Vladimir Putin instructed to develop mechanisms for deductions to local budgets from taxes and fees

The government should develop proposals for the introduction of additional standards for deductions to local budgets from federal and regional taxes and fees. Such a proposal is included in the list of instructions signed by President Vladimir Putin following a meeting of the Council for the Development of Local Self-Government (LSG). In addition to the topic related to the financing of municipalities, he also gave instructions related to improving the level of training of personnel in local self-government and limiting control and supervisory activities in relation to local authorities.

The instructions cover many topics on which there are problems in local self-government now, but the two main ones are the restriction of control and supervisory activities in relation to local self-government bodies and the introduction of a risk-based approach, which allows not to conduct inspections for the sake of inspections, but to limit existing risks, says the chairman of the expert Council of the Union of Russian Cities Andrey Maksimov. And the second is the creation of the entire chain of personnel training. “In general, the instructions are very detailed, aimed at technologizing the solution of many problems in the LSG system,” he says.

The government, together with State Council commissions, should expand the most effective practices in the regions that encourage LSGs to increase local budget revenues. The White House should also work on changes to legislation that are aimed at clarifying approaches to determining the level of subsidization of local budgets. In addition, local self-governments should be provided with guarantees for reimbursement of expenses that arise due to the transfer of certain state powers to them (recently, Vedomosti wrote that the Constitutional Court considered the case of transferring the powers to clean up landfills to municipalities without appropriate budgetary funds).

State Duma deputy from the New People party, ex-mayor of Yakutsk Sardana Avksentyeva positively assesses the instructions, especially in terms of the fact that the president proposes to “solve the problem of hopeless poverty of municipalities by increasing tax deductions to local budgets.” “This is exactly what we have been talking about for several years. We need to look for new ways to replenish the budgets of municipalities. The President drew attention to the need to redistribute taxes. Taxes should remain where they were collected, local budgets should receive more funds. Now everything ends up in a common federal pot, a small part – in regional pots, and municipalities get almost nothing. The system of interbudgetary relations is built unfairly, it needs to be fine-tuned,” she says.

It is very important that the head of state instructed to submit proposals for changing the budget legislation in terms of clarifying approaches to determining the level of subsidization of local budgets, Avksentyeva emphasizes: “I have repeatedly had to explain, including to federal politicians, that subsidization of regions and local budgets is often a fictional “.

The fact that the president instructed to give LSG guarantees to compensate for additional expenses arising in connection with the exercise of the powers delegated to them is “the most important point”. “During my work as the mayor of the city of Yakutsk, I repeatedly came across the fact that new powers, i.e., duties, were lowered from above to the municipality in pursuance of some new federal law. But the search for funds has always been at the mercy of the heads of municipalities,” says Avksentieva.

The financial issue for LSG is traditionally the most painful, says Rostislav Turovsky, vice-president of the Center for Political Technologies: “Breakthroughs are hardly possible here, since it is more important for the center not to expose the regional level, and their similar problems are growing there. Here the government, reacting to the instructions, will have to offer a compromise.” In his opinion, the development of plans for socio-economic development, which is now being practiced in the Far East, can more likely become a plus for cities in solving financial problems. “But it all depends on the lobbyists of these cities,” he concludes.

Maximov is more optimistic. According to him, for decades they have been talking about not pulling budget funding to the federal and regional levels, that it is necessary to leave a guaranteed income for municipalities. “For municipalities to be able, for example, to attract investments themselves, while realizing that their work will lead to replenishment of the budget of municipalities, that money will not be taken from them, this is very important for the development of territories. This includes support for those regions that encourage their municipalities to develop. Actually, the instructions contain initiatives that are aimed at this,” he says.

Part of the instructions concerns the conduct of supervisory activities. The government needs to submit proposals on the use of a risk-based approach, preventive measures to eliminate pre-trial appeals when exercising state control over the activities of local self-government bodies, and also consider developing mechanisms to optimize the debt of local self-government bodies to pay fines. The Prosecutor General’s Office should submit proposals for regulating the procedure for supervisory activities in local self-government bodies, as well as for adjusting the law enforcement practice of such supervision.

Municipalities across Russia are complaining about the increased number of inspections of LSGs and municipal enterprises by regulatory authorities, says Avksentyeva: e. to the municipalities.” Huge fines do not help solve problems, she adds. The deputy gives an example when the municipality does not have enough funds for the overhaul of some social facility: “The deadlines have been missed, a fine has been issued, but there is still no money, no overhaul is being carried out.”

Maksimov agrees with Avksentieva: “They check everything, from building to the maintenance of cemeteries, from schools to the quality of the curb stone. It is clear that inspections are indispensable, but a situation is emerging when municipalities have to communicate with the regulatory authorities around the clock.” He gives as an example a “typical situation” that has affected many heads of small settlements: the place in the cemetery is running out, but people need to be buried, so the borders of the cemetery are expanding at the expense of the neighboring forest, which is why trees are cut down: “As a result, cases are brought against the heads of municipalities for cutting down trees. It’s a telling story.” The introduction of a risk-based approach, which is proposed in the instructions, is not a formal observance of norms and instructions, but an emphasis on the possible risks that may be in case of violations, Maksimov says.

Also, the government should establish rules for monitoring the implementation of long-term plans for the socio-economic development of key settlements and keep statistics on them. These are settlements outside urban agglomerations, where the accelerated development of infrastructure is being carried out. Maksimov explains that this is a program of the Ministry of Agriculture, aimed at developing villages that have positive or stable demographic dynamics, they need to maintain and develop social infrastructure, and additional measures should be taken for their development.

The governors were instructed to create competency development centers for state and municipal employees like Senezh. The presidential administration, together with the RANEPA, needs to ensure that by September 1, the development of a program for the development of the municipal personnel reserve “School of Mayors” – funding must be allocated for this. And the government, together with the RANEPA, should submit proposals for improving educational programs in the direction of “state and municipal management.”

One of the most important issues in the instructions is the continuation of the educational vertical at the municipal level, Turovsky notes: “This is a very important issue for the presidential administration. It will have the opportunity to multiply the training and personnel selection practices that are typical for the regional level.”

Some of the instructions affect the ANO “Dialogue Regions”, for example, they, together with the government, must submit proposals for the creation of a digital platform for communication of LSG bodies. They also need to consider creating municipal control centers (similar to regional control centers that monitor the public mood of citizens). All these initiatives must be funded.

The President also instructed to update the assessment of the effectiveness of LSG activities, bringing it into line with the assessment of the activities of governors. It is necessary to submit proposals for the preparation of uniform standards for organizing the work of local administrations, taking into account best practices. An instruction was also given to discuss the possibility of priority admission to the federal and state civil service, if a person has work experience in municipal positions.

The government should create information content that would be aimed at popularizing the municipal service.

Of the entire list of instructions, Avksentieva is skeptical about only the issue related to the creation of content aimed at popularizing the municipal service: “The municipal service can be made attractive if salaries for ordinary performers are increased. Many of them receive a penny, but they do a huge amount of work and bear a lot of responsibility.”