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Austria - Monitoring report

Date of the monitoring visit: from 10 to 12 December 2019
Report adopted on: 28 September 2020
Files : Report CG-FORUM(2020)01-03 | Recommendation 446 (2020)
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This report was prepared following the second monitoring visit to Austria since the country ratified the Charter in 1987.

 

It welcomes the constitutional and legal recognition and substantial implementation of the principle of local self-government in Austria, the introduction of the Länder Administrative Courts to strengthen Austrian federalism, the extension of the competences of the associations of local authorities to co-operate and the reforms carried out since 2011 with a view to clarifying the distribution of competences between the Federation, the Länder and local authorities. The adoption of the New Government Plan with the objective, among other things, to tackle some of the outstanding issues reflected in this report has also been welcomed.

 

At the same time, the rapporteurs stress that in Austria there is still a high degree of complexity in the allocation of powers. Subnational authorities’ tax-raising power continues to be low and they rely extensively on intergovernmental transfers. The criminal legislation places a disproportionate personal responsibility on local elected representatives which, coupled with inadequate social conditions, leads to mayors’ vulnerability and, consequently, prevents a broad range of potential candidates from standing for local election.

 

Hence, the recommendation invites the Austrian authorities, among other things, to provide the Länder and municipalities with greater freedom to set the rates and base of their own-source taxes, align the criminal legislation regarding the liability of mayors with the principle of free exercise of elected mandates, and improve social conditions under which elected functions are exercised.

 

It also calls on Austria to sign and ratify, in the near future, the Additional Protocol to the European Charter of Local Self-Government on the right to participate in the affairs of a local authority (CETS No. 207).

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Article ratified Ratified with reservation Non ratified
Compliance Partial compliance Non compliance To be determined
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Article 2
Constitutional and legal foundation for local self government - Article ratified

The principle of local self government shall be recognised in domestic legislation, and where practicable in the constitution.

B-VG specifically recognises the first core element of local self-government, namely, the existence of “local authorities endowed with democratically constituted decision-making bodies”. Firstly, Articles 6 to 8 identify the municipal level, as one where fundamental rights of the Austrian citizens need to be protected. Secondly, Chapter VI on Municipalities, and more specifically, Article 117 enumerates the municipal authorities, namely: a) the municipal council (Gemeinderat), the general representative body to be elected by those entitled to vote in the municipality; b) the municipal executive board (city council) (Gemeindevorstand / Stadtrat), or in Statutory cities, the city senate (Stadtsenat); c) the mayor (Bürgermeister).

 

Pursuant to Article 117.2, B-VG, the municipal council is elected on the basis of proportional representation by equal, direct, personal and secret suffrage by the male and female federal nationals who have their main domicile in the municipality. And although specific election regulations may occur, the conditions for suffrage and electoral eligibility may not be more restrictive than in the electoral regulations for the Land Parliament. Paragraph 6 indicates that the mayor is elected by the municipal council. B-VG recognises, however, the possibility of the Länder to stipulate in their constitutions that the mayor shall be elected by those with municipal council suffrage.

 

Local self-government is also enshrined in Municipal codes of all Länder,44  namely, in Burgenland Municipal Code (Burgenländische Gemeindeordnung 2003),45 Carinthian Municipal Code (Kärntner Allgemeine Gemeindeordnung 1998),46 Lower Austrian Municipal Code (NÖ Gemeindeordnung 1973),47 Upper Austrian Municipal Code (Oö. Gemeindeordnung 1990),48 the Municipal Code of Salzburg (Salzburger Gemeindeordnung 1994),49 Styrian Municipal Code (Steiermärkische Gemeindeordnung 1967),50 The Municipal Code of Tyrol (Tiroler Gemeindeordnung 2001),51 The Municipal Code of Vorarlberg (Vorarlberg Gesetz über die Organisation der Gemeindeverwaltung 1985).52 These documents include references to the two other core components of local self-government, namely: autonomy in exercising local power and resources necessary to accommodate local needs.

 

In Burgenland, the Municipal Code (Article 14) identifies the following organs of the municipality: the municipal council, the municipal board, the mayor and the municipal treasurer. Elections are direct, free, secret, proportional and all Austrians residing in the municipality can vote, as well as members of another EU country who are registered in the municipality. The members of the municipal council as well as the mayor are elected for a period of five years (Articles 16-17). Burgenland differentiates between Marktgemeinde – of greater economic importance for the surrounding areas, and Stadtgemeinde – municipalities that have gained particular importance for the wider area due to their economic structure, their cultural institutions, their population or traffic situation (Article 3.1).

 

In Carinthia, according to the Municipal Code, the municipal council is elected by all municipality citizens for a mandate of six years (Articles 2, 18 and 19). Similar provisions apply to the mayor as well (Article 23).

 

The Lower Austrian Municipal Code describes the organs of the municipality (the municipal board, the municipal council, the mayor) (Article 18). The mayor is elected from among the municipal councillors by the municipal council (Article 26).

 

The Upper Austrian Municipal Code enumerates the municipal organs in Article 17 and states that the mayor is elected by the municipal council (Article 25). In addition, Article 3 recognises the right of the Land government to create municipalities of different kinds, upon their request, and in the limits of the population (municipalities with more than 2 000 inhabitants may apply to become Marktgemeinde and those with more than 4 500 inhabitants, Stadtgemeinde).

 

In Salzburg, the municipal council, the municipal leadership, the mayor, and the committees are the local authorities (Article 18). The mayor is directly elected by all the eligible voters in the municipality (Article 35).

 

The Styrian Municipal Code enumerated the following local authorities: the municipal council, the municipal board (Gemerindevorstand), the mayor, the management committees, the specialised committees, and the municipal treasurer (Article 14). Styria enjoys directly elected municipal councils and mayors elected by the municipal council for a term of five years (Articles 16, 17 and 19). In addition, Article 3 states that the designation Marktgemeinde may be given only to municipalities of more than 3 000 inhabitants, whereas that of Stadtgemeinde to those of at least 10 000 inhabitants.

 

In Tyrol, the Municipal Code describes the local authorities in Article 21 and stipulates the length of the mandate: six years (Article 25).

 

The Municipal Code of Vorarlberg indicates in Article 20 that the municipal council is to be directly elected by Austrian citizens and foreign citizens of the Union who have the right to vote according to the municipal electoral law; and in Article 61 that the municipal council elects the mayor. The political mandate is for five years (Article 35).

 

During the monitoring visit, the members of the Austrian National Delegation to the Congress as well as of the National Associations acknowledged the legal recognition and substantial implementation of the principle of local self-government in Austria.

 

The rapporteurs observe that elements of the principle of self-government are present in the Federal Constitution, as well as in the Land Municipal Codes, and therefore conclude that Austria complies with Article 2.


44 The enumeration does not include Vienna, as its distinctive character has been already presented in section 2.2.

45 Document available online at: https://www.ris.bka.gv.at/GeltendeFassung.wxe?Abfrage=LrBgld&Gesetzesnummer=20000221

 

46 Document available online at: https://www.ris.bka.gv.at/GeltendeFassung.wxe?Abfrage=LrK&Gesetzesnummer=10000276

 

47 Document available online at: https://www.ris.bka.gv.at/GeltendeFassung.wxe?Abfrage=LrNO&Gesetzesnummer=20000105

 

48 Document available online at: https://www.ris.bka.gv.at/GeltendeFassung.wxe?Abfrage=LrOO&Gesetzesnummer=10000288

 

49 Document available online at: https://www.ris.bka.gv.at/GeltendeFassung.wxe?Abfrage=LrSbg&Gesetzesnummer=10000813

 

50 Document available online at: https://www.ris.bka.gv.at/GeltendeFassung.wxe?Abfrage=LrStmk&Gesetzesnummer=20000218

 

51 Document available online at: https://www.ris.bka.gv.at/GeltendeFassung.wxe?Abfrage=LrT&Gesetzesnummer=20000101

 

52 Document available online at: https://www.ris.bka.gv.at/GeltendeFassung.wxe?Abfrage=LrVbg&Gesetzesnummer=20000047

Article 3.1
Concept of local self government - Article ratified

Local self-government denotes the right and the ability of local authorities, within the limits of the law, to regulate and manage a substantial share of public affairs under their own responsibility and in the interests of the local population.

The explanatory report to the Charter53 states that “it is not possible to define precisely what affairs local authorities should be entitled to regulate and manage. (…) The traditions of member states as to the affairs which are regarded as belonging to the preserve of local authorities differ greatly. In reality most affairs have both local and national implications and responsibility for them may vary between countries and over time and may even be shared between different levels of government”.

 

In Austria, there are four essential types of power:54

  • i. Exclusive federal power (of legislation and execution, according to Article 10, B-VG);
  • ii. Federal legislation power and Land execution power (Article 11, B-VG);
  • iii. Federal legislation power for general principles and Land implementing and execution power (Article 12, B-VG);
  • iv. Exclusive Land power (of legislation and execution, Article 15, B-VG).

