Local Government and Metropolitan Regions in Federal Countries 9780773576452

Citation preview

local government and metropolitan regions in federal systems

a global dialogue on federalism

A Joint Program of the Forum of Federations and the International Association of Centers for Federal Studies editorial board co-chairs George Anderson, Forum of Federations Cheryl Saunders, Australia senior editor, book series John Kincaid, United States Raoul Blindenbacher, Switzerland Rupak Chattopadhyay, Forum of Federations David Cameron, Canada J. Isawa Elaigwu, Nigeria Thomas Fleiner, Switzerland Fernando Rezende, Brazil Horst Risse, Germany Nico Steytler, South Africa Ronald L. Watts, Canada www.forumfed.org www.iacfs.org A Global Dialogue on Federalism publications available book series Constitutional Origins, Structure, and Change in Federal Countries (2005), Volume 1 Distribution of Powers and Responsibilities in Federal Countries (2006), Volume 2 Legislative, Executive, and Judicial Governance in Federal Countries (2006), Volume 3 The Practice of Fiscal Federalism: Comparative Perspectives (2007), Volume 4 Foreign Relations in Federal Countries (2009), Volume 5 booklet series Dialogues on Constitutional Origins, Structure, and Change in Federal Countries (2005), Volume 1 Dialogues on Distribution of Powers and Responsibilities in Federal Countries (2005), Volume 2 Dialogues on Legislative, Executive, and Judicial Governance in Federal Countries (2006), Volume 3 Dialogues on the Practice of Fiscal Federalism: Comparative Perspectives (2006), Volume 4 Dialogues on Foreign Relations in Federal Countries (2007), Volume 5 Dialogues on Local Government and Metropolitan Regions in Federal Countries (2007), Volume 6 Dialogues on Diversity and Unity in Federal Countries (2009), Volume 7 Select Global Dialogue publications are available in other languages, including Arabic, French, German, Portuguese and Spanish. For more information on what is available, please visit www.forumfed.org.

A Global Dialogue on Federalism Volume VI

L O C A L GO V E R N M E N T A N D M E T R O P O L I TA N R E G I O N S I N F E D E R A L S YS T E M S e d i t e d b y n ic o s t e y t l e r se n io r e d it or jo h n k i n c a id

Published for

and

by McGill-Queen’s University Press Montreal & Kingston • London • Ithaca

© McGill-Queen’s University Press 2009 isbn 978-0-7735-3562-6 (cloth) isbn 978-0-7735-3563-3 (paper) Legal deposit third quarter 2009 Bibliothèque nationale du Québec Printed in Canada on acid-free paper that is 100% ancient forest free (100% post-consumer recycled), processed chlorine free This book has been published with generous financial support from the Government of Canada and the Swiss Agency for Development and Cooperation. McGill-Queen’s University Press acknowledges the support of the Canada Council for the Arts for our publishing program. We also acknowledge the financial support of the Government of Canada through the Book Publishing Industry Development Program (bpidp) for our publishing activities.

Library and Archives Canada has catalogued this publication as follows: Local Government and Metropolitan Regions in Federal Countries / edited by Nico Steytler; senior editor John Kincaid (A global dialogue on federalism, v.6) Includes bibliographical references and index. isbn 978-0-7735-3562-6 (bnd) isbn 978-0-7735-3563-3 (pbk) 1. Federal government. 2. Federal government – Foreign relations. 3. Comparative government. I. Steytler, Nico II. International Association of Centers for Federal Studies III. Forum of Federations IV. Series: Global dialogue on federalism; v.6 HJ 141.P 69

2009

321.02

C 2009-902348-7

This book was typeset by Interscript in 10/12 Baskerville.

Contents

Preface

vii

Introduction

3

nico steytler

Commonwealth of Australia Republic of Austria

7

graham sansom

andreas kiefer and franz schausberger

Brazil luiz cesar de queiroz ribeiro and sol garson braule pinto 75 Canada

106

robert young

Federal Republic of Germany Republic of India

martin burgi

george mathew and rakesh hooja

United Mexican States

boris graizbord

Federal Republic of Nigeria Republic of South Africa Kingdom of Spain

habu galadima

234

267

jaap de visser

andreas ladner

United States of America

329

michael a. pagano

Comparative Conclusions nico steytler 437

Participating Experts Index 451

200

francisco velasco caballero

Swiss Confederation

Contributors

136

443

393

363

298

166

37

This page intentionally left blank

Preface

This volume on local government and metropolitan regions in twelve federal systems is the sixth contribution to a series of practical books on federalism being published as a part of the program “A Global Dialogue on Federalism.” The goal of this Global Dialogue is to engage experts from around the world in comparative conversations and debates about core themes and issues of federalism. One of the goals is to build an international network that enables practitioners, students, scholars, and others to learn from one another, share best practices, and enhance their understanding of the prospects as well as the problems of federalism as a mode of governance in today’s world, especially in relation to democracy, freedom, prosperity, and peace. The Global Dialogue is a cooperative program created and conducted jointly by the Forum of Federations and the International Association of Centers for Federal Studies (iacfs). The Forum is an international network on federalism that seeks to strengthen democratic governance by promoting dialogue on, and understanding of, the values, practices, principles, and possibilities of federalism. The iacfs is an association of centres and institutes throughout the world that maintain a research and teaching focus on political systems that have federal features. The work of the Forum of Federations and the iacfs is part of a broader endeavour to build and strengthen democracy through federalism when and where appropriate. As a mode of governance that seeks to combine self-rule for regional and minority interests with shared rule for general and common purposes, federalism is necessarily of interest to advocates of democracy. This is particularly true in a world in which the vast majority of nation-states are multinational, multilingual, multireligious, and/or multicultural. Indeed, there has been a tremendous upsurge of interest in federalism since the emergence of a new wave of democratization in the late 1980s. This worldwide interest in federalism is linked directly

viii

Preface

to movements promoting greater democracy and decentralization and to the simultaneous trends toward globalization and regionalization evident throughout today’s world. Given the dominance of statist ideologies during the past two centuries, however, federalism has often been viewed as a stepchild less worthy of attention and cultivation than the seemingly natural children of modern nationalism. Consequently, while there is a long history of federal-democratic experience in a few countries, such as Australia, Canada, Switzerland, and the United States, there is little practical experience with democratic federalism in most countries, and there are problematic experiences in a number of fledgling federal democracies. In turn, there is a paucity of accessible literature and information on comparative federalism and a dearth of intellectual capital available for investment in research and teaching about the many varieties of federalism worldwide. This series of books, being published as one important product of the Global Dialogue program, seeks to create informational capital and to fill gaps in our comparative knowledge by providing as balanced a view as possible of theories and practices of federalism in various countries around the world. The series does so by exploring comparative and contrasting theoretical and practical perspectives, with each volume focusing on a particular aspect of federalism through the examples of selected countries that reflect federalism’s diversity, including its strengths and weaknesses. Our aim is to produce books that are accessible to interested citizens, political leaders, government practitioners, and students and faculty in institutions of higher education. Each chapter in this volume, therefore, seeks to provide an overview of its country’s arrangements, institutions, and practices regarding local governments and metropolitan regions, especially local selfgovernment, in a way that covers all relevant, important information without including overwhelming detail while also providing some analysis of the rationales and workings of local governments and metropolitan regions in federal countries and indicating how well or poorly each country’s local government arrangements and institutions function in relation to its constitution and society. Local self-government is a crucial function of all federal democracies, but in many federal countries, there are barriers to both effective local government and autonomous local government, even though there has been a trend in recent decades to extend some federal constitutional recognition to local governments, especially municipalities. The first volume, Constitutional Origins, Structure, and Change in Federal Countries (2005), began the series with an exploration of the constitutional systems of twelve federal countries. The second volume, Distribution of Powers and Responsibilities in Federal Countries (2006), examines the various practices and dimensions of power distribution in eleven federal countries. The third volume, Legislative, Executive, and Judicial Governance in Federal Countries (2006), examines the dynamics and interactions of the multiple legislatures,

Preface

ix

executives, and courts that operate in federations. The fourth volume, The Practice of Fiscal Federalism: Comparative Perspectives (2007), examines fiscal structures, practices, and issues in twelve federations. The fifth volume, Foreign Relations in Federal Countries (2007), looks especially at the roles of constituent states or provinces both in direct international relations and in relations with their federal governments involving foreign affairs, trade, and treaties having impacts on the constituent states. Future volumes will be devoted to diversity and unity in federal countries, intergovernmental relations, and political parties and civil society, with a somewhat different mix of countries being represented in each volume. The Global Dialogue program also produces a booklet series that provides an entry point to each corresponding book by highlighting the insights, key issues, and items of international interest that arose at the country and international roundtables. In keeping with its educative and accessible format, each booklet also includes a glossary of country-specific terminology. The corresponding booklet to this book is available; indeed, the more limited scope of the booklet allows it to be published quickly, in multiple languages, and reproduced with revisions as changes in the federal countries warrant. The conceptual framework of the Global Dialogue program can be found in the first volume, Constitutional Origins, Structure, and Change in Federal Countries, edited by John Kincaid and G. Alan Tarr. The key idea of the Global Dialogue is to draw on the wealth of others’ experiences to learn from one another. The program entails a comparative exploration of a dozen core themes in federal governance. Through a series of themed roundtables, participants representing diverse viewpoints in a representative and diverse sample of federal countries search for new insights and solutions. The new information emanating from the roundtables is used to produce comparative materials for worldwide distribution. Each theme exploration entails a multiple-staged process. First, a “theme coordinator” is chosen, who makes use of the most current research on the theme to create an internationally comprehensive set of questions covering institutional provisions and how they work in practice. This set of questions, or “theme template,” is the foundation of the program, as it guides the dialogue at the roundtables and forms the outline for the theme book. The theme coordinator also selects a representative sample of federal countries and recommends, for each featured country, a “country coordinator” – each of whom is the author of a country chapter in the volume. Next, each country coordinator invites a select and diverse group of expert practitioners and scholars to participate in a roundtable in his or her country, guided by the theme template. The goal is to create the most accurate picture of the theme in each country by inviting experts with diverse viewpoints and experiences who are prepared to share with and learn from others in a nonpoliticized environment.

x

Preface

At the end of the day, the coordinators are equipped to write a short article that reflects the highlights of the dialogue from each country roundtable. The booklet articles are generated from such exchanges. Once each country has held its roundtable, representatives of the countries gather at an international roundtable. The representatives are experts who share their varied experiences and perspectives, as well as the knowledge gained from their country roundtables, to identify commonalities and differences and to generate new insights. To ensure that the knowledge gained at these events does not end with only those who participated in them, the final stage integrates the reflections from the country roundtables and new insights from the international event into book chapters, thus building on the progress already made and creating opportunities to use the material for further events. The chapters reflect the fact that their authors were able to explore the theme from a global vantage point, resulting in a more informed comparative analysis of the topic. Given the extent of the Global Dialogue program, we have many people and institutions to thank. Special appreciation is owed to the editor of this book, Nico Steytler of the Community Law Centre at the University of the Western Cape, for his invaluable help in organizing and launching this volume. At the Community Law Centre, the assistance of Jaap de Visser, Annette Christmas, Reuben Baatjies, Meghan McDermott (a Forum of Federations intern), Yonatan Fessha, Valma Hendricks, Trudy Fortuin, and Virginia Brookes with the organization of the international roundtable is much appreciated. A special word of thanks goes to Geraldine Mettler for facilitating the financial assistance that the Gauteng provincial government so generously provided for the roundtable. Thanks are due also to all the participants in the twelve country roundtables and in the international roundtable, whose input helped to shape the content of this volume’s chapters. The assistance that Annette Christmas, Solly Leeman, and Michelle Norton provided with the editing of the chapters is gratefully acknowledged as well. We wish to thank, in addition, colleagues who read and critiqued drafts of the chapters contained in this book: Henry Alapiki, University of Port Harcourt, Nigeria; Caroline Andrew, University of Ottawa, Canada; Thomas Fleiner, University of Fribourg, Switzerland; Jean-Francois GaudreaultDesBiens, University of Montreal, Canada; Lawrence S. Graham, University of Texas at Austin, United States; Arthur B. Gunlicks, University of Richmond, United States; Joaquin Ferret Jacas, Universidad Autónoma de Barcelona, Spain; Sumitra K. Jain, Shaheed Bhagat Singh (E) College, India; Wolf Linder, University of Bern, Switzerland; Alvin Magid, State University of New York at Albany, United States; Joseph Marbach, Seton Hall University, United States; Christina Murray, University of Cape Town, South Africa; Theo Öhlinger, Universität Wien, Austria; Luis Ortega, Universidad de Castilla-La

Preface

xi

Mancha, Spain; Fernando Rezende, Getúlio Vargas Foundation, Brazil; Horst Risse, Bunderat, Germany; Fritz Sager, University of Bern, Switzerland; Anne Twomey, University of Sydney, Australia; Peter Vaz, rti International, South Africa; Brian Wampler, Boise State University, United States; James Wunsch, Creighton University, United States; and Joseph F. Zimmerman, State University of New York at Albany, United States. The assistance of these individuals is greatly appreciated, although they are, of course, not responsible for any deficiencies in the chapters. We also thank our colleagues and associates at the Forum of Federations and at the International Association of Centers for Federal Studies. The program and the present book could not exist without their assistance and expertise. We wish to acknowledge the work of the entire Forum of Federations staff and, in particular, the Global Dialogue staff, Rhonda Dumas (program assistant) and Chandra Pasma (former interim program manager), for technical support, as well as Rupak Chattopadhyay (senior director and head of Global Programs) for his leadership of the program. Special appreciation is owed to Raoul Blindenbacher, former vice president of the forum, who played crucial roles in helping to launch and then guide the Global Dialogue on Federalism program. Thanks are due also to David A. Stamm (former undergraduate excel Scholar) and Terry A. Cooper (administrative assistant) for their work on behalf of this volume at the Robert B. and Helen S. Meyner Center for the Study of State and Local Government at Lafayette College, Easton, Pennsylvania. Finally, we thank the staff at McGill-Queen’s University Press for all of their assistance in producing the volume and working with us to ensure the success of this sixth book in the Global Dialogue series. On behalf of the Global Dialogue Editorial Board John Kincaid, Senior Editor

This page intentionally left blank

local government and metropolitan regions in federal systems

This page intentionally left blank

Introduction nico steytler

Federal systems are usually conceived, although not exclusively so, as comprising two orders of government: federal and state (the latter referring to states, provinces, Länder, and cantons).1 Local government is usually seen as a competence of states,2 implying that the primary relations are between states and local governments to the exclusion of the federal government. Increasingly, however, local government is being seen as an integral part of federal governance. In the first volume in the Global Dialogue series, Constitutional Origins, Structure, and Change in Federal Countries, John Kincaid noted that seven of the twelve countries included in that volume accorded constitutional recognition of some sort to local government, although not always treating local government as the third order of government.3 The important distinction drawn here is between local governments that, as creatures of the constituent states, are wholly subject to the control of the latter and local governments that, due to their degree of autonomy in decision making, can be regarded as an order of government of a kind not wholly dissimilar to the states and the federal government. In examining the executive and legislative structures in federal countries in the third volume in the Global Dialogue series, Cheryl Saunders pointed out a trend toward according local government increasing autonomy, which often results in “a tension between the traditional autonomy of constituent units [states] in relation to local government and the relative new found autonomy of local government.“4 In the fourth volume, which considers fiscal relations in federal countries,5 local government was regarded as an integral part of the practice of fiscal federalism in each country survey. Building on the previous volumes, this volume explores more fully the place and role of local government in the case-study federal systems, examining how it relates to state and federal government. The term “local government” is most often used as though it refers to a uniform institution with a set number of identifiable characteristics. On

4

Introduction

closer inspection, this term is merely a collective noun for a wide variety of governance institutions that come in all shapes and sizes and that perform widely divergent functions. They range from mammoth metropolitan municipalities of mega-cities to small rural entities. Their function can be either multipurpose in the case of municipalities or single-purpose in the case of special authorities and school districts. They may be single- or twotier structures with shared jurisdictions. It would, therefore, be more appropriate to refer to local governments, in the plural. What they do have in common is that there is no order of government between them and the communities they serve. This is also their strength and democratic claim; they are the government closest to the people. The place and role of local governments have come strongly to the fore in the governance of metropolitan regions. With high levels of urbanization, often concentrated in a few areas, metropolitan regions are the locus both of economic productivity and, particularly in developing countries, of poverty and environmental degradation. Consequently, they largely define the wealth and health of the nation. Where local governments have to deal with the challenges of massive conurbations, they have staked their claim to be a partner at the federal table of government, seeking money, power, and respect. Urban governments have demanded new fiscal tools to meet their increasing responsibilities, they need powers commensurate to the challenges of urbanization, and finally, given the vital role they play in the social and economic well-being of a country as a whole, they want respect as a recognized partner in government. For this volume, twelve very different federal or federal-type countries have been selected: Australia, Austria, Brazil, Canada, Germany, India, Mexico, Nigeria, South Africa, Spain, Switzerland, and the United States. The countries also represent divergent economic and social conditions as well as distinct political and institutional arrangements. Old established federations can thus be compared with more recent additions to the federal family, even with those, such as Spain and South Africa, that deny familial connection despite some federal features in their constitutional make-up. From a constitutional perspective, the old federal constitutions (i.e., those of the United States, Switzerland, Canada, and Australia) did not refer to local government, and if they did, then it was merely as a competence of the states or provinces. In contrast, ever since the Second World War, the other countries in this sample have all given federal recognition to local government, although not always as a full-fledged order of government. More important than constitutional recognition of local government is the practice of intergovernmental relations, which more closely reflects the place and role of local governments in the federal system. We ask whether local government has become a partner in the federal system of government or whether it is still under the tutelage of states. In this context, are direct relations emerging between local government and the federal government or

Introduction

5

do states mediate that relationship? Where local government is recognized as a partner in the federal system of government, how has that affected the relationship between the federal government and states? Is there competition for power and resources between states and the large local governments, such as metropolitan cities? Where local government is a partner in the federal system, what has been the impact on the system as a whole? Have intergovernmental relations become more complex and unwieldy, with less accountability to each order of government’s constituency? In addressing these questions, the country chapters, as in previous volumes in the Global Dialogue series, have been written to an agreed template in order to ensure coverage of similar issues. Meaningful comparisons can then follow. Each chapter commences with an introductory overview providing the geographic, demographic, and economic context of the federal polity and its political institutions. The second section focuses on the history, structures, and institutions of local government. The historical development of local government is sketched, tracing the evolution of its role over time. As noted above, the collective term “local government” includes counties, municipalities, townships, town councils, school districts, special districts, rural local authorities, villages, and traditional or tribal authorities. The myriad institutions also differ in having either multiple purposes or a single purpose. An important factor in this context is the institutional arrangements for the governance of metropolitan regions. A subsidiary factor is the governance of federal capital cities. The third section is concerned with the constitutional recognition of local government. The focus is on the reasons for, and the scope, nature, and consequences of, recognition in both federal and state constitutions. The next section analyzes the overall governance role that local governments play in a country. This depends on the exercise both of their own functions and of those administered on behalf of the state and federal governments. The focus then shifts to the institutions that exercise power and perform the functions of local government. Financing the governance role of local government is the subject of the fifth section. Whatever the formal functions and powers of local governments may be, the degree of self-sufficiency in revenue raising is a strong indicator of the level of local self-governance. A reliance on transfers from state governments is likely to lead to dependency. The focus, then, is on the sources of revenue – whether own or as a result of transfers – and the level of expenditure discretion. The following section further examines the theory and practice of supervision of local government exercised by states and the federal government. Supervision includes standard setting, support, routine review of decisions, monitoring of performance, and intervention. The extent of supervision has an important bearing on the level of local autonomy.

6

Introduction

Although the states’ supervisory role reflects a hierarchical relationship, the practice of intergovernmental relations with other orders of government may suggest a relationship based more on equality. In the seventh section, the relationships between local government and the states are outlined. The question is also probed of whether direct relations with the federal government are developing. In both sets of relations, organized local government plays an important role as the voice of local government and partner in government. The practice of intergovernmental relations is relevant to the next section, which deals with the political culture of local governance. To what extent have local politics been incorporated into the national-party political system, either facilitating intergovernmental relations or, alternatively, dictating local decisions? The final section concerns the role of local government in the evolution of the federal system: what are the main issues of, and emerging trends in, local government that may affect a country’s federal system. What role will the growth of metropolitan regions and cities play? The concluding chapter in this volume gives a comparative analysis of the different themes examined in each chapter. It seeks to answer the overall question of whether the growth of local government with relative autonomy is changing the shape of federal systems. Is there a movement, slow but sure, away from the classical two-order federal system and toward multisphere governance? If this is the case, what are the new demands on the theory and practice of federalism?

note 1 A page is devoted to local government in Ronald L. Watts, Comparing Federal Systems, 3rd ed. (Montreal and Kingston: McGill-Queen’s University, 2008), 132-3. 2 See Ronald L. Watts, “Comparative Conclusions,” in Distribution of Powers and Responsibilities in Federal Countries, ed. Akhtar Majeed, Ronald L. Watts, and Douglas M. Brown, 322–49 (Montreal and Kingston: McGill-Queen’s University, 2006), 330. 3 John Kincaid, “Comparative Observations,” in Constitutional Origins, Structure, and Change in Federal Countries, ed. John Kincaid and G. Alan Tarr, 409-48 (Montreal and Kingston: McGill-Queen’s University Press, 2005), 438. 4 Cheryl Saunders, “Legislative, Executive, and Judicial Institutions: A Synthesis,” in Legislative, Executive, and Judicial Governance in Federal Countries, ed. Katy le Roy and Cheryl Saunders, 344–84 (Montreal and Kingston: McGill-Queen’s University Press, 2006), 374. 5 Anwar Shah, ed., The Practice of Fiscal Federalism: Comparative Perspectives (Montreal and Kingston: McGill-Queen’s University Press, 2007).

