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)-(8) of the Charter is also adopted in Law no. 273/2006, namely in section 15, entitled “The principle of solidarity, section 6(3) and various other sections of that law, which has since its last revision in particular permitted financial equalisation at the central level (between counties) and the local level (between the rural localities of the same county) as well as the sharing of resources between the central and local levels. It also authorises the local authorities to issue capital on the European and international capital markets and to take out loans.
Under Government Emergency Order no. 51/2010, local councils can, in order to pay their debts to economic operators, request loans from the state at an annual interest rate of 6.25% for a period of five years with interest payments not beginning until the second year. In order to benefit from these loans, local authorities must be given permission by the Public Finance Ministry’s Commission for the Authorisation of Local Authority Loans. According to the new provisions of Law no. 273/2006 on local public finances, failure to comply with the obligation to request the Public Finance Ministry’s consent makes the local authority representatives criminally liable and is punishable by three to ten years’ imprisonment or, in the case of serious consequences, from five to fifteen years’ imprisonment plus a ban on exercising certain rights. Moreover, if the representatives of the local public authorities do not comply with the obligation to send the Public Finance Ministry the required information on the loans raised and the local public debt, they will incur a penalty in the form of a fine of 10,000 to 30,000 lei (€2392.80 to €7178.40).
Chapter V of Law no. 215/2001, entitled “The financing of local administrative authorities", is equally important. It provides that the administrative-territorial units shall receive amounts for specific purposes deducted from certain state income, in order to guarantee the vertical and horizontal balance of local budgets. The arrangements and criteria for the allocation of the shares and amounts to balance the local budgets are determined by the law on local public finances. The size of the amounts for balancing the local budgets is determined by the law on finances.
The co-rapporteurs were also informed that in practice the county council remains strongly politicised, especially as far as the budget is concerned, and that the distribution of resources is affected by problems of political cronyism, which extend to all government parties. The process whereby budgets are prepared at local level seems to be the object of political negotiation, at the expense of the real needs of the local communities.
Article 9(6) of the Charter is incorporated into section 18 of Law no. 273/2006.