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Bulgaria - Monitoring report

Date of the monitoring visit: 14 and 15 December 2020
Report adopted on: 21 January 2021
Files : Report CG(2021)40-20 | Recommendation 460(2021)
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This report follows the third monitoring visit to Bulgaria since the country ratified the European Charter of Local Self-Government in 1995.

 

It welcomes the considerable progress Bulgaria has achieved in implementing a decentralisation strategy, devolving the powers to the local level while increasing municipal resources, and institutionalising several consultation procedures. The establishment of regional development councils (RDCs) promotes the participation of local representatives in decision making on regional development policies. In addition, Bulgaria has ratified previously non-ratified Article 7.2 of the European Charter of Local Self-Government (the Charter) and the Additional Protocol on the right to participate in the affairs of a local authority.

 

Nevertheless, important problems persist concerning the discretion of local authorities to adapt the fulfilment of delegated tasks to local conditions, a strong dependency of local authorities on State budget transfers, the lack of revenues coming from local taxes, the lack of commensurate resources available to local authorities and a generally low level of local self-government financial autonomy.

 

Consequently, the recommendation invites the Bulgarian authorities, among other things, to clarify the responsibilities allocated to different levels of government, enlarge local authorities’ discretion in adapting the exercise of delegated powers to local conditions, reduce local self-government dependency on State financial transfers and enhance local authorities’ taxation powers. It is also recommended to entitle local authorities to a right of direct recourse before the Constitutional Court whenever a law violates their constitutional status, the Charter or both.

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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 – Constitutional and legal foundation for local self‑government

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

  1.  According to the contemporary commentary of the Charter,20 Article 2 binds the parties to recognise “the principle” of local self-government. This expression introduces in the Charter the difference between “principles” and “rules”. Consequently, it must be considered sufficient for a party to comply with Article 2, to recognise the core elements of local self-government.

 

  1.  To define these “core elements”, a key role is played by the Preamble and by Article 3 of the Charter. Both refer to the aspects of local self-government that have always been considered as the essential features of this concept in the modern European tradition: (a) “local authorities endowed with democratically constituted decision-making bodies”; (b) “a wide degree of autonomy with regard to their responsibilities”; (c) “ways and means by which those responsibilities are exercised, and the resources required for their fulfilment”. Therefore, it would be necessary to check not only the formal recognition of the principle in the domestic legislation, but also whether those core elements are enshrined in that legislation.

 

  1.  According to Article 136(1) of the constitution, “a municipality shall be the basic administrative territorial unit at the level of which self-government shall be practiced. Citizens shall participate in the government of the municipality both through their elected bodies of local self-government and directly, through a referendum or a general meeting of the populace.” Furthermore, Article 138 of the constitution stipulates that “The body of local self-government within a municipality shall be a municipal council elected directly by the populace for a term of four years by a procedure envisaged by the law”, while Article 139(1) defines that “the mayor shall be the executive power within a municipality. He shall be elected for a term of four years by the populace or by the municipal council in a manner established by law”. Bulgarian municipalities are therefore endowed with democratically constituted decision-making bodies.

 

  1.  While the constitution does not directly refer to the municipal sphere of responsibility, the Local Self‑Government and Local Administration Act (LSGLA: Article 17)21, stipulates that local self-government shall be expressed in the right and actual opportunity of citizens and their elective bodies at the municipal level “to resolve on their own all issues of local importance that the law has empowered them [with]”, also including an indicative list of municipal responsibilities.22

 

  1.  The constitution stipulates that “a municipality shall be entitled to own municipal property, which it shall use to the interest of the territorial community” (Article 140). Article 141 stipulates that “(1) A municipality shall have its own budget. (2) A municipality’s permanent sources of revenue shall be established by law. (3) The municipal council shall determine the size of local taxes under conditions, by a procedure and within the frames, established by law. (4) The municipal council shall determine the size of local charges by a procedure, established by law. (5) The State shall ensure the normal work of the municipalities through budget appropriations and other means.” In other words, the constitution itself provides for means and resources for the fulfilment of municipal responsibilities. Further relevant regulations are included in the legislation and especially in the Local Taxes and Fees Act (LTFA)23 and Public Finance Act.

 

  1.  The rapporteurs conclude that local self-government in Bulgaria is guaranteed by the constitution as regards principles of exercise, bodies, property rights and municipal finance. The constitutional norms are further developed in domestic legislation. Therefore, the rapporteurs consider that the requirements of Article 2 of the Charter are satisfied in Bulgaria. Nevertheless, they would encourage the Bulgarian authorities to include more specific provisions about the sphere of local government responsibilities in the constitution, following a relevant amendment, since explicit constitutional safeguards would further protect municipal powers and discretion.

20 A contemporary commentary by the Congress on the explanatory report to the European Charter of Local Self-Government, adopted by the Statutory Forum  on 7 December 2020, https://rm.coe.int/contemporary-commentary-by-the-congress-on-the-explanatory-report-to-t/1680a06149

21 Amended and supplemented, SG No. 65/1995, amended, SG No. 69/2003. See also http://www.sng-wofi.org/country-profiles/Fiche%20BULGARIA.pdf

22 See part 2.1 of the current report.

23 Promulgated, State Gazette No. 117/10.12.1997, effective 1.01.1998, amended and supplemented several times and most recently SG No. 99/12.12.2017, effective 1.01.2018. 

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.

 Article 3.1

  1.  According to the contemporary commentary of the Charter24,this provision defines the content and the subjects of local self-government. As subjects, the Charter mentions the “local authorities”. These are territorial public entities endowed with their own legal personality having the power to make decisions and enforce them. These authorities should have the democratic features provided by Article 3.2. Different types of local authorities are the addressees of the Charter since they are not confined to the lowest or “local” level of territorial organisation and may encompass also “regional” bodies (see Article 13 of the Charter). Therefore, the notion of “local authorities” should be understood and interpreted in a broad sense. It comprises different types of entities such as urban and rural municipalities, county-type cities and capital cities with special status, supra-municipal or provincial entities. In the case of Bulgaria, however, the notion of “local authorities” only applies to municipalities since mayoralties and wards are defined as “component administrative and territorial units of municipalities” without a distinct legal personality (Article, 2 paragraph 2, LSGLA), while regions lack directly elected bodies.

 

  1.  According to the Charter, local governments should regulate and manage a “substantial share of public affairs”. The Charter grants a certain margin of appreciation to States to set “the limits of the law” and to identify the radius of action of local authorities. However, the Charter stresses that the share of public affairs managed by local government should be “substantial” and not residual. In other words, local authorities should have a range of responsibilities offering the possibility of local public policies for the benefit of the local population.

 

  1.  Local authorities cannot regulate and manage effectively a “substantial share of local affairs” if these authorities are too small and/or are deprived of the resources necessary to fulfil their tasks. Therefore, amalgamations of municipalities may be advisable in some cases. Another possibility is the use of inter-municipal co-operation to achieve joint service provision.

 

  1.  The general conclusion that prevails is that the decentralisation strategy must integrate clearly defined sectoral policies and objectives that effectively contribute to achieving optimal and balanced decentralisation of power and resources, as well as measures encouraging the local authorities to pursue policies for sustainable economic and social development25.

 

  1.  Bulgaria has experienced a substantial increase in local government competence, even though the output of the ambitious decentralisation strategy has not been considered as satisfactory. According to information provided by the NAMRB, local government responsibilities include, inter alia in the following fields:
  •  public works and communal activities, 100% of the services: cleanliness, street maintenance (57 000 km), street lighting, plumbing, parks and green areas (95 million m2);
  •  municipal road network: almost 50% of all roads in the country (19 500 km of municipal roads) – maintenance, repair and construction of municipal roads;
  •  education: 86% of all schools (2 018) and 96% of kindergartens (1 726) are municipal, and 74 schools (with "Agriculture", "Veterinary Medicine", "Food Industry” profiles) were transferred to municipalities with the entry into force of the new Preschool and School Education Act in 2016;
  •  healthcare: 122 municipal institutions for hospital care (36% of total), 152 institutions for out-patient care (7% of total), 820 nurseries, including nursery groups in kindergartens (over 90% of total);
  •  social services: municipalities are responsible for the management of all social services as a State-delegated activity, while municipalities directly provide 87% of all services, the rest is provided by private entities, out of which, specialised institutions: 167 are homes for adults with various disabilities, or for the elderly; 569 are daycare centres and daycare in the community services: 625 are residential services in the community; 1 387 are pensioners’ clubs; social patronage at home is provided in 231 municipalities and patronage care is provided in all municipalities;
  •  recreation, culture, and sports: municipal theatres, philharmonic associations and operas, orchestras, and ensembles, and libraries, museums, galleries, and ethnographic complexes, media, ritual halls, zoos, sports facilities, and sports schools;
  •  economic activities and services (tourism, other economic activities): support for tourist bases, sports and tourist schools, municipal markets, and other auxiliary activities.

24 Ibid.

25 Ministry of Regional Development and Public Works, Decentralisation Strategy, 2016-25, Sofia 2016.

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.

 Article 3.2

  1.  The right of self-government must be exercised by democratically constituted authorities. The Charter prioritises a system of representative democracy at local level, in which the decision-making power is exercised by councils or assemblies directly elected by the people. Direct democracy plays a complementary (and not substitutive) role. Thus, local elections play a key role in local democracy: local representatives must be directly elected in free elections, by secret ballot based on direct, equal, universal suffrage. In addition, the right to participation that has been especially developed in the Additional Protocol, considers both forms of participation: a) as voters or candidates in local elections; b) direct involvement in consultative processes, local referendums, and petitions26.

 

  1.  As for the structure of government at local level, the Charter does not express an option in favour of one specific form of local political organisation, leaving the choice in the hands of domestic legislation. The Charter only points out the central role that must be recognised to elected councils and assemblies. The representative body is indeed the organ required to deal with matters of the greatest importance to the local community, such as budgetary or tax matters. But the Charter does not refer to the necessity of having executive bodies, or to the way in which they are appointed: it is only stated that elected councils or assemblies “may possess executive organs responsible to them”27.