 

Pursuant to Article 118, B-VG, a municipality has its own sphere of competence and one assigned to it either by the Federation or the Land. Its own sphere of competence comprises, apart from the matters mentioned in Article 116.2, B-VG (on municipal associations, Gemeindeverbände), all matters exclusively or preponderantly the concern of the local community as personified by a municipality and suited to performance by the community within its local boundaries. Legislation shall expressly specify matters of that kind as being such as fall within the municipality’s own sphere of competence.

 

B-VG (Article 118.3), as well as the Municipal codes of the Länder include, in the area of municipal power, the following matters in particular:

  • i. appointment of the municipal organs, notwithstanding the competence of election boards at a higher level; settlement of the internal arrangements for performance of the municipal functions;
  • ii. appointment of the municipal staff and exercise of the service prerogative over them, notwithstanding the competence of disciplinary, eligibility, and exam commissions at a higher level;
  • iii. local public security administration (Article 15.2, B-VG), local events control;
  • iv. administration of municipal traffic areas, local traffic police;
  • v. crops protection police;
  • vi. local market police;
  • vii. local sanitary police, in particular in the field of emergency and first aid services as well as matters pertaining to deaths and interment;
  • viii. public decency;
  • ix. local building police; local fire control; local development planning;
  • x. public services for extra-judicial settlement of disputes;
  • xi. voluntary sale of movables.

 

In addition, municipalities are entitled in matters pertaining to their own sphere of competence to issue on their own initiative local police ordinances for the prevention of imminently to be expected or existing nuisances interfering with local communal life as well as to declare non-compliance with them an administrative contravention. Such ordinances may not violate existing laws and ordinances of the Federation and Land (Article 118.6, B-VG).

 

The municipality shall conduct the business for which it is competent within the framework of the laws and ordinances of the Federation and the Land on its own responsibility, free from instructions and under exclusion of legal redress to administrative authorities outside the municipality. According to Article 117.7, B-VG, the business of the municipalities is to be conducted by the local administrative office (city administrative office), and that of Statutory cities by the City administration. A civil servant with legal training shall be appointed to take charge as the city administration’s chief executive of the City administration’s internal services.

 

In matters of their own sphere of competence the Federation and the Land have a right of supervision over the municipality (Article 119a, B-VG). The mayor, the members of the municipal executive board (city council, city senate) and, if appointed, other executive officials are accountable to the municipal council for the performance of their functions relating to the municipality’s own sphere of competence (Article 118.5, B-VG). Also, according to Article 117.8, B-VG the Land legislature can, in matters pertaining to the municipality’s own sphere of competence, provide for the direct participation and assistance of those entitled to vote in the municipal council election.

 

During the monitoring visit, representatives of Austrian municipalities and associations appreciated that while the status of local government in Austria has generally improved since 2011, there still remains a need to redefine the scope of local responsibilities and ensure the financial sustainability of (small and medium) municipalities.

 

The rapporteurs welcome the recent reforms undertaken by Austria in order to strengthen local self-government and thereby encourage Austrian authorities to continue channelling their efforts to generate good local governance. The rapporteurs conclude that Austria complies with the provisions of this Article yet look forward to the translation of the New Government Plan (January 2020) into concrete measures intended to consolidate further the constitutional role and place of municipalities in Austrian federalism.


53 Document available online at: https://rm.coe.int/16800ca437

 

54 Gamper, Anna. Koch, Bernhard. 2014. “Federalism and Legal Unification in Austria”, in: Daniel Halberstam and Mathias Reimann(eds.), Federalism and Legal Unification, Springer, pp.104-110.

Article 3.2
Concept of local self government - Article ratified

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. This provision shall in no way affect recourse to assemblies of citizens, referendums or any other form of direct citizen participation where it is permitted by statute.

As presented above (section 3.1), all Austrian Länder guarantee the principles incumbent on local representative democracy. In all cases, municipalities are represented by freely elected councillors and mayors and the meetings of the deliberative bodies are usually public and open to external scrutiny.

 

In addition, in all municipal codes, just as advised by the Charter and its Explanatory Report, there are several instruments available to hold elected officials administratively and politically accountable. The following paragraphs present a non-exhaustive overview of such instruments.

 

For Burgenland, Article 51 of the Municipal Code regulates the town meetings (Gemeindeversammlung), Article 52, the consultation of the people (Volksbefragung), Article 53 the citizens’ initiative, Article 54 the referendum (Volksabstimmung) and Article 55 the right to petition and appeal the municipal decisions.

 

In Carinthia, section 11 of the Municipal Code describes the rules on the consultation of the people (Gemeindevolksbefragung) and section 12 regulates the citizens’ meetings as instruments for holding the elected officials accountable.

 

In Lower Austria, the Municipal Code recognises the right of initiative to all municipal voters (Article 16), while section 5 regulates the consultation of the people (Volksbefragung).

 

The Municipal Code of Upper Austria regulates the referendum (Volksabstimmung) in Article 31a, Article 38, the consultation of the people (Volksbefragung) in Article 38, and the citizens’ initiative in Article 38b.

 

In Salzburg, the Municipal Code speaks of the town meetings (Article 66), referenda and consultations of the people (Articles 67, 69 and 70), as well as citizens’ initiatives (Bürgerbegehrens) (Articles 71 to 74).

 

The Styrian Municipal Code recognises the ability of the municipal council to express distrust in the mayor (Article 36), while the citizen involvement in policy-making is regulated in section 6 of the Constitution of Styria (Citizens’ rights in municipality).

 

Articles 61 to 65 of the Municipal Code of Tyrol regulate the consultation of the people (Volksbefragung), Article 66 the town meetings and Article 67 the right to petition.

 

Finally, in Vorarlberg, Article 21 regulates the requests, Article 22 the referendum, Article 23 the consultation of the people, and Article 25 the right to petition.

 

Bearing the above into consideration, the rapporteurs consider that Austria complies with this paragraph.

 

During the monitoring visit, the rapporteurs observed, on several occasions, that local participatory democracy is deeply rooted in the daily life of Austrian municipalities. However, the rapporteurs take note of the fact that Austria has not yet signed nor ratified the Additional Protocol on the right to participate in the affairs of a local authority (CETS No. 207). Considering that there are no envisaged technical impediments, and in light of the positive examples of public participation in local decision-making, the rapporteurs strongly encourage Austrian authorities to sign and ratify the said Protocol.

Article 4.1
Scope of local self government - Article ratified

The basic powers and responsibilities of local authorities shall be prescribed by the constitution or by statute. However, this provision shall not prevent the attribution to local authorities of powers and responsibilities for specific purposes in accordance with the law.

As presented in above, section 3.2.1 the Federal Constitution (B-VG) and the Municipal Codes of Austrian Länder regulate the allocation of legislative powers between the Federation, the Länder and the municipalities.

 

Considering the exchanges between the rapporteurs and representatives of the National Associations and the National Delegation of Austria to the Congress, and following the documentation on the implementation of local self-government in Austria, the rapporteurs acknowledge that there is a high degree of complexity in the allocation of powers between the Länder and the Federation, and that municipalities are, to some extent, peripheral.

 

However, the rapporteurs appreciate the wording of the Explanatory Report to the Charter, namely, that: “it is not possible, nor would it be appropriate to attempt, to enumerate exhaustively the powers and responsibilities which should appertain to local government throughout Europe”. Therefore, they conclude that Austria complies with this provision.

Article 4.2
Scope of local self government - Non ratified

Local authorities shall, within the limits of the law, have full discretion to exercise their initiative with regard to any matter which is not excluded from their competence nor assigned to any other authority.

In accordance with Article 12.2. of the Charter, Austria has not declared itself bound by this provision.

 

The explanatory report of the Charter indicates that “in addition to the responsibilities assigned by legislation to specific levels of authority, other needs or possibilities for action by public bodies may present themselves. Where these fields of action have local implications and are not excluded from the general competence obtaining in most member states, it is important to the conception of local authorities as political entities acting in their own right to promote the general welfare of their inhabitants that they have the right to exercise their initiative in these matters”.

 

Pursuant to Articles 10 to 15 and 118, B-VG, in Austria, the allocation of legislative powers is exclusive: either the Federation or the Länder may regulate, implement and/or execute in the public interest, in different areas, as decided by the constitutional law (and its subsequent legal texts).

 

Pursuant to Article 116.2, B-VG, municipalities are independent economic entities, and have, as indicated by Article 118.1, B-VG, their own sphere of competence and one assigned to them either by the Federation or the Land. As such, municipalities enjoy some (residuary)55 powers, as indicated, inter alia, by Article 85 (Constitution of Burgenland), Article 58 (Constitution of Lower Austria), Article 66 (Constitution of Upper Austria), Article 51 (Constitution of Salzburg), Article 74 (Constitution of Tyrol), and Article 74 (Constitution of Vorarlberg).


