1. SORIN IONITA - 20101 LOCAL & REGIONAL DEVELOPMENT AND URBAN POLICIES II Sorin Ioniţă sorin@ionita.eu Cluj, April 2010

2. Decentralization (D) To be effective, D must follow criteria: LGs decide freely the content and level of services supplied, and taxes raised (even if they may get some financial transfers from the centre) LGs decide freely the content and level of services supplied, and taxes raised (even if they may get some financial transfers from the centre) LGs are responsible to their citizens for their decisions (services / taxes) LGs are responsible to their citizens for their decisions (services / taxes)

3. Decentralization (D) To be truly accountable, LGs should be free to make real decisions To be truly accountable, LGs should be free to make real decisions As a result, the bundle of taxes / services reflect citizens’ preferences As a result, the bundle of taxes / services reflect citizens’ preferences

4. Role of the state (= public sector) Collects funds Delivers services Fiscality function Functions a-b-c Input Output / outcome The basic principle: money follow the function The basic principle: money follow the function

5. Decentralization (D) Two components of decentralization: A.Assignment of functions (attributions: a, b, c) B.Assignment of revenues Ideally they should match: enough money to perform the functions

6. A. Functions The assignment of functions by tiers of government is ruled by criteria: a)Subsidiarity (“legalist”) b)Economic efficiency 1: economies of scale c)Economic efficiency 2: avoiding inter- jurisdictional externalities

7. A. Functions The assignment of functions by tiers of government should follow criteria: d)Administrative capacity: structure / size / experience of LGs e)Inter-governmental equity: horizontal balance; vertical balance f)Tradition, local conditions, etc

8. A. Functions The assignment of functions – elements: 1.Defining the service: what / and at what standards 2.What are the acceptable costs 3.Delivery: who actually delivers the service 1-2-3 the reponsibility may be shared by more than one tier of gov (many times is)

9. A. Functions (handout 1) ●Arrangements differ a lot ●Some LGs may not be ready to take over new functions, even if economic argument says they should (economic optimality vs. managerial capacity) ●Politics and tradition often prevails ●D advances incrementally: “learning by doing”

10. Local governance in Romania CITIZENS Local Councils (3,160) Mayors (3,160) County Councils (41) Prefects (41) Cabinet (central executive) Parliament Direct election, political legitimacy Political appointment, administrative legitimacy

11. Local governance in Romania (handout 2) ●Romania has a 2-tier system of local governance; no formal subordination ●With 7,300 loc/unit, it is not very fragmented ●Official strategy is to consolidate small rural communes (efficiency argument) ●However, political pressures  creation of new LGs (about 20-30 per year)

12. Local governance in Romania (handout 3) 1. Assignment of functions in the education system: ●Practical exercise ●Compare / contrast with real situation 2. Assignment of the road maintenance 3. Assignment of the function of local development (what is local dev?)

13. A. Functions TierFunctionComment Central Defence, national roads, civil aviation, (universities?) Benefits spread broader than one jurisdiction Local Local roads, parks, police, water- sewage In general, benefits accrue locally Shared Education, health, social assistance Several levels of service

14. Local governance in Romania