 

  1.  The Charter underlines that existing executive organs are “responsible” to the elected councils or assemblies. The interpretation of the notion of “responsibility” has important consequences for the local form of government. In any case, the primacy of the directly and universally elected council or assembly means that this body takes the most relevant decisions and that there should be some tools to make the executive body accountable to the council. The concept of “responsibility” does not necessarily mean that the executive must be dismissible by the assembly. The minimum that is necessary for the “responsibility” requirement to be met is the introduction of a system of effective supervision of the executive by the assembly, allowing regular scrutiny of the executive’s activities28. 

 

  1.  In Bulgaria, the constitution itself defines in Article 138 that “the body of local self-government within a municipality shall be a municipal council elected directly by the populace for a term of four years by a procedure envisaged by the law”. Thereupon, Article 139 clarifies that “(1) The mayor shall be the executive power within a municipality. He shall be elected for a term of four years by the populace or by the municipal council in a manner established by law. (2) In his activity a mayor shall be guided by the law, the acts of the municipal council and the decisions of the populace.”

 

  1.  The LSGLA provides a comprehensive framework for the interaction between the two local authorities’ bodies. The municipal council shall formulate the policy of the municipality’s growth and development in connection with the activities provided by the LSGLA (Articles 17 and 21), as well as in connection with other activities provided by law. It will furthermore resolve other issues of local importance that do not fall within the exclusive competence of other bodies.

 

  1.  The municipal council exercises control over the work of the local administration through the possibility to address different questions to the mayor of the municipality. The municipal council may annul administrative acts of the mayor that contradict their acts, as well as challenge illegal ones before the court. The municipal council and its standing committees may request references, reports, information and other materials related to the implementation of the decisions taken from the mayor of the municipality, deputies and the municipal administration.

 

  1.  The mayor of the municipality is a body of the executive power in the municipality (Article 38, LSGLA). In his or her activity the mayor is guided by the law, by the acts of the municipal council and by the decisions of the population. At the same time, the mayor is obliged to perform functions assigned to him or her by the central State bodies, but only when this is determined by law (Article 44, paragraph 4, LSGLA).

 

  1.  The mayor of the municipality shall send to the municipal council his or her acts, issued in implementation of the council’s decisions, the contracts and their amendments and supplements, within three days from their issuance. The mayor of the municipality is obliged to organise the implementation of the acts of the municipal council by submitting a report on their implementation twice a year.

 

  1.  The mayor is the only body that can assess the expediency of the acts of the municipal council, return the inexpedient ones for a new discussion (Article 45, LSGLA) and challenge them before the administrative court. The act referred for new consideration shall not enter into force and shall be considered by the municipal council within 14 days after its receipt. The municipal council may rescind, amend, or adopt the act referred back for a second consideration. The act referred back for new consideration shall be adopted again with a majority specified by law but not less than one half of the total number of municipal councillors. The amended or adopted for a second time administrative act may be contested before the respective administrative court under the procedure of the Administrative Procedure Code (APC).

 

  1.  The right to participate in the affairs of a local authority is currently regulated in the Constitution of the Republic of Bulgaria (Article 136(1) “…Citizens shall participate in the government of the municipality both through their elected bodies of local self-government and directly, through a referendum or a general meeting of the populace”), the APC, the Electoral Code, the Law on Direct Participation of Citizens in State Authority and Local Self-Government, LSGLA, the Access to Public Information Act, the Public Finance Act (PFA) and the Municipal Debt Act. The right to participate in the affairs of a local authority is applied in the local acts and activities of the Bulgarian municipalities. According to information provided by the NAMRB, ordinances for civic participation in the affairs of the respective municipality have been adopted in a number of municipalities, and separate ordinances for specific policies specify the manner of participation of the local community. The Additional Protocol does not provide for the possibility for the member States of the Council of Europe to express reservations and declarations under its provisions, so that the Republic of Bulgaria is bound by all its provisions.

26 A contemporary commentary by the Congress on the explanatory report to the European Charter of Local Self-Government, adopted by the Statutory Forum  on 7 December 2020, https://rm.coe.int/contemporary-commentary-by-the-congress-on-the-explanatory-report-to-t/1680a06149.

27 See Recommendation 113 (2002) on relations between the public, the local assembly and the executive in local democracy (the institutional framework of local democracy).

28 Ibid.

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 4.1

  1.  Article 4.1 requires clarity and legal certainty for the regulation of the “basic powers and responsibilities” of local government bodies. They should be prescribed by the constitution or by statute, so as to provide predictability, permanence and protection for the benefit of local self-government. Therefore, the tasks of local authorities should not be assigned on an ad hoc basis and should be sufficiently enshrined in written parliamentary legislation. Establishing local powers and competences by means of administrative regulation should be avoided and goes against the spirit of the Charter. This general rule is not incompatible with the attribution to local authorities of powers and responsibilities “for specific purposes” in accordance with the law.

 

  1.  National legislation follows different patterns on regulating the allocation of local responsibilities. In some countries, there are general statutory provisions that use broad terms in order to describe the “matters” or domains of such responsibilities (e.g. “elementary education”, “green spaces”, etc.). Then, in a second step, sector-specific legislation precisely identifies the concrete tasks to local governments. In other countries, there are no general provisions and the concrete tasks and responsibilities of local governments are singled out in a wide range of sector-specific legislation. In such cases, it is nearly impossible to get a comprehensive picture, a situation that could frustrate transparency and obstruct efficient consultation of local authorities according to Article 4.6.

 

  1.  Τhe fundamental powers and responsibilities of municipalities are mainly set out in Articles 17, 21 and 44 of the LSGLA that introduces a system for allocating powers between the different organs of an authority (council, mayor). An emerging question is which powers and responsibilities can be “basic” and do require, in principle, systematic regulation. But the definition of “basic” powers cannot be the same in the different countries and national authorities have a wide margin of discretion in defining these “basic” powers. Traditional tasks characterising local government operation in a specific country would certainly be part of those basic powers.

 

  1.  Apart from the LSGLA which mentions some important responsibilities of local government, the distribution of competencies between central and local authorities is regulated in a number of laws and other normative acts in the respective spheres of activity. According to information provided by the Ministry of Regional Development and Public Works, responsibilities of local authorities are currently regulated in eight codes, 131 acts, over 500 bylaws. Thus, the municipalities are engaged in the implementation of the national sectoral and horizontal policies on their territory.

 

  1.  The NAMRB has prepared some key proposals formulated under the framework for the preparation of a programme for implementation of the strategy for decentralisation of public administration for the period 2021-25. Concerning the “Protection and development of the own sphere of activity of the local self-government”, the NAMRB has proposed, inter alia:

 

  •  granting/expanding the powers to manage activities important for the local community, including some of the delegated ones (in the field of secondary education, in the management of water supply and sewerage associations, in the control of compliance with local regulations, etc.);
  •  providing the management, respectively the revenues of resources with local importance – natural, cultural, historical and others (caves, mineral waters, etc.);
  •  expanding the powers of local authorities to act in emergencies and extraordinary situations;
  •  more tools to encourage investments of local importance in the construction of industrial parks, and so forth.;
  •  stimulation of public investments by creating funds and programmes for financing municipal infrastructure.
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.

  Article 4.2

  1.  It is important to the conception of local authorities as political entities acting to promote the general welfare of their inhabitants that they have the right to take initiatives on matters not explicitly excluded from their competence by the law29.

 

  1.  In Article 21(2) of the LSGLA, it is provided that the municipal council can “resolve other issues of local importance that do not fall within the exclusive competence of other bodies”. According to interlocutors representing local authorities, however, the case-law shows that there are many cases of repeal of municipal ordinances or part of their texts due to the lack of an explicit legal delegation for regulation through local ordinances of the respective issue. Moreover, these interlocutors complained about the extensive State regulation of different fields of action that would barely leave any margins for local statutes and initiatives. In fact, this kind of critique emerges in many European countries, due to the tendency of domestic legislators to regulate even the details in many policy fields and, in addition, to introduce several controls and requirements for previous State approvals that suffocate local initiatives. But this is a common problem that does not seem to have extraordinary dimensions in Bulgaria; moreover, the rapporteurs had the impression that it would rather be the lack of resources that would frustrate local initiatives. Their conclusion is, therefore, that Article 4.2 is respected in Bulgaria.

29 A contemporary commentary by the Congress on the explanatory report to the European Charter of Local Self-Government, adopted by the Statutory Forum  on 7 December 2020, https://rm.coe.int/contemporary-commentary-by-the-congress-on-the-explanatory-report-to-t/1680a06149.

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 4.3

 

  1.  This paragraph of the Charter introduces the “subsidiarity principle”, whereby public responsibilities should be exercised “in preference” by those authorities or bodies that are closest to the citizen. This principle crosscuts all levels of territorial organisation and introduces closeness to the citizens as a primary criterion for the allocation of responsibilities unless there are overriding considerations of efficiency and economy because of the extent and the nature of the task. It is of central importance for the protection of local authorities against up-scaling and re-centralisation tendencies that threaten to empty the substance of local self-government. Moreover, subsidiarity can reduce the possible rigidity that unity of application can involve. In this sense, subsidiarity better achieves efficiency, responsiveness, and accountability of governmental action.[30]

 

  1.  In Bulgaria, this principle has been involved when additional tasks were transferred to municipalities in the fields of environmental protection, spatial development, the primary sector, social services, education and health, and so forth. Despite these efforts, the principle of subsidiarity in the sense of strengthening local self‑government is not yet sufficiently implemented at present. It seems that the principle of subsidiarity is still essentially understood as a principle of de-concentration. With the legal amendments in the field of education and social assistance, for instance, municipalities were assigned many new responsibilities. They were defined as State-delegated activities.A relevant general tendency becomes clear also from the predominantly task-related financing of municipal tasks (see below).

30 Ibid.

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 4.4

  1.  According to Recommendation CM/Rec(2007)4 of the Committee of Ministers to member States on local and regional public services31, law makers should establish a clear definition of the responsibilities of the various tiers of government and a balanced distribution of roles between these tiers in the field of local services. This would make it possible to avoid both a power vacuum and the duplication of powers. Moreover, this allocation of responsibilities should promote predictability and guarantee continuity in the provision of certain local public services that are essential for the people.

 

  1.  In several monitoring reports it has been pointed out that confusion and lack of clear demarcation of powers would blur responsibility and lead to a power shift for the benefit of higher level and especially of central authorities. Due to the lack of resources at lower governmental levels, complementary action by higher-level authorities is often required, but quite often this is not made on the basis of parity and partnership; local authorities would then be reduced to mere agents of regional or national authorities32.

