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Hungary - Monitoring report

Date of the monitoring visit: from 19 to 21 March 2019

Report adopted on: 12 February 2021

Files : Report CG-FORUM(2021)01-03 | Recommendation 451 (2021)
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This report follows the third monitoring visit to Hungary since the country ratified the European Charter of Local Self-Government in 1994.
The report notes with satisfaction that the capital city has a special status and that local authorities can associate themselves to define their interests. In addition, national minorities may, in order to safeguard and promote their cultural identity, establish self-government local authorities. National minorities can thus represent their cultural interests at local and national level.
Nevertheless, the report notes a generally negative situation in terms of local and regional self-government, due to a general failure to comply with the Charter. The rapporteurs express their concerns about a clear trend towards recentralisation, a lack of effective consultation and significant interference by the State in municipal functions. Moreover, the report highlights certain shortcomings in the situation of local self-government in the country, such as a lack of financial resources available to local authorities and their inability to recruit high quality staff.
Consequently, national authorities are called upon to act in such a way as to reverse the centralisation trend, ensure a fair and effective consultation process in line with Article 4.6 of the Charter, while limiting State interference. The rapporteurs also recommend that the authorities allocate sufficient financial resources to local authorities while allowing them to set local taxes and determine their rate.

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.

Article 2 requires that the principle of local self-government be enshrined in law, preferably in the Constitution.

The 2013 report pointed out that in Hungary the principle of local self-government is not explicitly enshrined either in the Constitution or in legislation and argued that the right to local self-government is not presented as a fundamental principle of Hungarian institutions.⁶⁷ The revision of the Cardinal Act on Local Self-Government was recommended so that the principle of local self-government is explicitly guaranteed in legislation and in practice.

However, the rapporteurs of the present report believe that this conclusion can be tempered by the explicit reference, in the preamble to the Cardinal Act on Local Self-Government, to the Charter⁶⁸ which enshrines the principle of local self-government – and that the principle of local self-government can therefore be considered to be formally recognised in legislation.

In the rapporteurs’ view, both the Constitution and legislation also contain some important elements of this principle. Article 31.1 of the Fundamental Law establishes that “In Hungary, local governments shall function to manage local public affairs and exercise local public power”. Articles 31 and 32 of the Constitution guarantee the existence of local authorities, although the Constitution stipulates that the powers of local authorities are exercised “within the limits of the law” which leaves the legislature with considerable room for manoeuvre.

Article 2.1 of the Cardinal Act on Local Self-Government sets out that “Local self-governance is the right of the community of electors in a settlement or a county to enforce the responsibility of the citizens, facilitating constructive cooperation within the local community”. However, the Cardinal Act focuses especially on the “sense of responsibility of citizens” and on the “rationalisation” of public services, much more than on local autonomy and self-government.

Therefore, the rapporteurs consider that, even though guaranteed in domestic law, the principle of local self-government could indeed be more explicitly recognised in legislation and in practice.

In light of the preceding considerations, the rapporteurs conclude that the requirements of Article 2 of the Charter are formally complied with in Hungary, although, they are of the opinion that the legislation could be improved to anchor the principle of local self-government more explicitly in order to ensure its full respect in practice.

67. See P. TILK, The main changes in the system of local government in Hungary after the commencement of the fundamental Law, in Studia Parwno-Economiczene, 2014, 95 ss., p. 99.

68. Extract from the Preamble of Cardinal Act on Local Self-Government No. CLXXXIX of 2011: “…The National Assembly, respecting the local government traditions of our nation, in order to complete the rights of local governments as defined in the Fundamental Law, create the conditions necessary for local self-government, strengthen national co-operation, promote the self-sustaining capacity of settlements, as well as strengthen the local community’s ability to self-care, taking account of the principles laid down in the European Charter of Local Self-Government, for implementing the Fundamental Law …”.

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 main question that must be addressed under this heading is whether, in the present situation, Hungarian municipalities and counties regulate and manage a “substantial share of public affairs under their own responsibility and in the interests of the local population”. This provision requires an assessment which takes into account the rather “subjective” and relative nature of such concepts as “ability”, “a substantial share of public affairs”, “under their own responsibility” and “in the interests of the local population” since no official or universal method of measuring such substantial character has yet been developed. The question must be addressed considering the historical evolution, the culture and the constitutional traditions of the country under analysis. It is also closely linked to the assessment of the compliance with other parts of the Charter, such as Articles 4, 8 and 9.

In order to assess compliance with this provision, both legislative and factual aspects should be taken into consideration.

In Hungary, local government authorities have regulatory powers. Based on Article T of the Fundamental Law, the decrees of local government are legal acts in which a generally binding rule of conduct may be determined. The normative power of local authorities is regulated in detail by the Cardinal Act on Local Self-Government.

Nevertheless, the part of public affairs local authorities can regulate and manage is definitely limited. The share of public affairs entrusted to local government has decreased very significantly. The financial autonomy of local governments has severely reduced, strengthening the control of central government over local government finance. In addition, numerous powers hitherto exercised by local government are described as being “naturally” recentralised. In particular, health and social care as much as education have been almost completely centralized. All three sectors, accounting for 86% of local expenditure, which were previously a matter for the municipalities and counties, have been transferred to the central level. In the new system of powers, counties now have only competences on rural development, regional development, regional planning and coordination.

Another indicator of the “importance” or the political and social role of local government in a country is the local government expenditure in the national general government consolidated budget, especially in comparison with other EU countries. In Hungary, as previously indicated, the local authorities manage only 12.9% of the total public expenditures, which is equivalent to 6% of GDP.

Recommendation 341 (2013) called the Hungarian government to “revise the legislation concerning local authorities’ mandatory tasks and functions so as to extend the range of powers normally assigned to them on the basis of the principles of decentralisation and subsidiarity”.

The process of recentralisation that affected several competences already transferred to local authorities, already outlined in the 2013 report, has not been reversed in the subsequent period and the Recommendation 341 (2013) has not been fulfilled.

It should especially be pointed out the transfer of many competences of local government to the new districts, introduced from 1 January 2013, which serve as divisions of State deconcentrated administration.