55 Gamper, Anna. 2012, op.cit, p.33.

Article 4.3
Scope of local self government - Non ratified

Public responsibilities shall generally be exercised, in preference, by those authorities which are closest to the citizen. Allocation of responsibility to another authority should weigh up the extent and nature of the task and requirements of efficiency and economy.

In accordance with Article 12.2. of the Charter, Austria has not declared itself bound by this provision.

 

Pursuant to the explanatory report of the Charter, this paragraph articulates the general principle that the exercise of public responsibilities should be decentralised and in fact, names the subsidiarity principle.

 

For Austria, as argued in the Report on Definition and Limits of the Principles of Subsidiarity,56 the principle of subsidiarity has been particularly important, and it has to be seen as a means of strengthening local democracy, and not at all (except in case of real need) as a means of diminishing the local level in favour of the regional, or the regional in favour of the central.

 

The principle of subsidiarity is embedded, at the Land level, in several constitutional laws (e.g. Article 1.3, Constitution of Carinthia; Article 4, Constitution of Lower Austria; Article 9.2, Constitution of Upper Austria; and Article 7, Constitution of Vorarlberg).

 

Finally, Article 23g, B-VG, introduces the principles of subsidiarity in connection with the European Union: “The National Council and the Federal Council present their view in a founded comment to a drafted legal act in the framework of the European Union, for which reason the draft is incompatible with the subsidiarity principle”. In a similar vein, some Land constitutions speak of subsidiarity when introducing their views on projects within the framework of the European Union (e.g. Article 50b, Constitution of Salzburg; Article 55, Constitution of Vorarlberg).

 

Taking into consideration the existing legal provisions as indicated above (in Sections 3.3.2 and 3.3.3, as well as the daily reality of Austrian co-operative federalism, where Länder and (to some extent) municipalities are granted the right to fully exercise their own public responsibilities, the rapporteurs invite the Austrian authorities to ratify paragraphs 2 and 3 of Article 4 of the Charter since they appear to be applied in practice.


56 Report prepared for the Steering Committee on Local and Regional Authorities (CDLR), Local and regional authorities in Europe, No. 55, Strasbourg 1994. The document is available online at: https://rm.coe.int/1680747fda

Article 4.4
Scope of local self government - Article ratified

Powers given to local authorities shall normally be full and exclusive. They may not be undermined or limited by another, central or regional, authority except as provided for by the law.

The explanatory report to the Charter underlines that in the interest of clarity and for the sake of avoiding any tendency towards a progressive dilution of responsibility, powers allocated to local authorities should normally be full and exclusive.

 

As already indicated (e.g. by Article 15.1, B-VG), Austria is a highly centralized federation: what is of no exclusive responsibility of the Federation, is legislated by it and executed by the Länder, framed by it (in general principles) and implemented and executed by the Länder or legislated and executed by the Länder. The municipalities do have their share of responsibilities and they are actively engaged in federal and Land policy-making (Article 118.1, B-VG, regulates that municipalities have their own set of powers and one assigned by the Federation or the Land).

 

Austrian municipalities perform their duties under their own responsibilities, free from instructions and under exclusion of legal redress by administrative authorities outside the municipality. As indicated by Article 118.7, on application by a municipality, the performance of certain matters in its own sphere of competence can, in accordance with Article 119a.3, B-VG, be assigned by ordinance of the Land Government or by ordinance of the Governor to a Land authority. In so far as such an ordinance is meant to assign competence to a federal authority, it requires the consent of the Federal Government. In so far as such an ordinance by the Governor is meant to assign competence to a Land authority, it requires the consent of the Land Government. Such an ordinance shall be rescinded as soon as the reason for its issue has ceased.

 

Pursuant to Article 119a, B-VG, municipalities are under constant supervision so that they do not infringe laws and ordinances in dealing with their own responsibilities, in particular do not overstep their powers, and fulfil the duties legally devolving upon them.

 

During the monitoring visit, the rapporteurs observed that there is an unbalanced distribution of exclusive regulatory powers to the benefit of central and/or Länder authorities. This presents a threat to exercise of local self-government. However, considering the complexity of Austrian cooperative federalism, the rapporteurs conclude that Austria complies with this paragraph. Still, they invite the Austrian authorities to avoid unnecessary limitation of the municipalities’ powers.

Article 4.5
Scope of local self government - Non ratified

Where powers are delegated to them by a central or regional authority, local authorities shall, insofar as possible, be allowed discretion in adapting their exercise to local conditions.

 

In accordance with Article 12.2. of the Charter, Austria has not declared itself bound by this provision.

 

Pursuant to the explanatory report of the Charter, this paragraph builds on the familiarity of local authorities with local conditions. When receiving delegated tasks, local authorities “should, when possible, be allowed to take account of local circumstances in exercising delegated powers”.

 

In Austria, according to Article 119, paragraphs 1 and 2, B-VG, in performing delegated tasks, municipalities need to comply with the federal or Land laws, and the mayor – the person responsible for performing the said tasks, is bound by the instructions provided by the Federation or the Länder. Therefore, as suggested by the doctrine with regard to delegated functions, “municipalities have no right to self-government and serve as mere administrative units.”57

 

In light of the foregoing, the rapporteurs conclude that this provision is not fully respected in Austria.


57 Gamper, Anna. 2012. “Local Government in Austria”, in: Angel – Manuel Moreno (ed.), Local Government in the Member States of the European Union: A Comparative Legal Perspective, National Institute of Public Administration Spain, Madrid, p.31.

Article 4.6
Scope of local self government - Article ratified

Local authorities shall be consulted, insofar as possible, in due time and in an appropriate way in the planning and decision-making processes for all matters which concern them directly.

 

The right of local authorities to be consulted by higher levels of government is a fundamental principle of European legal and democratic practice and pillar of good governance building. In fact, the Congress formulated several principles that should guide the consultation process, namely: mutual respect between all actors; openness and transparency; responsiveness, with all actors providing appropriate feedback.58

 

Pursuant to Article 10.3, B-VG, before the Federation concludes state treaties which make necessary implementing measures in the sense of Article 16, B-VG or affect the autonomous sphere of competence of the Länder in another way it must give the Länder the opportunity to give their opinion. If the Federation is in possession of a uniform opinion of the Länder, the Federation is bound thereby when concluding the state treaty. The Federation may depart therefrom only for compelling foreign policy reasons; it shall without delay advise the Länder of these reasons.

 

According to Article 14b.3, B-VG, when legislating on public tendering, the Federation has to grant the Länder opportunity to participate in the preparation of draft bills; in addition, if the execution of such legislation falls under the business of the Länder, the latter need to give their consent.

 

Article 23d, B-VG states that the Federation must inform the Länder and municipalities, should they be concerned, without delay regarding all projects within the framework of the European Union which affect their autonomous sphere of competence or could otherwise be of interest to them and it must allow them opportunity to present their views within a reasonable interval to be fixed by the Federation. Such comments shall be addressed to the Federal Chancellery. In these matters, representation of the municipalities is incumbent on the Austrian Association of Cities and Towns (Austrian Municipal Federation) and the Austrian Association of Municipalities (Austrian Communal Federation) (Article 115.3, B-VG).

 

Austria is known, also, for its informal horizontal cooperation of the Länder, taking the form of a Conference between Land Governors (Landeshauptleutekonferenz). These Conferences act as true political fora where unanimity is required to reach a decision.59 In addition, as already presented (above 3.2.2) all Land constitutions have specific regulations pertaining to public consultation (referenda, public initiatives, etc.).

 

Pursuant to Article 34.1, B-VG, the Länder are represented in the Federal Council in proportion to the number of nationals in each Land. The members of the Federal Council are elected by the Land Parliaments. The Federal Council has the right to submit legislative proposals to the National Council (Article 41.1, B-VG), every enactment of the National Council60 is conveyed by its President to the Federal Council (and save as otherwise provided by the constitutional law) an enactment can be authenticated and published only if the Federal Council has not raised a reasoned objection to the enactment (Article 42.2, V-VG). To the extent an enactment of the National Council requires the consent of the Länder, it is to be notified by the Federal Chancellor pursuant to Article 42, B-VG, immediately after the procedure has been closed to the Land Government Offices of the Länder concerned. The consent is deemed to be granted if the Governor of the Land does not notify the Federal Chancellor within eight weeks after the day on which the enactment has been served to the Land Government Office, that consent is denied. Before expiry of this period the enactment may only be published if the Governors of the Länder concerned have notified the express consent of the Land (Article 42a, B-VG). Finally, the Federal Council needs to give its consent when constitutional laws or constitutional provisions contained in simple laws restrict the competence of the Länder in legislation and execution (Article 44.2).

 

Considering the above, the rapporteurs assess that there are effective consultation mechanisms of local authorities in place, and that Austria complies with provision 4.6 of the Charter.

 

However, during the monitoring visit, the rapporteurs took note of the municipalities’ interest in having a stronger (constitutional) voice at the federal level, especially when financial matters are concerned (e.g. in the distribution of shares from the federal taxes; in concluding agreements on the basis of 15a B-VG; etc.).