Commonwealth of Australia graham sansom

Australia has around 560 local government areas.1 They are extremely varied, with populations ranging from fewer than 100 inhabitants to nearly 1 million, and areas from just 2 to almost 380,000 square kilometres. Overall, local government in Australia is relatively weak. Its activities are limited mostly to the provision of municipal services and local infrastructure, and its expenditures account for only 2.5% of gross domestic product (gdp). Local government is not recognized in the Australian Constitution. It is established under state2 laws, and all aspects of local administration are subject to detailed state control. Metropolitan regions are managed principally by state agencies, and most regions are divided into numerous local government areas whose councils3 find it difficult to play a strategic role in metropolitan planning and development. Yet despite these limitations, local government has increasingly emerged as a partner in the federal system. Although small rural and remote councils have extremely limited capacity to provide services and depend heavily on state and federal support, local government as a whole is more than 80% self-funding. Its scope of activity has increased considerably over recent decades, taking on additional functions in such fields as environmental management and community services. It plays a leading role in several areas of essential service delivery, notably roads, recreation, waste disposal, and in some states, water supply and sewerage. Larger councils raise 90% or more of their revenues locally and are thus able to operate quite autonomously and to promote the well-being of their communities across a broad range of functions. Importantly, local government now enjoys a direct relationship with the federal government, which provides the bulk of grant funding for councils and which has sponsored local government participation in a growing number of intergovernmental forums. Since the early 1980s, there has been a federal minister with the words “local government” in his or her title, and

Commonwealth of Australia

9

federal policies have been one of the main drivers of an expansion in local government’s role over the past half-century. These moves reflect underlying changes in the Australian federation, especially a steady decline in the financial and political strength of the states relative to the federal government. A key question now for Australian local government is whether it can capitalize on recent developments and secure its federal presence. Can it really justify its claim to be the “third sphere” in the federation? This chapter explores the forces at work and suggests possible answers to these questions.4

country overview The Australian federation was established in 1901 and comprises a federal government (also referred to as the Commonwealth or Australian government), six states (New South Wales, Victoria, Queensland, South Australia, Western Australia, and Tasmania), and two semi-autonomous federal territories (Northern Territory and Australian Capital Territory).5 Australia covers a continent with an area of 7.7 million square kilometres but has a population of only 21.2 million. Population growth averages around 1.2% per annum. In 2006 gdp was approximately US$760 billion, or US$36,300 per capita.6 Public sector debt is low, and government budgets are typically balanced or in surplus. The population is extremely diverse, although the dominant group and culture remain those of the Anglo-Celtic settlers who first moved to Australia in the late eighteenth century. They have been followed by waves of other immigrants, mostly from Europe but also including substantial numbers from many other parts of the world, especially east and southeast Asia. The indigenous population of Aborigines and Torres Strait Islanders comprises only 2.4% of the total but is a major presence in parts of Queensland, Western Australia, and especially the Northern Territory. Around 75% of Australians live in towns and cities, making the country one of the world’s most urbanized. There is a continuing drift from rural areas and small towns to larger regional centres and the major cities. At the same time, many people are leaving the cities to live in quieter coastal areas (“seachangers”) or, to a lesser extent, in the country (“treechangers”). The rate of population growth is fastest in Queensland and Western Australia, the leading beneficiaries of a booming minerals sector. Queensland is also a very popular retirement destination. Australia remains a constitutional monarchy. The queen (of England and Australia) is represented at the federal level by the governor general, who is the de facto head of state, and by a governor in each state.7 The Commonwealth and each of the states and territories has a Westminster-style parliament, and all parliamentarians are elected democratically. Parliaments are dominated by the Australian Labor Party and by the Liberal-National Party

10

Graham Sansom

coalition (or variants of it). There has been a tendency toward greater numbers (still small) of minor party and independent members of parliament over recent decades, reflecting changing policy agendas, such as the environmental movement, a variety of regional and local concerns, and some general disenchantment with the major parties. Nevertheless, the system of government is very stable, and the party in power is usually able to exercise tight control over policy and programs. Governments are held accountable principally through parliamentary and electoral processes but also through the courts, various anticorruption bodies, ombudsmen, and the media. The federal High Court plays a key role in interpreting the provisions of the Australian Constitution.

h i s t o r y, s t r u c t u r e s , a n d i n s t i t u t i o n s of local government Local councils were first established in the mid-nineteenth century, largely to help then colonial administrations manage a rapidly growing population and increasingly dispersed settlements.8 Early activities of local government focused on public health and building regulation and, in rural areas, construction of roads. From the outset, local governments raised their own revenues through local property taxes (“rates”) but operated under tight colonial control. The state governments that succeeded the colonies were also most reluctant to devolve any real power to councils. The result is a system of local government with a quite limited range of functions. Overall, Australian local government accounts for around 4% of total government revenues and 5% of expenditures. Its activities focus on municipal services and local infrastructure; it does not control electricity, police, education, hospitals, or (except in the City of Brisbane) public transport. These are all state or territory functions. However, local government is a very significant contributor in other areas, notably roads, recreation and open space, storm-water management, water supply and sewerage (in Queensland, Tasmania, and nonmetropolitan New South Wales), urban and regional planning, cultural facilities (notably public libraries), and some aspects of health and community services (especially in Victoria). It controls assets valued in 2006 at nearly US$140 billion. Also, it is an important employer, with a total workforce across Australia of some 169,000 people (about 10% of all government employees).9 Local government areas vary enormously in size, population, and resources. The City of Brisbane is by far the largest in population, with nearly 1 million residents and an annual budget approaching US$2 billion. At the other end of the population spectrum are remote shires and indigenous community councils with fewer than 100 people and little or no income apart from government grants.

Commonwealth of Australia

11

Despite these great variations, local government systems are all unitary; there are no higher-level regional councils or lower-level “neighbourhood” councils, nor are there elected special-purpose local government bodies operating alongside general-purpose councils. However, councils in most jurisdictions can enter into joint arrangements with their neighbours for service delivery, procurement, or to share resources more broadly (e.g., skilled staff, major items of equipment, and information technology), and a growing number are doing so. Typically, councils can also delegate some of their responsibilities to committees or community organizations. Over the past century, there have been recurring moves to amalgamate councils into larger units. These amalgamations have been driven by a combination of factors: the limited resources of smaller councils, pressures to increase efficiency of administration and cut costs, the perceived scope for more strategic planning and management, and in some cases, sheer political expediency.10 State governments may bring about boundary changes and amalgamations (or very occasionally, subdivision) of councils by whatever means they see fit, but usually there is some form of (semi-)independent commission or ad hoc inquiry that makes recommendations to the responsible minister. The most dramatic case of amalgamations was in Victoria in the mid1990s, when all but 1 of 210 councils were dismissed and boundaries completely redrawn to create 78 new councils, which were then placed under state-appointed commissioners to implement administrative reforms before fresh elections were held. Most recently, the Queensland government decided in early 2007 to terminate what it saw as an excessively slow process of voluntary structural reform led by the state’s local government association. Instead, it appointed a Local Government Reform Commission to recommend boundary changes.11 The commission proposed reducing the number of councils from 157 to 73. Despite some strong opposition, these changes were implemented through local elections held in March 2008. Council amalgamations have also been widespread in New South Wales, Tasmania, and South Australia. Largely as a consequence of such processes, Australian local councils have a relatively large average population by international standards – around 36,000 – although this masks the continued existence of many small (in terms of population) councils in rural and remote areas. Over half of all councils have fewer than 10,000 people. Many of the smallest councils are those serving indigenous communities. These are concentrated in far-north Queensland, including the Torres Strait Islands and the Northern Territory. Substantial parts of the country remain unincorporated – that is, without any form of elected local government in the conventional sense of the term. Largely unpopulated areas of western New South Wales, the northern part of South Australia, and much of the Northern Territory are administered

12

Graham Sansom

directly by Commonwealth government agencies and, in South Australia, by Aboriginal land councils. In the Northern Territory local government was until recently confined to a few general-purpose councils for the larger towns, plus dozens of small community councils for mainly Aboriginal settlements in remote areas. However, during 2008 the whole territory was incorporated into local government areas, with new rural shires each covering a number of townships and outlying settlements.12

constitutional recognition of local government Australian local government is established under the laws of the six states and the Northern Territory. It exists and operates essentially at the discretion of those state governments. There is no separate local government in the Australian Capital Territory, where the territory government also undertakes municipal functions. Each state has its own local government Act that sets a framework for the operations of local councils, including such matters as their purpose and functions, electoral systems, revenue raising, financial management, corporate planning, meeting procedures, and so on. In addition, councils carry out functions – and have many of their activities regulated – under a wide range of state or territory Acts covering such responsibilities as land-use planning, building control, environmental management, roads, and land administration. Local government is not recognized (or even mentioned) in the 1901 federal Constitution. The evidence suggests that at the time, (1) representatives of municipalities did not press strongly for a reference to local government, (2) there was very little discussion of the issue, and (3) any move to recognize local government would have been seen as a threat to established colonial (state) powers and, hence, to reaching agreement on federation.13 Subsequently, local government has been granted varying degrees of recognition and protection under state constitutions, but as a general rule14 these can be altered simply by an Act of the state parliament, whereas changes to the federal Constitution require a referendum. Moreover, state constitutions do not reserve particular powers for local councils, and in New South Wales the constitution fails to guarantee elected local government. There have been two unsuccessful referenda seeking to recognize local government in the federal Constitution.15 The first was in 1974, when the then federal Labor government sought authority to provide funding to local government bodies directly rather than through the states. The second took place in 1988 and sought to include the following words in the Constitution: “Each State shall provide for the establishment and continuance of a system of local government, with local government bodies elected in accordance with the laws of the State and empowered to

Commonwealth of Australia

13

administer, and to make by-laws for, their respective areas in accordance with the laws of the State.” Along with three other questions, the proposition was easily defeated. It remains a matter of conjecture whether this result reflected genuine opposition to the concept of local government recognition or instead Australians’ long-established reluctance to amend the Constitution, reinforced by an Opposition campaign simply to vote “no” to all four questions. Local government associations continue to press for another referendum, although it is unclear precisely what this might achieve, beyond symbolic confirmation that local government is indeed part of Australia’s federal system. Given the demonstrable difficulty of changing the Constitution,16 it seems unlikely that any achievable form of recognition – essentially one that would not attract vehement opposition from the states – would make much difference in practical terms. The question posed in 1988 would merely have required each state to have a system of elected local government, and there is no evidence to suggest that the existing systems are under threat. Nor, thus far, has local government attempted to go beyond what was proposed in 1988 by seeking a greater measure of autonomy from state control and intervention. In the meantime, the former conservative federal government, which did not favour constitutional recognition of local government, accepted a recommendation from a House of Representatives committee that there should be a parliamentary resolution acknowledging local government’s role.17 This recommendation was adopted by both houses of Parliament in September 2006. Among other things, the resolution: •

•

•

recognises that local government is part of the governance of Australia, serving communities through locally elected councils; acknowledges the role of local government in governance, advocacy, the provision of infrastructure, service delivery, planning, community development, and regulation; and acknowledges the importance of cooperating with and consulting with local government on the priorities of their local communities.

At face value, the parliamentary resolution was merely a token gesture. However, it does underline that irrespective of the Constitution, federal governments have increasingly involved themselves in local government issues as and when they see fit.18 Whether this trend will continue remains to be seen. The Labor federal government elected in November 2007 is committed both to improving intergovernmental relations with the states and to moving toward a further referendum on recognition of local government. Its election policies and subsequent actions suggest that current programs to assist local

14

Graham Sansom

government, as well as arrangements for local government involvement in intergovernmental forums (see below), will remain largely unchanged, but given that all states also have Labor governments, it might be less inclined to intervene in their relationships with local governments or to take initiatives without their agreement.

powers, functions, and governance As noted earlier, Australian local government derives its powers and functions from a combination of state-local government Acts and a wide range of other state legislation dealing with specific areas of administration. The local government Acts have all been substantially amended or rewritten over the past twenty years to introduce new corporate governance and management frameworks (see below).19 Most now give local councils a “power of general competence” – or something very close to that – to pursue the good governance of their local areas as necessary (within the constraints of state and federal law). Some states also enable councils to pass local laws (bylaws), again subject to consistency with state or federal legislation.20 As a general rule, all councils operate under the same legislation within each jurisdiction, regardless of location, size, or capacity. Some of the capitalcity councils are subject to supplementary legislation that adds to or modifies provisions in local government Acts, but the differences are minor. Both local government Acts and other legislation include requirements for councils to perform certain functions and to do so in a manner prescribed by the state or federal government as the case may be. Councils may also be required to perform services or collect charges and levies on behalf of state governments and to pay levies to those governments (e.g., for fire brigades and waste disposal in New South Wales). In many cases, they are contractors to state government agencies, notably in road construction and maintenance. It is also common for councils and state agencies to play overlapping or complementary roles in delivering services (e.g., some health and community services, especially in Victoria) or in administering regulation (e.g., development control and environmental management). In almost all cases, however, the state agency dominates. Over recent years, there has been a trend to contract out or corporatize a number of local government services, especially in public works and waste management. A more business-like approach to service delivery was promoted strongly under the National Competition Policy adopted by the federal and state governments in 1995. Also in the mid-1990s, councils in Victoria were required to call for tenders for up to half of their total expenditure, and council employees had to form business units to compete for work. However, this requirement was abolished following a change in party control of state government in 1999.

Commonwealth of Australia

15

Whatever the mode of service delivery, the period since the 1950s has seen considerable growth in the spread of local government’s functions and far-reaching changes in the operations of many – but not all – local councils across Australia. As well as responding to community pressures for a wider range of services, local councils have been forced, or encouraged, to add to their activities by state and federal legislation and funding programs. Key areas of new or increased activity have been land-use and strategic planning, environmental management, economic development, and community services. However, growth in local revenue has not kept pace with the expansion of local government functions, resulting in underfunding of infrastructure (see below). In parallel with this growth in local government’s functions, there has been the emergence of a substantial number of much larger, betterresourced councils. This has occurred partly by design and policy intent, most obviously through amalgamations of adjoining councils but also as a result of population growth in middle and outer metropolitan areas, along the coast, and in some inland regional centres. On the metropolitan fringe, what were once large semi-rural shires are now suburban cities with populations of 150,000 to 250,000 or more. Together with increased responsibilities and bigger councils have come changed perceptions about the role local government should play. Many, but by no means all, people in local government now believe they can make a greater contribution to the federal system of government and the well-being of communities. At the same time, the influx of more and different professional staff required to discharge local government’s additional responsibilities has brought new perspectives on the functions performed by councils and on how they should go about their activities. Stronger state and national networks, supported by local government associations and professional institutes, and more recently by growing international links and exchanges, have also been important factors in broadening horizons. Councils combine legislative and executive roles; councillors can make both policy and administrative decisions. Also, unlike federal and state parliaments, there is no defined political executive – no “ministers” or “cabinet.” Mayors do not have executive powers under local government legislation, although in some cases they may play a quasi-executive role if they enjoy clear majority support within the council and/or a strong personal mandate. This tends to apply particularly to the capital-city councils in Brisbane, Sydney, and Melbourne and to some other larger councils with directly elected mayors and/or an entrenched majority party. In general, the governance provisions of the new local government Acts tend to be managerialist; that is, they see the elected councillors primarily as a “board of directors” responsible for policy and setting the budget, but with day-to-day management firmly in the hands of the chief executive and senior

16

Graham Sansom

staff. This approach can lead to difficult relationships between councillors and management, given the nature of local government functions and the often blurred line between policy and administration. Such tensions become particularly significant when most chief executives and senior managers are on short-term contracts. Even if those contracts are notionally performancebased, and there is a formal system of performance assessment in place, the reality is that decisions on whether to extend contracts are in the hands of councillors. Hence, these decisions are ultimately political. Of crucial importance in recent years has been the development of strategic and corporate planning. Corporate planning requirements were a key feature of the new local government Acts of the 1990s, but larger councils with big budgets had already begun to introduce new planning and management systems that addressed their expanding role, plus the need to balance expenditure across the wider range of functions being performed. In addition, local government has had to respond to the drive throughout government at all levels for greater efficiency and effectiveness within a more competitive global economy. This has led, among other things, to a much stronger focus on financial and asset management, contracting out, performance management, organization development, benchmarking, shared services, and regional cooperation. As noted earlier, these pressures have prompted some state governments to undertake amalgamations of smaller councils. In other cases, councils have voluntarily come together in regional organizations or “strategic alliances,” seeking to capture economies of scale and other benefits through joint purchasing, resource sharing, pooling of expertise, and the like. Alongside this focus on corporate management, there has been considerable development of broader strategic planning, involving councils taking a more synoptic view of trends and issues in their local areas, even though these may extend beyond the formal responsibilities of local government. Initially, this form of strategic planning represented an extension of councils’ statutory functions in land-use planning, but increasingly it has come to reflect the need to integrate elements of planning associated with new roles in community services, environmental management, and economic development. The concepts of sustainable development and the “triple bottom line” (economic-social-environmental) have been influential in this regard. Finally, there has been an increasing emphasis on accountability and good governance, especially the accountability of councils to their local communities. This has led to greatly expanded requirements for community consultation in decision-making processes, as well as more accountability to ratepayers and electors through, for example, exhibition of draft budgets for comment before rates are struck and publication of detailed annual reports. In addition, councils are held accountable to both communities and state governments by a raft of scrutiny provisions, such as independent financial

Commonwealth of Australia

17

and, in some cases, performance audits; complaints procedures; oversight by anticorruption bodies, ombudsmen, and states’ local government departments; and the ever present possibility of intervention by state ministers. Decision making in local government is theoretically conducted almost entirely in public. Local government Acts provide for very few decisions to be taken in camera; such decisions are usually restricted to matters affecting individual members of staff and issues that can be deemed commercialin-confidence. Councils may establish committees and delegate some decision making to them, but as a general rule, committee meetings must also be held in public, and recommendations from committees can be debated at the ensuing council meeting. However, where one party or grouping of councillors has a clear majority, discussion in council meetings may be restricted. Metropolitan Regions Governance of Australia’s metropolitan regions is dominated by the states, with local government playing essentially a supporting role. Australia was colonized by the British from six widely dispersed capital cities located around the coast,21 with settlement then spreading outward from those centres. In every case, the former colonial capital remains the dominant population centre in what are now the states – typically housing half or more of each state’s population – and as such is the primary focus of state politics and administration. The same applies to the position of Darwin as capital of the Northern Territory. Management of metropolitan areas is thus one of the most important functions of state governments. They exercise tight control over metropolitan planning, including dealing directly with major development proposals, and most have established special-purpose agencies for urban transport, main roads, water, sewerage and drainage, pollution control, major cultural facilities, and other functions that might otherwise be the responsibility of local government. The exception to this has been Brisbane, where about 40% of the metropolitan population live within the boundaries of the central city. Brisbane City Council is a key provider of metropolitan infrastructure and services, including water and sewerage and public transport. Until recently, metropolitan planning for southeast Queensland was carried out as a truly cooperative venture by state agencies and local government.22 However, even here, pressures arising from metropolitan expansion, plus growing concerns about water supplies and local government’s capacity to manage population growth and infrastructure provision effectively, have prompted more state intervention and control.23 In addition to their political significance for state governments, a key factor limiting local governments’ role in metropolitan regions is their continued

18

Graham Sansom

division into tens or even scores of separate council areas. Metropolitan Sydney, for example, with a total population of 4.5 million, is divided into more than forty local governments, half with populations of 75,000 or fewer and several with under 40,000 people. Perth has twenty-nine local governments to serve some 1.5 million people, including six with populations of fewer than 10,000. This fragmentation undermines local government’s potential to handle metropolitan planning and management issues; yet councils have fiercely resisted amalgamation and have made only limited moves toward regional cooperation and resource sharing. It is also noteworthy that in Perth the state government has twice intervened to divide large councils, apparently to ensure the state’s political and administrative dominance. By contrast, the recently announced amalgamations of Queensland councils will place the metropolitan area under the control of just ten councils – half with populations of 250,000 or more. It remains to be seen how financially and politically powerful these large new councils will become and whether the changes will impact state-local relations. It might be expected that the titular capital-city councils would play a leadership role in metropolitan local government, but except for Brisbane, and to some extent Melbourne, this has not occurred. There are a number of reasons for this. First, apart from Brisbane, the capital-city councils cover absolutely or relatively small geographical areas in the heart of metropolitan regions, sometimes just the central business district and immediately adjoining suburbs. Second, in population terms, they are usually far from being the largest council in the metropolitan region. Third, they are typically the focus of most state intervention; major commercial developments in central areas are often “called in” by state planning ministers or handled by state-dominated committees. In the case of Darwin, the city council covers most of the urban area, but its functions are severely limited; planning controls, for example, rest with the territory government.