During the consultation process, the government opposed the views expressed by the rapporteurs, in particular regarding the focus on re-centralisation of certain competences related to public services. It explained that this re-centralisation should be considered as building “a strong, active and efficient State”. The government pointed out that before 2010 a significant portion of public services had been provided by local self-governments, resulting in unacceptable differences in the quality of services due to economic discrepancies among municipalities, and essentially transferring the increasing social tensions to the local authorities along with steadily decreasing resources”.

The rapporteurs do not share this approach. For a signatory State to comply with Article 3.1 of the Charter, the goal of ensuring an equal level of public services must be achieved by other tools than the transfer of most basic competences of local authorities to State institutions: primarily, by granting to local authorities’ sufficient financial resources and through implementing a fair and effective equalisation instrument, as indicated in Article 9 of the Charter.

In light of the preceding considerations, it has to be reiterated that the requirements of Article 3.1 of the Charter are not met in Hungary.

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 for Article 3, paragraph 2, the right to self-government is exercised in Hungary by elected bodies.

According to Article 33 of the Fundamental Law, “(1) The functions and powers of a local government shall be exercised by its representative body. (2) A local representative body shall be headed by the mayor. The president of a county representative body shall be elected by the county representative body from among its members for the term of its mandate”. Article 35 establishes that: ”(1) Local government representatives and mayors shall be elected by universal and equal suffrage in a direct and secret ballot, in elections which guarantee the free expression of the will of the voters, in a manner laid down in a cardinal Act”.

The representative governing body at municipal level is the municipal assembly, while the municipality’s executive organ is the mayor. Both of them are directly elected by citizens, for a term of five years (since 2014, it was four years before 2014). Although the assembly cannot dismiss the mayor, it can enforce his/her responsibility. Actually, representative bodies may declare their own dissolution, as provided for by a cardinal act (Article 35.4 Fundamental Law). Upon a representative body dissolving itself or upon it being dissolved, the mandate of the mayor shall also terminate (Article 35.6). Therefore, for the municipal assembly to early terminate the mandate of the mayor, its own dissolution is required, in accordance with the principle “simul stabunt, simul cadent”.

In the counties, the president is elected by the assembly among its members. He or she cannot be dismissed earlier, although it would be possible, as at municipal level, an earlier dissolution of the assembly by the way of a declaration of its own dissolution, which implies also the termination of the mandate of the president of the county.

In conclusion, it seems to the rapporteurs that the requirements of Article 3.2 are satisfied in Hungary.

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.

Article 4, paragraph 1 of the Charter requires that the basic powers and responsibilities of local authorities are prescribed by the constitution or by statute.

The Fundamental Law contains some general principles in Article 32, whereas the Cardinal Act on Local Self-Government establishes, as a matter of principle, a list of tasks (Article 13), the content of which is determined by various specialized laws. The regulation makes a distinction between local authorities, differentiating the tasks according to a territorial perspective.

Therefore, it appears to the rapporteurs that overall Article 4, paragraph 1, is respected in Hungary.

Article 4.2

Scope of local self government - Article 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.

As for Article 4, paragraph 2 of the Charter, according to which “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 Hungary local authorities can provide optional tasks, i.e. tasks which are not required by acts.

The main aim of local government is the fulfilment of the mandatory tasks; municipalities can provide the optional tasks only if strict legal conditions are met. Firstly, only local public affairs may be performed as an optional task. Municipalities can perform such a task, which does not belong to the responsibility of the central government⁶⁹.

Municipalities may freely undertake optional tasks determined on the basis of the population’s requirements and the availability of financial resources, but voluntarily undertaken local public affairs cannot endanger the fulfilment of obligatory local government tasks and powers prescribed by the law, and they can be financed by the municipality’s income or by separate resources set aside for this purpose.

During the monitoring visit the delegation was informed that, in practice, it is almost impossible for local government, especially for small municipalities, to undertake optional tasks, considering the limited financial resources. In this respect, as on many other issues, an enormous difference exists between the bigger towns and the small villages.

The competences of the counties are even more limited. They are not empowered by a “general competence”. Their tasks are limited to territorial development, as stated in Article 27.1 pf the Cardinal Act on Local Self-Government. Moreover, rapporteurs were informed that the county self-governments are totally ignored in practice even with regard to their only field of competence, the development policy. The counties have no formal decision-making power, only preparatory and advisory tasks in the distribution of EU subsidies. The role of intermediary and management bodies lies with the central government.

Therefore, the rapporteurs consider that Article 4, paragraph 2, is not respected in Hungary.

69. A. FÁBIÁN, Local Self-Government in Hungary: The Impact of Crisis, in C. NUNES SILVA, J. BUÄŒEK (eds.), Local Government and Urban Governance in Europe, Springer, 2017, p. 77.

Article 4.3

Scope of local self government - Article 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.

Article 4, paragraph 3 of the Charter articulates the general principle of subsidiarity. It establishes that “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”.

This principle is neither enshrined in legislation in Hungary, nor applied in practice. As it was pointed out in 2013 report, the allocation of public responsibilities previously managed by local authorities to State 26/45
deconcentrated administration or to the central government happened without taking into account the principle of subsidiarity. The Recommendation 341 (2013) asked the Hungarian government to “revise the legislation concerning local authorities’ mandatory tasks and functions so as to extend the range of powers normally assigned to them on the basis of the principles of decentralisation and subsidiarity”.

Since then, the situation has not changed, and the competences of local governments remain limited. During the consultation process, the Hungarian government pointed out that “the aim in transforming the major health and social care systems was not to centralise powers, but to improve the efficiency of public services operated in a fragmented and uneconomical manner”. It added that “none of the Charter’s articles prohibits the re-designation of specific State (public administration) functions and public services falling within local government competence to be taken over by public authorities, e.g. with a view to improving the efficiency and quality of services for the citizens”.

The rapporteurs do not agree with this view. They remind that Article 4.3 requires that public responsibilities should be exercised “in preference” closest to the citizen. In this respect, it is essentially a political principle since its aim is to bring decision-making as close as possible to the citizen. Allocation of responsibility to another authority which is less close to the citizen is possible, but it should weigh up “the extent” (size or scale) and “nature” of the task itself as well as the requirements of “efficiency” (not effectiveness) and “economy” (of scale, of scope and of minimising costs). A generic reference to the will of “improving the efficiency and quality of services for the citizens” cannot be considered a sufficient justification, especially considering the extent of this allocation, which had an impact on the “substantial share of public affairs” under Article 3.1 of the Charter.