 

The rapporteurs reiterate the invitation to the Austrian authorities to consider modifying Federal Constitutional Law in order to allow the associations of municipalities to participate in agreements between the Federation and the Länder on all matters that concern them. Also, fully considering the particularities of the Austrian consensual-driven policy making, the rapporteurs underline the importance of considering the municipalities equal partners of the Federation and the Länder.


58 OECD, 2010, Better regulation in Europe: Austria 2010, OECD Publishing.

 

59 Idem footnote above.

 

60 There are exceptions: e.g. Article 42.5, B-VG: The Federal Council has no claim to participation in so far as National Council enactments concern the National Council’s rules of procedure, the dissolution of the National Council, a federal law providing detailed regulations on the making of the Federal finance frame law, the Federal finance law and on the household of the Federation, a temporary provision consonant with Article 51a.4, B-VG or a disposal of federal property, the assumption or conversion of a federal liability, the contraction or the conversion of a federal monetary debt, the sanction of a final federal budget account.

Article 5
Protection of local authority boundaries - Article ratified

Changes in local authority boundaries shall not be made without prior consultation of the local communities concerned, possibly by means of a referendum where this is permitted by statute.

 

In Austria, the Municipal codes of the Länder include specific provisions for boundary changes. For Burgenland Article 7 indicates that a Land law is required to change the boundaries of municipalities against the will of a participating municipality; otherwise, municipalities have the option of voluntarily deciding on their new borders (including merger or separation).

 

In Carinthia, Article 7 to 8a of the Municipal code regulate changes in the boundaries: the Land government can, by law, change municipal boundaries to the extent required by the social, economic and cultural structure of the municipalities involved, if these municipalities request it by means of corresponding municipal council resolutions and have reached an agreement on any property dispute. A municipality can be divided into two or more municipalities, if there is a favourable majority (of at least two thirds) in the municipal council, each community arising or affected by the separation is likely to provide the means for its continuation and the separation corresponds better to the social, economic and cultural structure of the community members and community interests. For Lower Austria, the Municipal code regulates in Section 2: border changes, mergers and separations. For each resolutions of the municipalities involved, and the approval of the Land government are required. Separations may occur if either: a decision is taken by the municipal council (with a majority of three quarters of the votes cast) or, a referendum on the separation of the municipality, which also includes a provision for property law, has the approval of at least three quarters of the voters in the new communities to be formed, and with the participation of at least two thirds of those entitled to vote in each of the communities to be newly formed. For Upper Austria, Section 10 deals with border changes: they can all be accepted at the will of the municipal councils, and if the municipalities are in opposition, when a Land law is issued. Similar provisions pertaining to divisions and border changes are contained by the Municipal Code of Salzburg (Article 7 to 11) and Tyrol (Articles 5-6). In Vorarlberg, border changes must be made at the will of the municipalities and with the approval of the state government (Article 6) and if there is opposition, a Land law is required.

 

The Styrian Municipal Code – Section II provides that in order to change the boundaries of municipalities, the municipal councils of the participating municipalities must agree, and the Land government must approve them. The approval is to be granted if the changes are made for reasons of public interest and considering the geographic location of the municipality, and capacity to fulfil its legal tasks. Public interests are to be understood in particular as economic, infrastructural, regional planning and transport policy, demographic or financial reasons. A law is required to change borders against the will of a participating municipality.

 

Pertaining to the issue of changing borders in the Styrian amalgamation reform,61 during the monitoring visit, the rapporteurs met with Styrian Land representatives, as well as with the mayor of Raaba-Grambach, one of the merged municipalities, opposing the process. As indicated by the interviewees, local community, as well as elected officials from different municipalities affected by the reform were both formally and informally consulted. Albeit the result of the consultation was favourable to merger in just 85% of the cases (and not all), the consultation did occur and the legal conditions for achieving the merger were met.

 

Considering the above, the rapporteurs conclude that Austria complies with this paragraph.


61 For further reference, please visit: http://www.gemeindestrukturreform.steiermark.at/

Article 6.1
Appropriate administrative structures and resources for the tasks of local authorities - Article ratified

Without prejudice to more general statutory provisions, local authorities shall be able to determine their own internal administrative structures in order to adapt them to local needs and ensure effective management.

Article 116, B-VG states that the municipality is an independent economic entity, entitled to self - administration and, within the limits of the law, to possess assets of all kinds, to acquire and to dispose of such at will, to operate economic enterprises to manage its budget independently within the framework of the financial constitution and to levy taxation.

 

The business of the municipalities will be conducted by a local administrative office (city administrative office or city administration), managed by a civil servant with legal training (Article 117.7). The mayor, the members of the municipal executive board (city council, city senate) and, if appointed, other executive officials are responsible to the municipal council for the performance of their functions (Article 118.5, B-VG).

 

Considering the above, the rapporteurs conclude that Austria complies with the provision of this paragraph.

Article 6.2
Appropriate administrative structures and resources for the tasks of local authorities - Article ratified

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; to this end adequate training opportunities, remuneration and career prospects shall be provided.

All Austrian Länder have regulations for civil servants and contractual employees at local level: e.g. Burgenland Municipal Employees Act,62 Vorarlberg Municipal Employees Act,63 etc. These regulations include specific elements pertaining to rights, career prospects and benefits.

 

Article 21.1, B-VG, regulates that legislation and execution in matters pertaining to the service code, including the regulations on service contracts, and for staff representation rights of employees of the Länder, the municipalities, and the municipal associations are, save as provided otherwise, incumbent on the Länder. Disputes arising from contractual employment are settled by the courts of justice.

 

During the monitoring visit, the rapporteurs noted the concerns raised by small and medium sized municipalities that local effective management is unlikely to occur when professional, technical advice is not available. All local authorities need to be able to recruit and retain high quality personnel in order to provide high quality services to their local communities. During the consultation procedure, the Association of Austrian Municipalities also pointed out that as local government becomes increasingly complex in terms of the legislation to strictly comply with to avoid personal liability, both elected representatives and administrative staff need more extensive legal knowledge.

 

The rapporteurs invite the Austrian authorities to reflect on opportunities to intensify trainings for local personnel, and to identify solutions for ensuring a high quality, proficient and continuous delivery of local public services in all, but especially in small and medium-sized municipalities. According to the Association of Austrian municipalities, this would also enable small municipalities to cope with ever-increasing legal complexity without being forced into unwanted mergers.

 

Despite those reservations and that the situation in practice could be improved, the rapporteurs note that overall Austria formally complies with the provision of this paragraph.


62 Document available at: https://www.ris.bka.gv.at/GeltendeFassung.wxe?Abfrage=LrBgld&Gesetzesnummer=20001002

 

63 Document available at: https://www.ris.bka.gv.at/GeltendeFassung.wxe?Abfrage=LrVbg&Gesetzesnummer=20000291

Article 7.1
Conditions under which responsibilities at local level are exercised - Article ratified

The conditions of office of local elected representatives shall provide for free exercise of their functions.

A free exercise of the local mandate implies free access to resources (electronic, material, etc.) necessary to perform properly the tasks indicated by existent regulations. Article 22, B-VG, provides that the Federation, the Länder, the municipalities and the municipal associations as well as the other self-administering entities (as described by Chapter 6, Section B, B-VG) are bound within the framework of their legal sphere of competence to render each other mutual assistance.

 

In relation to the accessibility of the legal norms to the locally elected, the Legal Information System of the Republic of Austria (Rechtsinformationssystem des Bundes - RIS) is a computer-assisted information system on Austrian law, which is coordinated and operated by the Federal Ministry for Digital and Economic Affairs. RIS started in 1983 when the essential features of the system were designed. After federal legislation had been incorporated, the court decisions were included as well. Since June 1997, RIS, which previously had been accessible only to the public administration, is available on the Internet free of charge.64 In addition, the platform www.offnerhaushalt.au, a service of KDZ, Centre for Administrative Research, offers free access to municipal financial data of Austrian municipalities. Furthermore, the Federal Budget Act 201365 states that the Federal Minister of Finance supports the personnel of municipalities and municipal institutions by providing standardized ICT solutions and IT processes, by means of prior arrangements or contracts (Article 44a.1).

 

Resolution 393 (2015) on conditions of office of elected representatives66 acknowledges that “elected representatives need to work harder than ever to meet the unsatisfied needs and expectations of their constituents. Although most local and regional politicians have to combine their elected political responsibilities with another full-time job, they are at the same time expected to be available quasi full-time for their political work, often at the expense of their family responsibilities and leisure time” (paragraph 1). It also recognises that “the low levels or absence of pay for local and regional elected representatives is also an important factor, as is the lack of appropriate training for them”.