 

  1.  A characteristic example mentioned by the NAMRB is the Water and Sewerage Services. Since the municipalities became owners of a significant part of the water supply and sewerage networks and facilities in 2010, they acquired new responsibilities for the maintenance and development of the networks and for the quality of the service to the citizens. These responsibilities are accompanied by severely limited management rights. Municipalities are obliged to join the so-called water supply and sewerage associations in designated territories, concluding contracts with commercial companies – water supply and sewerage operators. The State has a blocking quota in these associations, which mainly perform advisory functions in the adoption of the regional master plans for water and sewerage and the business plans of the water and sewerage operators. Thus, municipalities cannot really influence the process of investments to improve the networks, nor the quality and price of the service.

 

  1.  Another example that has been mentioned is the field of education: Municipalities do not have instruments to influence good governance, although they are the owners of the material base and are in charge of its maintenance. The municipalities are not employers of the school management, they do not participate in their attestation.

 

  1.  Local interlocutors have also mentioned the field of healthcare: municipalities are the owners of 122 municipal hospitals (36% of all hospitals in the country), which compete on a market basis in their activities with other public, private, and mixed hospitals. Municipalities have no legal basis to finance their activities but can only participate in the improvement of the material and technical base.

 

  1.  One of the main challenges of the decentralisation reform process is to allocate clearly the management and relevant responsibilities to the different levels and to eliminate overlapping of competences. As long as this is not yet achieved at a satisfactory level, there is only partial compliance of Bulgaria with Article 4, paragraph 4, of the Charter.

31 Adopted by the Committee of Ministers on 31 January 2007 at the 985th meeting of the Ministers’ Deputies, https://search.coe.int/cm/Pages/result_details.aspx?ObjectID=09000016805d6b5e 

32 A contemporary commentary by the Congress on the explanatory report to the European Charter of Local Self-Government, adopted by the Statutory Forum  on 7 December 2020, https://rm.coe.int/contemporary-commentary-by-the-congress-on-the-explanatory-report-to-t/1680a06149.

 

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 4.5

 

  1.  Delegation of competences and governmental tasks may adopt different mechanisms. Usually, the State or regional authorities keep the ownership of the competence and transfer to local entities the exercise or application of that competence. At the same time, the delegating bodies (in their capacity as “master of the competence”) keep the power to instruct the local ones on how to implement the delegated tasks and to supervise the execution of those delegated tasks.

 

  1.  According to Recommendation CM/Rec(2007)4 of the Committee of Ministers to member States on local and regional public services, the proximity to the population of local public services is a fundamental necessity. In order to ensure that services are adapted to the citizens’ needs and expectations, local entities should benefit from a high degree of decentralisation and a capacity for independent action. Delegating authorities should adopt minimum standards for the protection of the users of the delegated services and create the necessary machinery for monitoring compliance with them33.

 

  1.  According to the NAMRB, the scope of the State-delegated activities includes new services, mainly in the field of education, social care, as well as healthcare, defence and security. The scope of the most important delegated activities is the following:

• education: 86% of schools and 95% of kindergartens are municipal;

• healthcare: 36% of all hospitals or 122 municipal health facilities; nearly 100% of all nurseries, health offices in kindergartens;

• social assistance and care: 90% of social services are provided by municipalities.

 

  1.  The vague formulation of the own sphere of local self-government makes it possible to assign atypical responsibilities to the municipalities through changes in normative acts in the sectoral legislation. Such cases are: service (delivery) of administrative and judicial proceedings; control over the observance of copyright and related rights; control over the use of medicinal plants; deratisation and disinfection outside urban areas owned by others; control over the deposit and distribution of printed works; registration of apiaries, and so forth. This leads to additional aggravation of the administration and spending of own financial resources, while relevant discretion is barely granted to municipalities, as local interlocutors have stressed.

 

  1.  Annually, by a decision of the Council of Ministers, the activities delegated by the State, financed from the State budget in the organisation and provision of public services are determined and standards are adopted for the activities delegated by the State with natural and value indicators in the respective year. Most of the new responsibilities transferred to the municipalities, primarily in the field of social assistance, education, and so on, are defined as State-delegated activities. The system for financing most of the State-delegated responsibilities through uniform expenditure standards currently applied, limits the powers of municipal councils to redistribute these resources according to local needs and priorities. The NAMRB upholds the position that the expansion of municipal powers should happen only if it goes hand in hand with relevant funding and discretion.

33 Adopted by the Committee of Ministers on 31 January 2007 at the 985th meeting of the Ministers’ Deputies,https://search.coe.int/cm/Pages/result_details.aspx?ObjectID=09000016805d6b5e

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 4.6

  1.  Consultation is a key principle of the Charter and local authorities should be consulted by State (or regional) bodies in the discussion and approval of laws, regulations, plans, and programmes affecting the legal and operational framework of local democracy. This also increases democracy, in the sense that decision makers should listen to the voice of local authorities and of their associations. Moreover, this is demanded by the principles of transparency in the governmental action, and by the principle of subsidiarity34.

 

  1.  The Congress has adopted several recommendations and resolutions on the right of local authorities to be consulted by other levels of government35. In its Recommendation 171 (2005) the Congress emphasised that the right of local authorities to be consulted is a fundamental principle of European legal and democratic practice, the aim of which is to contribute to good governance36. Recommendation 328 (2012)37 emphasises that consultation should be organised in a manner and timing such that local authorities have a real opportunity to formulate and articulate their own views and proposals, in order to exercise influence.

 

  1.  According to information provided by the NAMRB, on issues that directly concern the municipalities, the following statutory consultation mechanisms apply.

 

  •  At the initiative of the NAMRB since 2016, through amendments to the Normative Acts Act, each draft normative act that affects the powers of municipalities should be consulted with the NAMRB before being submitted for adoption to the Council of Ministers.

 

  •  The draft normative acts are subject to obligatory public consultation and published on a special internet portal of the government. Within the deadlines for these consultations, both the NAMRB and individual municipalities can also send their opinions and actively do so.

 

  •  In the parliament, the NAMRB submits opinions to the competent parliamentary committees on all bills which affect the activities of municipalities. Representatives of the NAMRB are invited to participate in meetings of parliamentary committees and may express positions during the debates on submitted bills.

 

  •  In total, the NAMRB and the municipalities participate in 260 advisory bodies, councils, commissions and working groups at the various ministries and central departments with 640 representatives from 180 municipalities. This approach of preliminary joint work provides the municipalities with the opportunity already at the stage of initiative to reform particular sectors and be an active participant in the process.

 

  •  The representation of the NAMRB in the Monitoring Committees of the Partnership Agreement with the EU 2014-20, in the Monitoring Committees of the Operational Programmes and the Rural Development Programme is important for the activity of the municipalities. These powers are defined by a decree of the Council of Ministers.

 

  •  Municipalities are also represented in the new regional development councils, which according to the Regional Development Act co-ordinate the implementation of State policy for regional development in the respective planning region at Nomenclature of Territorial Units for Statistics (NUTS) level 2. Representatives of municipalities (mayors and chairmen of municipal councils) have 70% of the votes in the regional councils. They were elected through a transparent procedure organised by the NAMRB, at the level of planning regions. Thus, the local government will have the opportunity to participate directly in the process of preparation and approval of the new Integrated Territorial Strategies (ITS) for Development at NUTS 2 level planning regions. The law provides for these strategies to be adopted by the Council of Ministers under the proposal of the Minister for Regional Development and Public Works after their approval by the relevant regional development councils.

 

  1.  Another important institution for consultation is the Council for Decentralisation of Public Administration (where also the NAMRB is represented) at the Council of Ministers. It has a decisive role for the implementation of the main objectives of the decentralisation strategy. This permanent advisory body was established by a government decree in 2006 to support the implementation of State policy in the field of decentralisation. With various normative changes in governmental acts regarding the functions of this council, its activity was interrupted twice – from 2011 to 2013, as well as from 2016 to 2020. After persistent efforts by the NAMRB in August 2020 after a four-year interruption a meeting of the Council was held. At this meeting it was decided to update the Decentralisation Strategy 2016-25, to elaborate a programme for its implementation for the period 2021-25, as well as to prepare a draft government decree, guaranteeing the sustainable and effective activity of the Council. For this purpose, a working group was established, which started its activities in January 2021.

34 A contemporary commentary by the Congress on the explanatory report to the European Charter of Local Self-Government, adopted by the Statutory Forum  on 7 December 2020, https://rm.coe.int/contemporary-commentary-by-the-congress-on-the-explanatory-report-to-t/1680a06149.

35 Resolution 368 (2014) debated and adopted by the Congress on 27 March 2014, rapporteur: Anders Knape, Sweden (L, EPP/CCE). See, also: Resolution 437(2018) on the consultation of local authorities by higher levels of government, of 8 November 2018.

36 Debated and approved by the Chamber of Local Authorities on 1 June 2005 and adopted by the Standing Committee of the Congress on 2 June 2005 (see Document CPL (12) 5).

37 Debated and adopted on 18 October 2012 by the Congress (see Document CG(23)ll, explanatory memorandum).

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.

 

Article 5 – Protection of local authority boundaries

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.

 

  1.  Territorial reforms have been implemented in several European countries, where the existence of very small and weak municipalities goes along with a shortage of capacities leading to inefficiency and non-compliance with Charter requirements. In this context, the Charter does not prohibit amalgamations, nor impose a closed pattern of territorial or institutional design. It introduces procedural rules for changes in local authority boundaries.

 

  1.  In this vein, it is a mandatory procedural requirement that no change of local boundaries may be adopted without consultation. This must take place at a timely stage before a final decision on this matter is made. This is required in order to promote the efficiency of consultation, in other words the real possibility of local communities to be heard and to express their views at a time where influence over amalgamation decisions and their different aspects can really be exercised and consultation is not only of formal or symbolic nature. If the amalgamations include a considerable part of the country or the whole country, then the national associations of local or/and regional authorities should also take part in the consultation procedures38. 

 

  1.  In its Recommendation (2004)12, the Committee of Ministers of the Council of Europe established some principles that should be followed by the parties when they engage in reforms of the boundaries or the structure of local authorities39.  Moreover, the objectives, methods and results of a process of reform should be fully compatible with the provisions of the Charter. Furthermore, where appropriate, the parties should further ensure that the objectives, methods and results of the process of reform comply with their obligations under Article 7.1.b of the European Charter for Regional or Minority Languages, and Article 16 of the Framework Convention for the Protection of National Minorities.