Therefore, it has to be reiterated that the requirements of Article 4.3 of the Charter are not complied with in Hungary.

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.

Article 4, paragraph 4, provides that “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”.

As it was already underlined by the 2013 report, the competences of local government in Hungary experienced a severe reduction after 2011 constitutional and legislative reforms, as many tasks have been recentralised by the State, or devolved to State deconcentrated administration. However, this does not mean that the remaining powers of local authorities are full and exclusive. It happens quite often that local authorities are bound by many legal and factual constraints, further reducing their powers.

During the monitoring visit, the delegation was informed that this happened in the waste management.⁷⁰ Under the terms of the Cardinal Act on Local Self-Government, waste management is a mandatory duty of the local government. For many decades, municipalities resorted to their own companies, which also collected the waste collection fee. The new regulation removed the right to levy the waste collection fee from the waste handling public service providers (including local self-government companies) and this right was entitled to a State company set up for this purpose, so that this company could issue bills to residents. In theory, the legal regulation stipulated that this State company then shares with the public service providers the fees collected from the residents, irrespective of the actual costs, but in practice this become very complicated as the State company was unable, or only partially able to issue bills to residents, and as a consequence it did not have the funds, or only the partial funds to re-allocate to the public service providers. In addition, the local governments were forced to establish associations, and these associations then carried out waste handling with the involvement of the former public service providers as sub-contractors. Since the associations did not receive money, or only received money in part and delayed, from the central company, because it could not collect the fees properly from residents, was consequently unable to pay the sub-contractor, determining constant problems with waste collection.

Therefore, the rapporteurs consider that Article 4, paragraph 4 of the Charter is not respected in Hungary.

70. Act CLXXXV of 2012 on Waste.

Article 4.5

Scope of local self government - Article 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.

Article 4, paragraph 5, refers to delegated responsibilities, establishing that local authorities shall, insofar as possible, be allowed discretion in adapting their exercise to local conditions.

In Hungary, most of the delegated administrative powers were taken back by the central government from local officials (mainly from the town hall clerks). Since 1 January 2013, almost all the local and regional state administrative tasks and functions have been carried out by the newly established 198 district offices, which are the subordinate units of the county governmental offices.⁷¹ Although the delegated tasks have always been State administrative functions (earlier delegated to municipal officials), as a consequence of their recentralisation, the mayor’s offices have lost a large part of personnel and a large amount of financial resources.

Therefore, the rapporteurs are of the opinion that Article 4, paragraph 5, can be considered only partially respected in Hungary.

71. Act XCIII of 2012 on the establishment of administrative districts and the amendment of specific related acts, Government Decree 218/2012. (VIII. 13) on administrative district (municipal district) offices.

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.

Article 4 para. 6 of the Charter provides that “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”. This issue was addressed in Recommendation 341 (2013), according to which the Hungarian authorities had to “consult local authorities and their national associations and define the consultation partners so that appropriate and effective consultation is arranged, in practice, within reasonable deadlines on all issues of interest to local authorities”.

Since then, no new legal mechanisms of consultation have been introduced in the Hungarian legal system.⁷²

As a matter of fact, the delegation received contradictory information about the practice of consultation, as some local authorities’ representatives did not complain about the lack of consultation, whereas other local representatives pointed out that local governments are not consulted by the central government and parliament. It was underlined that, as the law establishes that the government should consult with the parties affected by the legislation, the most important laws are submitted as private member’s motions, or as committee amendment motions, in order to avoid consultation. For example, the provisions on the solidarity contribution were introduced as committee amendment proposal, without any prior impact study or consultation. As for consultation via the National Cooperation Council of Local-Self Government (composed of representatives of the government and the presidents of the associations of local authorities) – which the Hungarian government mentioned in its comments to the draft report during the consultation procedure – according to the interlocutors, it cannot be considered as an effective tool, due to the time shortage or sometimes sabotage of the consultation meetings.

The delegation was informed that local authorities led by the opposition parties are experiencing difficulties in getting answers from the government and, in general, they are not consulted by the State authorities.

Therefore, the rapporteurs believe that the requirements of Article 4.6 of the Charter are not complied with in Hungary.

72. Act CXXX of 2010 on Legislation, Section 19: § (1) “If an Act explicitly grants the right to a state or local government organisation or another organisation to provide an opinion on draft laws concerning its legal status or its functions, those preparing such laws shall ensure that the organ concerned can exercise this right.” In Point 14 of Government Decree 1144/2010. (VII. 7) on the Rules of Procedures of the Government (“If the motion affects the scope of tasks of local or nationality self-governments, the draft must be sent to the relevant national self-government interest representation bodies for opinions. The mayor of Budapest or the chair of the county assembly must be involved in the drafting of governmental decisions affecting the authority of the municipal or county self-government.”), the government prescribed as obligatory on itself the need to arrange consultation. See also Government Decree 1128/2012, which establishes a “National Cooperation Council of Local Self-Government”.

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.

This Article requires that local communities should be consulted in case of changes of local authorities’ boundaries.

The Cardinal Law on Local Self-Government establishes, in Article 125.4, that the territorial structure of Hungary is decided by Parliament, and therefore – after obtaining the opinion of the given municipalities – the consolidation and division of counties, borders, the name and seat of counties, and the formation of the capital districts and the borders of the capital are defined by a Resolution from Parliament.

During the monitoring visit the issue was not raised. Although local government is highly fragmented in Hungary and there are many small villages experiencing serious problems in managing their tasks, consolidation is not an option in Hungary and the principle “one village, one local authority” is applied.

The rapporteurs consider that the requirements of Article 5 are satisfied in Hungary.

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 6, paragraph 1 of the Charter provides that local authorities shall be able to determine their own internal administrative structure.

The Fundamental Law (Article 32.1 d) entitles local governments to decide on their own administrative structure, as well as the rules of their operation. The legal basis of the local administrative structure of a local government is the Rules of Organisation and Operation that must be adopted in the form of a Decree by the body of representatives, which must respect the legislative provisions. The Cardinal Act on Local Self-Government enumerates the organs of the local authority, including its administration, under the name mayor’s office, among them.