 

During the monitoring visit, the rapporteurs understood that although the status of locally elected representatives is well established and generally enjoys popularity amongst their constituencies, it becomes increasingly difficult to attract interested men and women to take over executive responsibilities in some municipalities in Austria. This was partially explained by a combination of factors, amongst which interlocutors with whom the delegation met during the visit mentioned the low level of salaries received by mayors or the low level of social security. This leads to a reduced political engagement in local politics, in particular by women as stressed by the Association of Austrian Municipalities during the consultation procedure. This situation is aggravated by the fear of personal liability67 for political decisions of local elected representatives, i.e. under section 153 of the Austrian Criminal Code.68

 

Pertaining to the salaries, the figures valid for January 2020 are presented in Table 2 - Comparative overview of mayors’ salaries (except Statutory cities), gross earnings69 (Page 26 of the PDF file of the report)

 

Pursuant to section 153 of the Austrian Criminal Code, breach of trust (Untreue) is defined as follows: “Whoever knowingly abuses the authority conferred to him by statute, official order or contract to dispose of property not belonging to him or to oblige this other person and causes damage to another person in this way, shall be liable to imprisonment for up to six months or a fine of up to 360 daily rates. Authority is misused by anyone who unjustifiably violates such rules that serve to protect the property of the beneficial owner. Whoever causes a damage exceeding 3 000 Euros shall be liable to imprisonment for up to three years, whoever causes damage exceeding 50 000 Euros shall be liable to imprisonment from one to ten year.”70

 

Article 119.3, B-VG, states that: the mayor can - without detraction from his/her responsibility - on account of their factual connection with matters pertaining to the municipality's own sphere of competence transfer individual categories of matters pertaining to the assigned sphere of competence to members of the municipal executive board (city council, city senate), other organs created in accordance with Article 117.1, B-VG or members of official bodies for performance in his/her name. In these matters the organs or members concerned are bound by the instructions of the mayor and responsible in accordance with paragraph 4. The latter (Article 119.4, B-VG) continues: in so far as intent or gross negligence can be laid at their charge, the authorities named above can on account of breach of law as well as on account of noncompliance with an ordinance or instruction be declared to have forfeited their office, by the Governor if they were acting in the field of federal execution, by the Land Government if they were acting in the field of Land execution. Should such a person belong to the municipal council, the membership is not thereby affected.

 

Also, Article 23, B-VG, provides that the Federation, the Länder, the municipalities and the other bodies and institutions established under public law are liable for the injury which persons acting on their behalf in execution of the laws have by illegal behaviour culpably inflicted. Therefore, persons acting on behalf of Länder and municipalities are liable, in so far as intent or gross negligence can be laid at their charge, for the injury for which the legal entity has indemnified the injured party. Similarly, they are liable for the injury which in execution of the laws they have by illegal behaviour inflicted directly on the legal entity.

 

The rapporteurs draw attention to the fact that the vulnerability of elected representatives (pertaining to inadequate payment and insurance liability) was also raised in 2011, by the Report on Local and Regional democracy in Austria (CG(20)8). Considering that the new Government Plan acknowledges the need to analyse the Criminal Code, the rapporteurs express their confidence that this time elected representatives would receive proper attention and their status will be improved.

 

In light of the foregoing, the rapporteurs consider that it is important to modify the criminal legislation with regard to the liability of local and regional elected representatives when carrying out their duties so that it does not infringe on their autonomy to exercise their elected mandate. In the rapporteurs’ view this would also encourage citizens from all sectors of the population to stand for local election.

 

Until this is achieved, the rapporteurs conclude that Austria partially complies with the requirement of this paragraph.


64 It is available at: https://www.ris.bka.gv.at/

 

65 Document available here : https://www.ris.bka.gv.at/Dokument.wxe?Abfrage=Erv&Dokumentnummer=ERV_2009_1_139

 

66 Document available at:
https://rm.coe.int/conditions-of-office-of-elected-representatives-bureau-of-the-congress/168071a464

 

67 Please see also the Report on Liability of Local Elected Representatives for Acts or Omissions in the Course of Their Duties (1998), Local and regional authorities in Europe, no. 67, available online at: https://rm.coe.int/16806f93c8

 

68 BGBI. Nr. 60/1974, available online at: https://www.ris.bka.gv.at/GeltendeFassung.wxe?Abfrage=Bundesnormen&Gesetzesnummer=10002296.
For the Code of Criminal Procedure (BGBI. No.631/1975), please visit: https://www.ris.bka.gv.at/Dokumente/BgblPdf/1975_631_0/1975_631_0.pdf.
Last amendment (2019) is available here: https://www.ris.bka.gv.at/eli/bgbl/I/2019/111

 

69 Source:
https://gemeindebund.at/website2016/wp-content/uploads/2020/01/bundeslaendervergleich2020_buergermeisterbezuege.pdf

 

70 Adapted after: OECD: Directorate for Financial and Enterprise Affairs, 2010, Austria – Phase 1 bis, Review of Implementation of the Convention, (OECD Anti-Bribery Convention), available online at: https://www.oecd.org/daf/anti-bribery/anti-briberyconvention/46227111.pdf

Article 7.2
Conditions under which responsibilities at local level are exercised - Non ratified

They shall allow for appropriate financial compensation for expenses incurred in the exercise of the office in question as well as, where appropriate, compensation for loss of earnings or remuneration for work done and corresponding social welfare protection.

In accordance with Article 12.2. of the Charter, Austria has not declared itself bound by this provision.

 

As mentioned above, during the monitoring visit local and regional elected representatives and their associations raised the issue of unfair material compensation for their work.

 

In this regard, in line with Congress recommendation 383 (2015) on conditions of office of local elected representatives, the rapporteurs note that the levels of payment established at national or regional level should be such as to avoid disparities among authorities and the financial reward should be adequate for the work performed by local and regional elected representatives. This would also stimulate the interest of a broader range of people to stand for local election and contribute to preventing risks of corruption.

 

Given that there is material compensation for local and regional elected representatives in Austria, but its adequacy does not appear to be achieved, the rapporteurs conclude that the situation in Austria is partially compliant with the requirement of this provision.

 

The rapporteurs would like to reaffirm their opinion that social welfare protection of Austrian local elected representatives needs to be strengthened as an important measure to safeguard local democracy and local public interest.

Article 7.3
Conditions under which responsibilities at local level are exercised - Article ratified

Any functions and activities which are deemed incompatible with the holding of local elective office shall be determined by statute or fundamental legal principles.

According to the explanatory report on the Charter, this paragraph provides that disqualification from holding local elective office should only be based on objective legal criteria and not on ad hoc decisions.

 

In this respect, the Austrian Land regulations provide specific and objective criteria for disqualifying a locally elected person. In addition, municipal codes of different Länder clearly state the conditions when office is lost (e.g. for Burgenland, Article 48; in Carinthia, Section 68a; and in the case of Salzburg, Articles 21 and 22).

 

The rapporteurs conclude that Austria complies with the requirement of this paragraph.

Article 8.1
Administrative supervision of local authorities' activities - Article ratified

Any administrative supervision of local authorities may only be exercised according to such procedures and in such cases as are provided for by the constitution or by statute.

Pursuant to Article 119a.2 and 3, B-VG, the Land has the right to examine the financial administration of a municipality with respect to its thrift, efficiency, and expediency. The result of the examination is conveyed to the mayor for submission to the municipal council. Within three months, the mayor informs the supervisory authority of the measures taken by reason of the result of the check. In so far as a municipality’s own sphere of competence comprises matters deriving from the sphere of federal execution, the right of supervision and its legislative regulation lie with the Federation, in other respects with the Länder; the right of supervision is exercised by the authorities of the ordinary public administration, in matters of their own sphere of responsibilities, the Federation and the Land have the right of supervision over the municipality.

 

As indicated by Article 121.1, B-VG, the Austrian Court of Audit is the competent institution to examine the administration of public funds by the municipal associations and the municipalities. It is directly subordinate to the National Council and independent from the Federal Government and the Land Governments. Article 127a, B-VG clarifies the scope of supervision in the case of Länder. The Austrian Court of Audit examines the financial administration of municipalities with at least 10 000 inhabitants as well as the financial administration of endowments, funds and institutions administered by the authorities of a municipality or persons (groups of persons) appointed for the purpose by the authorities of a municipality. The examination extends to the arithmetical correctness, compliance with existing regulations, and the employment of thrift, efficiency and expediency in the financial administration. The mayor transmits annually to the Austrian Court of Audit and simultaneously to the Land Government the budget estimates and the final budget accounts. The Austrian Court of Audit also examines the financial administration of enterprises where a municipality with at least 10 000 inhabitants is either the sole participant or holds at least fifty per cent of the share, stock, or equity capital together with other legal entities falling within the competence of the Austrian Court of Audit or where the municipality is either their sole or joint operator with other such legal entities. The Austrian Court of Audit is competent to examine the financial administration of corporations under public law using funds of a municipality with at least 10 000 inhabitants. At the substantiated request of the Land Government the Court examines the financial administration of municipalities with less than 10 000 inhabitants. Each year only two such requests may be filed. Such requests are only allowed regarding such municipalities which, compared to other municipalities, show a conspicuous development in debts or liabilities.

