by Article 6.1 of the Charter and to the prohibition on control of expediency stipulated in Article 8.2 of the Charter.

56. Local financial autonomy

a. The average share of Italian municipalities' revenues made up by their own resources has grown steadily, although this is partly due to the State's gradual disengagement from the funding of local government. However, there is a growing discrepancy between local authorities' responsibilities and their financial resources. As to local taxes, they are not as "diversified and buoyant" as requested in the Charter.

b. In spite of recent legislation, the provinces' own resources are too low; on the other hand, there are too may earmarked subsidies. This curtails the provinces' autonomy.

1 Bearing in mind Section 45 of Act No. 142 of 8 June 1990, the group has decided to translate "leggittimità" as "lawfulness".

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