Not all towns and villages have their own administration, due to economic reasons. According to the Cardinal Act on Local Self-Government (Article 85), in small villages with fewer than 2,000 residents, the administration of local governments operates in a form and under the name joint local government office if the concerned villages can be found in the same district and their administrative borders are separated by no more than the administrative territory of another town.⁷³ Villages with more than two 2,000 residents may also be affiliated to a joint local government office. Villages affiliated with such a joint local government office are required to have at least 2,000 residents in total, or the joint local government office must cover at least seven towns in order to create an efficient administration.

While the office is directed by the mayor, it is headed by the chief executive (also called clerk). The chief executive exercises employment rights in respect to the officials and employees of the office and exercises other employment rights in respect to his assistants. Appointment, remuneration, management appointment, dismissal, withdrawal of management appointment, and the rewarding of certain public officials and employees of the local government office require the consent of the mayor as specified by himself. The chief executive is obliged to report annually to the body of representatives on the activities of the office. The chief executive is appointed by the mayor for an undetermined period on the basis of open competition. Qualification – a BA in public administration or MA in law – is required by law, and consequently, the chief executive represents permanence and proficiency in the office. Proficiency includes ensuring the legality of the decisions made by local government organs and preparing the decisions of the mayor on state administration matters.⁷⁴

During the consultation process, the Hungarian government pointed out that the “joint local government” is a consequence of the highly fragmented structure of local government in Hungary (the smallest settlement has only 9 inhabitants) and that the employees of the local government office are exclusively made up of local government officials engaged by the specific local government, or the local governments to operate a joint office.

Therefore, it appears to the rapporteurs that in this respect, the situation in Hungary partially complies with Article 6.1.

73. I. BALÁZS, Une politique nouvelle de l'intercommunalité en Hongrie: les bureaux communs et obligatoires, in L. VANDELLI, S. GUÉRARD (eds.), The Impact ofthe Economic Crisis on Locals Governments in Europe: L'impact de la crise économique sur les collectivités locales en Europe, Institut Universitaire Varenne, 2017, pp. 447-455.

74. Observatory on Local Autonomy, Local Self-Government in Hungary, September 2014, p. 52, available at http://www.ola-europe.eu/index.php?eID=tx_nawsecuredl&u=0&file=fileadmin/user_upload/ressources/monographie/mono_en/mono_hungary_en_2014.pdf&t=1559312599&hash=e32ff8bbf81babdd9fb3a3cb387afc26

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.

Article 6, paragraph 2 of the Charter refers to the conditions of service of local government employees: they shall be such as to permit the recruitment of high-quality staff on the basis of merit and competence.

A parliamentary act regulates the main elements of the status of civil servants, most of the dispositions actually concern both local civil servants and Cabinet civil servants. Consequently, there are considerable differences between the status of civil servants and that of private employees, while the differences between the two categories of civil servants are not so significant.⁷⁵

Differences between local civil servants and civil servants under the Government’s direction are given by Chapter VIII of the Act⁷⁶. Employer’s rights over civil servants of the mayor’s office are exercised by the chief executive, and strategic decisions – such as a staff reductions or general pay raises, meaning fixing the base salary, as well as holidays for the administration – are made by the body of representatives. In local administration, rules of incompatibility might be less strict, given the difficulty of finding the adequate and qualified staff for a post in a small village.

Although it must retain the weekly number of working hours, the body of representatives is entitled to determine a daily work schedule different than the general one fixed by the Act for the civil service as a whole. The system of promotion is generally the same, taking into account time spent in service and educational background. The same grades can be achieved in local administration as under the direction of the Government. Remuneration is one of the fields where particularities can be found in local administration in comparison to Cabinet civil servants. Some important decisions are made by the body of representatives in the framework established by the Act.

During the monitoring visit, the delegation was informed that staff of local self-government institutions are legally public employees, whose salaries are fixed centrally and are significantly below pay scales in the private sphere. This results in a migration of labour - for example, the migration of health workers and those employed in the social sphere is a problem afflicting Hungary as a whole - and it is not merely a problem for the local self-government, but it also affects the State sector. During the consultation process the Hungarian government pointed out that “In 2017-2019 considerable changes occurred due to salary increase as a result of significantly raised and guaranteed minimum wage. To this end the funds required for the local governments are provided by the annual budget”.
Recommendation 341 (2013) asked the Hungarian government to “ensure that local and regional authorities are equipped with the administrative structures and resources needed for performing their tasks”.

In light of the preceding considerations, it has to be concluded that the requirements of Article 6.2 of the Charter are not complied with in Hungary.

75. Observatory on Local Autonomy, Local Self-Government in Hungary, September 2014, available at http://www.ola-europe.eu/index.php?eID=tx_nawsecuredl&u=0&file=fileadmin/user_upload/ressources/monographie/mono_en/mono_hungary_en_2014.pdf&t=1559312599&hash=e32ff8bbf81babdd9fb3a3cb387afc26
76. Act CXCIX of 2011 on civil service.

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.

The purpose of Article 7, paragraph 1, is to guarantee the free exercise of their functions by elected representatives.

In Hungary, according to the Fundamental Law, local representatives are elected for five years and cannot be recalled.

Their mandate shall terminate before the end of the five years term in the cases mentioned in Article 29 of the Cardinal Act on Local-Self Government. Among them, it is worthy mention the letter e), establishing early termination “if the local representative fails to participate in assembly meetings continuously for a year from the date of the first meeting missed”.

No professional standards are required. However, representatives must participate in professional training organised by the Government Office within 3 months after taking his/her oath at the inaugural meeting, which is held within 15 days of the election.⁷⁷

Local representatives are required to make a declaration of assets every year (Cardinal Act on Local Self-Government, Article 39). As long as they do not fulfil this obligation, they may not exercise the rights arising out of the office or receive any allowance from the local government.

Local representatives have the right to and are entitled to get involved in the work of the body of local representatives. During the session, a local representative may request information on local public affairs from the mayor (vice-mayor), the notary (town clerk), or from the head of the committee. The answer must be given orally during the session or in writing no later than fifteen days following the session. At his/her request, proposals are noted in the minutes; his/her oral remarks are included.

The local representative may attend any committee meeting and propose a debate on any question related to committee tasks to the committee chair. The debate based on the proposal made by the local representative is then submitted to the next session to which the local representative is invited. S/he may call for the revision of decisions on local municipal issues made by a committee, the mayor, the body of the local partial government, or by the body of the local minority government under delegated power. The administrative assistance required for his/her tasks is ensured by the Office of the body of representatives.