financing local government On average, Australia’s local councils fund well over 80% of their expenditure from their own sources, chiefly property rates and service charges. They have very low levels of debt, and on the surface most might appear to be financially sound. However, financial issues dominate discussion about the future of local government. Inquiries into the financial sustainability of councils have been commissioned by local government associations in four states (New South Wales, Tasmania, South Australia, and Western Australia), by the Queensland government, and nationally by the Australian Local Government Association. A study into local government’s revenue-raising capacity by the federal government’s Productivity Commission was completed in April 2008,24 and a similar inquiry by the New

Commonwealth of Australia

19

South Wales Independent Pricing and Regulatory Tribunal is currently under way. There are several reasons for this flurry of concern. First, although local government overall appears to be in a strong financial position, this is not the case for the many small rural and remote councils, which have very little capacity to raise revenue locally and are highly dependent on federal and state government grants. The Productivity Commission’s study found that 20% of councils depended on grants for at least 34% of their revenue, while 10% were highly dependent, with grants accounting for 43% or more of their revenue. It should be noted, however, that these councils represent only about 0.4% of the total population residing in local government areas. Second, many councils of all types and sizes are faced with substantial backlogs in infrastructure maintenance and renewal, resulting from several decades of relative cutbacks in infrastructure expenditure, made to fund increased responsibilities in planning, environmental management, economic development, and community services.25 Local government revenues have grown more slowly than those of the state and federal governments and not fast enough to cover both these new functions and an adequate standard of infrastructure maintenance and renewal. Council rates are a highly visible tax, levied through an annual notice sent to all property owners, and councillors have been reluctant to support necessary increases due to concerns about the reaction from ratepayers.26 Both councils and state governments have tended to use the consumer price index as a yardstick for rate increases, even though this is well below cost indices for local government and fails to take account of councils’ growing responsibilities. The Productivity Commission found that, for Australia as a whole, the ratio of rates revenue to gdp decreased from 1.0% to 0.9% between 1990–91 and 2005–06. If the ratio were still 1.0%, local government would be collecting around US$1 billion per annum more from rates. The report identified significant scope for most councils to raise additional own-source revenue, especially in metropolitan areas, where larger councils could become self-sufficient. Although it noted a variety of legislative and regulatory restrictions imposed by the states on the raising of own-source revenue by local government, it found that generally these do not appear to be significant impediments to generating sufficient revenue, except for rate-pegging and compulsory rating concessions in New South Wales (see below). Moreover, councils have been influenced by federal and state government moves to cut public sector debt and reduce borrowings, even though debt levels in local government are generally very low and borrowings are widely regarded as the most appropriate way to fund costly infrastructure with a life of several decades.27 The recent Independent Inquiry into the Financial Sustainability of New South Wales Local Government

20

Graham Sansom

recommended that councils in that state borrow a total of US$4 billion to help overcome infrastructure backlogs.28 Third, financial pressures on councils have been increased by cost shifting, with the states and, to a lesser extent, the federal government requiring councils to undertake additional functions, in terms of either service delivery or regulation and compliance, but without providing any financial support or access to offsetting revenues.29 Indeed, some states have simultaneously placed restrictions on councils’ ability to raise revenue. The most extreme example of this is rate-pegging in New South Wales, where for nearly thirty years councils have had to make special applications to the minister for local government if they wish to increase rates by more than a set percentage each year. The Productivity Commission found that New South Wales had the lowest average real rates per person in 2005–06. Furthermore, its real rates revenue per person was largely unchanged from 1998–99 to 2005–06, compared with increases in all other states, except Western Australia, and an average national growth of 1.6% per annum. Throughout Australia the financial management powers and responsibilities of local government are set out in local government Acts and can thus be modified by state governments at any time. State constitutions fail to provide any guarantee that local government can maintain its financial independence. Even so, with the exception of New South Wales, local councils presently enjoy a substantial measure of autonomy in setting rates and charges, and some states have, tacitly or explicitly, endorsed policies of accelerating rate increases to address infrastructure backlogs. Also, councils are not legally prevented from running deficits from time to time, although consistent deficit budgeting would undoubtedly attract some form of intervention by the state minister.30 In practice, councils nearly always adopt “balanced” budgets, even though the figures may conceal underexpenditure on infrastructure and, hence, a real decline in the underlying financial position. Although council finances are controlled by the states, the single most important source of external funding for local government are the federal financial assistance grants first introduced in the mid-1970s and maintained or increased under bipartisan policies ever since.31 These grants are untied (essentially unconditional), and in 2006 were worth over US$1.4 billion per annum. Financial assistance grants serve two purposes: (1) to reduce the vertical fiscal imbalance in the federation that results from Commonwealth dominance of all major forms of taxation; and (2) to promote horizontal equalization between rich and poor councils. They are distributed to councils via the states’ local government grants commissions that apply complex formulae to determine revenue and expenditure disabilities (a weak revenue base or inherently high costs of service delivery) and adjust grants accordingly. All

Commonwealth of Australia

21

councils receive a minimum per capita grant, but around two-thirds of total funding is allocated to nonmetropolitan areas where councils are generally in greater need. Even so, the total amount of money available is far from sufficient to bring those disadvantaged councils up to even an average capacity to deliver services. In addition to untied grants, councils also receive substantial federal support through special-purpose assistance, notably the Roads to Recovery Program introduced in 2000. This provides around US$300 million per annum for local road improvements and “strategic” regional roads managed by local councils. Total federal funding for local government is thus in excess of US$1.7 billion per annum. By comparison, recent data on state grants to local government show considerable variations from year to year, but in total they appear to average around US$1 to $1.2 billion per annum.32 Despite its problems, local government displays generally sound financial management in the sense that it accepts a large measure of responsibility for its own funding; budgets (excluding depreciation) are usually in balance; and there is a high degree of transparency and accountability. Councils report extensively to state agencies and to their constituents, audits are generally thorough, and financial corruption is rare. Moreover, the discipline imposed on councils by the need to fund increasing responsibilities, by state policies, and by the political imperative to contain rate increases has prompted improved efficiency and other forms of cost saving, such as resource sharing.

supervision of local government All aspects of Australian local government are subject to detailed state control.33 State governments reserve and exercise the power to amalgamate local government areas or change their boundaries, to dismiss duly elected councils and appoint commissioners or administrators in their place (usually after some sort of inquiry), and to establish other appointed bodies to undertake municipal functions. In New South Wales, for example, urban renewal of the inner Sydney suburbs of Redfern and Waterloo has been placed in the hands of a statutory authority, even though the area falls within the very well-resourced City of Sydney. The same applied to the early stages of redevelopment of the Melbourne docklands in Victoria, although that area has now been returned to local government control. Dismissal of elected councils occurs most frequently in New South Wales, perhaps reflecting a more interventionist culture than exists elsewhere. In early 2008 five New South Wales councils were under state-appointed administrators. State supervision is exercised primarily through ministers for local government and their departments. Typically, councils must submit annual reports and various other statistical and financial returns to state departments,

22

Graham Sansom

which may carry out inquiries if they have concerns about a council’s financial position or governance. Inquiries may also be initiated by state anticorruption commissions or ombudsmen on the basis of complaints or other information received. Supervision may also be cooperative and constructive. There are examples across Australia of state departments and local government collaborating to introduce improvements to management and governance. Better Practice Reviews conducted by the New South Wales Department of Local Government are a case in point. Moreover, a recent intergovernmental agreement, signed by federal, state, and local governments, seeks to enshrine a cooperative approach to determining respective roles and responsibilities.

intergovernmental relations Australia’s Constitution has very little to say about intergovernmental relations. Nor is there much in the way of law to guide cooperation or to resolve disputes between the federal and state governments. What has emerged, however, is an extensive and quite complex framework of intergovernmental forums and other mechanisms established administratively. Local government is now an accepted part of this framework. A literal interpretation of Australia’s Constitution places the federal and state governments on roughly equal terms, with little overlap in functions. Local government is wholly subservient to the states, with no direct relationship to the federal government. By contrast, the practical reality is one of federal dominance, extensive functional overlap between the federal and state governments, and direct links (both financial and functional) between local and federal governments. This reflects the federal government’s financial strength, derived from control of both income and indirect taxes, as well as a series of High Court decisions that have interpreted the Constitution in such a way as to extend federal powers.34 Local-Federal Relations Local government’s primary relationship remains with the states, based on the constitutional and legal frameworks, state oversight and control of local government activities, and the close interrelationships between state and local government responsibilities for service delivery and infrastructure. However, as federal power and influence have expanded into areas previously the sole domain of the states, and as federal interest in working more directly with regional and local communities has grown, local government has found itself dealing more regularly with federal agencies and needing to establish a political presence nationally.

Commonwealth of Australia

23

The critical threshold in local government’s involvement with the federal government came in the early 1970s when the Whitlam Labor government introduced general-purpose financial assistance as well as new special-purpose grants. Its support for local government was undoubtedly aimed in part at bypassing the states, which were seen as likely to frustrate any expansion of federal government influence. At the time, some officials in local government opposed what they saw as radical and dangerous federal policies, despite the financial benefits and promise of more status in the federal system. In 1975 the Whitlam government was replaced by a conservative coalition, and many of Whitlam’s programs were abandoned. However, federal financial assistance to local government was retained and increased, and the new Fraser government also established the Advisory Council for Intergovernment Relations, which devoted considerable time and resources to examining issues affecting local government and its place in the federal system, leading ultimately to the 1988 referendum on recognition of local government in the federal Constitution. During the 1980s, there was steady growth in federal-local links. The Hawke Labor government established the federal Office of Local Government and supported local government participation through the Australian Local Government Association (alga) in a number of ministerial councils – regular meetings of federal and state ministers with closely related or overlapping responsibilities. One of these is the Local Government and Planning Ministers Council. In 1990 Prime Minister Hawke launched a major new initiative to improve intergovernmental relations – the Special Premiers Conferences. These two conferences were intended to promote a range of reforms to federal-state relations, as well as to continue and extend the federal government’s longstanding microeconomic reform agenda. alga had observer status at the conferences and subsequently became a member of their successor, the Council of Australian Governments (coag). This remains the peak intergovernmental body and comprises the prime minister, state premiers, and territory chief ministers, plus the president of alga. Local government representatives were then included in a raft of committees and working groups of officials established to assist coag and to pursue specific agendas, such as microeconomic reform and ecologically sustainable development. In the main, alga has had to rely on federal government support to secure its seat at the table. The states tend to be cautious or negative about local government’s participation in what are often sensitive discussions touching on the balance of power between the states and the federal government. They can always argue that local government is their constitutional responsibility and that whenever legislation is required to apply coag agreements to local

24

Graham Sansom

government, it is theirs to frame and promulgate. Sometimes such arguments hold sway, and alga is not always included in coag working groups. Another innovation of the late 1980s was the introduction of annual meetings between alga’s national executive and the prime minister and senior ministers, known as the High Level Consultations. In 1995 these led to negotiation of a Commonwealth-Local Government Accord setting out a shared policy agenda. The accord was short-lived, however, because the then Keating Labor government lost the federal election held in March 1996. The incoming conservative coalition initially retreated from close working links with local government, adopting a more traditional states’ rights position. However, the early years of the twenty-first century have seen further strengthening in federal-local relationships. There appear to be two key factors at work. First, local government has been able to capitalize on renewed federal interest in regional (nonmetropolitan) development, sparked by the then government’s need to bolster the position of the rural-based National Party. Second, in the early years of this century, the federal coalition found itself confronted by Labor governments in all states and both territories. Not surprisingly, this turn of events appeared to weaken its traditional support for states’ rights, and like its Labor predecessors, the coalition apparently came to see local government as a useful mechanism to implement some of its policies and programs – with or without state support and involvement. These forces coalesced in the coalition’s decision in 2000 to establish the Roads to Recovery Program, under which grants are paid directly to councils, even though this may be considered in breach of the Constitution. Then, in 2002, the government announced an inquiry into Local Government and Cost Shifting, which many saw as a political move designed to embarrass Labor state governments. The inquiry undertook a wide-ranging examination of the position of local government in Australia’s federal system, including its current roles, responsibilities, and financial position as well as its relations with state and federal governments. It highlighted the need for improvements to intergovernmental relations in order generally to clarify roles and responsibilities and specifically to reduce cost shifting onto local government. Its key recommendations included: •

•

•

new intergovernmental agreements on roles, responsibilities, and associated funding measures, on cost shifting, and on addressing arbitrary state restrictions on local government revenue a House of Representatives resolution recognizing local government as an integral level of the governance of Australia a coag summit on intergovernmental relations to review progress and promote further steps, including best practices in establishing working partnerships between the three spheres of government

Commonwealth of Australia •

25

major changes to the system of financial assistance grants to assist smaller councils

The coalition government rejected a coag summit and changes to arrangements for financial assistance grants, but it did promote an intergovernmental agreement (iga) dealing with cost shifting and related issues and initiated the Productivity Commission study into local government’s capacity to raise revenue. The Inter-Governmental Agreement Establishing Principles Guiding InterGovernmental Relations on Local Government Matters was signed by the federal government, states, territories, and alga in April 2006.35 It acknowledges that local government is established and regulated under state laws but that there is a need to develop a framework to improve the way the three spheres of government relate to each other in achieving the best possible outcomes for communities, including how services are funded and delivered. The agreement promotes and, in some instances, requires greater consultation and negotiation with local government when federal or state governments seek or impose the provision of additional services or functions by councils. As a general rule, more attention is to be given to the financial implications and other impacts of adding to local government’s functions. For its part, local government has committed to sound public governance through good fiscal and asset management, by ensuring that decisions are made with regard to their effects on future generations, through better strategic planning and pricing regimes, and by taking responsibility for the funding implications of its own policy decisions. These undertakings address some criticisms of local government management made by the cost-shifting inquiry. Local-State Relations Relationships between local and state governments vary greatly from state to state and over time, but as a general rule, they tend to be somewhat uneasy and unstable.36 This reflects the underlying forces at work. On the one hand, local government is created by, and is legally subservient to, the states; on the other hand, most councils are, to a large extent, financially independent of their state masters. Moreover, as was the case in colonial times when local government was first established, many administrative, regulatory, and public works functions can be carried out effectively only by local entities. Certainly, the states have the option of delivering “local” services by regionalizing their agencies, but this can be expensive, and recent years have seen a reduction in the number and scope of state-funded regional authorities and offices. Due to their legal relationship and overlapping functions, state and local governments are engaged in a more or less continuous dialogue at an operational level. This is commonly conducted by means of a raft of special-purpose

26

Graham Sansom

consultative or advisory committees. However, formal mechanisms for exchange of views on policy matters or for joint planning have been much less common, particularly on a “whole of government” basis. There is rarely a clearly articulated statement of roles and responsibilities or shared priorities, and scarce resources can be wasted due to a lack of coordination between state and local policies, programs, and expenditure decisions. Nevertheless, the beginning of the current century has been a time of relatively productive state-local relations in all jurisdictions, except New South Wales, where the combination of rate-pegging, a generally dismissive attitude on the part of the state government, and a relatively weak local government association seems to present intractable barriers to consistent and effective cooperation. Most states have a forum of some sort for regular meetings between the premier and/or senior ministers and representatives of the state’s local government association. Most have also seen the negotiation of protocols or partnership agreements between state and local governments on key policy issues. The best developed framework is in Tasmania, where a wide range of agreements have been negotiated at state, regional, and local levels, including an individual agreement between the state and each of the twenty-nine local councils. It is interesting to note the philosophy underlying the Tasmanian agreements. According to the head of the Local Government Division in the Department of Premier and Cabinet: “They not only provide the state government with a structured way of talking to local government, they also reflect the increasing complexity of local government as it expands its responsibilities towards the broader social mix of community democracy.”37 Queensland and South Australia also have long histories of negotiating state-local government protocols and agreements across a range of issues. In Queensland these include an umbrella protocol on the role of the system of local government and agreements on financial relationships. Similarly, South Australia has a State-Local Relations Agreement to “improve consultation arrangements, government communication practices and to build a closer, more productive and collaborative working relationship between State and Local Government.”38 Significantly, the South Australian minister for local government is titled “minister for state/local government relations,” and, as in Tasmania, the need to strengthen local government’s capacity to play an enhanced role in the state public sector has been explicitly recognized in the State-Local Relations Agreement. Organized Local Government Australia has a federal system of local government associations comprising seven state and territory associations as well as the Canberra-based Australian Local Government Association. The latter is a “wholly owned subsidiary” of

Commonwealth of Australia

27

the state and territory associations, which monopolize direct links with member councils and collect all membership fees. alga thus tends to struggle with limited resources that have not increased sufficiently to match the growing complexity of local government’s involvement in federal forums and policy debates. Much of the work of state and territory associations revolves around links between local government and state agencies, plus what might be termed operational policy issues, such as how legislation is administered and how state programs of assistance to councils are managed. To varying degrees, however, the more significant role of the associations lies in their contribution to the ongoing evolution of the system of government, and to how local government fits into that system in terms of respective roles and responsibilities, financial relationships, higher-level policy, and so on. This aspect of their role has been highlighted by the findings of recent inquiries into local government’s financial position and the steps needed to secure a sustainable system of local government in the long term. For example, in response to the findings of their financial inquiry, the New South Wales Local Government and Shires Associations established a Strengthening Local Government Task Force to undertake a wide-ranging review of related management and governance issues.39 These policy imperatives also resonate in the federal arena, and despite its limited resources, alga has assumed a much higher profile over the past few decades. By the early 1990s it was clear that local government, and specifically alga, needed a much more robust national policy platform and a stronger political presence to carry its rapidly growing representational load and to advocate effectively in intergovernmental forums, notably the new Council of Australian Governments. A number of larger urban councils were expressing dissatisfaction with alga’s performance, and the capital-city lord mayors had established their own national body.40 To strengthen its position, alga decided in 1994 to institute the annual General Assembly of Local Government, to be convened in the federal capital, Canberra, and to be open to all councils across Australia. Moreover, it revamped its previous set of policy statements as the new National Agenda for Australian Local Government, to be adopted and then updated annually by the General Assembly.41 The general assemblies have become notable events on the political calendar. They appear to have consolidated alga’s position as the national arm of local government and enhanced its presence in both the political arena and intergovernmental forums.

political culture of local governance Throughout Australia local governments are elected under a universal adult franchise for residents but with a supplementary property franchise

28

Graham Sansom

in all jurisdictions, except Queensland and the Northern Territory.42 Elected councils typically consist of seven to fifteen councillors. They are headed by a mayor, who may be directly elected by the voters for the full term of the council (three or four years) or elected by and from the councillors, in which case there may be a mayoral election every twelve months. The level of voter turnout in council elections varies widely. In Queensland, New South Wales, Victoria, and Tasmania, voting for local government is compulsory, as it is for state and federal elections throughout Australia. In South Australia and Western Australia voter turnout can be quite low (30% or less), depending on the amount of interest generated by current local government issues. In response, measures such as postal voting have been introduced to encourage higher levels of participation. The number of councillors is relatively low by international standards. Each councillor in Australia represents on average 3,000 residents. In Victoria the average is over 8,000, and councillors in large metropolitan and regional councils can each have 15,000 or more constituents. Yet with few exceptions, councillors are part-time, receive only expenses and/or modest allowances, and must perform their duties with little administrative or research support. This combination of factors tends to limit the number and type of people in a position to stand for election. Only 30% of councillors are women, and women are also seriously underrepresented in senior professional and management positions. In both cases, this reflects a dominant male culture and the special difficulties faced by women in balancing family and public life.43 Very few councillors are recent migrants or (except in indigenous councils) of Aboriginal or Torres Strait Islander descent. The level of overt party politics in local government varies greatly from one council to another. As a general rule, party tickets are uncommon outside major metropolitan and regional centres. The Labor Party tends to be well organized in those large centres and evidently uses local government as a training ground for future members of state or federal parliaments. The Liberal and National parties appear to place less emphasis on local government, although the Liberal Party is active in some urban areas and “independent” councillors in rural Australia are often seen to be sympathetic to the National Party. A few councils are regarded as glittering political prizes, notably the cities of Brisbane, Sydney, and Melbourne.

e m e r g i n g i s s u e s a n d tr e n d s Despite its weak constitutional and legal positions, local government has made considerable progress toward acceptance as a partner – albeit junior – in the federal system. This has occurred primarily as a result of the growing power of the federal government relative to the states, together with

