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Monday 25.06.2018 | Name days: Maiga, Milija

Association of Local and Regional Governments critizes «hundred-lats»

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Our red tape is already a too heavy burden for taxpayers, the Chairman of the Latvian Association of Local and Regional Governments Andris Jaunsleinis told in an interview to the business news portal BNN, suggesting changing the investment policy regarding regions, do away with the «hundred-lats» programme and launch large-scale reforms in the government.

Baltic news, News from Latvia, BNN-NEWS.COM, BNN-NEWS.RU, Chairman of the Latvian Association of Local and Regional Governments Andris Jaunsleinis

Chairman of the Latvian Association of Local and Regional Governments Andris Jaunsleinis

The funds the World Bank has attributed to the «hundred-lats» programme for the jobless are soon to run out, how to ensure those permanently unemployed find a job?

I believe this programme should be rounded up this year. We must return to the socially useful work programme, once forwarded by the State Employment Agency.

«Hundred-lats» programme was a short-term solution for the crisis situation, it reduced the social pressure considerably. The contradiction lies somewhere else. A participant of the programme gets 100 lats, while a person with the minimum wage gets 130 lats a month. While one of them has a real job and higher professional requirements, the other earns only 30 lats less, in addition it also a way to spend time, because it is better to remove snow than do nothing. However, I must admit the «hundred-lats» programme damages the whole employment system. As soon as the economy exits the crisis, it must be stopped.

In «the fat years» there were a lot of intermediary companies who drafted projects commissioned by municipalities and undertook to take care of them being approved at ministries and agencies. Have they disappeared?

Local municipalities officials have to consider whether it pays back to do it themselves. They need certain amounts of projects to hire a highly qualified specialist – project developer. Sometimes purchasing professional outsourcing services is cheaper. Bigger regions form Development and Project departments to attract qualified staff. Intermediary companies have not disappeared anywhere. The Minister has warned us such people wander municipalities and their companies offering «to arrange matters», as they as if have a direct contact with ministries. These are fraudsters calling themselves lobbyists. There is no corruption there. Environmental Protection and Regional Development Minister Raimonds Vejonis advised us not to listen to them.

Why is the Latvian Association of Local and Regional Governments (ALRG) demanding subsidies for local routes are kept at the level of 2010?

State finances cuts of 20% for local routes, 12% VAT and diesel fuel price gains will result in 35% funds drop, instead of 20% for local traffic in 2011. There are some «red lines», though. Residents of rural areas should always have options to get somewhere using the public transport. The Minister of Transport will come to the ALRG session in February to discuss these issues. I assume most of municipalities will have run out of funds for snow removal by spring, and they will need additional help from the state. Similarly, money should be put aside for repairing holes in roads. Given that the local traffic reduced its losses by 13.48% in the first half of the year 2010, while intercity only by – 1.38% – it is not objective to divide 2011 funds equally between local and intercity routes. We believe local regional transportations should have the same funds as in 2010, with local routes having 13.77 million lats, including 12.08 million lats for the compensation of losses and 1.69 million lats for fare discounts. At the same time it is necessary to reorganize intercity transportation by splitting off regional routes and together with the funds transferring them to the planning regions. Public transport consolidation in 2011 is only possible if funds for intercity routes are cut. There are also many private carriers, who make profit with minibuses. The private take the category of the solvent both legally and illegally, while we are operating even half-empty buses resulting in huge losses.

Is that true the European Union authorities see Latvia as one, not five regions?

This is what we ourselves have defined. We have abandoned showing regional differences to EU authorities. It is easier to them to work with Latvia as a single region. The average economic temperature of the state is not that bad actually. Out disproportion in regional development is our internal issue. Thus EU structural funds allocation according to regions quotas principle is misleading of the municipalities and the society. We highlighted this issue already back 2004, when Latvia joined the EU. It was not approved then, as if, because of the lack of experience. The EU itself has admitted the structural funds allocation by sectors has not paid back, as it aims at faster levelling of municipalities differences. Sectors are in a constant interaction, it is impossible to coordinate it. Because we cannot modernize water supply simultaneously with roads repair work, if there are different sources of the money and completion terms. Local municipalities do not know how to halt a project to wait for the next one, in order brand new roads would not be torn down to install a water pipeline. We are now carrying out an integrated development plan, which should be introduced in the whole Latvia. It would be a real return from the EU funds investments.

How did the ALRG and the government agree dividing risks by half in the 2011 state budget?

The decision of the Cabinet of Ministers provided municipalities getting the personal income taxes though the Treasury are guaranteed the PIT revenue not less than 92% of the planned, while we asked for 100% for each local municipality. The Prime Minister Valdis Dombrovskis and the Finance Minister Andris Vilks concluded the government was ready to step back. I suggested dividing the risks by half and the Prime Minister agreed to guarantee in the 2011 state budget the PIT forecast of 96%. This is an example of the right direction to make closer bonds with the government in leveling the municipalities finances. The law of 1998 has been in an «emergency state» during the crisis. We need a new law for levelling finances to come into force in 2013. The PIT revenue (82% to the local municipalities and 18% – to the state budget) are forecast to comprise 590.4 million lats for municipalities in 2011. According to the state’s total budget figures, the proportion of municipalities revenue has dropped considerably during the crisis – from 27%-28% down to 21%.

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  1. Litas says:

    Local routes should definitely be funded more, for the residents of rural areas to have options as well.

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