Therefore, the rapporteurs believe that Article 7.1 of the Charter is respected in Hungary.

77. These information are in Observatory on Local Autonomy, Local Self-Government in Hungary, September 2014, p. 21 ss., available at http://www.ola-europe.eu/index.php?eID=tx_nawsecuredl&u=0&file=fileadmin/user_upload/ressources/monographie/mono_en/mono_hungary_en_2014.pdf&t=1559312599&hash=e32ff8bbf81babdd9fb3a3cb387afc26

Article 7.2

Conditions under which responsibilities at local level are exercised - Article 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.

Article 7, paragraph 2, refers to an appropriate financial compensation for elected representatives.

Local representatives are entitled to receive a salary and benefits in-kind (Cardinal Act on Local Self-Government, Article 35). Both can only be provided if the local government’s own-source revenues can cover them and the allocation does not endanger the performance of obligatory municipal tasks.⁷⁸ A local representative may only claim expenses related to his/her work as a local representative. There is a local government decree on the compensation (honorarium, benefits in kind) of representatives. The compensation of the mayor and deputy mayors is regulated by an act of parliament.

The remuneration and benefits in kind of the local representative who breaches his/her obligations may be reduced or withdrawn based on the decision of the body of representatives (Cardinal Act on Local Self-Government, Article 33).

Therefore, the rapporteurs consider that Article 7.2 of the Charter is respected in Hungary.

78. Ibidem.

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.

As for Article 7, paragraph 3, according to which “Any functions and activities which are deemed incompatible with the holding of local elective office shall be determined by statute or fundamental legal principles”, in Hungary the incompatibilities are determined by several legal provisions. One novelty of the 2011 reform has been the introduction of the incompatibility between mayors and members of the parliament.

According to the Cardinal Act on Local-Self Government, Articles 36 and 37, a strict regulation on the conflict of interest has been introduced. Article 36 lists several precise reasons for conflict of interest, that must be removed (according to Article 37) within thirty days after being elected or after the reason for incompatibility arises. If, after a waiver and the following delay, the local representative fails to remove the conflict of interest, the proceeding may bring to the termination of the mandate.

Therefore, the activity that are incompatible with the office can be considered determined by statute. The only concern is raised by the opening statement of Article 36.1, according to which “Local representatives shall not engage in any activity which threatens the public confidence that is necessary to perform his/her functions”. Rapporteurs believe that, in order to comply with Article 7.3 of the Charter, this provision has to be interpreted as specified by the following text of the paragraph in which it is included, i.e. not as a general open provision.

In the light of this interpretation, the rapporteurs are of the opinion that Article 7.3 of the Charter is respected in Hungary.

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.

Article 8 of the Charter deals with supervision of local authorities. According to Article 8, paragraph 1, any administrative supervision of the activities of local authorities must be exercised according to such procedures and in such cases as are provided for by the constitution or by statute.

In line with the requirements of the Charter, in Hungary the rules governing central control over local authorities and the powers of the central authorities concerned are determined by the Constitution and by the law.

Article 32 of the Fundamental Law establishes the rules on supervision on local government decree, which shall no conflict with any other law. Local governments shall send local government decrees to the capital or county government office immediately after their promulgation. If the capital or county government office finds the local government decree or any of its provisions to be in breach of any law, it may initiate a judicial review of the local government decree. The capital or county government office may apply to a court for the establishment of the omission of a local government of its obligation that is based on an Act to adopt decrees or make decisions. Should the local government fail to comply with its obligation to adopt decrees or make decisions by the date determined by the court in its decision establishing omission, the court shall, at the initiative of the capital or county government office, order the head of the capital or county government office to adopt the local government decree or local government decision required to remedy the omission in the name of the local government.

The Cardinal Law on Local Self-Government in Article 132 further details those provisions (see above).

Therefore, the rapporteurs believe that Article 8.1 of the Charter is respected in Hungary.

Article 8.2

Administrative supervision of local authorities' activities - Article 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.

According to Article 8, paragraph 2, of the Charter, the supervision over local authorities can only aim at ensuring compliance with the law and constitutional principles. Expediency control can be used only in case of delegated tasks.

The 2013 report expresses some doubts about the lack of precision of Article 32.5 of the Fundamental Law, especially on the clear distinction should be established between, on the one hand, the local authorities’ own competences and those delegated by the central government and, on the other hand, between the control of the local authorities’ activities’ legality and supervision of their decisions’ expediency.⁷⁹

The rapporteurs consider that those issues have been fixed by the legislation, which limits the State supervision to the legality control.

Therefore, Article 8.2 can be considered complied with in Hungary.

79. CG(25)7FINAL 31 October 2013, Local and regional democracy in Hungary, para. 149.

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.

Article 8, paragraph 3, deals with the way in which the supervision is exercised in practice, and requires compliance with the principle of proportionality.

Recommendation 341 (2013) asked the Hungarian government “limiting central government supervision of the management of local finance so that it is “proportionate” within the meaning of Article 8 of the Charter”.⁸⁰

The rapporteurs are fully aware of the importance of a proper financial management at local level and of the risk of a negative impact of local government debts on the general financial framework of the country. They also appreciate the introduction of an auditing approach and the activity developed by the State Audit Office. Nevertheless, they consider that the financial supervision is too pervasive, limiting the financial autonomy of local authorities beyond the proportionality principle.

In light of the preceding considerations, the requirements of Article 8.3 of the Charter are not complied with in Hungary.

80. CG(25)7FINAL 31 October 2013, Local and regional democracy in Hungary, para. 149 and Recommendation 341 (2013), lett. c).

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.

Another basic principle, established in Article 9, paragraph 2, requires that local authorities should have sufficient financial resources in proportion to the responsibilities assigned to them by law.

In Hungary, Article 34.1 of the Fundamental Law reproduces this principle, establishing that “For the performance of their mandatory functions and powers, local governments shall be entitled to proportionate budgetary and other financial support”.

Nevertheless, in practice, the delegation was informed that in many municipalities and counties the financial resources do not cover the expenditures for mandatory tasks. Also richer municipalities, as a consequence of the already mentioned ‘solidarity contribution’, find difficult to have sufficient financial resources.

Therefore, the requirements of Article 9.2 of the Charter are not complied with in Hungary.

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.