Commonwealth of Australia

29

federal financial and policy backing for an expanded role for local councils, plus support for local government membership of key federal forums. Although local government remains legally subservient to the states, it would not be in the states’ financial interests to seek to reverse the direction of federal policy, which has enabled them to limit their own financial support to local government. Many in local government see recognition in the federal Constitution as fundamentally important to its future, but to date there is little evidence that lack of such recognition has hampered local government’s expanded role and growing stature. As Nico Steytler points out, constitutional recognition in and of itself does not create effective local government; local selfgovernment is embedded in practice.44 In this regard, A.J. Brown has argued for “comprehensive, holistic and serious” reform that goes far beyond the symbolic or minimalist approaches to constitutional recognition pursued to date.45 He makes the case for a “general overhaul of the federal system” involving substantial rearrangement of the roles and structures of both local and state governments: “If the current theory of a cooperative, national federal system is to yield any new breakthroughs, then it appears the position of local government vis-à-vis the states will eventually need to be tackled head on.”46 The fact remains, nevertheless, that local government’s emergence on the federal scene is presently not guaranteed and could be reversed at any time if federal and state governments were to agree on such a course. At this stage, local government’s admission to federal forums can be interpreted as placatory rather than empowering, and alga’s position remains weak because it cannot bind its member local government associations and their member councils. Moreover, the states could effectively legislate away any national agreement alga might secure that did not suit their purposes. One of local government’s potential strengths in federal relations is the high degree of financial independence enjoyed by large councils in metropolitan areas and major regional centres. These councils have the capacity for effective strategic planning and are able to deliver a wide range of essential infrastructure and services from their own resources.47 They can become valued partners in the federal system, helping federal and state governments to tackle complex issues that require coordinated local management. For example, local government has already demonstrated a willingness to take a lead on climate change. Australia has the world’s highest rate of participation in the Cities for Climate Protection® program, overseen by the International Council for Local Environmental Initiatives (iclei), and local government has received strong federal government support for its efforts. Provision of integrated services to an aging population is another area where local government can play a major role. alga has worked with federal agencies to prepare a national strategy,48 and in

30

Graham Sansom

Tasmania local, state, and federal governments have signed a tripartite partnership agreement on meeting the needs of an aging population.49 Yet, at the same time, local government appears to suffer from a poorcousin mentality, often presenting itself as a mendicant, unable to meet its responsibilities without more state and federal support. In part, this accurately portrays the growing difficulties faced by small rural and regional councils with a limited rating base, but as the Productivity Commission’s findings suggest, it may also reflect a reluctance among many, if not most, councils to make a greater effort to raise revenue from their own sources. There has been substantial growth in service fees and charges as a source of revenue, but unlike state and federal taxes, property rates have failed to keep pace with growth in gdp and personal incomes. The tendency has been for higher fees and charges to substitute for rate increases rather than adding to total revenue. However, this situation is beginning to change in several states as recent studies reveal the depth of local government’s underlying financial problems. The notable exception is New South Wales with its system of rate-pegging. As noted earlier, bigger, more independent councils are the product of suburban or regional population growth, plus amalgamation of smaller local government areas. The recent wholesale restructuring in Queensland suggests that there remains considerable scope for further amalgamations in other states, especially in metropolitan areas, large regional centres, and some more densely populated rural areas. This could greatly strengthen local government’s strategic presence and capacity, making it a more attractive federal partner, but most councils remain strongly opposed to amalgamations. Finally, there is the question of local government’s ability to engage effectively in intergovernmental processes with the federal and state governments. Writing more than twenty years ago, Ralph J.K. Chapman and Michael Wood reflected on the gains local government had already made in establishing itself on the intergovernmental stage but observed that much more needed to be done: “To survive as part of the body politic local government must accustom itself to, and be seen to be, operating as part of the intergovernmental network.”50 They argued that intergovernmental negotiations demand much more than simple advocacy of local concerns and perspectives: “Advocates respond to issues: what is needed to protect local interests in the intergovernmental system is not advocacy alone, but full-time involvement in the political and administrative activity of the federal and state governments.”51 Against this background, it will be interesting to see how local government fares under the recently elected federal Labor government. In opposition, Labor promised a new cooperative federalism, including closer engagement with local government. It committed to forging partnerships with local and regional communities in order both to formulate whole-of-government,

Commonwealth of Australia

31

place-based strategies and to work on specific issues, such as housing affordability and improved health services. In particular, Labor signalled the establishment of the Council of Australian Local Governments to comprise a number of senior federal ministers and representatives of alga, state local government associations, and the Council of Capital City Lord Mayors, plus unspecified “regional bodies and other stakeholder organizations.” The new council would have two initial tasks: first, to plan for a referendum on constitutional recognition of local government and, second, to provide advice on future funding arrangements and a clearer definition of local government’s roles and responsibilities within the federation.52 An inaugural meeting of the new council, renamed the Australian Council of Local Government, was held in November 2008. It will be chaired by the federal minister for local government, have a broadly representative steering committee with membership along the lines indicated above, and hold an annual forum open to every mayor in Australia (as was the inaugural meeting). However, at the time of writing, further details of the council’s intended scope of activity had yet to be announced.53 Labor did not commit to a timetable for constitutional recognition but rather to a process of consultation, eventually leading to a referendum. However, the former shadow minister for local government did offer the following comments on what constitutional recognition might involve: We support Constitutional recognition because we believe that it is important to redefine the relationship between Commonwealth, state and local governments ... We need to make sure that local government is properly positioned to play its role as a key part of the government of this country. Local councils should no longer be seen as the plaything of State governments, to be dismissed or restructured at will ... I remind you that proposals for Constitutional recognition have twice been defeated. Opponents of Constitutional recognition will take advantage of any ambiguity in what Constitutional recognition might mean ... It is important that local government develop a clear idea of the form of Constitutional recognition that it prefers, and that local government be prepared to campaign with a single voice to build community support for this important initiative.54

The shadow minister’s comments appear to echo the views of A.J. Brown quoted above, and they hint at a form of constitutional recognition considerably more robust than that proposed in the 1988 referendum. As discussed earlier, it is doubtful whether such a proposal could succeed. Labor’s policies pose significant challenges for local government. Can it develop a coherent national policy agenda that goes beyond simply asking for more federal assistance? Will local councils prove to be capable partners in formulating and implementing place-based strategies? Will the Australian Council of Local Government speak with a single voice or reveal

32

Graham Sansom

serious divisions between local government’s varied representative organizations? And what will be the impact of the Productivity Commission study on local government’s revenue-raising capacity? alga’s initial response was to argue that overall, rates, fees, and charges are already rising as rapidly as can be expected and that a major shortfall in revenue has resulted from the declining level of financial assistance grants relative to total federal taxation.55 Such views seemed unlikely to appeal to a federal government grappling with the need for strict fiscal discipline in order to combat rising inflation,56 although the subsequent onset of the global financial crisis and prospect of a recession have brought about a marked shift toward Keynesian policies of increased government expenditure to offset reduced private-sector activity. The re-election of a Labor government has nonetheless underlined the potential for local government to make further progress toward securing its place in the Australian federation and to translate the procedural gains of recent years into more tangible advances in the way its role is perceived and supported by state and federal governments. Brown draws the following conclusion: “Although local government remains structurally weak, it is on a growth path – much stronger, much more credible and better recognized by its citizens than 40 years ago ... Questions of how best to develop the capacity of local government to shoulder a greater burden, including its own structural reforms, have ceased to be purely state-level questions: they are also clearly national ones.”57

notes 1 The precise count varies depending on the inclusion of local governing bodies “declared” for the purposes of the Commonwealth’s Local Government (Financial Assistance) Act 1995 but not established under states’ local government Acts. Currently, 559 local councils operate under those Acts. 2 Throughout this chapter, references to “state” include the Northern Territory, unless otherwise noted. 3 The term “council” is used in Australia to refer both to the elected body of councillors and to the local government unit as a corporate entity. A council may be called a municipality, shire, or city. 4 For broad coverage of issues in Australian local government, see Brian Dollery and Neil Marshall, eds, Australian Local Government: Reform and Renewal (Melbourne: MacMillan Education Australia, 1997); and Brian Dollery, Neil Marshall, and Andrew Worthington, eds, Reshaping Australian Local Government: Finance, Governance and Reform (Sydney: University of New South Wales Press, 2003). 5 For detailed accounts of various aspects of the Australian system of government, see Cheryl Saunders, “Commonwealth of Australia,” in Constitutional Origins, Structure and

Commonwealth of Australia

6 7 8

9 10

11 12 13

14

15

16 17

18

33

Change in Federal Countries, ed. John Kincaid and G. Alan Tarr, 13–47 (Montreal and Kingston: McGill-Queen’s University Press, 2005); John M. Williams and Clement Macintyre, “Commonwealth of Australia,” in Distribution of Powers and Responsibilities in Federal Countries, ed. Akhtar Majeed, Ronald L. Watts, and Douglas M. Brown, 8–33 (Montreal and Kingston: McGill-Queen’s University Press, 2006); Cheryl Saunders and Katy le Roy, “Commonwealth of Australia,” in Legislative, Executive and Judicial Governance in Federal Countries, ed. Katy Le Roy and Cheryl Saunders, 38–70 (Montreal and Kingston: McGill-Queen’s University Press, 2006); and Alan Morris, “Commonwealth of Australia,” in The Practice of Fiscal Federalism: Comparative Perspectives, ed. Anwar Shah, 43–72 (Montreal and Kingston: McGill-Queen’s University Press, 2006). See http://www.dfat.gov.au/GEO/fs/aust.pdf (viewed 30 January 2008). The Northern Territory has an “administrator.” For a useful historical summary, see Rolf Gerritsen and Dick Osborn, “Reform of Local Government in Australia,” in Comparative Study on Local Government Reform in Japan, Australia and New Zealand, ed. Council of Local Authorities for International Relations, 51–112 (Sydney: Japan Local Government Centre, 1997), 59–62. Australian Bureau of Statistics, “Australian Labour Market Statistics,” January 2008. Whether amalgamations achieve improvements in efficiency and effectiveness remains a matter for vigorous debate; see, for example, A. Witherby, B.E. Dollery, N.A. Marshall, and A. Auster, Is Bigger Better? Towards a Model Process for Local Government Structural Reform (Sydney: Australian Institute of Urban Studies, 1999). For further details, see http://www.strongercouncils.qld.gov.au (viewed 30 January 2008). See http://www.localgovernment.nt.gov.au/new (viewed 30 January 2008). See Chris Aulich and Rebecca Pietsch, “Left on the Shelf: Local Government and the Australian Constitution,” Australian Journal of Public Administration 61, no. 4 (December 2002): 14–23. In Queensland a bill to end the system of local government requires a referendum; in South Australia such a bill requires an absolute majority of both houses of parliament; in Victoria a referendum is required to amend the constitution with respect to local government. Cheryl Saunders, “Constitutional Recognition of Local government in Australia,” in The Place and Role of Local Government in Federal Systems, ed. Nico Steytler, 47–64 (Johannesburg: Konrad-Adenauer-Stiftung, 2005); Anne Twomey, “Sub-National Constitutional Law – Australia,” in International Encyclopaedia of Constitutional Law (New York: Kluwer, 2004), paras 329–51. A referendum must gain majority support in a majority of states (i.e., four out of six), plus an overall majority, and voting is compulsory. House of Representatives Standing Committee on Economics, Finance and Public Administration, Rates and Taxes: A Fair Share for Responsible Local Government (Canberra: Parliament of the Commonwealth of Australia, 2003). Prior to the 2007 federal election, the then coalition government saw political advantage in supporting community referenda on the proposed local government

34

19

20

21

22 23

24

25

26

27

Graham Sansom

amalgamations in Queensland. The state government had acted to prevent councils from holding such referenda. The federal Parliament passed the Commonwealth Electoral Amendment (Democratic Plebiscite) Act 2007, authorizing the Commonwealth Electoral Office to conduct the local referenda and seeking to override state legislation prohibiting them. Nevertheless, federal legislation could not prevent the amalgamations, which remain constitutionally a state matter. See Ed Wensing, “Systemic Reform or Administrative Update? Recent Legislative Changes in Local Government around Australia,” in Local Government Restructuring in Australasia, ed. Ralph Chapman, Marcus Haward, and Bill Ryan, 24–44 (Hobart: Centre for Public Management and Policy, University of Tasmania, 1997). See Chris Aulich, “From Convergence to Divergence: Reforming Australian Local Government,” Australian Journal of Public Administration 58, no. 2 (June 1999): 12–23. In order of metropolitan population, the state capitals are Sydney (New South Wales), Melbourne (Victoria), Brisbane (Queensland), Perth (Western Australia), Adelaide (South Australia), and Hobart (Tasmania). Canberra is the national capital, located within the Australian Capital Territory. See John Abbott, “A Partnership Approach to Regional Planning in South East Queensland,” Australian Planner 38, nos 3–4 (2001): 114–20. New arrangements for management of water supplies that will transfer bulk supply responsibilities to the state government and substantially reduce the role of local government are to come into effect in 2010. Productivity Commission, “Assessing Local Government Revenue Raising Capacity,” draft research report, Commonwealth of Australia, 2007. The Productivity Commission is a statutory body that undertakes independent investigations into economic and policy issues referred by the federal government. The Independent Inquiry into the Financial Sustainability of New South Wales Local Government estimated overall underspending on infrastructure renewal in that state to be US$300–460 million per annum. It would cost around US$4.8 billion to restore these assets to a satisfactory condition. A further US$11 billion may be needed to replace existing assets over the next fifteen years. This does not take account of new infrastructure needs for a growing and shifting population. See Independent Inquiry into the Financial Sustainability of New South Wales Local Government, “Final Report: Findings and Recommendations,” May 2006. Recent experience in several states, where councils have for varying reasons pursued substantial rate increases, suggests that fears of a ratepayer backlash are largely groundless. For example, in New South Wales councils seeking an increase above the rate-pegging limit must undertake extensive community consultation, and most receive community support on the grounds that services will improve. The absolute sums of money involved are rarely more than US$80 per household per annum. See, for example, B. Dollery, L. Crase, and A. Johnson, Australian Local Government Economics (Sydney: University of New South Wales Press, 2006), 281.

Commonwealth of Australia

35

28 Independent Inquiry into the Financial Sustainability of New South Wales Local Government, “Final Report,” 302. 29 House of Representatives Standing Committee on Economics, Finance and Public Administration, Rates and Taxes. 30 Ultimately, state governments are responsible for local governments’ debts. 31 See Richard Webb, Commonwealth General Purpose Financial Assistance to Local Government, research paper no. 9 (Canberra: Parliamentary Library, Parliament of the Commonwealth of Australia, September 2007). 32 Australian Government Department of Transport and Regional Services, “2005–06 Local Government National Report,” 2006, 24. 33 The Constitution does not give the federal government any power to supervise local government, except to the extent that federal legislation may apply to some aspects of local government operations and conditions may be attached to grant funding. 34 See Clement Macintyre and John Williams, “Australia: A Quiet Revolution in the Balance of Power,” in Dialogues on Distribution of Powers and Responsibilities in Federal Countries, ed. Raoul Blindenbacher and Abigail Ostien, 3–5 (Montreal and Kingston: McGill-Queen’s University Press, 2005). 35 See http://www.lgpmcouncil.gov.au/publications/reference.aspx (viewed 4 July 2007). 36 Graham Sansom, “Three Weddings, a Loveless Marriage and a Rich Uncle: Local Government Reform and Intergovernment Relations in Australia,” in Proceedings of the clair Forum (Sydney: Japan Council of Local Authorities for International Relations, 2002). 37 Marguerite Scott, “Partnering for Change: The Tasmanian Partnership Agreements Experience,” paper presented to the conference “Cutting Edge of Change,” University of New England, Armidale, February 2002. 38 See http://www.localgovt.sa.gov.au/policy (viewed 20 February 2008). 39 See http://www.lgsa-plus.net.au/www/html/1359–strengthening-local-government. asp (viewed 20 February 2008). 40 The Council of Capital City Lord Mayors. In most cases, the “capital city” is a local government area covering only the central business district and adjoining suburbs, although in Brisbane and Darwin the “city” council also administers much of the urban area. 41 See http://nga.alga.asn.au/business/nationalAgenda/intro.php (viewed 20 February 2008). 42 A “property franchise” gives a vote to owners of property as well as to residents. This varies from state to state, but it typically applies only to nonresident property owners and grants only one vote irrespective of the number of properties owned. 43 Australian Local Government Women’s Association, “Review of the National Framework for Women in Local Government – The Way Forward,” May 2007. 44 Nico Steytler, “Introduction,” in The Place and Role of Local Government in Federal Systems, ed. Nico Steytler, 1–9 (Johannesburg: Konrad-Adenauer-Stiftung, 2005), 8.

36

Graham Sansom

45 A.J. Brown, “Subsidiarity or Subterfuge? Resolving the Future of Local Government in the Australian Federal System,” Australian Journal of Public Administration 61, no. 4 (December 2002): 24–42, at 24. 46 Ibid., 39. 47 The Productivity Commission, Assessing Local Government, xxx, found that many urban councils could increase own-source revenue sufficiently to fund current levels of expenditure without any grant support. 48 See http://www.alga.asn.au/policy/healthAgeing/ageing/plan (viewed 4 July 2007). 49 See http://www.dpac.tas.gov.au/divisions/lgo/partnerships/news.html (viewed 26 February 2008). 50 Ralph J.K. Chapman and Michael Wood, Australian Local Government: The Federal Dimension (Sydney: George Allen and Unwin, 1984), 12. 51 Ibid., 167–8. 52 Senator Kate Lundy, speech to the Local Government Association of Queensland, 29 August 2007, http://www.katelundy.com.au/localgovernment.htm (viewed 27 February 2008). 53 See http://www.aclg.gov.au (viewed 19 December 2008). 54 Senator Kate Lundy, speech to the Local Government Association of Queensland, 29 August 2007, http://www.katelundy.com.au/localgovernment.htm (viewed 27 February 2008). 55 Letter from alga to Productivity Commission, dated 18 February 2008, http://www.alga.asn.au/policy/finance/algas_Comments_on_Draft_PC_ Local_Government_Study.pdf (viewed 27 February 2008). 56 See, for example, Hon. Wayne Swan, federal treasurer, RBA Statement on Monetary Policy, press release no. 007, 11 February 2008, http://www.treasurer.gov.au (viewed 27 February 2008). 57 A.J. Brown, “Federalism, Regionalism and the Reshaping of Australian Governance,” in Federalism and Regionalism in Australia: New Approaches, New Institutions? ed. A.J. Brown and Jennifer Bellamy, 11–32 (Canberra: Australian National University Press, 2006), 23.