 

  1.  According to Article 136(2) of the constitution,“the borders of a municipality shall be established following a referendum of the populace”. In the past 10 years, since the previous monitoring, there have been no mergers of municipalities in Bulgaria. The NAMRB informed the delegation that there were two cases of establishing new municipalities by separating the respective territory from an existing municipality. Thus, from 1 January 2015, the municipality of Sarnitsa became an independent municipality after a referendum, separating itself from Velingrad municipality. With this act the municipalities in Bulgaria reached 265. At the end of February 2021, a referendum was held to separate the town of Obzor and several nearby settlements into an independent municipality, from Nessebar municipality. With its decision from 23.03.2021the Council of Ministers confirmed the results of the referendum and announced the new municipality. The last stage of the procedure is forthcoming – issuing a presidential decree. The Administrative and Territorial Structure of the Republic of Bulgaria Act exhaustively determines the terms and conditions for the establishment, division or merger of municipalities. In the general case, the main requirement for all three hypotheses is to conduct and have a positive result from a referendum among the population from the affected settlements.

38A contemporary commentary by the Congress on the explanatory report to the European Charter of Local Self-Government, adopted by the Statutory Forum  on 7 December 2020, https://rm.coe.int/contemporary-commentary-by-the-congress-on-the-explanatory-report-to-t/1680a06149.

39 Recommendation (2004)12 of the Committee of Ministers to member States on the processes of reform of boundaries and/or structure of local and regional authorities (adopted by the Committee of Ministers on 20 October 2004 at the 900th meeting of the Ministers’ Deputies).

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 6.1

  1. This paragraph states that local authorities have discretion to determine their own internal administrative structures or organisation. The power to organise themselves is then a part of the autonomy enjoyed by local entities (self-organisation power). This discretion is not absolute but has to respect the general statutory framework on governmental organisation. The goal of the paragraph is to safeguard local autonomy by allowing local authorities to create such an administrative internal structure and organisation that enable them to meet the various needs of the local residents and provide a full range of public services.

 

  1. The self-organising power of local entities must be broad, and it should include not only the power to decide the internal local organisation, but also the power to establish independent bodies such as local companies or agencies for the better delivery of local services. Local authorities should also have discretion to establish territorial deconcentrated units and structures (such as municipal districts) to ensure the best delivery of their responsibilities40.

 

  1. Bulgarian municipalities do have the freedom to determine the internal organisation as well as their internal administrative structures. The LSGLA regulates in detail the powers of political elected bodies at the local level (municipal council, mayor, mayors of mayoralties and mayor deputies). Local authorities independently determine the organisation of the administrative structures, both internal (structuring of the administration) and external (creation of municipal units, public establishments, and municipal enterprises). The municipal administration is structured in directorates, departments, or sectors. Departments or sectors may also be organised as independent structural units, without being included in the composition of directorates or departments. The municipal council may establish services of the municipal administration in separate districts, mayoralties, settlements or in parts of them and determine their functions.

40 Ibid.

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 6.2

  1. With due respect to the general laws and regulations on civil service, local authorities should have the autonomy to determine the conditions of service of their own employees and to establish a sound and efficient personnel policy, also offering sufficient training and career opportunities. Local authorities should have the possibility to attract, recruit and maintain their qualified administrative staff. Naturally, these possibilities will largely depend, however, on the size and resources of each local entity41.

 

  1. The Congress has noted in its monitoring exercises that in many countries the national and/or regional authorities do regulate in a comprehensive way the status of local government staff, thus limiting discretion of local authorities. Also, in Bulgaria some local interlocutors complained about domestic laws and government regulations which restrict the activities of local governments in terms of selecting and evaluating staff, as well as in terms of offering an adequate remuneration.

 

  1. The rapporteurs consider, however, that the most important issue in this context is not the legal restrictions but the lack of the necessary staff. Local government officials emphasised the weak professional skills of many staff members, especially in smaller municipalities. Apart from in the big cities, it is extremely difficult for local authorities to attract specialised quality staff. Another problematic aspect is the lack of an efficient, reliable and easily accessible system for training, mainly because relevant experience and necessary resources are still missing. During the consultation procedure, the NAMRB informed the delegation that it seeks to fill this gap by organising trainings on the implementation of the latest amendments in the legislative basis, important for the activities of the sectorial policies’ experts in the municipalities. At the beginning of each new term of the local self-government NAMRB, organises trainings for newly elected local representatives - mayors and municipal councilors.

41 Ibid.

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.

Article 7.1

  1. Local authorities are required to provide all elected representatives with the facilities, equipment and technical support needed to carry out their tasks. This has to be done irrespective of their political affiliation; moreover, elected local politicians should have access to training programmes on their role, status, duties and limitations42.

 

  1. Elected representatives should not be prevented by the action of a third party from carrying out their functions. For instance, they should be protected by law against threats from social media or against infringements of their privacy. Another example could be the laws that favour the “judicialisation” of local politics, or where local elected representatives are de facto threatened with the prospect of being prosecuted even on trivial charges. In this connection, the fight against corruption should be balanced against the need to ensure that local politicians are not unduly threatened by the prospect of arbitrary prosecutions43.

 

  1. The status of the municipal councillors, determined according to the Bulgarian legislation, gives them the right to be elected in the standing and temporary commissions of the council, to propose the inclusion in the agenda of the municipal council meetings of issues within the competence of the council and to submit draft decisions, to participate in the discussion and resolution of all issues within the competence of the council, to address questions to the mayor. State bodies, economic and public organisations are obliged to provide assistance to municipal councillors, as well as to provide them with information and documents they need in connection with their activities as councillors, except when they compile classified information constituting a State or official secret.

 

  1. According to information provided by the Ministry of Regional Development and Public Works (MRDPW), the existing norms for the premature termination of a term of  office are applied precisely and there are no significant violations of the rights of local elected officials. The LSGLA exhaustively determines the cases in which a municipal council may be dismissed and new elections may be held (for instance, if it does not hold a meeting for three months: Article 27, paragraph 1). Likewise, the cases in which the powers of a municipal councillor and the mayor are terminated prematurely (respectively Article 30, paragraph 4 and Article 42, paragraph 1 of the LSGLA) are exhaustively determined. Temporary removal from office of a mayor is provided for as an option in the Criminal Procedure Code (Article 69) in the framework of pre-trial proceedings, when the person is charged with an intentional crime of a general nature, if there are grounds to believe that their official position will prevent the objective clarification of the circumstances of the case. A decision for the temporal removal can be taken only by the court at the request of a prosecutor.

 

  1. It is worth mentioning that elected posts in Bulgarian local government still attract a remarkable number of candidatures. During the last elections, according to the CEC, a total of 66 parties and coalitions were registered to run in the local elections. Some 29 477 candidates for municipal councillors, 1 253 candidates for mayors of municipalities, 463 candidates for district mayors in 35 districts in the cities with district division Sofia, Plovdiv and Varna and 5 040 candidates for mayors of 1 966 mayoralties with populations over 350 were registered at the municipal election commissions.

 

  1. Compared to the local elections held in 2015, however, there is a certain decrease in the number of registered candidates: there were 35 772 candidatures for municipal councillors; 1 600 for mayors of municipalities and 635 for district mayors in the cities with district division. The registered candidates for mayors of 3 190 mayoralties with a population at that time over 100 were 10 077 persons.

 

  1. The results of the 2019 elections show that 5 134 municipal councillors were elected; 265 mayors of municipalities, of which 160 (60.38%) were elected in the first round and 105 (39.62%) in the second round; 35 mayors of districts, of which four (11.43%) were elected in the first round and 31 (88.57%) in the second round; 1 966 mayors of mayoralties, of which 1 525 (77.57%) were elected in the first round and 441 (22.43%) in the second round. The average turnout for the country in these elections was 49.76% in the first round and 42.10% in the second round.

42 A contemporary commentary by the Congress on the explanatory report to the European Charter of Local Self-Government, adopted by the Statutory Forum on 7 December 2020, https://rm.coe.int/contemporary-commentary-by-the-congress-on-the-explanatory-report-to-t/1680a06149.

43 Ibid.

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 7.2

  1. This paragraph again refers to the conditions of office of local elected representatives and focuses on the financial aspect of their work. The aim of the paragraph is to ensure that local elected representatives receive “appropriate financial compensation” and to avoid the conditions of office preventing, limiting, or even excluding potential local candidates from standing for office because of financial considerations44. 

 

  1. Concerning elective office adistinction can be drawn between three degrees of commitment:

-  elective duties considered as a full-time responsibility (engagement in another occupational activity at the same time is barely possible);

-  duties considered as a part-time responsibility (40%, half time, etc.);

-  political duties which constitute an ancillary activity (not generally affecting the main occupational activity). The elected representative can keep a full-time job.

 

  1. The distinction between these three categories does not reflect the practice in all countries. Some consider that any elected office, even if it involves only a few hours’ work a month, is a part-time job. In many countries full-time engagement is often implied only for members of parliaments since engagements are usually not so demanding for local councillors. While a mayor (and in some cases one or several deputy mayors) can possibly be considered as a full-time responsibility, a substantial proportion of the local elected councillors hold part-time responsibilities, or their political duties constitute an ancillary activity.

 

  1. In Bulgaria, despite numerous legal changes in the last 10 years, the issue of renumeration for municipal councillors is relatively stable in the LSGLA Act, as the country has lifted reservations under Article 7.2 of the Charter. Remuneration of municipal councillors is determined as a percentage of the remuneration of the chairman of the municipal council or of the average remuneration of the municipal administration for the municipalities of different scales. The remuneration of the chairman is determined by the municipal council as an amount of up to 90% of that of the mayor of the municipality.

 

  1. Moreover, according to Article 34 of the Local Government and Local Administration (LGLA) Act, the municipal councillor shall use unpaid official leave for the time required for fulfillment of his or her obligations. Travel and other expenses used by the municipal councillor in connection with his or her work in the council, shall be taken from the municipal budget.

44 A contemporary commentary by the Congress on the explanatory report to the European Charter of Local Self-Government, adopted by the Statutory Forum on 7 December 2020, https://rm.coe.int/contemporary-commentary-by-the-congress-on-the-explanatory-report-to-t/1680a06149.

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.