 

Tables 3 and 471 offer a simplified outline of the auditing of local government in Austria (Pages 28 and 29 of the PDF file of the report)

 

One of the Audit missions focusing on the fiscal equalisation scheme for financially weak municipalities – BUND 2017/38 took place between February and May 2016 and audited the Ministry of Finance, Salzburg, Styria and Tyrol between 2011 and 2015. The auditors found undesired distributive effects and a lack of distributive goals.72 On other accounts, the audits substantiated the lack of transparency of the financial flows between municipalities and Länder and the lack of strategic goals and eventually led the path to a reform (in 2017, with the Financial Equalisation Act).

 

Pursuant to Article 129, B-VG, all Länder have Administrative Courts. They pronounce judgment on complaints on allegations of illegality against rulings by administrative authorities; against the unlawful exercise of direct administrative power and compulsion on the ground of breach of duty to reach a decision by an administrative authority. Pursuant to Article 130.2, B-VG, “Federal or Land legislation may confer other competences on the Administrative Courts to decide on 1. complaints of unlawful conduct of an administrative authority in executing the law; or 2. complaints of unlawful conduct of a contract making authority in matters of public procurement; or 3. disputes in matters relating to the employment of civil servants; or 4. complaints, disputes or requests in other matters. In matters of federal enforcement which are not directly dealt with by federal authorities, as well as in matters of Art. 11, 12, 14 paras. 2 and 3 and 14a paras. 3 and 4, federal acts pursuant to sub-paras. 1 and 4 may only be promulgated with the consent of the Länder”.

 

Pursuant to Articles 137 to 138a, B-VG, the Constitutional Court pronounces on pecuniary claims against the Federation, the Länder, the municipalities and municipal associations which cannot be settled by ordinary legal process nor be liquidated by a ruling of an administrative authority. At the request of the Federal Government or a Land Government concerned, it establishes whether an agreement within the meaning of Art. 15a.1, B-VG exists and whether the obligations arising from such an agreement, save in so far as it is a matter of pecuniary claims, have been fulfilled. If it is stipulated in an agreement within the meaning of Article 15a.2, B-VG, the Constitutional Court also establishes on application by a Land Government concerned whether such an agreement exists and whether the obligations arising from such an agreement, save in so far as it is a matter of pecuniary claims, have been fulfilled.

 

Considering the above, as well as the exchanges held during the monitoring visit, the rapporteurs conclude that Austria complies with the requirements of this paragraph.


71 Source: documents prepared for the Monitoring visit by Rechnungshof Österreich, 10.12.2019.

 

72 Idem footnote above.

Article 8.2
Administrative supervision of local authorities' activities - Non ratified

Any administrative supervision of the activities of the local authorities shall normally aim only at ensuring compliance with the law and with constitutional principles. Administrative supervision may however be exercised with regard to expediency by higher-level authorities in respect of tasks the execution of which is delegated to local authorities.

In accordance with Article 12.2. of the Charter, Austria has not declared itself bound by this provision.

 

As indicated by the Explanatory Report, the Charter presents a general preference for checks of legality and not expediency; and although the latter are not prohibited, they are to be severely restricted to delegated competences.

 

Pursuant to Article 118.4, B-VG, the municipality performs the business for which it is responsible, within the framework of the laws and ordinances of the Federation and the Land, on its own responsibilities free from instructions and under exclusion of legal redress to administrative authorities outside the municipality.

 

The Federation and the Land exercise the right of supervision over the municipality to ensure that it does not infringe laws and ordinances when dealing with its own sphere of competence, in particular that it does not overstep its sphere of competence, and fulfils the duties legally devolved upon it (Article 119a.1).

 

However, the Länder have the right to examine the financial administration of a municipality with regard to its thrift, efficiency, and expediency (Article 119a.2, B-VG) which, in the opinion of the rapporteurs, may go beyond the control of legality.

 

Considering the above, in the rapporteurs’ view, the situation in Austria only partially complies with this provision.

Article 8.3
Administrative supervision of local authorities' activities - Article ratified

Administrative supervision of local authorities shall be exercised in such a way as to ensure that the intervention of the controlling authority is kept in proportion to the importance of the interests which it is intended to protect.

The principle of proportionality is well enshrined in the Constitutional laws of Austria and its Länder.

 

During the monitoring visit, the rapporteurs heard no complaints from the elected representatives at local and regional levels and their associations about the lack of respect of the principle of proportionality of supervision in practice.

 

It appears that, although less apparent than in the case of political representation, proportionality as understood by the Charter in this paragraph is observed.

 

Considering the above, it seems to the rapporteurs that Austria complies with the requirements of this paragraph.

Article 9.2
Financial resources of local authorities - Article ratified

Local authorities' financial resources shall be commensurate with the responsibilities provided for by the constitution and the law.

According to the explanatory report to the Charter, this principle assumes that there should be an adequate relationship between the financial resources available to a local authority and the tasks it performs. This relationship is particularly strong for functions which have been specifically assigned to it.

 

During the consultation procedure, the Austrian delegation to the Congress pointed to an imbalance between the Länder and municipal responsibilities and the financial resources required to fulfil them. According to the Austrian delegation, although the Länder are involved in the negotiations on the distribution of revenues, greater financial autonomy for the Länder would be preferable to this form of consensual federalism. According to the Austrian delegation to the Congress, the complex system of revenue sharing and intergovernmental transfers, as well as the Länder and the municipalities’ own financial resources should be reformed to enable them to generate sufficient and legally secure revenues to fulfil their responsibilities.

 

In line with the concerns expressed above and in para 3.8.1 about the low level of autonomous taxes available to local authorities, notwithstanding the consensus-based tax-sharing, the rapporteurs consider that Austria is partially complying with this provision.

Article 9.8
Financial resources of local authorities - Article ratified

For the purpose of borrowing for capital investment, local authorities shall have access to the national capital market within the limits of the law.

Municipalities are free to borrow, although as a general rule they can only borrow for investment projects. Borrowing of municipalities is regulated by each Land.

 

During the monitoring visit, the rapporteurs heard no complaints from local elected representatives about their borrowing autonomy. They consider that this provision is generally respected in Austria.

Article 9.7
Financial resources of local authorities - Article ratified

As far as possible, grants to local authorities shall not be earmarked for the financing of specific projects. The provision of grants shall not remove the basic freedom of local authorities to exercise policy discretion within their own jurisdiction.

The Intergovernmental Fiscal Relations Act defines various types of grants, such as between grants to cover special needs or purposes of other governments, non-earmarked block grants, special need transfers and earmarked grants. For example, there are investment grants or ongoing subsidies in the childcare sector.

 

General grants are aimed at equalising the average revenue of Länder and municipalities resulting from tax-sharing.

 

Special grants are made to accomplish a specific task or to achieve a certain goal, and evidence for the use of these funds must be provided. For example, the federal government granted to Länder a special grant for hospital financing in the amount of € 690.8 million in 2018 and € 718.0 million in 2019.

 

In contrast, other financial allocations can in principle be used freely by Länder and municipalities. An example of this is the new federal financial allocation to the Länder and municipalities to ensure sustainable household management, especially in the areas of health, care and social affairs, € 300 million annually (§ 24 FAG 2017).

 

During the monitoring visit, the delegation did not hear any complaints from the representatives of local and Land authorities with whom it met about the negative impact of the share of earmarked grants on their financial autonomy.

 

In light of the foregoing, the rapporteurs consider that Austria complies with this provision, but needs to reflect on the financial sustainability of local self-government in the long term.

Article 9.6
Financial resources of local authorities - Article ratified

Local authorities shall be consulted, in an appropriate manner, on the way in which redistributed resources are to be allocated to them.

Municipalities are represented in the 15a agreements (Article 15a, B-VG) on the Stability Pact and the Consultation Mechanism by their associations (namely, according to Article 115.3, B-VG: Austrian Association of Cities and Towns (Austrian Municipal Federation) and the Austrian Association of Municipalities (Austrian Communal Federation).

 

During the monitoring visit, the rapporteurs were told that beyond the existing agreements, the associations consider themselves properly consulted on financial matters in practice.

 

The rapporteurs consider that Austria complies with this provision of the Charter.

Article 9.5
Financial resources of local authorities - Article ratified

The protection of financially weaker local authorities calls for the institution of financial equalisation procedures or equivalent measures which are designed to correct the effects of the unequal distribution of potential sources of finance and of the financial burden they must support. Such procedures or measures shall not diminish the discretion local authorities may exercise within their own sphere of responsibility.