Republic of Austria andreas kiefer a n d fra nz sc h au sb e r g e r “The measure of things therefore is man, not humanity, society, nation or the state. As man is small also his institutions – family, enterprise, tavern, hospital, village, city, singing club – remain relatively small, in order not to squeeze him,” writes Salzburg-born philosopher Leopold Kohr, promoting “the human measure of things.”1 This sentiment seems to reflect his country of birth. In Austria 42,248 municipal councillors perform their mostly unsalaried duties in 2,357 municipalities for 8.3 million inhabitants. Thus, with one councillor for every 196 citizens, or 5.1 councillors per 1,000 inhabitants, local officials are within easy reach of the electorate. This small structure is an intrinsic feature of Austria, and the small size of many municipalities is rarely questioned. Indeed, in 2007 the federal government declared its intention to amend the Federal Constitutional Act (Bundes-Verfassungsgesetz, or b-vg) in order to further protect the existence of small municipalities and also its intention to facilitate intermunicipal cooperation in order to improve citizens’ services, achieve economies of scale, and provide expertise. After the collapse of the governing coalition in the summer of 2008, this unchallenged initiative was reintroduced as an objective for the legislative period 2008–13. Local government implements federal and Land legislation and employs one-third of all civil servants. Opinion polls show that the highest rates of citizen trust and confidence are in mayors (74%), the federal president (68%), municipal councillors (64%), and Land governors and governments (61%).2 The figures for other federal and European politicians range between 45% and 28%. A December 2005 survey confirmed the high esteem for local government (68%) and Land governments (64%), clearly ahead of that for the federal Parliament and the federal government, with 40% each, and for the European Union Commission, with only 19%.3 Given the long tradition of representative democracy, public institutions and political parties are the main actors. Awareness of individual citizenship (Staatsbürgerlichkeit) is not highly developed, and demonstrations by

Republic of Austria

39

the general public are rare. Democratic life in Austria gets its momentum mostly from social partners, organized civil society, and political parties. Momentum rarely comes from individual citizens.4 This lack of individual political initiative is compensated for by the commitment of numerous Austrians to associations and clubs, many of which are indispensable to social existence and public life in the municipalities. They offer sports as well as social and cultural activities, preserve traditional customs, run voluntary firefighting and rescue services, and much else. The number of registered associations as of 31 December 2007 was 111,282, thus also showing very small structures, with one association or club for every seventy-five citizens.5 Austrian sports associations alone accounted for 3.36 million members (40.4% of the population). Despite decreasing voter participation and the decline in people willing to stand for mayor, volunteer community services remain attractive. Among Austrians older than fifteen years, 44% engage in organized or informal unsalaried activities, to which they contribute on average 3.9 hours per week.6 Austria is a democratic republic and federal country, consisting of the nine autonomous Länder of Burgenland, Carinthia, Lower Austria, Upper Austria, Salzburg, Styria, Tyrol, Vorarlberg, and Vienna.7 Although the federal Constitution assigns most competences to the federation, most federal laws are implemented by Land authorities, a system called indirect federal administration. As political authorities and administrative units, the municipalities are the third order of government entrenched in the federal and Land constitutions.8 Austria covers 83,871 square kilometres in the eastern part of the Alps and had 8,342,746 residents in October 2008. Austria’s population is rather homogenous. The official languages spoken are German (88.6%) and, in parts of the territory, Croatian (1.6%), Hungarian (0.5%), and Slovenian (0.3%). Religious belief does not play a major role in public life, but in the 2001 census 73.6% of the population identified as Roman Catholic, 4.7% Protestant, 4.2% Muslim, 0.1% Jewish, and 12% without religious belief. After Luxemburg, 38.6% of whose residents are foreign, Austria has the second highest proportion of foreign residents (9.4%) in the European Union (eu), followed by Germany with 8.9%. The four largest groups (as of 1 January 2008)9 were from Serbia and Montenegro (133,692), Turkey (109,716), Germany (124,088), and Bosnia and Herzegovina (85,215). The proportion of foreign residents ranges from highs of 18.7% in Vienna and over 12.8% in Vorarlberg and 12.3% in Salzburg to lows of 6.2% in Carinthia, 5.7% in Styria, and 4.5% in Burgenland.10 Within Land Salzburg’s municipalities, the number of foreigners ranges from 0.6% to 35.7%. These statistics show that problems can arise regionally because 15% or more of foreigners are a challenge for municipalities with respect to integration, schooling, and tolerance.11

40

Andreas Kiefer and Franz Schausberger

The 2007 gross domestic product (gdp) of €270.8 billion (US$371.2 billion) amounted to approximately €32,570 (US$44,645) per capita.12 In 2006 Land disparities per inhabitant ranged from €20,500 (US$25,749) in Burgenland to €34,800 (US$43,710) in Salzburg – not taking into account the special situation of Vienna as the capital, with €41,500 (US$52,125). The rate of economic growth over the past few years has been stable, as has been the economic outlook. The International Monetary Fund’s World Economic Outlook, October 2008 showed a real growth of gdp for 2006 of 3.4% and 2007 of 3.1%. The outlook for 2008 was 2.0% and for 2009 it was 0.8%. These figures are slightly higher than the ones reported and expected for the euro-area, with 2.8% and 2.6% in 2006 and 2007 and 1.3% and 0.2% in 2008 and 2009 respectively.13 The rules of the European Economic and Monetary Union keep the deficits of public budgets relatively low: 0.5% of gdp (2007) in Austria compared to 0.9% in the twenty-seven eu member states (eu-27). Public debt as a percentage of gdp (2007) amounts to 59.1% in Austria and 58.7% in the eu-27.14 This is one of the results of the involvement of the Länder and municipalities in the Austrian stability pact (described below). The Austrian legal system is based on civil law. Public life is governed by representative democracy, proportional representation, and self-government. The 183 members of the National Council (Nationalrat), the 448 members of the nine one-chamber Land parliaments, called Landtage, and the 42,248 members of municipal councils are elected directly, as are the federal president and the mayors in six of the nine Länder. The members of the second federal chamber, the Federal Council (Bundesrat), are elected by the Land parliaments after a Land holds its election. The continual turnover of its present 62 members means that the Federal Council has no legislative period. The number of seats per Land may be adapted according to decreases or increases in the population. The executives are either appointed – for example, the members of the federal government by the federal president and backed by the National Council – or elected, as are the governor (Landeshauptmann) and the members of the Land executive by the respective Landtag and the members of a municipal executive (the municipal board) by the respective municipal council. The mayors in three Länder are also elected by the municipal councils. Until 2006 the National Council was elected every four years. From the beginning of the twenty-fourth legislative period – due to early elections in September 2008 instead of October 2010 – an extension to five years was introduced. The mandates for Land legislators and municipal councillors last, according to the respective Land legislation, for five or six years. Austria also has a high degree of sector self-government. This comprises, among many others, the chambers of labour (Arbeiterkammern), economic

Republic of Austria

41

chambers (Wirtschaftskammern), chambers of agriculture (Landwirtschaftskammern), Austrian National Union of Students (Österreichische Hochschülerschaft), and the social security sector, to mention just a few policy areas of civil society.15 Until 2006 the spectrum of political parties was rather stable. The two major parties, the spö (Sozialdemokratische Partei Österreichs) and the övp (Österreichische Volkspartei), garnered 35.3% and 34.3% of the vote respectively in the federal election in October 2006, and they formed a coalition government. Politicians of these two parties then held 74% of the seats in the National Council and 88.7% of those in the Federal Council. The election of the National Council of 28 September 2008 led to a significant change of the political landscape, cutting the spö to 29.3% (minus 6%) and the övp to 26% (minus 8.3%), together accounting for 55.6% of the votes and 59% of the seats. The far-right fpö (Freiheitliche Partei Österreichs) gained 17.5% (plus 6.5%) and the populist rightist bzö (Bündnis Zukunft Österreich, or Alliance for the Future of Austria) 10.7% (plus 6.6%). This seems to mark the end of the traditional two-party system, at least in the federal arena. In the Land parliaments, as of January 2008, the spö and the övp respectively had 183 and 168 seats, which is 78.3% of the total of 448 seats. Municipal councils are also dominated by these two parties; together they account for 79% of all councillors.16 Hence no landslide changes like those seen in the federal arena are expected in Land and municipal governance. The fpö represented a nationalist element and consequently gained support. After carrying an spö-led minority government of Chancellor Bruno Kreisky in 1970, the fpö entered into a federal coalition government with the spö from 1984 to 1986 – under Chancellor Fred Sinowatz (spö) and Deputy Chancellor Norbert Steger (fpö). In 1993, after internal disputes, the fpö split into a nationalist part (fpö) and a liberal part (Liberales Forum). In April 2005 the fpö split again, and the bzö, led by Jörg Haider until his death in a car accident on 10 October 2008, emerged as a new populist movement using the colour orange, a deliberate association with the unexpected democracy process in the Ukraine, which was followed with great attention in Austria and all of Europe. From February 2000 until January 2007, first the fpö, and then the newly created bzö, was in a federal coalition with the övp – under Chancellor Wolfgang Schüssel (övp) and Deputy Chancellor Susanne Riess-Passer, succeeded by Deputy Chancellor Hubert Gorbach under party leader Jörg Haider (fpö/ bzö). The Greens entered the political scene during the 1970s and are represented in all Land parliaments and several municipal councils. After the federal elections on 1 October 2006, an spö-led coalition government with the övp was sworn in on 11 January 2007. It collapsed in the summer of 2008 mainly due to a dispute over Austria’s future eu policy

42

Andreas Kiefer and Franz Schausberger

and the clearly visible distrust of the spö in its chairman and chancellor, Alfred Gusenbauer. For the period 2008–13, a spö-led coalition government with the övp was sworn in on 2 December 2008. The Land governments were led in late 2008 by nine governors: four spö, four övp, and one bzö. The constitutions of the Länder may not contain provisions inconsistent with the federal Constitution. They cannot be changed unilaterally by the federal legislature, and any revision of the principle of federalism, including the role of the Länder, would be subject to popular approval by a constitutional referendum. Conflicts between the federation and the Länder must be settled by the Constitutional Court (Verfassungsgerichtshof). This is very much in line with Austria’s highly developed system of judicial review of actions of government, including legislative Acts. The federation can, however, influence the role of the Länder through its power to decide the allocation of powers and by adopting federal constitutional laws. The role of the Federal Council in this context is legally and politically limited. It is worth mentioning that the Federal Constitutional Act (b-vg) is not the classic systematic codification of all federal constitutional law, as is the German Basic Law (Grundgesetz). The latter demands in Article 79, paragraph 1, that all amendments to the constitution must be incorporated into the Basic Law. In the preparation for the Austrian Convention,17 set up in 2003 to present a proposal for a fundamental reform of Austria’s federal system, experts identified 451 constitutional provisions in regular federal laws adopted between 1923 and 2003.18 The unicameral legislative assembly (Landtag) of each Land is elected every five to six years on the basis of universal suffrage. It then elects the governor (Landeshauptmann) and the Land government (Landesregierung), which comprises between six (Burgenland) and fifteen (Vienna) members. Land legislative responsibilities include the Land constitution, municipal laws, supervision of the municipalities, regional planning and zoning, policy for rural areas, building laws and regulations, youth, hospitals, nature conservation and protection of the countryside, care of farm animals, national parks, tourism, hunting and fisheries, culture, sports, laws pertaining to various professions (e.g., schools for ski instruction, dancing schools, and workers’ rights in agriculture and forestry), electoral laws for the Land and its municipalities, the staff code for the public sector (civil servants and agents of the Land and municipalities), and very limited taxation.

h i s t o r y, s t r u c t u r e s , a n d i n s t i t u t i o n s of local government Local government is constitutionally enshrined as the third order of government after the federation and the Länder. It refers to the smallest territorial

Republic of Austria

43

entity with its own political structure – an elected assembly and an executive. Local government comprises the municipalities and the activities they perform, either as individual municipalities or jointly in cooperative structures based on public or private law. The provisional municipal law (provisorisches Gemeindegesetz), adopted on 17 March 1849, established modern local government. The municipality, even then, was responsible for autonomous tasks and for implementing public administration delegated by the respective Land and the national government. The main autonomous tasks were hygiene, health, poverty policy, roads, fire, markets, public decency, and building regulations. The mayor (Bürgermeister) represented the municipality and had to implement the decisions of the municipal committee (Gemeindeausschuss) in accordance with the budget. He also had to manage the municipal staff, publish and implement the laws and decrees of other authorities, collect direct taxes, and support the recruitment of soldiers. In the course of establishing the constitutional monarchy, a new municipal law of 1862 further developed the principles of the 1849 law. It confirmed the autonomous and the delegated spheres of action. The autonomous sphere covered the areas where the municipality could act “in free autonomy” (Art. 5: “nach freier Selbstbestimmung”) while still respecting the central state and Land laws. The republican federal Constitution of 1 October 1920 established public administration in the Länder according to the principle of autonomy (Selbstverwaltung) of local and district municipalities (Orts- und Gebietsgemeinden) with a mayor, a municipal council, and a municipal office (Gemeindeamt). All further details were left for the Länder to legislate, with the provision that they respect the principles of the federal Constitution. These constraints led to rather uniform municipal legislation among the Länder. The concept of district municipalities, comparable to the German Kreise, was not developed. Municipal autonomy was significantly curtailed from the time of the authoritarian regime, the Anschluss, to the end of the Second World War (1934–45).19 After the reestablishment of Austria in 1945, the federal Constitution was amended extensively on 12 July 1962, introducing new responsibilities and rights for municipalities. The mayor was defined as an organ of the municipality, being responsible to the municipal council for all conduct in the autonomous sphere of action. In all delegated fields, the mayor acts on behalf of the federation or the Land and is bound by its instructions. He or she may delegate, when appropriate (e.g., in matters of the autonomous sphere), certain tasks to other members of the municipal executive, who remain accountable to him or her. The 1962 amendment was interpreted by the Constitutional Court to mean that mayors had to be elected by the municipal councils. In a constitutional amendment in 1994,

44

Andreas Kiefer and Franz Schausberger

the Länder obtained the right to introduce the direct election of mayors. Six Länder have made use of this option. All Länder, except Vienna, consist of municipalities, and all parts of the Austrian territory must form part of a municipality. This applies also to state infrastructure and military training grounds, and there is no direct federal or Land rule in any geographical area. Neither the federal nor Land constitutions make provision for metropolitan areas or regions. The special case of Vienna being a Land and a municipality is discussed below. Within the Länder, eighty-four district authorities (Bezirkshauptmannschaften), led by civil servants of the Länder, implement federal and Land legislation. The districts are administrative units without political bodies and encompass the territories of several municipalities. By 2008 local government comprised 2,357 municipalities: 15 cities (towns with their own statutes), 198 towns (Stadtgemeinden), 759 markets (Marktgemeinden), and 1,385 villages (Ortsgemeinde). The constitutional concept of the “uniform municipality” (Einheitsgemeinde) does not allow for the attribution of different tasks to municipalities according to their territorial size, financial strength, status (city, town, market, or village), or population. Land legislation sets the criteria for designation as a market (municipality of significant importance) or town (municipality of outstanding importance).20 The designation has no further legal consequences but indicates the role, functions, and services of the municipality. Historic city rights, like those of 1289 for Radstadt, Salzburg, with 4,800 inhabitants, and those of 1393 for Rattenberg, Tyrol, with now only 550 inhabitants, remain in place. Exceptions from the concept of the “uniform municipality” are Vienna, as a Land and a city, and the other fourteen cities with their own statutes. A municipality with more than 20,000 inhabitants and of outstanding importance can apply to the Land government for its own statute (Stadtrecht), passed by the Land parliament, and then, after approval of the Land parliament and with the consent of the federal government, also perform functions as a district authority. The statute thus implies additional responsibilities for the municipality. The number of municipalities increased by 2.5% from 2,300 in 1976 to 2,357 in 2008. In rural areas 178 municipalities have fewer than 500 inhabitants, and two-thirds (1,528) of all municipalities have between 501 and 2,500 inhabitants. Over half of Austria’s population (55.6%) live in municipalities of up to 10,000 inhabitants;21 hence the average size is only 3,539 inhabitants. Municipalities enjoy constitutional guarantees. In individual cases, however, and under certain conditions, like regional public interests, a Land parliament can decide to amalgamate or separate municipalities. The municipalities concerned have to be consulted prior to any changes of municipal boundaries, and a people’s consultation can be demanded by the Land

Republic of Austria

45

parliament or the municipality. When the boundaries of municipalities are changed, a decree of the Land government is sufficient if the municipalities in question agree. If not, the respective Land parliament has to adopt a law. If a change of the boundaries of municipalities affect the boundaries of a Land, identical constitutional laws of the federation and the Land or Länder concerned are required. In the 1960s and 1970s four Länder amalgamated municipalities on a large scale. Lower Austria reduced the number from 1,652 to today’s 574.22 In Burgenland and Carinthia, however, many of these amalgamations were again split up after several years. Given the large number of small municipalities, intermunicipal cooperation has been a feature of local government. Article VII of the Reichsgemeindegesetz of 1849 stipulated that municipalities were free to cooperate with each other in respect of both their autonomous and delegated competences. Since then, they have developed various forms and patterns of cooperation, although always limited by the borders of the Länder, as there is no common supervisory Land authority for municipalities from different Länder. Intermunicipal cooperation respects the identity and political structure of all participating municipalities and aims to provide the necessary economies of scale and expertise that individual municipalities might lack (e.g., staff skills, information-technology solutions, and size of wastewater treatment plants). Flexible federal23 and Land24 constitutional frameworks have proven very effective by not specifying in too much detail cooperation arrangements under public or private law. The legal system provides for the establishment of intermunicipal cooperation under public law (associations of local and regional authorities and administrative associations), under private law (nonprofit associations, corporations such as limited liability companies or public limited companies, partnerships such as limited partnerships, and commercial limited partnerships or noncommercial partnerships), as well as by agreement (contracts of services and cooperation agreements). Frequently, cooperation initiatives originate from the municipalities, but approval by the Land is required. Voluntary intermunicipal cooperation is also promoted by the Länder in granting funding for intermunicipal projects. Additionally, new socio-economic areas have emerged, which do not follow old municipal and administrative boundaries. With respect to regional-development planning, therefore, Land ministries fix indicators and minimum or maximum benchmarks for public services or infrastructure to be delivered by the municipalities, such as local government administration buildings, compulsory schools, municipal roads, kindergartens, homes for senior citizens, wastewater facilities, waste-removal centres, music schools, and public pools. In some cases, cooperation may be imposed by legislation, such as the determination of school districts, districts for awarding citizenship, and waste-management associations.

46

Andreas Kiefer and Franz Schausberger

By the end of 2007 there were 1,429 registered intermunicipal cooperation structures involving schools, public welfare, water supply, environment, health, and others. They employed 13,636 staff and had a total expenditure of €3.15 billion (US$4.34 billion).25 A growing area is public transport, where federal, Land, and municipal bodies cooperate with increasing numbers of privatized – formerly publicly owned – service suppliers. Presently, the federal Constitution permits such associations to serve only one purpose. However, there is political consensus for future reforms to address the possibility of establishing associations of local and regional authorities that would serve various purposes at the same time, thus making better use of synergies. Due to demographic developments, social expenditure is increasingly burdening municipal budgets. Concurrently, the shift of revenue from taxes in favour of the federal government is curtailing the resources available to municipalities (especially the very small ones). The transfer of tasks in recent years (e.g., afternoon supervision in schools and waste management) is also increasingly tying up municipal funds. Along with serious budget problems, the increasing complexity of municipal responsibilities motivates enhanced intermunicipal cooperation. Furthermore, with specialization and the number of legal provisions on the increase, and a general call for more efficiency in providing services, stepping up cooperation is becoming imperative. In economic terms, municipalities are frequently faced with having to make investments they cannot handle on their own. Circumstances require that they join forces with other state institutions to raise the quality of life of people living in their areas. Economies of scale can be achieved by the various cooperation models. Equally, size does not matter in relations with the federation and the Länder, as the municipalities negotiate general affairs via their umbrella organizations in the federal and Land arenas.

constitutional recognition of local government The role of the municipalities and their significant autonomy date back to March 1849, when, following the revolution of March 1848, Article 1 of the Reichsgemeindegesetz proclaimed the “free municipality the basis of the free state.” The republican Constitution of 1920 and a substantial reform in 1962 developed this concept further. Based on the principle of subsidiarity, municipalities enjoy a high degree of autonomy. According to Article 118, paragraph 1, of the Federal Constitutional Law, and mirrored in the constitutions of the Länder, the jurisdiction of a municipality comprises everything that exclusively or mostly concerns the local community and that can be performed by the community within its boundaries. The

Republic of Austria

47

municipalities are thus granted autonomy within their own sphere of action. This is the practical application of the principle of subsidiarity. However, municipalities are also functional implementation units of the federal and Land administrations and are bound by their respective instructions. Articles 115 to 120 of the b-vg are the main constitutional bases for entrenching local self-government and municipal institutions. Autonomous and delegated responsibilities and requirements for amalgamation are defined, as well as the legal personality of municipalities and their capacity to acquire property. With its ratification of the Council of Europe’s Charter of Local Self-Government on 23 September 1987,26 Austria also acknowledged these international standards. The Land constitutions are bound by the principles laid down in the b-vg but enjoy a certain freedom in developing their own municipal systems, such as with regard to direct election of mayors, supervision of municipalities, salaries of mayors, and remuneration of councillors, to mention a few. Unlike the Länder in the Bundesrat, the municipalities are not represented directly in a federal legislative chamber. The Austrian Association of Cities and Towns (Österreichischer Städtebund) and the Austrian Association of Municipalities (Österreichischer Gemeindebund), however, enjoy constitutional acknowledgment as consultative partners in negotiations on draft legislation of the federation and the Länder.27 The Austrian Convention, a representative forum established to draft proposals for the substantial reform of the federal Constitution, was unable to reach consensus on a proposal that several Länder and a certain number of municipalities be given the right to introduce legislative proposals for discussion in the National Council.28

powers, functions, and governance of local government The constitutional status and powers of municipalities are substantial and widely accepted. Examples of their autonomous competences are the election of their organs, limited taxation, employment and supervision of staff, local policing in matters of security, management of municipal roads, traffic policing, enforcement of the protection of the landscape (Flurschutzpolizei), market policing, local health and sanitary policing, burials, public decency, building regulations, and local zoning. Tasks within the autonomous sphere must be identified explicitly and defined clearly in the relevant federal or Land laws. To provide the necessary expertise in complex matters, the federation and the Länder offer the possibility of delegating some autonomous municipal competences to a Land’s district administration.29 This is frequently used for administrative procedures involving building permits.