Article 7.3

 

  1. Restrictions on holding elected office should be as limited as possible and set out in national laws, which means they apply to all levels of government. The main restrictions on holding office should be related to potential conflicts of interest or involve a commitment that prevents the local representative from discharging his or her duties for the local authority in a professional way45.

 

  1. Over the past 10 years, several changes have been made to the legal framework regulating the election and activities of local authorities. The conditions for the election of local authorities were regulated in the Electoral Code adopted in 2014, regulating the conduct of all types of elections in the country, including those for members of European Parliament. It introduced a new requirement for candidates for municipal councillors and mayors: to have lived in the respective settlement at least in the last six months, which also applies to citizens of EU member States, when applying for positions as municipal councillors.

 

  1. A significant change is the adoption of the new Counter-Corruption and Unlawfully Acquired Assets Forfeiture Act (CCUAAFA, 2018). It regulates the procedures for prevention and establishment of corruption, as well as conditions for incompatibility of taking and holding posts in both elected offices and senior positions in municipal administrations. At the same time, through this law, changes were made in the LSGLA, which introduced new conditions for incompatibility of municipal councillors. Some of these changes led to limitations for some active and prominent citizens in local communities to run in the 2019 elections.

 

  1. More precisely, according to Article 34(5) of the LSGLA, the municipal councillor cannot: 1. be a member of a managing, supervisory or a control body, board of directors, a controller, manager, procurator, commercial proxy, syndic or a liquidator of trade companies with municipal participation or a director of a municipal enterprise; 2. occupy a position of municipal councillor or similar position in another Member State of the European Union; 3.carry out activities, which lead to violation of a prohibition or restriction under Chapter Eight, Section II of the CCUAAFA.

 

  1. According to paragraph 6 of the same article of the LSGLA, within one month from taking the oath, a person, who, upon their election as a municipal councillor, holds a position under paragraph 5, items 1 and 2, shall apply for their dismissal from the position, and shall notify in writing the chairman of the municipal council and the municipal election committee. When a municipal councillor has a private interest, they shall be obliged to take action to prevent a conflict of interest under Chapter Eight, Section III of the CCUAAFA.

45 Ibid.

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 8.1

  1. In its Recommendation to member States on the supervision of local authorities’ activities CM/Rec(2019)3E46, the Committee of Ministers set out three different types of supervision: administrative, financial, and democratic, only the first of which falls within the ambit of Article 8 of the Charter. It does not apply to any form of supervision or control exercised by the Ombudsman, by criminal prosecutors or by the legislature. The existence of administrative supervision is justified by the need to comply “with the principles of the rule of law and with the defined roles of various public authorities, as well as the protection of citizens’ rights and the effective management of public property”.

 

  1. The Explanatory Report to the Charter limits the subject matter of Article 8 to the supervision that is carried out “by other levels of government”, that is to say, by central authorities or bodies (line ministries, Ministry of the Interior, and so forth) or regional authorities. As for the matters that can be “supervised”, the Charter refers to the broad concept of activities, which covers all types of plans, projects, rules, decisions or strategies approved at local level.

 

  1. The Charter establishes an important principle here in the area of intergovernmental supervision of local authorities: any form of such supervision must be provided for by the constitution or by statute, that is to say, the Charter introduces the legality principle into the supervision of a local authority. Supervision cannot be improvised or ordered by the higher level without a clear legal basis. At the same time, supervisory authorities must strictly comply with the procedures established by law for the exercise of such supervision (time, manner, competence, and so on)47.

 

  1. According to Article 144 of the Constitution of the Republic of Bulgaria (CRB) the central bodies of State and their local representatives shall exercise control over the legality of the acts of the bodies of local government only when authorised to do so by law. Article 145 of the CRB provides that every municipal council shall be free to challenge before a court any act which encroaches on its rights.

 

  1. The nature and scope of the administrative supervision of local authorities are specified in detail in the Local Government and Local Administration Act (LGLAAct. Article 45, paragraphs 1-12 of the LGLA Act provides the following mechanism for administrative supervision over the acts of local authorities.

•            The acts of the mayor of a municipality can be appealed under administrative procedure before the regional governor, unless otherwise provided in a law.

•            The municipal council can revoke administrative acts, issued by the mayor of a municipality, which disagree with acts, adopted by the council, within 14 days after their acceptance. Within the same term the council can dispute the unlawful administrative acts, issued by the mayor of a municipality, before the respective administrative court.The acts of the municipal council can be appealed before the respective administrative court.

•            The regional governor shall exercise control for the lawfulness of the acts and actions of the local governments and the local administration (Art. 31, para. 1, item 5 of the Administration Act), unless otherwise provided in a law. He or she can bring the unlawful acts back for new consideration by the municipal council or to dispute them before the respective administrative court. The appeal shall suspend the application of individual and general administrative acts and the application of sub-legislative legal acts, unless otherwise resolved by the court.

•            To all matters concerning issuing, appealing and implementation of acts of municipal councils and mayors, not covered herein, the provisions of administrative procedure, set in a law, shall be applied.

 

  1. Another important piece of legislation is the APC. The rules for the administrative procedure, established by law, shall be applied for the unsettled issues on the issuance, contestation and implementation of the acts of the municipal councils and the mayors. The APC provides for the possibility for any citizen of the municipality, including a mayor or municipal councillor, to contest an administrative act (according to Article 15, paragraph 1, of the APC, “parties in the administrative proceedings may be the administrative body, the prosecutor and any citizen or organisation, whose rights, freedoms or legitimate interests are or shall have been affected by the administrative act or by the court decision, or for whom they shall have raised rights or obligations”).

46 Recommendation CM/Rec(2019)3 of the Committee of Ministers to member States on supervision of local authorities’ activities (adopted by the Committee of Ministers on 4 April 2019 at the 1 343rd meeting of the Ministers’ Deputies). This recommendation includes an appendix with guidelines on the improvement of the systems of supervision of local authorities’ activities.

47 A contemporary commentary by the Congress on the explanatory report to the European Charter of Local Self-Government, adopted by the Statutory Forum on 7 December 2020, https://rm.coe.int/contemporary-commentary-by-the-congress-on-the-explanatory-report-to-t/1680a06149.

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.

Article 8.2

  1. The general rule of the Charter is that supervision will (“normally”) aim only at ensuring compliance with the law and with constitutional principles. It thus proclaims a general preference for checks on legality over checks on expediency, the former being the only checks that in general comply with the Charter. Checks on expediency are not prohibited by the Charter but are severely restricted, for they are held to be in contradiction with the very meaning of local self-government. Administrative supervision based on expediency should be limited to the tasks that higher-level authorities (the supervisory bodies) have delegated to local authorities. Therefore, the type of local power is highly relevant for determining the nature and scope of the administrative supervision that may be exercised by higher administrative bodies in conformity with the Charter48.

 

  1. According to the Administration Act and the LSGLA, the regional governor exercises control only on legality, over the acts of the municipal council and the mayor. He or she may return an act of the municipal council deemed illegal for new discussion, which must be considered within 14 days of its receipt. It may be re-adopted by a majority provided by law, but not less than half of the total number of councillors. The regional governor may subsequently (or directly, without returning it) challenge the council’s act in court. The challenge suspends the implementation of the act, unless the court decides otherwise.

 

  1. According to information provided by the MRDPW, the acts of the mayor of the municipality are disputed before the regional governor in accordance with the general administrative order. Illegal acts of the mayor may be revoked by the regional governor within 14 days of their receipt or referral. Accordingly, the mayor of the municipality may appeal to the administrative court against the repeal of their act by the regional governor. The financial control is carried out by the National Audit Office and the State Financial Inspection Agency. Municipalities have established systems for the first level of financial control.

48 Ibid.

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 8.3

  1. This provision enshrines the principle of proportionality in the administrative supervision of local authorities’ activities by higher-tier bodies. This principle stands here for the premise that the intervention of the supervisory authority should be proportionate to the importance of the interests it intends to protect. In this connection, in 2019, the Committee of Ministers recommended that the governments of member States adopt appropriate measures to “put in place an appropriate legal, institutional and regulatory framework for supervision of local authorities’ activities which is proportionate, in law and in practice, to the interests which it is intended to protect”49.

 

  1. Apparently, this principle is applicable to any form of intergovernmental supervision, with either a priori or a posteriori checks on legality or expediency. It is a generally worded principle that can only be tested in the precise context of an actual dispute, but it could be explained in simple terms by pointing out that in ensuring compliance with the law, the regional/State body should not “use a sledgehammer to crack a nut”.

 

  1. Consequently, under the principle of proportionality, the regional or State body should intervene only to the extent necessary, considering the relevance of the public interest at stake, or the seriousness of the legal violation allegedly committed by the local authority. A system under which local authorities must obtain prior approval from regional or State bodies for minor or even trivial decisions would not comply with the principle of proportionality.

 

  1. According to the National Delegation of Bulgaria to the Congress, there is no remarkable change in pertinent legislation, but the cases of unjustified, politicised interference in the mayor's powers are significantly reduced. Pursuant to the Administration Act, the regional governor ensures the observance of the legality on the territory of the region and carries out administrative control over the implementation of the administrative acts. In this capacity, she/he may revoke an administrative act of the mayor, but only on the grounds of illegality. Accordingly, the mayor of the municipality may appeal the repeal before the regional administrative court.

 

  1. The National Delegation of Bulgaria to the Congresshas stressed that the existing norms are applied precisely and there are no significant violations of the rights of local elected officials. The LSGLA exhaustively determines the cases in which a municipal council may be dismissed, and new elections may be held. Likewise, the cases in which the powers of a municipal councillor and the mayor are terminated prematurely are exhaustively determined and have not been changed in the period since the last monitoring. Temporary removal from office of a mayor is provided for as an option in the Criminal Procedure Code (Article 69) in the framework of pre-trial proceedings, when the person is charged with an intentional crime of a general nature, if there are grounds to believe that her/his official position will prevent the objective clarification of the circumstances of the case. A decision for the temporal removal can be taken only by the court at the request of a prosecutor.

49 Recommendation CM/Rec(2019)3 of the Committee of Ministers to member States on supervision of local authorities’ activities (adopted by the Committee of Ministers on 4 April 2019 at the 1 343rd meeting of the Ministers’ Deputies).

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.