Article 9, paragraph 8, refers to the access to the national capital market for the purpose of borrowing for capital investment.

In Hungary, the permission of the government for local government borrowing was introduced by Article 34.5 of the Fundamental Law. Detailed rules are established by Act No. CXCIV of 2011 on the economic stability of Hungary. All loans and other transactions with the nature of loan (for example, municipal bonds) must be authorised by the government. There are exceptions to this principle. For example, there is a de minimis rule, and illiquid loans do not need permission. Similarly, loans required for projects co-financed by the European Union and reorganisation credits linked to the municipal debt settlement process do not need the consent of the government.

The rapporteurs are aware of the impact of the local government debt on the public finances and of the importance of keeping a balanced budget. Nevertheless, they consider that a balance with the principle of local autonomy has always to be pursued. In Hungary, the financial freedom of local governments has been significantly limited by these regulations. Although a great number of other exceptions exist, the financial freedom of local governments remains significantly limited.

The rapporteurs consider that the requirements of Article 9.8 of the Charter are not fully complied with in Hungary.

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.

As for Article 9, paragraph 7 of the Charter, according to which “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”, grants for specific projects do exist in Hungary. Part of local investment projects are also financed through EU structural funds and other financial instruments.

The delegation was informed of a multiplication of earmarked grants, among them the recent ‘Hungarian villages program’, aimed at reviving settlements found in underdeveloped areas, which is about to start in 2019.⁸⁷

It was also mentioned, beginning from 2019, a special grant for improving the salaries of local government staff: local authorities that are qualified according to the law (taking into account several indicators) may apply.

Another important program is the Modern Cities Program, addressed to the 23 towns with county rights. The government’s Modern Cities scheme, financed by EU funds, provided Hungarian towns with county status more than 150 billion HUF (465 million euros) for development projects in 2018. The delegation received different opinions on the Modern Cities Program. On one hand, the programme resulted in an increase of funds for the recipient municipalities, which were allowed to offer better services and improve the quality of urban spaces and buildings. On the other hand, the process for attributing the grants, based in an agreement between the municipality and the central government, signed by the Prime Minister and the Mayor, makes the grants rather discretionary. The delegation was told that municipalities and counties with an influential Fidesz leader have been in a better position to get additional funding⁸⁸. Even without following this point of view, however there is a risk of a political exploitation of the government, also considering the media coverage devoted to this programme. Exactly for avoiding political manipulation and influence from central government, Article 9.7 of the Charter sets clear limits to earmarked grants.

Consequently, rapporteurs consider that the requirements of Article 9.7 of the Charter are not complied with in Hungary.

87. https://hungarytoday.hu/the-future-of-hungarian-villages-prospects-of-eco-villages/
88. http://www.sgi-network.org/docs/2018/country/SGI2018_Hungary.pdf

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.

As for Article 9, paragraph 6, of the Charter, on consultation of local authorities on the way in which redistributed resources are allocated, this issue was addressed in Recommendation 341 (2013), together with the general issue of the lack of adequate consultation, that has been mentioned under Article 4.6. Things haven’t’ changed in the recent years, as it is shown by the enactment of the 2017 budgetary law, which introduced the so-called ‘solidarity contribution’.

Therefore, the requirements of Article 9.6 of the Charter are not complied with in Hungary.

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.

Article 9, paragraph 5, refers to the protection of financially weaker local authorities through equalisation procedures.

The existing equalisation mechanism (aimed at equalising only the mandatory tasks) is quite obscure. Those municipalities possessing low tax-income capacities (under 8,500 HUF) receive a supplement (with a supplement support of a certain percentage based on the amount of general supports), above this sum, the deduction takes place in single zones. The calculated income to be reduced is 0.55% of the tax base (previously 0.5%), in the case of local governments with very high tax income it might reach 0.65%.⁸⁶

During the monitoring visit the delegation heard many complaints, especially by representatives of villages, on the equalisation mechanism. It was pointed out that the mechanism does not take into account the real needs of local authorities and is insufficient. In particular, notwithstanding the equalisation, smaller municipalities cannot carry out their mandatory tasks. Other local government representatives complained that the mechanism lacks any objective basis to calculate the equalisation and that its effects are unpredictable, determining a high degree of uncertainty as for the local resources.

Therefore, the rapporteurs consider that Article 9, paragraph 5 of the Charter is only partially respected in Hungary.

86. We quote E. STEINER, Introduction to the Hungarian Local Government System, 2016, available at http://www.manorka.net/uploads/images/Kiadv%C3%A1nyok/Local%20Governments_boritoval.pdf

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.

Article 9, paragraph 3, requires that at least part of the financial resources of local authorities must derive from local taxes of which, within the limits of statute, they have the power to determine the rate.

The main local taxes are the local business tax (representing the 74% of local taxes in 2013), the tourism tax, the municipal tax on individuals and businesses, the land tax and the building tax.

In Hungary, the financial resources deriving from “local taxes” represent a minimal part of the municipal incomes (22.5% according to the 2013 OECD data),⁸⁵ whereas counties do not have any real “local tax”.

Therefore, the requirements of Article 9.3 of the Charter are not complied with in Hungary.

85. http://www.oecd.org/cfe/regional-policy/sngs-around-the-world.htm

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 Article 9, paragraph 1 of the Charter, local authorities should have adequate financial resources of their own, of which they may dispose freely within the framework of their powers. Financial autonomy is an essential component of the principle of local self-government and an important condition for the exercise of a wide range of responsibilities in the field of local public affairs. These elements are cumulative and not alternative, which means that all the conditions laid down in Article 9, paragraph 1 of the Charter are mandatory.

In Hungary, local authorities manage a small part of financial resources, which account for up to 15.1% of public expenditures. Their revenues correspond to 10% of the GDP (2.3% of the tax revenues, 6.7% of grants and subsidies; 1% of other revenues).⁸¹ The true question, however, is whether they are allowed to dispose freely of those resources and whether these are proportional to the level of local responsibilities.

It should also be mentioned that according to the OECD⁸² in 2016 only 27.3% of total public investment was carried out by subnational governments in Hungary, compared to an OECD average of 56.9%. The share of public investment carried out by subnational governments in Hungary is among the lowest among OECD countries.
The issue was already raised in the 2013 monitoring report. Recommendation 341 (2013) asked the Hungarian government to “grant local authorities financial autonomy to enable them to exercise their powers properly, in particular by adjusting the level of grants allocated by the central government to local authorities so that their resources remain commensurate with their powers”.