48

Andreas Kiefer and Franz Schausberger

In addition to their autonomous tasks, the federation and the Länder delegate further tasks to municipalities, including the organization of elections (e.g., lists of candidates, authorities, counting, and reporting) for the federal president, the National Council, the Land parliament, and the European Parliament; the organization of referenda; popular consultations and initiatives; and maintenance of the lists of citizens, marriages, births, and deaths. Also included are the protection of water, civil protection in case of floods, measures in case of animal diseases, and a variety of statistical reporting. Several important tasks of the municipalities are not covered by constitutional provisions because they constitute neither clearly public administration nor private economic activity. It is considered a public task of municipalities to provide their citizens with services of general interest (Daseinsvorsorge) at affordable prices, available in all parts of the municipality and of the same quality. Private contractors are frequently used to deliver these services on behalf of the municipalities. Municipalities also often establish their own enterprises to deal with, for example, water, gas, transport, and waste disposal. Municipalities are increasingly providing services (e.g., schools, water, transport, social services, facilities for senior citizens, kindergartens, daycare, leisure facilities, sports, and cultural activities), in addition to the traditional functions of public administration (e.g., building permits, taxation, and policing). The municipalities are important both politically and economically. Excluding the City of Vienna, they employ 18% of all civil servants, a figure that increases to 35% if Vienna is included – leaving the federation with 35% and the Länder (without Vienna) with 30%. Municipalities account for 13.6% – or €2,278 (US$2,862) per capita, including Vienna – of all public expenditure. The federation accounts for 71%, or €13,455 (US$16,902) per capita, whereas the Länder (without Vienna) account for 15.4%, or €3,264 (US$4,100) per capita. The key areas of municipal expenditure are general services, at 33%, or €771 (US$969) per capita; education, leisure, sport, and science, at 13.9%, or €326 (US$410) per capita; own institutions and administration, at 12%, or €284 (US$357) per capita; social welfare, at 9%, or €216 (US$271) per capita; roads, transport, and water, at 9%, or €216 (US$271) per capita; healthcare, at 7%, or €168 (US$211) per capita; and miscellaneous smaller items.30 When it comes to hiring personnel, the standards of supervision in the different Länder vary considerably. Some Länder accept the staff complement proposed by municipalities as part of their municipal budget; others demand to approve each new contract or promotion of existing personnel. The political actors of a municipality, as stipulated in Article 117 of the b-vg, are the municipal or city council, the executive board (Gemeindevorstand in municipalities, Stadtrat in towns, and Stadtsenat in cities with their

Republic of Austria

49

own statutes), and the mayor (Bürgermeister). The municipal council is elected directly by the local citizens according to the same electoral principles applied to elections for the National Council and the Land parliaments. All Austrian residents over the age of sixteeen can vote. After some Länder reduced the voting age from eighteen to sixteen years for Land and municipal elections in 2004, the federation also reduced the voting age for federal elections to sixteen years in 2007. As the electoral provisions of the Länder may not be more restrictive than the federal ones, the remaining Länder adapted their laws accordingly. Under a European directive,31 this right to vote extends to eu citizens resident in Austria. This can lead to the anomalous situation where young eu citizens enjoy more rights in their host country than they would in their country of origin. eu citizens, however, may not be elected as mayors, and some Länder reserve the position of deputy mayor and membership on a municipal executive board to Austrian nationals.32 With regard to all delegated powers, the mayor carries out the executive function. Matters within the sphere of autonomous powers are the responsibility of the mayor – up to certain financial limits – acting together with the executive board. The municipal council is, however, the final decisionmaking body on matters falling within the autonomous sphere. The composition of the municipal executive mostly mirrors the political composition of the council. Many decisions are prepared in committees and then adopted by the council. The municipal office, under the mayor’s supervision, implements the decisions of the council. Since 1995 the Länder have been permitted to adopt constitutional provisions allowing for the direct election of mayors. Thus far, this has been applied by six Länder with different experiences. Immediately after the introduction of direct elections, the declining turnout in the local elections was slowed, but this was not a lasting phenomenon. In general, however, combining elements of a presidential system with a parliamentary one is not widely appreciated, notably by political parties. Direct election of a mayor can lead to majorities in the municipal council and the municipal executive that are not in the hands of the mayor’s party. A directly elected mayor may have to govern “against” a majority in the council. This is not an easy situation. Also problematic is that mayors sometimes focus much more on their own campaigns than on those of their political parties. In the six Länder, however, the media would not support an initiative to return to the council-elected system, so initiatives to this end in the Land parliaments are unlikely. By contrast, in Lower Austria, Styria, and Vienna, there is no movement to directly elect mayors. All plenary meetings of municipal councils are open to the public. Before implementing local planning schemes, municipalities must consult widely, publish the proposed decisions locally, and inform the citizens concerned. To allow for public involvement, most municipalities have their own websites,

50

Andreas Kiefer and Franz Schausberger

organize public meetings to discuss projects or initiatives, send official newsletters to all citizens, and use local media for information purposes. From 1984 onward, the Länder developed different forms of direct participation of citizens in municipal affairs, sometimes applicable only in big cities:33 citizens’ vote (Bürgerabstimmung), citizens’ initiative (Bürgerbegehren), and consultation with the citizens (Bürgerbefragung). These are not used frequently, and turnout is generally below 40%. Citizens’ votes are conducted whenever the council or the mayor so decides. Official resolutions subject to a citizens’ vote do not enter into effect until there is a positive vote. If the result is negative, the resolution cannot be executed because the result is binding on the municipal authorities. In Land Salzburg, for example, mandatory votes have to be held to approve a municipal council’s decision to apply for the status of a city or town. In 2000, 35.9% of the citizens of Oberndorf, Land Salzburg, participated in the vote, and 78.7% favoured the proposal. In principle, a citizens’ initiative can be introduced by 10% of the voters. An exception is the City of Salzburg, where, for example, a citizens’ initiative needs to be signed by only 2,000 petitioners, or only 1.3% of the population. If a majority of yes-votes calls for a specific resolution of the municipal organ, the respective body has to debate and decide on the matter. It has no further binding effect. A recent example was an initiative voted on 20 October 2006 to keep contemporary art out of the historic old town of Salzburg for five years. This provocative initiative of artists attracted a turnout of only 1.9%, producing a 90.8% yes-vote.34 Consultation with citizens is the oldest form of participation, and it exists in all Land legislation on municipalities. It applies to matters within the competence of the municipality with some exceptions, such as taxes, fees, and matters concerning individual citizens and municipal staff. The intention is to determine the citizens’ opinion on future decisions concerning the municipality, especially planning. Either the municipal council or the mayor can decide to conduct a consultation. However, the executive authorities of the municipality are not bound by the result of the consultation. Examples are the consultation about the future of a primary school in a district of Graz, Styria, on 11 September 2005, with a turnout of 24.2%, producing a 99.3% yes-vote,35 and a consultation on whether the City of Salzburg should apply to host the Olympic Winter Games of 2014, which was held in April 2005 with a turnout of 28.8%, producing a yes-vote of only 39.5%.36 The Special Case of Vienna Vienna covers an area of 414 square kilometres, has 1.6 million inhabitants, and has all the attributes of the Austrian Länder as well as municipal

Republic of Austria

51

constitutional and administrative orders; it is one of the nine Länder, Austria’s largest municipality with its own statute, and the federal capital. Vienna’s double function as a Land and a municipality is also recognized in the financial equalization scheme, where it receives its share both as Land and as municipality. No specific rights arise from its role as the national capital, except that all supreme federal institutions have their seat in Vienna. Vienna’s political and administrative system has a double legal structure but is staffed by the same actors.37 The most senior politician is simultaneously Land governor (Landeshauptmann) and mayor. The 100 Vienna municipal councillors also perform a double function in the municipal council and in the Land parliament (Landtag), according to the sphere of competence of the political or administrative Act they are adopting or implementing. The city’s civil service, the so-called Magistrat, is simultaneously also the administration of the Land government. The mayor, elected by the municipal council, represents the city, heads the municipal administration, and works with the executive city councillors, the twenty-three municipal-district chairpersons (Bezirksvorsteher), and all municipal staff. The executive board of the city is the Stadtsenat, composed of the mayor, two deputy mayors, six executive city councillors (amtsführende Stadträte), and five city councillors without portfolio (nicht amtsführende Stadträte). They are elected by the municipal council. There is no federal supervision over the municipal tasks, and the mayor and the members of the executive cannot be dismissed. The governor is elected uno actu by the Land parliament and is sworn into office under the federal Constitution by the federal president. As Vienna is both a municipality and a Land, a direct election of the mayor (who is also the governor) is not envisaged by Article 117, paragraph 6, of the b-vg. The governor represents the Land, forwards laws adopted by the Land parliament to the federal government, chairs the Land government, and as a member of the Land government, is entrusted with the principal administrative duties of the Land. In this respect, he or she is responsible to the Land parliament while, as a representative of the indirect federal administration, being accountable to the federal minister in charge. The Land government (Landesregierung) consists of the governor, two deputy governors, and six members, all elected by the Land parliament. In matters of federal implementation, the federal government can file a suit in the Constitutional Court, just like any other Land.38 The portfolios are divided into eight groups, each of which is headed by an executive city councillor. These groups comprise seventy municipal departments in total as well as the enterprises Wiener Krankenanstaltverbund (hospital association), Wiener Wohnen (housing), city museums, Wiener Stadtwerke (utilities), and Vienna Holdings. The chief civil servant’s directorate (Magistratsdirektion) and the internal audit, as well as the municipal

52

Andreas Kiefer and Franz Schausberger

district offices (Magistratische Bezirksämter), do not fall under the supervision of an executive city councillor. As a municipality, Vienna is also a political district subdivided into twentythree municipal districts, each having its own district council (Bezirksvertretung) with certain competences and headed by an elected district chairperson. Large cities, like Vienna, are active on the international scene in twinnings, partnerships, and networks like metrex and eurocities, as well as in cooperative forums with neighbouring regions. Vienna, as a Land and municipality, has developed a specific policy for external relations39 and promoted, among others, the establishment of centrope, a cooperation platform of three Austrian Länder and regions from the Czech Republic, the Slovak Republic, and Hungary.40 Hosting offices of several international organizations (including the United Nations, opec, and the eu’s Fundamental Rights Agency), it enjoys the federation’s special support, which is not questioned by the other Länder or municipalities.

financing local government The Financial Constitutional Law (Finanz-Verfassungsgesetz), a constitutional law adopted on 21 January 1948 (last amended in 2003), stipulates that the federation, the Länder, and the municipalities bear the cost of implementing their assigned tasks. Legislation about taxation principles, taxing rights of the federation, the Länder, and in part the municipalities, and shared federal taxes are all federal competences. Funding for the budgets of the three orders of government is negotiated every four or five years by the federation, the Länder, and the umbrella organizations of the municipalities, and each government’s share of the joint federal taxes is then laid down in the financial equalization law (Finanzausgleichsgesetz),41 adopted by the federal parliament by a simple majority. The Länder and municipalities are predominantly financed by their share of the joint federal taxes (Gemeinschaftliche Bundesabgaben). These taxes account for 79.4% of all Austrian taxes, compared to 9.0% exclusive federal taxes and 5.4% Land and municipal taxes.42 After the federation deducts all transfers to the Länder and municipalities (e.g., for salaries and pensions of teachers in primary schools, housing, and the environment), its share of the joint federal taxes is 57.2%, whereas 21.1% goes to the Länder (without Vienna), 9.8% to the municipalities (without Vienna), 8.5% to Vienna (as Land and municipality), and 3.4% to the eu. The latter contribution is shared among the federation (75.48%), the Länder (20.79%), and the municipalities (3.73%).43 Transfer payments within the public sector, including social security and health insurance, amounted to €33 billion (US$41 billion) in 2004, about one-third of all levied taxes and charges and social security contributions.

Republic of Austria

53

The largest amount of €12 billion (US$14.9 billion) is transferred to the Länder, partly as a consequence of shifting tasks from the federation to the Länder and partly for onward relay to municipalities. Federal and Land transfers to municipalities are often linked to specific expenditures, such as homes and care for senior citizens and the disabled, primary schools (for ten to fourteen year olds), hospitals, water supply, and wastewater treatment.44 Land taxes (without Vienna) play a minor role and accounted for only 1.46% of all taxes in 2003, whereas municipal taxes (without Vienna) amounted to 5%.45 In 2007 the most important ones were the municipal tax (Kommunalsteuer), which totalled €2.24 billion (US$3.07 billion) (or 3.1% of all taxes), and property taxes, which totalled €555 million (US$760.4 million) (or 0.4% of all taxes). The municipal tax, introduced in 1993 by federal legislation,46 is a levy of 3% on the salaries of all employees working in enterprises in a municipality; this is levied annually by the employer. Since 2005 the federal finance authorities have collected the tax and refunded the relevant amounts to the municipalities concerned.47 On the basis of the transfers in terms of the Financial Equalization Act 2008 and the municipal taxes, municipalities are able to conclude agreements with other municipalities about joint investment in developing industrial or commercial areas and, subsequently, about the share of the municipal tax raised there. When disputes arise from such agreements, it is not the supervising authority that decides but the regular civil courts. A recent example concerned a cross-border business area between two municipalities in Upper Austria and two in Land Salzburg.48 The budgets of the municipalities (excluding Vienna) are funded by shared federal taxes (38%), fees and service charges (22%), own-source taxes such as the property tax and municipal tax (21%), federal and Land transfers and other income (14%), and economic activities (5%). In the case of Vienna, the revenue sources are 38% from shared federal taxes, 12% from fees and service charges, 11% from own taxes, 37% from federal and other public transfers, including that for the Vienna underground system, and 2% from economic activities.49 The exclusive municipal taxes, as laid down in the Financial Equalization Act 2008, are the property tax, municipal tax (salary levy), tax on secondary residences, amusement tax, tax for owning dogs, market fees, use of public land and public air space (e.g., for advertising),50 fees for using municipal facilities, and parking fees. Land legislation may authorize the municipal councils to fix the percentages of most of these taxes within prescribed margins. These exclusive municipal taxes account for only about 40% of all own-source revenue. The financial strength (Finanzkraft) of a municipality is calculated on the basis of the amount of its property tax, municipal tax, joint federal taxes, and other revenue in relation to the population size of the municipality.

54

Andreas Kiefer and Franz Schausberger

The average expenditure of municipalities in 2007 amounted to €2,481 (US$3,399) per inhabitant.51 Low financial strength entitles municipalities to additional transfers from the federation and the respective Land. It is assumed that bigger municipalities also fulfil central functions for the surrounding area, which causes additional costs. Bigger municipalities, therefore, receive a larger share of the joint federal taxes. Loans are permitted for capital investment expenditures only if the municipality is able to repay the debt and the stability criteria are met (see below). Operational expenditure has to be covered by regular receipts from taxes and fees. The debts of municipalities in 2007 rose by 0.7% to €11.05 billion (US$15.14 billion), which is €1,705 (US$2,336) per capita. Vienna improved its situation in the past few years to €834 (US$1,134) per capita.52 Länder generally require that municipalities levy the taxes assigned to them properly, and to the optimal degree, before granting them funds for larger-scale projects. Austria’s fiscal equalization system is complex, but there still is, due to its participatory and consensus-oriented approach, an efficient horizontal outcome. Broad acceptance of the system suggests that the balance between regional equalization (solidarity) and performance incentives could be maintained. However, the weak tax competences of the Länder are not appropriate to the federal character of Austria.

supervision of local government Supervision of municipalities is exercised by several institutions of the federation and the Länder and of the municipalities themselves. Supervision can range from superficial coaching to strict control, with restrictions on local autonomy impacting democracy. Within their autonomous sphere of action, municipalities are not bound by the instructions of the federation or of the relevant Land. However, all municipal actions may be scrutinized for compliance with legislation, as well as against criteria of thrift, efficiency, and expediency.53 The mayor has to report to the Land within three months regarding the measures that were taken to comply with the supervision report compiled by the Land authorities.54 In case of noncompliance, the Land may invalidate Acts, demand their proper legal implementation, and if the municipality does not act, implement the measure on behalf of the municipality. Mayors and members of municipal executives may be fined up to €2,000 (US$2,741) for violating official duties. The federal Court of Auditors (Rechnungshof) supervises the budgets of the twenty-four municipalities with more than 20,000 inhabitants, the municipal enterprises controlled by these municipalities, and the associations of municipalities. On demand of a Land government, the federal Court of Auditors can also audit the budget of municipalities with fewer than

Republic of Austria

55

20,000 inhabitants. Annually, the mayors submit municipal budgets and financial statements to the Court of Auditors and the relevant Land government. The Court of Auditors reports to the municipal council, the Land government, and the federal government, and the court publishes its reports. These contain recommendations but no binding directives. Due to their publication, and to the review of whether earlier recommendations have been taken into account by the municipalities, the reports are generally followed. Article 148a-i of the b-vg further requires that municipalities, like the federal and Land authorities, may have to justify their administrative acts to the so-called Commission for Complaints from the Public (Volksanwaltschaft), a three-member ombudsperson board. The three commissioners are elected by the National Council on the basis of nominations by the three largest political parties. All Länder have established independent courts of auditors for control of Land administration, although only in Burgenland, Upper Austria, and Salzburg can the Land court of auditors also examine the budgets and the administration of municipalities, on demand of the Land government. In such a case, however, the court is not independent, and the results of the examination and the recommendations are not made public. Aiming at changing this legal basis, the presidents of the Land courts of auditors have proposed an amendment of the federal Constitution allowing them to examine the books of municipalities and recommend improvements. A draft constitutional amendment presented in July 2007 envisaged that the Land parliaments would be entitled to decide whether Land courts of auditors could get this responsibility. In the fall of 2008 a decision was still pending. Most supervision of the municipalities is carried out by the Land governments. One or two members of a Land government are responsible for this portfolio. The levels of supervision or service and advice respecting municipalities vary significantly among the Länder. Standards for reservation clauses for contracts, the approval of loans, establishment of enterprises, and control of the legality of actions vary significantly. The degree to which municipal personnel matters are supervised also greatly varies. In some Länder (e.g., Salzburg) every post, promotion, and the like must be approved by the Land government. In other Länder municipalities present their staffing plans, together with their annual budget, for approval. A broad spectrum of limits for the approval of loans by Land authorities also exists. According to Article 119, paragraph 4, of the b-vg, members of the municipal executives – except in Vienna – can be dismissed by the Land governor on behalf of the federal government in cases of gross negligence in the implementation of federal law or by the Land government with regard to the administration of Land laws. Land legislation regulates the criteria for

56

Andreas Kiefer and Franz Schausberger

dissolving a municipal council in the case of its continued inability to make decisions. Where a council is dissolved, the Land government can establish a commissioner for the municipality until the next election of the municipal council. This constitutional provision has, however, not been applied often. The supervision of municipalities includes verifying compliance by the municipality with a federal and Land law. If a municipality feels that the Land supervision interferes with its autonomy, it can defend its rights in the federal administrative courts or the Constitutional Court.55 Many bigger cities have their own internal audits or City Court of Auditors, like Graz, Austria’s second largest city. These auditors, established by the special statute of those twenty-four cities, are independent and responsible to the city council. They supervise the municipal budgets, including those of municipal enterprises. All municipal councils have to establish control and screening commissions for their own control of the municipal administration. These are established by Land legislation, which also grants rights of scrutiny to opposition parties. In general, the supervision rights over municipalities and the practices of the federation and the Länder are seen as “municipality friendly,” and proposals for further limitations of these rights by a federal constitutional amendment have been tabled.56 Local autonomy is much more threatened by being hollowed out financially and by the extension to municipalities of federal and Land policies – for example, in regional planning, schools, and social policy.57 Municipalities have conferred upon them more and more mandatory tasks with financial burdens, like social welfare. This narrows their ability to act and to implement their own priorities. Intermunicipal bodies and local government associations actively lobby the Länder and federal institutions in this respect.

i nt er g ove rn m en ta l r el at i on s The Austrian Association of Cities and Towns (Österreichischer Städtebund) was established in 1915, and the Austrian Association of (formerly Rural) Municipalities (Österreichischer [Land]Gemeindebund) followed in 1947. The vast majority of Austrians live in the 2,346 municipalities represented by voluntary membership of the associations. Each association (including Land organizations) employs around thirty people, and their administrative capacity is thus rather limited. However, the president of the Association of Cities and Towns is the powerful mayor and governor of Vienna, which strengthens the position of this association. The Association of Cities and Towns has 247 cities and towns as members and is organized into nine Land branches. The members of the Austrian Association of Municipalities are nine Land associations. Six Länder have one association each. Burgenland and Lower Austria, however, have one for Christian Democrat and another for Social

Republic of Austria

57

Democrat municipalities or municipal councillors respectively. This has not yet been a problem because the vast majority of councillors and mayors have been members of these parties. Given developments in both the Land and federal arenas, where the main two political groups have around 35% representation each and a further two parties have around 11% each, the twoparty construction of representation in Burgenland and Lower Austria will have to be reconsidered for the future. The associations of municipalities are – with exceptions in two Länder – not affiliated with political parties. This is considered one of the reasons for their success, as they represent the common positions of the vast majority of the political spectrum. In 2006 more than 90% of all mayors (2,124 out of 2,357) had an övp or spö background. A second reason offered for their success is that they generally present proposals agreed upon among themselves, taking into account the needs of urban areas as well as those of the small municipalities in rural areas. This facilitates negotiations with the federal and Land governments, as a compromise among the municipalities is already achieved. The consultative involvement of the municipalities in federal and Land lawmaking has led to a better understanding of the needs of local government without slowing the former’s legislative processes. It seems to be an Austrian tradition to find political solutions by consensus rather than to go to court and have judges make political decisions. The associations have long been involved in informal consultations. In 1954 the Federal Chancellery invited all ministries, the Court of Auditors, and the management of the Federal Post and of the Austrian Federal Railways to inform the two associations about important draft laws and regulations that concern the interests of municipalities and to give them, rather than only the authorities of the Land governments, an opportunity to bring the interests of the municipalities to bear on proposed legislation. The federal government and the Land governments have been consulting with local government for quite some time via the two associations, particularly on financial questions. It took a long time, however, before the municipalities were mentioned constitutionally as partners in consultation processes. In 1988 the two associations were mentioned in Article 115, paragraph 3, of the b-vg as representatives of local authorities. Even before this clarification in the Constitution, about 150 draft bills were submitted each year to them for comment. When Austria joined the European Union, the participation rights of both the Länder and the local authorities were enhanced substantially. One reason for this was the need for the support of the subnational governments for Austria’s entry into the eu. The federal government wanted to avoid losing the referendum on membership; therefore, it involved the most important political organizations, which included the local authorities. The 1995 referendum on eu membership returned a two-thirds yes-vote.