Article 9.2

  1. This paragraph enshrines the so-called “principle of commensurability” of local authorities’ financial resources. This means that the resources available to local authorities should be sufficient and commensurate with their functions and tasks. It does not mean that all these tasks should be financed with their own revenues. This paragraph states that the revenues and mandatory tasks of local authorities should be balanced to ensure that the financial resources available to those authorities are satisfactory in comparison to the tasks assigned to them by law51. 

 

  1. The new PFA retained the provision from the repealed Municipal Budgets Act, according to which the State compensates for the reduction in revenues from local taxes and fees when it arises from the conduct of State policy. According to art.19 of PFA no statutory acts that entail an expenditure increase, a revenue reduction and/or expenditure/payment pledges after the adoption of the state budget act for the relevant year shall be stipulated to enter into force not before the date of their amendment or entry into force for the following budget year. Article 53, par. 1 of PFA states that delegated activities are financed with general subsidy for those activities. Art. 51, par. 2 and Art. 55a of PFA stipulates the changes in the amount of the fiscal relations between municipal budgets and the central budget, where this derives from law, restructuring of activities delegated by the State, or changes in economic and/or value indicators for financing the activities concerned under municipal budgets, or when implementing policy areas, projects, programmes, and procurement activities. The regulation determining the obligation of the State to provide full financial compensation in the following cases was not transferred to the new act:
  2. updating the salaries of the employees engaged in the State-delegated activities, financed through the municipalities;
  3. other cases established by law.

 

  1. However, there is no guarantee in practice that the powers delegated by the State, which are not subject to funding through a subsidy, will be ensured additionally. For this reason, the practice of transferring unsecured powers to local authorities from the central government or the adoption of acts regulating the procedure for spending own funds of municipalities continues with different dynamics in different years of the past period.

 

  1. Preparation of a mandatory impact assessment is envisaged in the Normative Acts Act, which examines the impact of the respective draft normative act on certain areas of public life. In the methodology for preparing this assessment, municipalities and local budgets are not explicitly mentioned as stakeholders.

 

  1. The rapporteurs conclude that commensurate financial resources are not secured, while in practice the municipalities carry a heavy burden of tasks without sufficient resources. 

51 Ibid.

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 9.8

  1. Access to national capital markets is important for local authorities to finance investment projects necessary for the further development of the local area because in many cases the amount of their own “ordinary” resources is not enough. The law may establish requirements, procedures, criteria, limits, or ceilings concerning local authorities’ financial activities but in any event those standards should not deter them from borrowing on the national capital market or make it extremely difficult in practice.

 

  1. According to Article 21, paragraph 10 of the LSGLA, the municipal council “shall pass resolutions on contracting of bank loans, on extending of interest-free loans, as well as resolutions on incurring of municipal debt through conclusion of loan contracts or issuance of municipal securities and on issuing of municipal guarantees under terms and according to a procedure established by statute”. Access to the national capital market is free and the terms and procedure for assuming municipal debt are set out in a special law – the Municipal Debt Act. Article 35 of the PFA stipulates that the Minister of Finance determines the procedure, manner and time limits for the provision of information by municipalities about their debt position and debt movement, the assets owned by them in the form of debt instruments, their intentions to assume debt, as well as the intention of municipalities to issue guarantees.

 

  1. These provisions are in accordance with the Charter which refers to “access” to the national capital market within the limits of the law. 
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.

 Article 9.7

  1. This paragraph is concerned with grants to local authorities from higher levels of government. Grants are a key tool for intergovernmental financial assistance. Local authorities receive centrally allocated grants for specific projects as well as general grants (transfers). The allocation of specific grants should be based on objective, transparent criteria justified by spending needs, and criteria for the allocation of general grants should be specified by law to enable local authorities to know in advance how much they are to receive in transfers56.

 

  1. Article 52 of the PFA states the following.

 

(1) The fiscal relations between the municipal budget and the State budget shall encompass:

1. transfers for:

(a) global subsidy for financing activities delegated by the State;

(b) local activities: a total balancing subsidy and for winter maintenance and snow removal of municipal roads;

(c) targeted capital expenditure subsidy;

(d) other target costs, including target costs for local activities;

(e) financial compensation by the State;

2. temporary interest-free loans.

 

(2) The municipal budget shall also encompass fiscal relations with other budgets and accounts for European Union funds.

 

  1. Moreover, Article 53 of the PFA states the following.

 

(1) The State shall fund public activities delegated to municipalities with a total subsidy for these activities at the expense of the central budget, as well as at the expense of the budget authorisers, by delegation under the State budget, who implement the relevant policy areas.

 

  1. According to data provided by the NAMRB, municipal revenue in Bulgaria (7 billion euros in 2019) comprises the following:

 

  •  own revenues – a share of 34%:

-local taxes 43%,

-local fees 35%,

-revenues from property and other revenues 22%;

 

  •  State transfers – a share of 64%:

-State-delegated activities 75%,

-GES 8%,

-capital expenses 4%,

-targeted transfers and other compensations 11%,

-other transfers 4%.

 

  1. As previously mentioned, municipalities barely have any space of discretion on spending priorities when the relevant activities are financed through State transfers. The share of State transfers is close to 70% of municipal revenue and this system of municipal finance removes, in most cases, the freedom of local authorities to exercise policy discretion. 

56 Ibid.

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.

Article 9.6

  1. This paragraph refers to a general principle of consultation, as enshrined at Article 4.6. In this case, consultation is required on the way in which redistributed resources are to be allocated to local authorities by other levels of government. No distinction is made between equalisation funds or other grants, or between general and earmarked grants. The legal form of the allocation decision is not specified. It may be an act of parliament, a decree, a ministerial order or a decision by another body belonging to a higher level of government (that is a regional or provincial assembly or executive committee).

 

  1. The usual bodies covered by this consultation requirement are the State or regional authorities in countries where local authority finances partly or totally depend on the regions. The method of allocating redistributed resources includes temporal aspects (for instance, the timing of financial transfers) and substantive aspects such as the different types and degrees of importance of criteria for such allocations. Therefore, this consultation is not merely a compulsory procedure that has to take place in a timely manner before a final decision is made. It must also cover the manner in which a decision is made and the criteria for doing so, not only the decision itself55.

 

  1. On issues that directly concern the municipalities, the following statutory consultation mechanisms apply.
    •  The PFA stipulates the mandatory participation of the NAMRB in consultations on the budgetary procedure. The association has the right to make proposals for the total amount of the main budgetary relations of the municipal budgets with the central budget and other proposals on the draft State budget for the respective year in its part for the municipalities and submit them to the Ministry of Finance. Prior to the submission of the State Budget Act for the next year to the parliament, the NAMRB and the Ministry of Finance sign a protocol for the consultations held, including the proposals made and reflected in the budget. This protocol is part of the package of documents to be submitted to the National Assembly, together with the draft act on the State budget for the following year.
    •  According to Article 54 of the PFA, the total balancing subsidy for local activities shall be intended to ensure a minimum level of local services in municipalities. The mechanism for distributing the total balancing subsidy per municipality shall be set out in the State Budget Act for the relevant year and the design of this mechanism shall be agreed upon by the NAMRB.
    •  According to Article 55 of the PFA, the amount of the targeted capital expenditure subsidy and the mechanism for distributing it per municipality is set out in the State Budget Act for the relevant year. The design of the relevant mechanism “shall be agreed upon by the NAMRB”.
    •  According to Article 71 of the PFA, within the budget procedure, the Council of Ministers shall, upon the proposal of the Minister for Finance, adopt standards for activities delegated by the State involving in-kind and value indicators. These standards shall be used to determine the total amount of resources for financing activities delegated by the State and for their allocation per budget authorised by delegation. The standards for activities delegated by the State shall be developed jointly by the minister concerned, the NAMRB and the Minister for Finance.

 

  1. The rapporteurs got the impression that mechanisms for timely and substantial consultation of financial matters under the participation of local government associations are available in Bulgaria. 

55 A contemporary commentary by the Congress on the explanatory report to the European Charter of Local Self-Government, adopted by the Statutory Forum  on 7 December 2020, https://rm.coe.int/contemporary-commentary-by-the-congress-on-the-explanatory-report-to-t/1680a06149.

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 9.5

  1. This provision addresses the question of the financial situation of municipalities that are financially disadvantaged due to their location in economically or geographically weak areas (transition, mountain or island regions), or simply because they are too small to obtain the amount of resources needed to perform their tasks.

 

  1. Article 9.5 introduces a rule for the protection of financially weaker local authorities. The Charter refers to financial equalisation as the conventional method of assistance for weaker local authorities, as this is a well-known redistribution mechanism in the context of fiscal federalism. According to the OECD, “fiscal equalisation is a transfer of fiscal resources across jurisdictions with the aim of offsetting differences in revenue raising capacity or public service cost.”53

 

  1. In Bulgaria, the financial equalisation of municipalities is implemented through a GES mechanism. The GES is intended to ensure a minimum level of local services provision in the municipalities, and its total amount may not be less than 10% of the statement of own revenues of all municipalities in the last annual report. This subsidy should reduce financial inequalities between municipalities and for this reason according to the legislation the criteria for its distribution by municipalities are determined jointly by the Minister for Finance and the NAMRB. These criteria should consider differences caused by objective factors beyond the control of local authorities, to maintain the incentive of municipalities to increase collection and cost-effectiveness.

 

  1. The GES applied from 2008 to 2018, including its formula for allocation, was complex and further aggravated by the application of various correction coefficients and components that were not updated in a timely manner. The mechanism equalised in terms of expenditure and revenue capacity with full or limited access of different groups of municipalities. For this reason, there was a tendency to increase the number of municipalities without or with a minimal increase in the subsidy, mainly small and poor municipalities, and the growth was only in 16 to 20 municipalities in a good financial condition. During the consultation procedure, the Ministry of Finance pointed out that the 2019 budget has changed the mechanism for distribution of the general equalization subsidy, placing the focus on its main purpose – provision of a comparable level of fiscal opportunities for municipalities and reduction of the imbalances among them.

 

  1. As of 2019, the GES allocation mechanism has changed significantly. A mandatory condition for access to it has been introduced, namely municipalities whose permanent tax revenues per capita are lower than 120% of the level for the country per capita have the right to participate in the distribution of this subsidy. For this reason, 18 municipalities no longer receive such a subsidy.