Although the local finances improved as a consequence of the consolidation of the debts (operation which reduced the debt of the local authorities from 1 344 billion of HUF to 100 billion of HUF), the transfer of competencies from the subnational to the national level has gone hand in hand with an even stronger reduction in subnational governments’ revenue sources. As a result, the latter have fewer resources for the remaining tasks than before.⁸³ In addition, rapporteurs were informed that most small municipalities have to apply annually to the central government for covering their operating costs or getting some capital revenue.

Special attention deserves the so-called ‘solidarity contribution’, introduced in 2017.⁸⁴ This contribution is a new payment obligation on the municipalities with large local taxes incomes. The Act specifically exempted the capital city of Budapest from this obligation. The additional government revenue for the year 2017 was of HUF 21.3 billion. The contribution had a strong impact on the finances of the municipalities with important local taxes incomes. For example, the municipality of Budaörs, a small city situated next to Budapest, with a population of 30,000, had to pay a solidarity contribution of HUF 2.1 billion in 2017.

During the monitoring visit, the delegation was informed that the introduction of the solidarity contribution has resulted in a position whereby the State does not contribute to mandatory duties that are conducted by the richer municipalities, indeed, it deducts an important proportion of local own revenues.

In light of the preceding considerations, the requirements of Article 9.1 of the Charter are not complied with in Hungary.

^{81. Based on OECD Data: http://www.oecd.org/regional/regional-policy/profile-Hungary.pdf

82. http://www.oecd.org/cfe/HUNGARY-Regions-and-Cities-2018.pdf

83. http://www.sgi-network.org/docs/2018/country/SGI2018_Hungary.pdf

84. Act XC of 2016 on the central budget of Hungary for 2017 (Annex 2. point V). The contribution has been reiterated in the following years: Act C of 2017 on the central budget of Hungary for 2018 (Annex 2. point V); Act L of 2018 on the central budget of Hungary for 2019 (Annex 2. point V).}

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.

Article 9, paragraph 4, refers to the need for the resources available to local authorities to be of a sufficiently diversified and buoyant nature to enable them to keep up as far as practically possible with the actual changes (increases) in the costs for carrying out their tasks.

In Hungary, the main financial resources of local authorities are State grants and subsidies, making local authorities highly dependent on the State. The limited possibility of establishing local taxes makes it difficult to consider local resources as having a sufficiently diversified and expanding nature to enable them to keep up as far as practically possible with the actual changes (increases) in the costs for carrying out their tasks.

Therefore, the rapporteurs consider that Article 9, paragraph 4 of the Charter is not respected in Hungary.

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.

Article 10 of the Charter covers the possibility of co-operation between local authorities and their right to associate, at both national and international level. Article 10, paragraph 1, refers to types of cooperation aimed at carrying out tasks of common interest.

Article 32.1, lett. k) of the Fundamental Law establishes that local governments may associate freely with other local governments, establish associations for the representation of their interests, cooperate with local governments of other countries within their functions and powers, and become members of international organisations of local governments.

The Cardinal Law on Local Self-Government, Article 87, states that representative bodies (councils) of municipalities may form inter-municipal associations with legal personality in order to more efficiently and appropriately perform one or more municipal tasks, or the delegated tasks of the mayor and the clerk. Associations are established by written agreement between the participating local governments, based on the decisions of the representative body, made by qualified majorities. The association can establish organisations governed by public law, companies, non-profit organisations, and other forms of organisations for the performance of public tasks.⁸⁹

The central organ of the inter-municipal association is the council of the association, whose members are delegated by the representative bodies of the participating local governments. The members of the council have a vote that is defined by the agreement. The decisions of the councils are made in the form of a resolution, because associations do not have legislative powers.

Therefore, the rapporteurs believe that Article 10.1 of the Charter is fully respected in Hungary.

89. Observatory on Local Autonomy, Local Self-Government in Hungary, September 2014, p. 35 ss., available at http://www.ola-europe.eu/index.php?eID=tx_nawsecuredl&u=0&file=fileadmin/user_upload/ressources/monographie/mono_en/mono_hungary_en_2014.pdf&t=1559312599&hash=e32ff8bbf81babdd9fb3a3cb387afc26

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.

The second paragraph of Article 10 of the Charter is also respected in Hungary.

Advocacy associations of Hungarian local governments are regulated by the Cardinal Act on Local Self-Government in Article 131, as part of the relationship between national and local authorities. The main reason for this paradigm is that members of associations have initiative and advocacy tasks in the field of legislation on the structure of the local governments and local public services. These bodies are defined by the Act as the main consultation partners of the Government of Hungary; thus, these bodies are classified as special consultative organisations. The conditions for the formation of these associations are defined by the Act, and strict terms of representativeness are required.

Hungary has several associations of local authorities, even compared with countries with considerably larger populations and surface areas. These associations all have differing missions, and their members appear to be keen on maintaining this diversity of representation.

The seven local authority associations are as follows:
- National Interest Group of Small Town Local Governments (Kisvárosi Önkormányzatok Országos Érdekszövetsége, KÖOÉSZ)
- National Local Government Federation of Villages, Smaller Municipalities and Micro-Regions (Községek, Kistelepülések és Kistérségek Országos Önkormányzati Szövetsége, KÖSZ)
- The Hungarian Village Federation (Magyar Faluszövetség)
- Alliance of Cities of County Rank (Megyei Jogú Városok Szövetsége, MJVSZ)
- National Alliance of County Governments (Megyei Önkormányzatok Országos Szövetsége, MÖOSZ)
- National Alliance of Municipal Governments (Települési Önkormányzatok Országos Szövetsége, TÖOSZ)
- National Alliance of Local Governments (Magyar Önkormányzatok Szövetsége, MÖSZ)

Therefore, the rapporteurs believe that Article 10.2 of the Charter is fully respected in Hungary.

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.

Article 10, paragraph 3, addresses the cooperation of local authorities with their counterparts in other States. The right to engage in cross-border cooperation is also protected.

Hungarian local authorities are entitled to co-operate with their counterparts in other States. Article 42.6 of the Cardinal Act on Local Self-Government considers the “agreement with foreign self-governments on cooperation, affiliation with and departure from international associations of self-governments” as a competence of local assembly, that cannot be delegated to other bodies.