58

Andreas Kiefer and Franz Schausberger

Consultation Mechanism and Stability Pact With Austria’s eu membership in 1995, it was already clear that, under the framework of the Economic and Monetary Union, measures had to be taken to ensure that Austria met the eu’s requirements regarding public deficits. At this time, the Länder and municipalities were not satisfied with the state of fiscal relations with the federation following the agreement on the financial equalization scheme, a federal law adopted after negotiations with the Länder and the associations of municipalities over a period of four years. The financial equalization law often unilaterally imposed unfunded mandates, causing new and unforeseen administrative and financial burdens for the Länder and especially for the municipalities. In the new eu context, they therefore strove for a new quality of financial relations, and a consultation mechanism and an Austrian stability pact were thus developed. A federal constitutional law of 1998 gave the two associations of municipalities a mandate to conclude agreements with the federation and the Länder on behalf of the municipalities in order to establish a consultation mechanism (Konsultationsmechanismus) for new legislation and to sign stability pacts.58 After negotiations, an agreement between the federation, the nine Länder, and the municipalities (represented by the Austrian Association of Municipalities and the Austrian Association of Cities and Towns) entered into force on 15 January 1999, obliging the federation and the Länder to inform the other partners – including the municipalities – about draft legislation and the expected administrative and financial impacts of its implementation on other governments.59 After a deadline for all partners to comment on a draft, a consensus has to be reached in negotiations. Without consensus, or if the consultation process is not followed properly, the offending government, whether the federation or Land, must bear the cost caused by the legislation. Between January 2000 and December 2003, individual Länder, as well as the municipal associations, demanded negotiations in the consultation board with regard to some eighty draft federal laws and regulations. In more than thirty cases, the demands were withdrawn after negotiations, and some demands were presented too late. 60 In 2004 the Länder initiated the consultation mechanism in twenty-two cases, and the federation did so in four cases. The associations of municipalities initiated the mechanism in six cases against Land legislation and in four against the federation. The experiences have been generally positive, but procedural problems remain. Often the financial impact of draft legislation is not calculated properly, and the deadlines of one week to comment on government initiatives and of four weeks within a regular consultation period irrespective of the volume and impact of legislation are considered too short.61 In most cases,

Republic of Austria

59

however, the demand for negotiations has led to adaptation (or abandonment) of the federal proposals after the objections of the concerned Land/ Länder or associations have been taken into account. This shows that awareness of costs and transparency on the side of the legislating federation and the Länder has increased substantially. It also means an important step toward cooperation and a culture of negotiation in the federal system. Demands for negotiation have been made in relation to a federal law governing family subsidies, budgetary laws, and road-traffic regulations, to mention a few. The first stability pact of 1999, aimed at coordinating the budgetary policies of the three orders of government, shared the maximum deficit quota of 3% of gdp between the federation (2.7%), the Länder without Vienna (0.11%), Vienna as Land and municipality (0.09%), and the 2,357 municipalities (0.1%). It was followed by pacts for the years 2001–04 and 2005–08. A new pact for the period 2008–13 was concluded stipulating the following contributions as percentages of gdp: maximal deficit quota (-) for the federation, minimum budget surplus (+) for the Länder, and balanced budgets of the municipalities within the Länder (table 2.1). Tradeoffs between the partners are possible. Relations become most intense where the Länder deal with the municipalities (and their Land associations) in co-financing municipal projects. The legislative competences of the Länder for spatial and urban planning, protection of nature, social affairs, and municipal provisions in general are issues for discussion and negotiation. Usually, the relations are constructive and cooperative. When it comes to grants and subsidies, the municipalities are often competitors and, therefore, in favour of guidelines and criteria determined by the Länder for financial incentives and so on. Within the governments of the Länder, one member is usually responsible for municipal affairs, including budgets, subsidies, and supervision. A remarkable division of tasks is practised in Upper Austria and Styria, where one member of the Land government is responsible for municipalities with an övp mayor and another member for those with an spö mayor. As a characteristic of federalism, the responsibility of the Länder for most of the legislation on municipalities leads to different solutions within a relatively small territory; this is frequently criticized by representatives of the economic sector. In February 2007 mayors of municipalities at the border between Upper and Lower Austria complained that citizens had to travel extremely far to get a Land-funded social benefit. Senior citizens from Ennsdorf, a little border village in Lower Austria, have to use Lower Austrian senior citizens’ residences in municipalities up to 40 kilometres away, whereas the closest one 2 kilometres across the border in Upper Austria has the necessary capacity and houses people they know from their neighbourhoods. The reason lies in the responsibility of Länder to

60

Andreas Kiefer and Franz Schausberger

Table 2.1 Austria: Percentage stipulated contributions of gdp, 2008–13 Federation

Länder + Vienna

Municipalities

Austria

2008

- 1.33

+ 0.45

0

- 0.88

2009

- 0.68

+ 0.49

0

- 0.19

2010–13

- 0.14

+ 0.52

0

+ 0.38

fund social services jointly with the municipalities in their jurisdictions. To solve the problem, many older people also register in the neighbouring municipality across the Land border, thereby becoming eligible for a place in a senior citizens’ residence in that municipality, which is closer to their former hometown. Kindergartners, too, experience different systems. Lower Austria, being the only Land with free kindergarten attendance, attracts youngsters from municipalities in neighbouring Länder. Parents register their children with Lower Austrian relatives and friends, and the children return to their parents’ hometowns outside Lower Austria every afternoon. Similar examples can be found along all Land borders, says Gottfried Kneifel, member of the Federal Council.62 A transparent calculation of public costs should lead to free choice of public services by citizens in selected areas. Länder or municipalities would then be able to develop equalization schemes for services so rendered. However, such a solution based on citizens’ needs requires an amendment to the federal Constitution. The federal portfolio for municipalities’ affairs lies with the Ministry of the Interior. Other ministries, whose functions are delegated to the municipalities, also maintain contact with the municipalities directly and with their associations. A deputy minister (Staatssekretär) in the Federal Chancellery deals with administrative reform and e-government, thus having regular contact with the municipalities and their associations. The associations represent municipalities in all federal bodies dealing with municipal issues. Municipal relations with the federation – via the federal associations without mediation of the Länder – deal mostly with constitutional matters and finances but primarily with matters of delegated powers, whereas the Länder are involved with the development of legal provisions or policies in the municipalities’ autonomous sphere of action. For the coordination of spatial planning – a Land competence – the federation, the Länder, and the municipalities have established the Austrian Conference on Spatial Planning (Österreichische Raumordnungskonferenz).63 The executive body, chaired by the federal chancellor, comprises most federal ministers, the Land governors, and the presidents of the two municipal associations. The office was established in the Federal Chancellery, and its

Republic of Austria

61

studies, projects, and research are carried out by committees and working groups involving all partners. Every ten years, the conference publishes the Austrian spatial development plan, detailing the plan’s impact on Länder and local governments. The rather homogenous structures of the representation of the municipalities facilitate relations with the federation and the Länder, and both the federation and the Länder take the municipalities seriously. The presidents of the associations – Michael Häupl, mayor of Vienna (spö), and Helmut Mödlhammer, mayor of Hallwang in Land Salzburg (övp) – are influential beyond their own political parties. According to the constitutional provisions, only the federation and the Länder possess legislative competences. The municipalities are merely partners at the negotiation table, even though they are greatly affected by both federal and Land legislation. Sometimes, therefore, the expression that “two and a half partners” are involved is used by municipal representatives. Exceptions are the consultation mechanism and the stability pact, where municipalities are full partners and signatories.

political culture of local governance The municipal political spectrum is similar to the federal and Land spectrums. However, citizens’ lists or groups with single local issues are a particular feature of municipal mandates. Traditional political parties are organized into municipal groups and, in bigger towns, also into districts or constituencies. Voter participation in elections is continually decreasing. The turnout in elections for the National Council fell steadily from 94.3% in 1945 to a low of 78.5% in 2006 and 78.8% in 2008. Turnout in elections for members of the European Parliament fell from 67.7% in 1996 to 49.4% in 1999 and 42.2% in 2004. Participation in the election of the federal president declined from 96.8% in 1951 to 71.6% in 2004.64 At approximately 80%, the average turnout in municipal, Land, and federal legislative elections held between 1990 and 2008 does not show any significant variation between the different governments. Average participation ranges between 82.9% for the National Council, 79% for Land parliaments, and 78.2% for municipal councils, with a downward tendency for all three.65 In 2005 a large majority (63.6%) of the 2,358 mayors were members of the övp. The spö had 26.5%, the fpö 1.7%, and independent lists 8.2%. Like the federal and Land governments, with 2,124 mayors, the spö and övp together account for 90.1% of the municipal leaders. The 42,248 councillors in the 2,358 municipal councils again mirror the predominance of the övp (44.6%) and spö (34.5%), followed by the fpö (5.2%), Greens (1.5%), kpö (Communist Party) (0.06%), and independent lists (5.3%).66

62

Andreas Kiefer and Franz Schausberger

Most municipal councillors are men. The number of female mayors increased from forty-five in 2003 to seventy-three in 2005, a significant increase, but still only a 3.1% share of the leadership positions.67 Political parties and the Länder as well as the municipalities hold seminars to encourage women to stand for election. The results, however, have not yet been impressive, although more women are coming into political positions. In Länder with a higher share of minority groups, some mayors come from these groups. In Burgenland, for example, about 6 of the 171 mayors belong to the biggest minority group, the Burgenland-Croatians. Many politicians start their careers in municipal government before moving to Land or federal careers. Günther Platter, for example, federal minister for defence until 2007 and minister for the interior in 2007 and 2008, served as mayor of his Tyrolean hometown from 1989 to 2000, before becoming a member of the Tyrol Land government and later federal minister and then returning as Land governor of Tyrol in 2008. In 2005, 56.3% of the 183 members of the National Council had had municipal mandates before or during their federal ones. A similar rate of 62.9% applied to the sixty-two members of the Federal Council.68 Members of the Land parliaments also often have a municipal background and serve as councillors or mayors. These positions are not incompatible, and thus can be held concurrently, although salaries earned from public positions are limited by federal legislation.69 The Federal Constitutional Act (b-vg) stipulates that membership of municipal councils and other general representative assemblies (e.g., National Council and Land parliament) is incompatible for the following positions: federal president;70 member of the federal Supreme Court, Court of Auditors, and constitutional and administrative courts; and ombudsperson.71 In principle, members of a federal or Land executive consider an additional municipal executive mandate to be incompatible with their positions, although no laws prohibit that explicitly, unless the post of mayor in larger municipalities is considered to be a gainful occupation. Siegfried Ludwig (Lower Austria, övp) was mayor from 1957 to 1981 and also member of the government of Lower Austria from 1968 to 1981, before becoming governor in 1981, and Karl Schlögl (Lower Austria, spö) was mayor from 1989 to 1997 and also deputy minister (Staatssekretär) in the Federal Chancellery from 1995 to 1997. Both held posts as mayors while serving in government. Double mandates in general happen only where one mandate is municipal and the local government background is considered helpful and valuable, facilitating contacts between the levels. Most Land parliaments decide the salaries of mayors, but Vorarlberg leaves it to the municipal councils to vote the mayor’s salary within fixed margins. Mayoral salaries for municipalities under 500 inhabitants range from €11,967 (US$16,403) per year in Burgenland to €21,910 (US$30,033) in

Republic of Austria

63

Tyrol, and for cities over 20,000 inhabitants from €88,536 (US$121,360) in Lower Austria to €110,670 (US$151,700) in Upper Austria. Most mayors are paraprofessionals: 85% of them work full time in their civilian professions. On average, they dedicate about thirty-three hours per week to their political mandates, in addition to their regular professions. The unsatisfactory social benefits provided for mayors make it less and less attractive to stand for the position. Mayors have no right to a municipal pension, no unemployment insurance, and none of the other rights that employees usually enjoy.72 As 59% of the mayors have responsibilities for children, this insecurity is a considerable hindrance for many, says Helmut Mödlhammer, president of the Austrian Association of Municipalities.73 In the election of 2004, 20% of the mayoral candidates in Land Salzburg stood unopposed. The turnover of mayors can be considered low, and most serve two to three terms. There are extraordinary examples of mayors serving longer, like Hermann Kröll, mayor of Schladming, Styria, from 1975 to 2005; Kurt Schagerer of Pitten, whose forty-three-year term from 1962 to 2005 marks the longest mandate in Lower Austria; and Valentin Deutschmann of Grafenstein, Carinthia, who retired on 30 September 2008 after holding the post for more than fifty years. Local party organizations are well embedded in the structures of the party in both the district and the Land arenas, often receiving technical support, coaching, seminars, and training. Land parties are exceptionally influential with regard to recruitment and topical issues in Land capitals. Most political parties oblige their politicians who receive a salary or remuneration for posts flowing from their political positions to pay contributions of between 10% and 20% thereof to the respective level of the party organization. Due to the small size of municipal and Land structures, most of the actors know each other, which facilitates contacts between the different levels. Members of the Land governments and parliaments and members of the federal government and the federal Parliament frequently participate in district and Land party meetings and so are within reach in a “friendly” environment.

tr e n d s a n d d e v e l o p m e n t s The main challenges for municipalities arise from the development of an aging society and the needs for healthcare and nursing. Initiatives of the federal government, such as a limit of twenty pupils per classroom, free kindergarten for the year before elementary school, and a new scheme of care for the elderly, cause additional municipal expenditures, which cannot be borne without changing the financial equalization. Mödlhammer has called for a substantial reform and clarification of tasks in the federal system but has confirmed the willingness of municipalities to perform their duties. A prerequisite for doing so, however, is an adequate financial basis.

64

Andreas Kiefer and Franz Schausberger

In their 2007 municipal summer talks,74 mayors opposed the undifferentiated introduction of international standards for public-private partnerships (ppp), which may have proven successful in metropolitan areas but do not take into account the specific small structures in Austria. International tenders of €50,000 (US$67,415) and above often exclude local suppliers, although contracting with a regional enterprise would create taxes and employment in the region with positive effects on municipal budgets. A key trend for local government is the impact of Austria’s eu membership, which has resulted in limitations on autonomous decisions with regard to tendering and budget discretion, partly introduced by international agreements. The eu represents its member states in negotiations of the General Agreement on Trade in Services (gats) and in the World Trade Organization (wto). The municipal umbrella organizations and the Länder have adopted several resolutions seeking to exempt from the gats negotiations the opening-up of the markets for public services, such as water, health, educational audiovisual services, urban transport, and social services, which are often provided by Länder or municipalities. European and global associations of municipalities, such as the Council of European Municipalities and Regions (cemr) and United Cities and Local Government (uclg), serve as platforms to reduce the negative impact of globalization on local government. eu membership brings not only new quasi obligations to co-finance eu-funded projects in the region but also new possibilities to cooperate across borders and to develop projects with partners from the other twentysix member states. The European Commission involves local and regional actors more and more in its policies, and the Committee of the Regions has established a subsidiarity monitoring network for municipalities on employment and growth. This has led to a significant increase in expertise and international exchange for municipal politicians and administrators as well as to new and unprecedented solutions. Although local self-government is not a competence of the eu, many policies and a large range of eu legislation must be implemented by local authorities. Länder and municipalities therefore strove for an early involvement in Austria’s eu politics – even before it obtained membership in 1995. Since 1989 two representatives of the municipal umbrella organizations have had a seat on the Council for Matters of the Austrian Integration and (since 2001) Foreign Policy,75 a consultative body of the federal government. An agreement between the federation and the Länder about participation in eu matters, signed on 12 March 1992,76 also included the rights of municipalities to comment on these proposals after coordinating views within their umbrella organizations. Although the comment of the municipalities is not legally binding and has to be considered only by the federal

Republic of Austria

65

government, the Länder are able to bind the federal government in negotiations at the level of the Council of Ministers in matters of Land legislative competence. The Länder (in 1994) and the municipalities (in 1996) made use of a provision in this agreement allowing them to second, at their own cost, staff to the Austrian Permanent Representation to the eu in Brussels. The full integration of one officer from each association allows access to nearly all documents passing through the permanent delegation on their way to the national capital. This is the basis for networking with other national or European associations of municipalities to jointly lobby national and European decision makers. An amendment to the federal Constitution in 1994 introduced the relevant provisions for eu membership. A new Article 23d, paragraph 1, of the b-vg stipulates that the federation has to inform the Länder and the municipalities about all projects within the framework of European integration, in so far as their own sphere of competence or other important interests of the municipalities are affected. The municipalities are represented by their two umbrella organizations. These were granted the right to nominate three of the twelve Austrian representatives to the Committee of the Regions and, most important, the right to comment on all eu issues of significance for local government. Representatives of the local authorities’ associations and the Länder are regularly invited to participate in all the national preparatory meetings. In reality, involvement depends largely on the working capacity of the associations, as meetings in the ministries on eu-related matters take place as often as once a week. The federal government acknowledged the important role of the municipalities in the integration process in its 1995 White Paper outlining the key elements of Austria’s eu policies.77 It advocated respect for the principle of local autonomy in the debates and negotiations for a constitution or a reform treaty for the European Union. Municipal Involvement in the European Arena: clrae, CoR, and Euro-regions The Council of Europe was the first European institution to set up a body for matters concerning the regions and local authorities. It started in 1952 with the Parliamentary Committee for Local and Regional Questions, followed in 1954 by the Committee for Local Affairs. In 1957 the Conference of Local and Regional Authorities was set up. The establishment of the Congress of Local and Regional Authorities of Europe (clrae) in 1994 as a consultative organ of the Council of Europe marked a breakthrough. Its 315 full and 315 substitute members work in a Chamber of Regions and a Chamber of Local Authorities and represent – being directly elected local and regional politicians – the 200,000 local and regional authorities in the Council of Europe’s forty-seven member states.