 

  1. The new equalisation mechanism consists of five components.
    •  The first and second component equalise on the basis of tax revenue (73.1% share of the allocated amount) and expenditure capacity (20.2% share).
    •  The third component is for municipalities with very low revenue capacity (3.8% share of the amount).
    •  The fourth component does not allow a decrease compared to the previous year (2.7% of the total amount)54.
    •  The fifth component is to stimulate the municipalities in terms of tax effort above the national average (0.2% of the total amount).

Due to the impact of the crisis caused by Covid-19, additional transfers were introduced in 2021 for other targeted expenditures for some municipalities without access to the GES.

 

  1. A consolidated and independent evaluation of this new equalisation system would be necessary in order to assess the efficiency of equalisation procedures and the fulfilment of relevant Charter requirements. 

53  OECD Network on Fiscal Relations Across Levels of Government: Fiscal Equalisation in OECD countries, 2007.

54 Over the years, the amount of GES also included compensations for local taxes revoked (seized) by the State and for this reason there is a large group of municipalities that should be compensated.

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 9.3

  1. According to Article 141 of the Bulgarian Constitution, the municipal council shall determine the size of local taxes under conditions, by a procedure and within the frames, established by law (paragraph 3).
    The municipal council shall determine the size of local charges by a procedure, established by law (paragraph 4). Regarding local taxes, the legislation gives the municipal councils the power to determine their amounts, and the mayor and the administration the power to administer them. Municipal councils do not have the power to determine the type, basis, limits of rates and tax relief. Concerning the tourist tax, by law the municipalities are obliged to spend the revenues from this tax on certain activities and types of expenses.

 

  1. In Decision No 4/2019 on Constitutional case No. 15/2018 the Constitutional Court notes that, as a rule, taxes are determined unilaterally by the State and only by law. The parliament cannot delegate this power to the executive branch. However, there is an exception to this rule in Article 141, paragraph 3, of the constitution, which states that municipal councils shall determine the amount of the local taxes under conditions, following a procedure and in the framework established by a law. Such an approach introduces a nuance of financial decentralisation in the legal framework of municipal public finances regarding the amount of local taxes but does not change the constitutional requirement for establishment of taxes by law.

 

  1. In 2007, municipal councils were given the power to determine the size of local taxes and fees within a given range. This step was not sufficient and did not lead to a substantial change in the structure of municipal budgets, although several consequent measures have been taken to provide for the financial stability of municipalities. According to the Institute for Market Economics in Bulgaria, developments over the last decade – steps towards more tax powers for municipalities, an enhanced role for EU funds, State regional development programmеs and the municipal financial rehabilitation process, are key to understanding the attitude towards the financial situation of municipalities and the challenges that financial decentralisation is facing. Nevertheless, the results achieved have a limited effect both on the financial independence and sustainability of the municipal budget and on the possibilities for influence of the municipal budget on the local and regional development outside the State transfers and the European funds. The problem is persistent and is a source of policy inefficiency, while the implementation of an effectivedecentralisation model may improve resource allocation, foster market development, and, in turn, promote economic growth.

 

  1. The average share of local taxes in the total own revenues of municipalities for the past 10-year period is 15%, with a clear trend of increasing tax revenues in each subsequent year with growth rates between 5 and 7%. There were considerable changes in the tax powers of the local government.
  2.  The powers of the municipal revenue units have been expanded.
  3.  Gradual changes in the system of local taxes were introduced:

-    a new local tax on taxi transport for passengers was introduced;

-    the tourist fee was transformed into a local tax;

-    at the end of 2018, the formula for determining the vehicle tax was substantially changed,introducing an environmental component;

-    in 2011, the last partial increase of the real estate tax assessments was made, according to the growth of the market prices reported by national statistics; the legal obligation for updating the tax assessments according to NSI market price data was dropped.

 

  1. Central government officials have stressed that in recent years, thanks to macroeconomic situation in the country, more funds are allocated to municipalities through budget transfers from the State budget, and the State Budget Act for 2021 provides significant additional funds, including to overcome the effects of the COVID-19 pandemic locally. According to local self-government representatives, met by the rapporteurs, however, the Bulgarian local authorities do not have sufficient in quantity, sustainable and with potential for development own sources of income. In this regard, during the consultation procedure, the Ministry of Finance argued that  local authorities do not take advantage of the legal opportunity to determine higher rates of local taxes than the limits set out in the Local Taxes and Fees Act pointing that  73% of municipalities have adopted a rate below the average limits set by the Local Taxes and Fees Act as regards the real estate tax for 2020, and 265 municipalities have adopted a rate below the average limits allowed by law as regards the vehicle tax for the most popular cars for 2020 with almost half of them having adopted the minimum statutory rate. The rapporteurs are of the opinion that the difference of views on this point highlights the need to restructure the tax system in favour of local taxes related to economic activity.

 

  1. The conclusion is that the part of municipal resources deriving from local taxes and charges remains extremely low, while the limits of tax rates are defined by central legislation. 
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.

Article 9.1

  1. This paragraph establishes two basic principles in the area of finance: first, local authorities should have their own financial resources; second, they should be free to decide how to spend those resources.

 

  1. As far as the first dimension is concerned, local authorities should be “entitled” to their own resources. This is not just an expectation but a genuine “right” that is not absolute but has to be exercised “within national economic policy”. The wording “adequate financial resources” incorporates the requirement to ensure proportionality between mandatory functions of local authorities and the funding available.

 

  1. The second dimension is the freedom of local authorities to dispose of (at least) their “own resources” within the framework of their powers. Any limits and restrictions imposed by higher authorities on local authorities should be specified and justified and aim at ensuring macroeconomic stability and sound financial management50.

 

  1. Regarding the financial base of local self-government, the Constitution of Bulgaria makes the following statements:

 

- Article 140. A municipality shall be entitled to own municipal property, which it shall use in the interests of the territorial community.

- Art. 141icle (1) A municipality shall have its own budget.

(2) A municipality’s permanent sources of revenue shall be established by law.

(3) The municipal council shall determine the size of local taxes under conditions, by a procedure and within the frames, established by law.

(4) The municipal council shall determine the size of local charges by a procedure, established by law.

(5) The State shall ensure the normal work of the municipalities through budget appropriations and other means.

 

  1. Paragraph 5 of Article 141 of the constitution introduces the obligation of the State to “ensure the normal work of the municipalities” without defining what is understood as “normal work” and whether it only includes the very basic municipal functions. In fact, local budgets are formed primarily from State transfers, whose share increased from 60% in 2010 to 64% in 2019. The lack of full powers of local authorities over the funds transferred from the budget for the State-delegated activities remains a tendency. Municipalities have full powers only over the general equalisation subsidy and partially over the targeted subsidy for capital expenditures. At the same time, the system for financing most of the State-delegated responsibilities through uniform expenditure standards currently applied, limits the powers of municipal councils to redistribute these resources according to local needs and priorities.

 

  1. Since 2014, budgetary and fiscal rules in the Republic of Bulgaria have been consolidated in the PFA, which permanently regulates the procedure for preparing and adopting municipal budgets. The participation of the NAMRB as a representative of the municipalities in the budget procedure and in the negotiations on the State Budget Act for the upcoming year is also regulated in Article 77 of the PFA.

 

  1. The deadlines for the preparation and submission of the draft State Budget Act to the National Assembly are clearly defined (to be submitted by 30 October). The amounts of all subsidies for municipalities and the applicable specific rules and conditions valid for the respective year are also determined by the State Budget Act of the Republic of Bulgaria. During the consultation procedure, the Ministry of Finance informed the Congress delegation that the State Budget of the Republic of Bulgaria Act provides information for the amount of each subsidy for a given municipality and for the relative part of general subsidy for each group of delegated activities (function), ex. art. 50 and 51 of 2021 SBRBA and that it issues guidelines for drawing up and execution of the municipal budgets and detailed information for the in-kind and value indicators used in the calculation of the subsidies for each municipality. The municipalities can independently adopt their budgets, while the PFA sets only the deadline for this (the mayor submits the draft budget to the municipal council within 20 working days of the promulgation of the State Budget Act for the respective year, and the municipal council adopts it within 15 working days of its submission). However, the rapporteurs heard from the representatives of local authorities they met remotely that the municipalities lack clarity about the specific figures set in the State budget and cannot plan their expenditures in the relevant areas precisely enough as municipal budgets are mainly formed by State subsidies (64% on average).

 

  1. The challenges related to the insufficient financial autonomy of municipalities influence not only their economic performance and competitiveness, but also a number of subsectors, notably education, human resources development and the provision of quality healthcare and social services. Many other political implications are related to the taxation policy, effective functioning of institutions, administrative capacity, and good governance at local level.

 

  1. With the adoption of the PFA, mandatory fiscal rules and indicators were introduced that the mayor and the municipal council must comply with when elaborating, adopting, and implementing the municipal budget. At the planning stage, the average growth rate of expenditures for local activities in the municipal budget for the projected medium-term period is monitored not to exceed the average growth rate of reported expenditures for local activities for the last four years.

 

  1. With the decision of the municipal council for adoption of the budget the following fiscal restrictions are also observed and approved:

 

  • a maximum level for new liabilities for expenditures that can be accumulated during the year under the municipal budget - liabilities for expenditures at the end of the year may not exceed 15%of the average annual amount of reported expenditures for the last four years;
  • a maximum amount of commitments for expenditures that can be made during the year within the municipal budget – the commitments for expenditures available at the end of the year may not exceed 50% of the average annual amount of reported expenditures for the last four years (the restriction does not apply to commitments for expenditure financed by grants and donations); According to the Ministry of Finance, from 2019, the restriction does not apply to the contracts concluded in 2019 for services provided by the municipality under Art. 62 of the Local Taxes and Fees Act and at the expense of the transfers from the central budget under Art. 52, para. 1, item 1, letter “d” of the PFА;
  • a limit for assuming new municipal debt and the maximum amount of the municipal debt and municipal guarantees as at the end of the budget year - the maximum annual amount of payments on municipal debt should not exceed 15% of the average annual own revenue and the general equalization subsidy for the last three years and the nominal value of the issued municipal guarantees may not exceed 5% of the total amount of revenues and the general equalization subsidy in the latest annual report on the municipal budget implementation.