The Austrian Stability Programme, Update for the period 2017 to 2022 and Austrian Draft Budgetary Plan 2018 (update)79 states that “at the end of 2016 intensive negotiations on future intergovernmental fiscal relations were successfully closed with an agreement and the signing of the Pact on a new Intergovernmental Fiscal Relations Act 2017 (IFRA 2017) by the Federal Government, the Länder and municipalities. IFRA 2017 implements a first step towards more task-orientation, more transparency and simplifications as well as strengthened tax autonomy of the Länder (p.38)”. It continues by saying that: “one of the key elements to safeguard the pace of fiscal consolidation is the Austrian Internal Stability Pact. From 2017 its rules require the federation, the Länder and municipalities to achieve structurally balanced budgets as a basic principle. The agreement covers the following key issues: a rule on a structurally balanced general government budget (“debt brake”), with the structurally balanced budget defined as a structural general government deficit not below -0.45% of GDP; a rule on the allowed annual expenditure growth (expenditure brake); a rule on public debt reduction as defined in ESA terms (adjustment of the debt ratio); and a rule on ceilings for public guarantees, whose implementation was harmonized in the course of the negotiations on intergovernmental fiscal relations in 2017. From 2019, the maximum number of guarantees by the central government and the states is limited to 175% of the revenues of the entity, while for municipalities it is limited to 75% of revenues; and rules to strengthen budgetary coordination and medium-term budgetary planning of all governments, mutual exchange of information and transparency”.

 

KDZ (2019) considers that the area of public debt is stable, overall and points to the success of the Austrian Stability pact. For the public debt by Länder in Euro / capita, 2017, see Figure 4 (Public debt by Länder in Euro / capita, 201780 - Page 35 of the PDF file of the report).

 

As mentioned above, a significant part of subnational government revenue comes from financial equalisation procedure. This procedure is based on tax-sharing and regulated by Fiscal Relations Act, agreed between the three levels of government. Among the most important shared taxes are VAT, corporation tax, income tax, etc.

 

Tax-sharing is calculated on a formula basis, and formulas are distinct for Länder and municipalities. Both formulas use such indicators as the number of inhabitants and local revenues. The number of inhabitants is the most important indicator for both. For municipalities, an indicator of a weighted population index (WPI) is used: in municipalities up to 10 000 inhabitants one inhabitant counts a factor which is multiplied by 1 41/67 (= around 1.61), in municipalities between 10 000 and 20 000 inhabitants - by 1 2/3, between 20 000 and 50 000 inhabitants by 2 and in communities with more than 50 000 inhabitants by 2 1/3. For statutory cities with the population of up to 20 000 inhabitants, the multiplier of 2 is used.

 

According to the officials of the Federal Ministry of Finance with whom the delegation met during the visit, the fiscal relations system aims to achieve fiscal equity.

 

During the monitoring visit, the rapporteurs heard no complaints from their interlocutors about fiscal equalisation.

 

In light of the above, the rapporteurs consider that Austria complies with this provision, insofar as the financial equalisation institution is concerned.


79 Available online at: https://ec.europa.eu/info/sites/info/files/economy-finance/en_stapro_final.pdf

 

80 Biwald, Peter; Mitterrer, Karoline; Seisenbacher, Marion, 2019, op.cit., p.33.

 

 

Article 9.3
Financial resources of local authorities - Article ratified

Part at least of the financial resources of local authorities shall derive from local taxes and charges of which, within the limits of statute, they have the power to determine the rate.

As already mentioned in section 3.8.1 and stressed in the previous Congress report, subnational authorities’ level of autonomous taxes is very low. According to the OECD data,78 “in 2016 tax revenues represented around 10% of subnational government revenues, well below the OECD average for federal countries of 47.5%. In 2016, tax revenue represented a small share of SNG revenue, amounting to 14.6% of local revenue and 5.6% of Länder revenues. As a share of GDP and public tax revenue, SNG tax revenue in Austria is well below the OECD average for federal countries (8.8% of GDP and 42.4% of public tax revenue). Approximately 95% of all tax revenue is levied by federal revenue offices as tax administration is carried out mostly at the federal level. Municipalities levy slightly more than 4% and Länder less than 1% of the total tax revenue. Municipalities can only regulate local taxes if they are entitled to those taxes by either the federal or state law”.

 

As for Länder, the same OECD report underlines that they “receive a negligible amount of tax income. In 2018, the tax autonomy to raise the housing subsidy contribution (Wohnbauförderungs-beitrag, currently 1% of payroll) was transferred from the central government to the Länder”.

 

Although municipalities can levy some local taxes (such as municipal business tax (Kommunalsteuer) and the property tax (Grundsteuer), they have no discretion in setting the tax base which is defined at the federal level. Municipalities have only limited discretion regarding the rate of the real property tax within limits set by regional regulations.

 

The representatives of local and regional authorities and their associations with whom the delegation met during the monitoring visit, particularly stressed the limited level of their own tax income of subnational government in Austria and the need to strengthen local tax raising powers as a key to local financial autonomy.

 

During the consultation procedure, the Austrian delegation to the Congress particularly stressed the need in a certain degree of fiscal leeway for proper and efficient functioning of a federal system. It advocated a higher degree of sub-national autonomy in tax and financial matters in the system of cooperative federalism in Austria.

 

The rapporteurs emphasise that local taxation is a critical indicator in measuring local autonomy. In the rapporteurs’ view, the low proportion of their own income coming from local taxes raises doubts over the financial independence of local authorities in Austria. However, since formally a part of the financial resources of subnational authorities derives from local taxes, the rapporteurs conclude that Austria partially complies with this provision.


78 2019 Edition of the World Observatory of Subnational Finance and Investment, Austria county profile, OECD, http://www.sng-wofi.org/country-profiles/Fiche%20AUSTRIA.pdf

Article 9.1
Financial resources of local authorities - Article ratified

Local authorities shall be entitled, within national economic policy, to adequate financial resources of their own, of which they may dispose freely within the framework of their powers.

According to the Financial Constitutional Law73 (section I – Financial equalisation), unless specified otherwise, the federal government and the other regional authorities bear the effort that arises from carrying out their tasks. Land governments are entitled to levy a surcharge from the municipalities or, where applicable, from the municipal associations. A maximum of the Land levy can be set by federal law. Pursuant to section 7.1 of the Federal Budget Act,74 Land governors are heads of budget-managing bodies to the extent they act in the capacity of federal entities.

 

Legally, the taxes are divided into the following categories (Article 6, Financial Constitutional Law):
i. Exclusive federal levies, the proceeds of which flow entirely to the federal government.
ii. Levies shared between the federal government and the Länder (municipalities), in the income of which the federal government and the Länder (municipalities) participate;
iii. Exclusive Land taxes, the proceeds of which flow entirely to the Länder;
iv. Levies shared between Länder and municipalities, in the revenue of which Länder and municipalities participate
v. Exclusive municipal taxes, the proceeds of which flow entirely to the municipalities.

 

According to KDZ75 the total income of the municipalities in 2017 (Figure 1 - Page 31 of the PDF file of the report) amounted to 20 billion Euro.

 

As presented by KDZ (2019), “almost a third of this is accounted for by income shares (share of municipalities in the total of taxes levied by the federal government, especially income tax, wage tax, sales tax, corporate tax)”.

 

In this regard, it should be noted that the income sharing system among the three levels of government is defined by the Intergovernmental Fiscal Relations Act which is periodically negotiated between the federal Minister of Finance, representatives of Länder and the local governments.

 

According to the KDZ “only around 10 percent of the funds are transfer revenues from the federal states or to a small extent from municipalities. These are, for example, investment grants or ongoing subsidies in the childcare sector. With almost 39 percent of the funds, the majority of the income comes directly from citizens and companies. The most important factors here are the local (municipal) tax (wages-based employer contribution), fees (especially for water, sewage and waste) and service fees (e.g. kindergarten contributions, income from renting and leasing). Land (property) tax is of comparatively little importance here”. According to the Association of Austrian Municipalities, the tax-base is outdated and does not reflect real-estate values. About 17% of revenues can be attributed to other sources. Examples include bank related sources, for instance loans, release of reserves and securities. Finally, there is the “Other” category, where one could include: withdrawals from outsourced businesses, sales revenues or transfers from non-local authorities (for example, businesses).

 

“In order to obtain an assessment of how the income situation of the municipalities has changed in recent years, the following focuses exclusively on the income of the federal government, the federal states, the municipalities and citizens. This is referred to below as "current income and capital transfer income". The majority of the above-mentioned income is current - therefore recurring - income. Only the capital transfer income from the federal states or other municipalities - for example for investment grants - is non-recurrent. If one only looks at the income mentioned here, the dynamics of the individual income categories are quite different (Figure 2). Current transfer income increased the most. This is due in 2010 to 2011 to additional transfer income from the federal states to cushion the financial and economic crisis and in 2017 to additional funds from the FAG 2017.Very stable developments in the area of dedicated taxes have been evident with + 29 percent since 2008, the fees and performance fees with + 28 percent and - since the financial crisis - with the share of earnings with + 23 percent. There were fluctuations in the capital transfer income - depending on the municipal investments made”.