This cooperation is well developed also in practice, as the delegation was told during the monitoring visit. Transfrontier cooperation projects exist between Hungarian counties and local authorities in Serbia and Romania.

It is also worth mentioning that Hungary has signed and ratified the European Outline Convention on Cross-border Co-operation between Territorial Communities or Authorities (CETS No.106).

Therefore, the rapporteurs believe that Article 10.3 of the Charter is fully respected in Hungary.

Article 11

Legal protection of local selfgovernment - Article 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.

Article 11 of the Charter refers to an effective judicial remedy to ensure respect for local self-government.

In Hungary, as it was stated in the 2013 report, Article 5 of the Cardinal Act on Local Self-Government establishes that the lawful exercise of the constitutional powers of local authorities is protected by the Constitutional Court and ordinary courts.

Local authorities may apply directly to the Constitutional Court only in case of conflict with another authority concerning their respective responsibilities.⁹⁰ Apart from this, indirect access to Constitutional Court, via preliminary ruling, is allowed to local authorities.⁹¹ As for the possibility of local authorities to lodge a direct complaint to the Constitutional Court, according to sections 26-31 of the Act on Constitutional Court, according to the case-law of the Constitutional Court it is limited to cases in which the local government acts as a private entity.⁹² On the contrary, direct complaint is not allowed when the local authorities act as public powers.⁹³

Article 16 of the Act provides for the possibility (on the part of local authorities) of appealing to the court against decisions which go against their interests in very specific cases (such as when the government takes away a development project which would have been of local interest for a municipality). This leads the rapporteurs to conclude that the right to lodge a complaint, when the interests of local authorities are – or risk to be – undermined, was very limited and that the legal protection of local self-government was not effective in the light of the relevant provision of the Charter. Recommendation 341 (2013) asked the Hungarian government to “revise the legislation in order to provide local authorities with an effective judicial remedy to secure the free exercise of their powers and guarantee the judicial protection of the good implementation of the basic principles of local self-government provided in the Charter ratified by Hungary”.

Since 2013, the concerns for the capture of the Constitutional Court by the government⁹⁴ and for the weakening of the independence of the judiciary have been growing, as pointed out by many resolutions and opinions adopted by the European institutions.⁹⁵ During the 2019 monitoring visit, although the legal protection was not the main concern of local authorities, some of the local representatives met by the delegation showed their reservations with regard to the possibility to have their local autonomy upheld by the courts, considering the general situation of the judiciary and of the rule of law in Hungary.

In light of the preceding considerations, the rapporteurs conclude that the requirements of Article 11 of the Charter are not complied with in Hungary.

90. Act on Constitutional Court, Section 36: “(1) If – with the exception of courts and public administration authorities – a conflict of competence arises between state organs or between a state organ and local government organs, the organs in question may request the Constitutional Court to resolve the conflict of competence based on the interpretation of the Fundamental Law. (2) The Constitutional Court shall determine which organ has competence in the dispute and appoint the organ obliged to proceed”.
91. Act on Constitutional Court, Section 25,
92. Constitutional Court, decision 3149/2016. (VII. 22.) AB and decision 3158/2018. (V. 16.) AB.
93. Constitutional Court, decision 3077/2015. (IV. 23.) AB.
94. See, among others, G. HALMAI, Dismantling Constitutional Review in Hungary, in Rivista di Diritti Comparati, 2019, 1, p. 1 ss.
95. See European Parliament, Resolution of 12 September 2018 on a proposal calling on the Council to determine, pursuant to Article 7(1) of the Treaty on European Union, the existence of a clear risk of a serious breach by Hungary of the values on which the Union is founded (2017/2131(INL) P8_TA(2018)0340 http://www.europarl.europa.eu/doceo/document/A-8-2018-0250_EN.pdf; See Venice Commission, CDL-AD(2012)001, Opinion on Act CLXII of 2011 on the legal status and remuneration of judges and Act CLXI of 2011 on the organisation and administration of courts of Hungary; CDL-AD(2012)020, Opinion on the cardinal acts on the judiciary that were amended following the adoption of Opinion CDL-AD(2012)001 on Hungary; CDL-AD (2019) 004, Opinion on the law on administrative courts.

Article 12.1

Undertakings - Non ratified

Each Party undertakes to consider itself bound by at least twenty paragraphs of Part I of the Charter, at least ten of which shall be selected from among the following paragraphs:

– Article 2,

– Article 3, paragraphs 1 and 2,

– Article 4, paragraphs 1, 2 and 4,

– Article 5,

– Article 7, paragraph 1,

– Article 8, paragraph 2,

– Article 9, paragraphs 1, 2 and 3,

– Article 10, paragraph 1,

– Article 11.

173. Hungary has no declarations or reservations in respect of the Charter, having withdrawn, on 8 March 2002, the declaration previously formulated in respect of Article 13 of the Charter upon ratification.

Article 12.2

Undertakings - Non ratified

Each Contracting State, when depositing its instrument of ratification, acceptance or approval, shall notify to the Secretary General of the Council of Europe of the paragraphs selected in accordance with the provisions of paragraph 1 of this article.

Article 12.3

Undertakings - Non ratified

Any Party may, at any later time, notify the Secretary General that it considers itself bound by any paragraphs of this Charter which it has not already accepted under the terms of paragraph 1 of this article. Such undertakings subsequently given shall be deemed to be an integral part of the ratification, acceptance or approval of the Party so notifying, and shall have the same effect as from the first day of the month following the expiration of a period of three months after the date of the receipt of the notification by the Secretary General.

ACCESSION

to the Council of Europe 6 November 1990

RATIFICATION

of the European Charter of Local Self-Government 21 March 1994

CONSTITUTION | NATIONAL LEGISLATION

Article 31.1 of the Fundamental Law establishes that “In Hungary, local governments shall function to manage local public affairs and exercise local public power”. Articles 31 and 32 of the Constitution guarantee the existence of local authorities, although the Constitution stipulates that the powers of local authorities are exercised “within the limits of the law” which leaves the legislature with considerable room for manoeuvre.

30Ratified provision(s)

0Provision(s) with reservation(s)

3 Non ratified articles

12Compliant Provision(s)

4Partially Compliant Articles

14Non-compliant Provision(s)