 

In the implementation of the budget, the municipalities are obliged not to allow:

  • incurring expenditures, accumulating new commitments for expenditures and/or undertaking commitments for expenditures, as well as starting programmes or projects that are not foreseen in the annual budget of the municipality;
  • undertaking commitments for expenditures, if the municipality has not adjusted its indicators for undertaken commitments and liabilities for expenditures in accordance with the restrictions of the limitations of Article 94, paragraph 3, sub-paragraphs 1 and 2 of the PFA;
  • accumulating new financial liabilities for capital expenditures and/or undertaking commitments for capital expenditures at the expense of revenues, if the revenues planned under the municipal budget are not fulfilled;
  • increasing the overdue liabilities already available under the municipal budget at the end of the year compared to the reported overdue liabilities at the end of the previous year if the overdue liabilities available at the end of the previous year exceed 5% of the reported expenditures.

 

  1. Bulgarian municipalities are extremely dependent on financial transfers from the State budget that also restrict their space of discretion. In addition, restrictive rules constrain the budgeting autonomy of local self‑government. 

50 A contemporary commentary by the Congress on the explanatory report to the European Charter of Local Self-Government, adopted by the Statutory Forum on 7 December 2020, https://rm.coe.int/contemporary-commentary-by-the-congress-on-the-explanatory-report-to-t/1680a06149.

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 9.4

  1. This paragraph refers to two important features of the financial systems on which local authorities’ resources are based: they must be diversified, and they must be “buoyant”. At first, the diversification of income sources is crucial if local authorities are to maintain their autonomy during fluctuation in economic cycles. Consequently, local authorities’ finances should not be based solely on taxes or transfers and should be bolstered by all possible sources of local income: transfers, local taxes, charges, fees, profits under private law, interest on bank accounts and deposits, penalties and fines, sales of property or goods and services offered to the private sector, and so forth.

 

  1. The second aspect mentioned in this paragraph is that the systems of local finance should be “buoyant”. This means that they should allow local finances to rise to meet the costs of the delivery of services, that is to say local finances should be able to adapt to new circumstances, needs and macroeconomic scenarios and be sufficient to cover service delivery. Therefore, transfers from regional or national bodies should be updated and possibly increased over the years to take account of price increases, or factors involved in the delivery of services. And local authorities should also be allowed to increase their tax rates where such a decision is necessary owing to inflation. Accordingly, any delegation of tasks that does not indicate the source of funding to meet the cost of the new responsibility is not compatible with the principle of buoyancy52.

 

  1. According to the NAMRB, periodic changes are made in the formulas and mechanisms for distribution of State transfers. Since 2016, the investment transfers from the State to the municipalities have been consolidated in one general target subsidy for capital expenditures. The target transfer for construction and general renovation of municipal roads existing until 2015 is included in the capital subsidy. Its distribution to the municipalities is determined by a formula, according to the annual State Budget Act. Finally, it is not the enlargement of the tax base, but measures for enhancing the collection and broader powers of local revenue authorities which remain the main driver behind the increase in own revenue.

 

  1. In view of this situation the NAMRB has proposed the following measures:
    •  reorganisation/restructuring of the tax system to strengthen the role and diversify local taxes, which would also mean transforming some of the national taxes (PIT, VAT, fuel excise rates, and so forth) into local taxes, more related to the dynamics of economic development;
    •  updating the real estate tax assessments in view of the real market conditions, and creating a mechanism for periodic automatic updates;
    •  a fair approach to real estate ownership taxation (including agricultural land and forests);
    •  creation of legal guarantees against the transfer of financially unsecured responsibilities to the municipalities;
    •  a legally established mechanism for determining the total amount of the capital subsidy, and the creation of a methodology for assessment of municipal road maintenance needs;
    •  optimisation of the criteria for access of municipalities to the general equalisation subsidy (GES).

 

  1. According to the analysis of local government finance already made in this report, local government finance seems to reach an acceptable level of diversification, but the system of local finance cannot be characterised as buoyant, especially concerning the revenue that should cover the costs of additional tasks that were delegated to local authorities (see comments in paragraph 2). 

52 A contemporary commentary by the Congress on the explanatory report to the European Charter of Local Self-Government, adopted by the Statutory Forum on 7 December 2020, https://rm.coe.int/contemporary-commentary-by-the-congress-on-the-explanatory-report-to-t/1680a06149.

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 10.1

  1. Under Article 10.1 of the Charter, local authorities have a general right to co-operate with one another to deliver local services or discharge their responsibilities. Inter-municipal co-operation (or co‑operation at other levels of local government) is a fundamental tool for local authorities in terms of delivering services, since many of them are too small or too weak (financially speaking) to deliver all the services they are supposed to or to carry out any meaningful local strategy or policy57.

 

  1. In 2017, a significant change was made in Chapter 8 of the LSGLA (Articles 59-61), setting the framework for inter-municipal co-operation.

·       The goals of the inter-municipal co-operation were defined: improving the quality of services provided; optimisation of service costs (economies of scale); optimisation of internal administrative processes and savings; implementation of projects at inter-municipal and regional level.

·       The form of co-operation was regulated: concluding an agreement. Through the agreement a joint legal entity for commercial or non-profit purposes can also be established.

·       The decision for co-operation is made by the municipal council with a two-thirds majority of the total number of councillors.

 

  1. The Social Services Act also defines forms of such co-operation in the provision of certain services of a residential type for users in the respective region. Moreover, the potential of inter-municipal co-operation is expected to expand with the active implementation of the amendments to the Regional Development Act and the implementation of the integrated concepts for territorial development.

 

  1. Mandatory inter-municipal co-operation is regulated by the specialised legislation in some sectoral policies, for example, the municipalities joined the water supply and sewerage associations at regional level (according to the Water Act), established regional associations for landfill management (according to the Waste Management Act). In a number of cases, municipalities associate for the implementation of projects with European funding, for example, for the construction of water supply and sewerage infrastructure on the so-called water cycles, as well as for the purchase of trolleybuses, electric buses and others.

57 Ibid.

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.

 Article 10.2

  1. In this paragraph the Charter sets out the right of local authorities to belong to: (a) a national association for the protection and promotion of their common interests; and (b) an international association of local authorities. At this point, the Charter is unusually categorical: that right “shall be recognised in each State”. This is the only provision in the Charter where this wording is used, which reinforces the directly enforceable nature of the paragraph.

 

  1. The National Association of Municipalities in the Republic of Bulgaria (NAMRB) was established on 11 December 1996 by one third of all Bulgarian municipalities. By the middle of 1997, the number of municipalities-members reached two thirds, which entitles the association to be a legitimate representative of the local government and to represent and defend its interests. Since 1999, 264 municipalities have been members of the NAMRB, and the newest Bulgarian municipality, Sarnitsa, became a member of the NAMRB in 2015. The association is a legal non-profit entity created under Article 9 of the Law on Local Government and Local Administration and under the Non-Profit Legal Entities Act. It operates on a voluntary principle and on principles of equality of its members.
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 10.3

  1. This paragraph reiterates the right of local authorities to co-operate, but it does so with a specific dimension: local authorities in one country are entitled to co-operate with local authorities in another country, so this paragraph sets out the right to engage in transnational, or transfrontier, co-operation, which is another form of inter-local co-operation58.

 

  1. Bulgarian municipalities co-operate with their partners from EU member States through the cross-border co-operation programmes Interreg VA, with municipalities from Romania and Greece. Under the cross-border co-operation programmes, funded by the European Instrument for Pre-Accession Assistance Interreg-IPA, Bulgarian municipalities are implementing joint projects with municipalities from Serbia, North Macedonia, and Turkey. Joint municipal projects are implemented with funding from other European programmes– Danube, Balkans-Mediterranean Sea, and others.

58 Ibid.

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 – Legal protection of local self-government

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.

 

  1. This article stresses the requirement that local authorities should have the right to invoke and to defend in the courts the principles of local self-government, especially in the context of lawsuits in which their rights and powers are challenged or curtailed, or when those rights are endangered by the higher (central or regional) levels of government. “Recourse to a judicial remedy” means access by a local authority to either a properly constituted court of law or an equivalent, independent, statutory body.

 

  1. According to Article 145 of the constitution, “a municipal council shall be free to challenge before a court any act which infringes its rights”. Since the Charter was ratified by law by the Bulgarian Parliament in 1995, it became part of the domestic legislation of the State. In this sense, any administrative act, as well as normative acts of a lower rank, can be challenged before an administrative court on the grounds of contradiction with the Charter. In addition, according to the Constitutional Court Act, it is in the competences of the Constitutional Court to rule on disputes over jurisdiction between local self-government bodies and central executive bodies. The Constitutional Court also rules on the conformity of laws with norms of international law and with international treaties to which Bulgaria is a party. It is worth mentioning that the question of the constitutionality of a law that violates the constitutional status of local self-government can be brought before ordinary judges (Supreme Court of Cassation or Supreme Administrative Court). If they consider the question important, they will suspend the procedure and apply to the Constitutional Court.

 

  1. With the adoption of the Management of European Structural and Investment Funds Act (MESIFA), in 2016, an important possibility was given to challenge in court the imposition of financial corrections in the implementation of grant agreements for realising projects with European funding. The concept of “administrative contract” was introduced, though which grants for each European project are provided. Through its regulation also in the Administrative Procedure Code (APC) it became possible to appeal against decisions of the managing body for imposing a financial correction, in a similar way to appeals of other administrative acts. Municipalities use this opportunity for judicial protection in case of insufficiently substantiated decisions of the central administration.

 

  1. Taking into consideration the legal framework and the practice that came to their knowledge, the rapporteurs concluded that Bulgaria complies with Article 11 of the Charter. However, they would strongly encourage the Bulgarian authorities to introduce the possibility of lodging a constitutional appeal for local authorities that would not be restricted only to jurisdiction disputes. This possibility would decisively strengthen the judicial protection offered to the institution of local self-government.

ACCESSION

to the Council of Europe 7 May 1992

RATIFICATION

of the European Charter of Local Self-Government 10 May 1995

CONSTITUTION | NATIONAL LEGISLATION

Formally speaking, Articles 2 and 3 of the Charter are fully complied with by Bulgaria, both at constitutional level (cf. the provisions of Chapter VII of the Bulgarian Constitution) and at the level of the country’s ordinary legislation (cf. the laws on local authorities).



30Ratified provision(s)
0Provision(s) with reservation(s)
0 Unratified Provision(s)
22Compliant Provision(s)
5Partially Compliant Articles
3Non-compliant Provision(s)