 

Figure 2: Distribution and development of current income and capital transfer income by income category, 2008 to 201776 (Page 32 of the PDF file of the report)

 

Figure 3: Average current income and capital transfer income by federal state in Euro per capita, 201777 (Page 32 of the PDF file of the report)

 

In the explanatory report to the Charter, this paragraph seeks to ensure that local authorities are not deprived of their freedom to determine expenditure priorities. During the monitoring visit, especially small and medium-sized municipalities complained about the lack of sufficient resources necessary to deal with the demands of the local community (e.g. to start infrastructural works, to entertain larger police forces, etc.). Additionally, the data above show that more access to autonomous local taxes is still desired, despite the fact that a significant part of local income comes from income-sharing based on political agreement among all levels of government.

 

The rapporteurs wish to remind the authorities that the previous Report on Local and Regional Democracy in Austria (2011) also pointed out that municipalities have practically no discretion with regard to local taxes. This is worrying, as local democracy without adequate financial sustainability is at risk. During the consultation procedure, the Association of Austrian Municipalities pointed out that a long overdue reform of local property tax would allow to modernise the calculation method and strengthen the municipalities’ own tax base.

 

The rapporteurs note that despite the consensus-based revenue sharing system in Austria, subnational authorities lack their own taxes. Consequently, they conclude that Austria partially complies with this provision.


73 Published in BGBI no.45/1948, available online at:
https://www.ris.bka.gv.at/GeltendeFassung.wxe?Abfrage=Bundesnormen&Gesetzesnummer=10003819.

 

74 Document available online at: https://www.ris.bka.gv.at/Dokument.wxe?Abfrage=Erv&Dokumentnummer=ERV_2009_1_139

 

75 Source of this Figure and the following paragraphs: KDZ own calculations 2019 based on Statistics Austria: municipal financial data 2017, p.12, in Biwald, Peter; Mitterrer, Karoline; Seisenbacher, Marion, 2019, Österreichischer Gemeindefinanzen 2019 - Entwicklungen 2008 bis 2022, Österreichischer Städtebund/KDZ – Zentrum für Verwaltungsforschung, Wien, available online at: https://www.kdz.eu/de/gemeindefinanzen-2019

 

76 Source: idem, p.16.

 

77 Source: idem above.

Article 9.4
Financial resources of local authorities - Article ratified

The financial systems on which resources available to local authorities are based shall be of a sufficiently diversified and buoyant nature to enable them to keep pace as far as practically possible with the real evolution of the cost of carrying out their tasks.

As presented by KDZ (2019), “the overall income of the municipalities has been characterized by high stability in recent years. This can be seen in all important revenue areas. Their own taxes developed most strongly with + 29 percent since 2008, followed by fees and service charges with + 28 percent and the income share with + 23 percent. (…) The investment activity of the municipalities (without outsourced companies) amounted to EUR 3.6 billion in 2017 and can thus follow up on the pre-crisis years. While public investment in the municipalities' core budget increased significantly, public investment in outsourced units is stagnating. Investments even declined in the municipalities' own businesses (quasi-corporations). Investments in education (especially for kindergartens and compulsory schools) developed particularly dynamically, which are mainly reflected in the core budget of the municipalities. In contrast, investments in the service sector developed significantly below average.”

 

The rapporteurs note again that local authorities in Austria do not enjoy sufficient share of their own taxes to be able to keep pace with increases in the cost of carrying out their tasks. The rapporteurs conclude that more efforts need to be invested in generating sustainable local finances, and therefore, consider that Austria complies partially with this provision.

Article 10.1
Local authorities' right to associate - Article ratified

Local authorities shall be entitled, in exercising their powers, to co-operate and, within the framework of the law, to form consortia with other local authorities in order to carry out tasks of common interest.

Pursuant to Article 116a, B-VG, for the performance of their matters municipalities can agree to associate in municipality associations (Gemeindeverbände). Such an agreement requires the sanction of the supervisory authority. The sanction shall be conferred by ordinance if a lawful agreement between the municipalities concerned is on hand and the formation of the municipal association:

  • a. does not in the case of performance of matters appurtenant to the sovereign administration jeopardise the function of the municipalities concerned as self-administering corporate bodies;
  • b. in the case of performance of matters appurtenant to the municipalities as holders of private rights it lies for reasons of expediency, economic efficiency, and thrift in the interest of the municipalities concerned. The organs of such created municipal associations need to be formed on democratic principles, and it is the Länder that prescribe their actual organisation.

 

Article 116a.6, B-VG introduces the possibility of a merger of municipalities of different Länder to municipal associations. Such a situation, however, can be permitted under the provision of an agreement between the respective Länder pursuant to Article 15a, B-VG, in which in particular provisions on the approval of the formation of municipal associations and the implementation of supervision must be contained.

 

Considering the above, the rapporteurs conclude that Austria complies with this provision.

Article 10.2
Local authorities' right to associate - Article ratified

The entitlement of local authorities to belong to an association for the protection and promotion of their common interests and to belong to an international association of local authorities shall be recognised in each State.

All municipal codes of the Länder allow municipalities to form municipal associations, administrative associations and conclude agreements (e.g. in Burgenland, the relevant Articles are 20, 21 and 22a; for Carinthia, Articles 17, 81 and 82; in Lower and Upper Austria, Section 3; for Salzburg, Articles 12 and 48; in Styria, Articles 37, 38 and 38a for small regions; in Tyrol, Articles 129 et seq and 142a and finally, in Vorarlberg, Article 93 et seq. and Article 97).

 

The rapporteurs conclude that Austria complies with this provision.

Article 10.3
Local authorities' right to associate - Article ratified

Local authorities shall be entitled, under such conditions as may be provided for by the law, to co-operate with their counterparts in other States.

According to Article 23c.4, B-VG, proposals for the nomination of members of the Committee of the Regions and their deputies is made by the Federal Government on the basis of proposals presentations from the Länder as well as from the Austrian Association of Municipalities and the Austrian Association of Cities and Towns. Each Land is to propose a member and its deputy; the other members and their deputies are to be proposed by the Austrian Association of Municipalities and the Austrian Association of Cities and Towns.

 

Durà (2018)81 provides several examples of best practices in Euroregions. Among those, there are several which involve several Austrian Länder and cities, including The International Lake Constance Conference, founded in 1972 is the joint platform of different territorial administrations surrounding Lake Constance (German, Austrian, Swiss, and Lichtenstein); the Euregio Bodensee; Europaregion; Via Salina Euregio, INNTAL Euregio.

 

Considering the above, the rapporteurs conclude that Austria complies with this provision.


81 Durà A., Camonita F., Berzi M. and Noferini A. 2018. Euroregions, Excellence and Innovation across EU borders. A Catalogue of Good Practices. Barcelona, Department of Geography, UA, available online at: https://ec.europa.eu/futurium/en/system/files/ged/recot_crii_catalogue_0.pdf

Article 11
Legal protection of local selfgovernment - Non ratified

Local authorities shall have the right of recourse to a judicial remedy in order to secure free exercise of their powers and respect for such principles of local self-government as are enshrined in the constitution or domestic legislation.

In accordance with Article 12.2. of the Charter, Austria has not declared itself bound by this provision.

 

Pursuant to Article 119.a.9, B-VG, a municipality is party to supervisory authority proceedings and is entitled to lodge complaint with the Administrative Court (Articles 130 to 132, B-VG). It is party to the proceedings before the Administrative Court and is entitled to file a final complaint at the Supreme Administrative Court (Article 133, B-VG) and a complaint at the Constitutional Court (Article 144, B-VG).

 

During the monitoring visit at the Austrian Constitutional Court, the rapporteurs were presented with several cases where municipalities defended their right to local self-government: e.g. E50/2015 on the alcohol prohibition regulation of the municipal council of Innsbruck82 and G386/2018 on the violation of the principle of local self-government through zoning plans in Sankt Ulrich am Pillersee.83

 

Taking into consideration the above, as well as the Länder constitutional provisions as described briefly further in section 4.3 the rapporteurs invite the Austrian authorities to ratify Article 11 of the Charter since it is respected in practice.


82 Decision available online at: https://www.ris.bka.gv.at/Dokumente/Vfgh/JFR_20151209_15E00050_01/JFR_20151209_15E00050_01.html (last access: February 2020)

 

83 Decision available online at: https://www.ris.bka.gv.at/Dokumente/Vfgh/JFR_20190312_18G00386_01/JFR_20190312_18G00386_01.html (last access: February 2020)

ACCESSION

to the Council of Europe 16 April 1956

RATIFICATION

of the European Charter of Local Self-Government 23 September 1987

CONSTITUTION | NATIONAL LEGISLATION

The Federal Constitutional Law of Austria recognises the principle of local self-government. Article 116 B-VG states that each Land is composed of municipalities and that each municipality is a territorial and administrative body of its own, enjoying the right of self‑administration.



24Ratified provision(s)
0Provision(s) with reservation(s)
6 Non ratified articles
21Compliant Provision(s)
7Partially Compliant Articles
1Non-compliant Article