66

Andreas Kiefer and Franz Schausberger

Each member state has the same number of seats in the Congress as it has in the Parliamentary Assembly. Austria nominates three members and three alternate members in each of the two chambers. A standing committee, comprising representatives of all the national delegations, meets during the autumn and spring sessions, alongside the other committees (i.e., Institutional Committee, Committee on Culture and Education, Committee on Sustainable Development, and Committee on Social Cohesion). Key tasks are the monitoring of the application of the European Charter of Local Self-Government, the European Outline Convention on Transfrontier Cooperation between Territorial Communities or Authorities, and the Convention on the Participation of Foreigners in Public Life at Local Level;78 the observation of local and regional elections; and advice to the Committee of Ministers on municipal and regional issues. The Congress also addresses member states of the Council of Europe with resolutions and monitoring reports. In 2007 it focused on an additional protocol to the Charter of Local Self-Government and a proposed legal instrument on regional democracy. National delegations must reflect the geographical and political composition of local and regional authorities in their countries and embody a fair balance between women and men. The clrae is also organized in political groups. The three members and three alternate members in the Chamber of Local Authorities (mandate 2006–08) represent municipalities from Tyrol and Lower Austria and from Upper Austria, Salzburg, and Styria respectively. Nominations by the umbrella organizations follow the strength of the political parties, with three representatives of both the spö and the övp.79 The Committee of the Regions (CoR) is the eu counterpart of the clrae. The CoR became operational in 1994. After enlargement on 1 January 2007, its members increased from 317 to 344. As about three-quarters of eu legislation is implemented locally or regionally, the local and regional representatives should have a say in the development of new eu laws. The CoR works through six commissions, and preparatory work is done in the national delegations and political groups. The European Commission must consult the Committee of the Regions whenever new proposals are made in areas that have regional or local repercussions, and the Council of Ministers and the European Parliament may do likewise. The Maastricht Treaty (in force from 1 November 1993) sets out five such areas: economic and social cohesion, trans-European infrastructure networks, health, education, and culture. The Amsterdam Treaty (in force from 1 May 1999) added another five areas – employment policy, social policy, the environment, vocational training, and transport – which now cover much of the range of the eu’s activity. In addition, the Commission, the Council, and the European Parliament may consult the CoR on a proposal involving issues with significant regional or local implications. The

Republic of Austria

67

CoR can also draw up an opinion on its own initiative, which enables it to put issues on the eu agenda. The CoR and the clrae have established a contact group, consisting of three members from each of them, to coordinate views on key issues and to support each other. Local authorities participate in the Austrian delegation to the CoR, where their associations jointly nominate three members and three alternate members.80 For the CoR term 2008–10, the six municipal representatives came from Lower Austria, Salzburg, Upper Austria, Vorarlberg, and Vienna and had spö and övp backgrounds. Three of them were also members of the clrae. The nine Länder nominate one member and one alternate member each.81 Institutional involvement in the Council of Europe and the eu by municipal politicians assisted by their experts from the municipal associations in Vienna and Brussels have created the capacities necessary for dealing with these issues once they arrive in the domestic arena. Cooperation between the federation, the Länder, and the municipalities in European affairs has improved significantly since eu membership, just as the bigger municipalities and the two associations have gained significant experience and professionalism. eu membership also brought other developments. The two municipal associations have supported local governments in the new democracies in central and eastern Europe, particularly by intensifying municipal partnerships, regularly holding conferences on specific municipal topics, and pursuing cross-border cooperation. This intensive cooperation between the associations and the local authorities of the central and eastern European countries not only paved the way for an intensified transfer of know-how but also increased cultural and economic interaction. These local activities call for the citizens of both sides to come closer together. Many municipalities cooperate across national borders, sometimes with complicated legal bases or without such bases. Effective from 1 August 2007, a new legal instrument of the European Union, called the European Grouping for Territorial Cooperation (egtc),82 provides a formal cross-border legal structure for the cooperation of eu member states, Länder, regions, municipalities and their associations, and bodies governed by public law. If legally compatible, neighbouring non-eu countries are also eligible to cooperate. The egtc facilitates cooperation in Euro-regions, which presently, unless bilateral agreements provide accordingly, do not provide for a single legal personality accepted on the other side of the border. The euRegio Salzburg – Berchtesgadener Land – Traunstein, established in 1995, with member municipalities from Land Salzburg, Upper Austria, Tyrol, and German Bavaria, for example, will be able to abandon the present three-pillar structure of private-law associations in favour of a single common one. The egct will extend intermunicipal cooperation beyond national borders and

68

Andreas Kiefer and Franz Schausberger

also stimulate cooperation between municipalities in different Länder or regions within member states. Fields of action include infrastructure, sports facilities, public transport, and common development strategies, to mention a few. As of late 2008, the required one federal and nine Land laws, needed in order to transpose the egct regulation, were still in preparation for parliamentary deliberations and adoption.

constitutional reforms ahead In the past twenty years, federal and Land governments have undertaken measures to safeguard the small structure of municipalities. The federal government, sworn in on 11 January 2007, but serving for fewer than two years, stated in its coalition agreement that it would guarantee the existence of municipalities through an amendment to the Federal Constitutional Law in the legislative period 2007–10. This initiative was not questioned and appeared again in the government program for the period 2008–13.83 The amendment shall make changes to the structure of the municipalities possible only with the agreement of the population in the respective municipalities, and all municipalities will continue, irrespective of their size, to have the same rights and responsibilities. To safeguard adequate performance and good governance despite the small size of the municipalities, the legal scope for intermunicipal cooperation will be enhanced. Länder as well as towns and municipalities shall be able to create joint institutions for economic activities subject to civil law, as well as for the implementation of public law, in order to accelerate processes and bring together specialist competencies with a view to achieving greater customer orientation. The remaining limitations to intermunicipal cooperation across Land borders will also be abolished. Both in private economic activities and in public law, the creation of joint institutions and authorities shall be made possible by the above-mentioned constitutional amendment. To this end, public-law contracts allowing a joint authority to be set up that extends beyond the bounds of local responsibilities will be permitted. The setting-up of appropriate legal procedures for possible conflicts resulting from such public law contracts will thus be imperative. The role of the municipalities will probably be stronger following the reforms foreseen from 2009 onward. Despite the small structure and the significant differences in size and financial and administrative capacities, the current symmetrical structure with a uniform type of municipality will remain. Specific new regimes for metropolitan areas are not on the agenda, and the status of Vienna as a Land and a city will remain unchanged. Challenges to municipal autonomy are the declining share of ownsource financial resources and the rising level of financial transfers that limit municipal autonomy and bring influence from, and dependence on,

Republic of Austria

69

Land and federal agencies. Policy extension, especially from the Länder, has the same effect. Municipalities also face difficult changes as a consequence of Austria’s eu membership, which significantly changed the legal environment for municipalities in the areas of public services, contracts, tendering, budget restrictions, and the like. All Austrian actors, therefore, endorse the provisions in the eu’s Lisbon Treaty introducing to international law that eu institutions are bound to respect the national identity of member states, which also extends to local and regional self-government. The municipalities and their associations are well embedded in the institutional system, and new opportunities have opened for them to participate in Austrian politics. eu membership, the consultation mechanism, and the financial discipline of the federation and the Länder, forced by the stability pact, gave the municipalities and their two associations a new role and responsibility, which they have fulfilled satisfactorily.

notes 1 Leopold Kohr, Das Ende der Großen: Zurück zum menschlichen Mass (Salzburg and Vienna: Otto-Müller-Verlag, 2002), 34. This is the most recent German version of the English original: Leopold Kohr, The Breakdown of Nations (London: Routledge and Keagan, 1957). 2 Opinion poll conducted by Market Institute Linz, published in Oberösterreichische Nachrichten, 27 September 2004, quoted at http://www.market.at/press/index. php/action.view/entity.press_detail/key.257/?PHPSESSID=d938e342b84b6 9136eddd7ef9154e1e1&sitelang=de&PHPSESSID=d938e342b84b69136e ddd7ef9154e1e1 (viewed 7 February 2008). 3 “Bürgernähe schafft politisches Vertrauen,” Market Institute News, no. 29, December 2005, 1–2, http://www.market.at/news/index.php/action.view/ entity.news_detail/key.311 (viewed 7 February 2008). 4 Ernst Hanisch, “Kontinuitäten und Brüche,” in Handbuch des politischen Systems Österreichs, ed. Herbert Dachs et al., 11–19 (Vienna: Manz Verlag, 1991), 19. 5 Statistik Austria, ed., Statistisches Jahrbuch Österreichs 2009 (Vienna: Verlag Österreich GmbH, 2008), table 6.21, at 192. 6 Federal Ministry for Social Affairs and Consumer Protection, ed., Struktur und Volumen der Freiwilligenarbeit in Österreich (Vienna: Statistik Austria, 2008). The key findings are summarized in a press release by Statistik Austria of 21 January 2008, http://www.statistik.at/web_de/presse/029570 (viewed 7 February 2008). 7 Burgenland became part of Austria after a referendum in 1921. Vienna was separated from Lower Austria in 1922. 8 For a description of the Austrian constitutional and political system, see Anna Gamper, “Republic of Austria,” in Legislative, Executive, and Judicial Governance in Federal Countries, ed. Katy Le Roy and Cheryl Saunders, 71–100 (Montreal and Kingston:

70

9

10

11 12

13

14

15 16 17

18 19 20

21 22

23 24

Andreas Kiefer and Franz Schausberger

McGill-Queen’s University Press, 2006); and Roland Sturm, “Austria,” in Handbook of Federal Countries, ed. Ann L. Griffiths and Karl Nerenberg, 44–57 (Montreal and Kingston: McGill-Queen’s University Press, 2002). Bevölkerungsregister der Statistik Austria (popreg), http://www.statistik.at/ web_de/statistiken/bevoelkerung/bevoelkerungsstruktur/bevoelkerung_ nach_staatsangehoerigkeit_geburtsland/031066.html (viewed 17 September 2008). Landesstatistik Salzburg, Salzburgs Bevölkerung 1961 bis 2006 – Stand, Struktur, Entwicklung, June 2007, 89, http://www.salzburg.gv.at/bev06_v40j-langf.pdf (viewed 7 February 2008). Ibid., 39. Ursula Havel and Team, “Bruttoinlandsprodukt 2007 und Revision der vgrZeitreihen 1995–2006,” Volkswirtschaftliche Gesamtrechnungen, 739, http:// www.statistik.at/web_de/static/bip_2007_und_revision_der_vgr__ zeitreihen_ 1995_-_2006_030434.pdf (viewed 17 September 2008). International Monetary Fund, World Economic Outlook, October 2008, “Table 2.1: Advanced Economies: Real gdp, Consumer Prices, and Unemployment,” 52, http:// www.imf.org/external/pubs/ft/weo/2008/02/pdf/text.pdf (viewed 19 December 2008). Figures from euROSTAT, news release no. 54 of 18 April 2008, http://epp. eurostat.ec.europa.eu/pls/portal/docs/PAGE/PGP_PRD_CAT_ PREREL/ PGE_CAT_PREREL_YEAR_2008/PGE_CAT_PREREL_YEAR_ 2008_ MONTH_ 04/2–18042008–DE-AP1.pdf (viewed 17 September 2008). Harald Stolzlechner, Einführung in das öffentliche Recht (Vienna: Manzsche Verlags- und Universitätsbuchhandlung, 2004), 287. Barbara Steininger, “Gemeinden,” in Politik in Österreich, ed. Herbert Dachs et al., 990–1007 (Vienna: Manz Verlag, 2006), 997. Mandate, working documents, composition, and proposals are published on the website of the Austrian Convention (Österreich Konvent): http://www. konvent. gv.at (viewed 5 January 2009). The list is published at http://www.parlament.gv.at/K/DE/GRUND-K/GRUND-K_ 00049/imfname_051333.pdf (viewed 7 January 2009). Roman Häußl, “Vom Meister der Bürger, der Bürgermeister wurde,” Kommunal, no. 10 (October 2005): 57–60, at 60. For example, § 3 Salzburger Gemeindeordnung (municipal Act), in the version of Land Salzburg Law Gazette, no. 8 (2000); or § 13 Vorarlberger Gemeindegesetz (municipal Act), in the version of Land Vorarlberg Law Gazette, no. 20 (2004). Statistik Austria, ed., Statistisches Jahrbuch Österreichs 2008, table 2.06, 42. Hans Neuhofer, “Landesgesetzgebung und Gemeinden,” in Föderalismus und Parlamentarismus in Österreich, ed. Herbert Schambeck, 125–36 (Vienna: Österreichische Staatsdruckerei, 1992), 127. b-vg, Article 116a. For example, l-vg [Land constitution] Salzburg, Article 51, para. 5.

Republic of Austria

71

25 Statistik Austria, Gebarungen und Sektor Staat 2007, part 2 (Vienna: Verlag Österreich GmbH, 2008), table 5.2.3, at 122, and table 5.2.7, at 125. 26 Signature, ratification, and entry into force of all Council of Europe treaties can be found at http://conventions.coe.int (viewed 5 January 2009). 27 Article 115, paragraph 3, of the b-vg came into force on 1 January 1989; see Bundesgesetzblatt [Federal law gazette] (1989), 685. 28 Statement of the president of the regional parliament of Vienna, Johann Hatzl, in the final session of the Austrian Convention on 28 January 2005, “Minutes of 17th Session,” 51. 29 b-vg, Article 118, para. 7. 30 Kommunalkredit Austria AG, in cooperation with Österreichischer Gemeindebund, Gemeindefinanzbericht 2007 (Vienna: Kommunalkredit Austria ag, 2007), 31. 31 Council Directive 94/80/EC of 19 December 1994 laying down detailed arrangements for the exercise of the right to vote and to stand as a candidate in municipal elections of citizens of the eu residing in member states of which they are not nationals, in Official Journal of the European Union (oj), L 368 of 31 December 1994, 38–47, amended by Council directives 96/30/EC of 13 May 1996, oj, L 122 of 22 May 1996, 14, and 2006/106/EC of 20 November 2006, oj, L 363 of 20 December 2006, 409. 32 Steininger, “Gemeinden,” 995. 33 Friedrich Graf-Götz, “Modelle der BürgerInnenbeteiligung in der Gemeinde,” Renner-Institut, 2003, http://www.renner-institut.at/download/texte/buergbet. pdf (viewed 5 January 2009). 34 See http://www.stadt-salzburg.at/pdf/Buergerbegehren_12_2006.pdf (viewed 5 January 2009). 35 Report about the result of the citizens’ consultation, in accordance with § 176 Steiermärkisches Volksrechtegesetz, to the City Council of Graz of 13 October 2005, gz: A 18 – K 134/2005–17, published on the website of the City of Graz: http://www.graz.at/cms/dokumente/10039962/cc1af372/a18_K_134_2005_ 17akt.pdf (viewed 5 January 2009). 36 Amtsblatt [Official journal] of the City of Salzburg, no. 7 (2005): 7, http://www. stadt-salzburg.at/pdf/Amtsblatt_07_2005.pdf (viewed 5 January 2009). 37 b-vg, Article 108. 38 Ibid., Article 142, para. 2. 39 Annual reviews can be found at http://www.wien.gv.at/english/international/ publications/pdf/report07.pdf (viewed 2 January 2009). 40 See presentation in English at http://centrope.info/baernew (viewed 5 January 2009). 41 Financial Equalization Act 2008 (Bundesgesetz, mit dem ein Finanzausgleichsgesetz 2008 erlassen wird sowie das Zweckzuschussgesetz 2001, das Katastrophenfondsgesetz 1996, das Finanzausgleichsgesetz 2005, das Finanz-Verfassungsgesetz 1948, das Bundesgesetz bgbl, nr. 301/1989, das Familienlastenausgleichsgesetz 1967 und das Umweltförderungsgesetz geändert werden), Bundesgesetzblatt [Federal law gazette], no. I 103 (2007).

72

Andreas Kiefer and Franz Schausberger

42 Statistik Austria, “Gesamtabgabenertrag nach Abgabenarten 2004–2007,” http://www.statistik.at/web_de/static/finanzausgleich_ gesamtabgabenertrag_ nach_abgabenarten_2004_-_2007_023561.pdf (viewed 7 January 2009). 43 See Hans-Peter Schneider, Finanzautonomie von föderalen Gliedstaaten und Kommunen: Ein internationaler Vergleich (Gütersloh: Bertelsmann Stiftung, 2006), 27; and § 9, para. 3, Financial Equalization Act 2008. 44 Johann Bröthaler, Helfried Bauer, and Wilfried Schönbäck, Österreichs Gemeinden im Netz der finanziellen Transfers: Steuerung, Förderung, Belastung (Vienna and New York: Springer Verlag, 2006), 5, abridged version at http://db2.staedtebund.at/php/ filesave.php?ID=7f141cf8e7136ce8701dc6636c2a6fe4 (viewed 5 January 2009). 45 Schneider, Finanzautonomie, 28. 46 Kommunalsteuergesetz 1993, Bundesgesetzblatt [Federal law gazette], no. 819 (1993), 6942–5. 47 Communication of the federal Ministry of Finance of 1 March 2006, https:// www. bmf.gv.at/MeinFinanzamt/Fachinformation/WeitereSteuern/Kommunalsteuer/ Internet-Version_zu_KommunalsteuerONLINE_Erklaerung.pdf (viewed 5 January 2009). 48 “Gewerbegebiet über Grenzen: Wenn zwei oder drei ...,” Salzburger monat – Das Magazin von Land und Stadt Salzburg, ed. Roland Floimair and Johannes Greifeneder, November 2006, 2, http://www.salzburg.gv.at/mo200611_10.pdf (viewed 5 January 2009). 49 Kommunalkredit Austria AG, in cooperation with Österreichischer Gemeindebund and Österreichischer Städtebund, Gemeindefinanzbericht 2008 (Vienna: Kommunalkredit Austria AG, 2008), table 2.1, at 21, table 2.7, at 42. The full report is online at http://www.kommunalkredit.at/DE/Kommunalkredit/Presse/Gemeindefinanzbericht%202008/Gemeindefinanzbericht+2008.aspx (viewed 7 January 2009). 50 For example, in Vienna: Gebrauchsabgabegesetz 1966, actual version in Wiener Landesgesetzblatt [Vienna Land law gazette], no. 42 (2003). 51 Kommunalkredit Austria AG, in cooperation with Österreichischer Gemeindebund and Österreichischer Städtebund, Gemeindefinanzbericht 2008, 30. 52 Ibid., 39–41, 43. 53 Klaus Berchthold, Gemeindeaufsicht (Vienna: Springer Verlag, 1998). 54 b-vg, Article 119a. 55 Hans Neuhofer, “Gemeinden,” in Handbuch des politischen Systems Österreichs: Die Zweite Republik, 3rd ed., ed. Herbert Dachs et al., 866–76 (Vienna: Manz Verlag, 1997), 874. 56 Karl Lengheimer, “Die Absichten lassen das Beste hoffen,” Kommunal, no. 1 (January 2007): 12–13, at 13. 57 Ludwig Bieringer, “Der Bundesstaat und die Gemeinden,” in Bundesstaat und Bundesrat in Österreich, ed. Herbert Schambeck, 155–80 (Vienna: Verlag Österreich, 1997), 160. 58 Bundesverfassungsgesetz über Ermächtigungen des Österreichischen Gemeindebundes und des Österreichischen Städtebundes, Bundesgesetzblatt [Federal law gazette], no. I 667 (1998).

Republic of Austria

73

59 Vereinbarung zwischen dem Bund, den Ländern und den Gemeinden über einen Konsultationsmechanismus und einen künftigen Stabilitätspakt der Gebietskörperschaften, Bundesgesetzblatt [Federal law gazette], nos I 249–52 (1999). 60 Reply of Chancellor Wolfgang Schüssel on 11 February 2004 to a parliamentary question on the experience with the agreement on a consultation mechanism from 2000 to 2003, parliamentary document 1243/ab, 22nd legislative period of the National Council. The document contains a list of all 160 demands for negotiations concerning eighty federal projects. The respective data for initiatives of the Länder are not available. 61 Institut für Föderalismus, ed., 30. Bericht über den Föderalismus in Österreich (Vienna: Braumüller Verlag, 2005), 202–3. 62 “Fische, Kinder, Alte nutzen Schlupflöcher in Landesgrenze,” Die Presse, 5 February 2007, 10. 63 See http://www.oerok.gv.at (5 January 2009). 64 Statistik Austria, ed., Statistisches Jahrbuch Österreichs 2008, 495–6, 499. 65 Figures from ibid., 498, and my own research drawing on the websites of the Länder. 66 Steininger, “Gemeinden,” 997. 67 Information obtained from the Austrian Association of Municipalities, June 2007. 68 Steininger, “Gemeinden,” 998. 69 See Theo Öhlinger, Verfassungsrecht (Vienna: WUV Universitätsverlag, 2005), 188; and Federal Constitutional Act on the Limitation of Emoluments of Holders of Public Offices, Bundesgesetzblatt [Federal law gazette], no. I 64 (1997), 863–93, abridged English version at http://www.ris2.bka.gv.at/Dokument.wxe? QueryID=Erv&Dokumentnummer=ERV_1997_1_64 (viewed 5 January 2009). 70 b-vg, Article 61, para. 1. 71 Ibid., Articles 92, 122, 134, 147, and 148g. 72 Wolfgang Mazal and Katharina Körber, “Zur sozialen Stellung von Gemeindemandataren: Bürgermeisterbefragung 2006,” Schriftenreihe Rechts- und Finanzierungspraxis der Gemeinden, ed. Robert Hink and Reinhard Platzer, May 2006, http://www.gemeindebund.at/rcms/upload/downloads/RFG_ 5_2006_ohne_Tabellen.pdf (viewed 19 December 2008). 73 Austrian Association of Municipalities, “Schwierigkeiten bei Bürgermeister-Suche,” press release, 24 July 2006. 74 Documentation of the Kommunale Sommergespräche 2007 is available at http:// www.gemeindebund.gv.at (viewed 7 February 2008). 75 Bundesgesetz, 29 June 1989, die Errichtung eines Rates für Fragen der österreichischen Integrationspolitik, Bundesgesetzblatt [Federal law gazette], no. I 368 (1989), 2761, amended by Bundesgesetzblatt [Federal law gazette], no. I 125 (2001), 1747. See further Daniela Zimper, Einflussmöglichkeiten der Gemeinden in europa. Prozess der Willensbildung. Gemeindeselbstverwaltung. Kommunale Weiterentwicklung (Vienna: Manzsche Verlags- und Universitätsbuchhandlung, 2005), 83–6. 76 Bundesgesetzblatt [Federal law gazette], no. I 775 (1992), 4473–6.

74

Andreas Kiefer and Franz Schausberger

77 Staatssekretariat für europäische Angelegenheiten, ed., Weißbuch der österreichischen Bundesregierung. Österreich in der europäischen Union (Vienna: Federal Press Service, Staatssekretariat für europäische Angelegenheiten, 1995), 170. See further Andreas Kiefer, “Aspekte der europapolitik Österreichs,” in Schillerhausgespräche 1999, vol. 10, ed. Martina Haedrich and Karl Schmitt, 135–70 (Berlin: Schriftenreihe des Hellmuth-Loening-Zentrums für Staatswissenschaften, 2000), 140. 78 Treaties and conventions of the Council of Europe with a municipal dimension are published on the website of the Treaty Office: http://conventions.coe.int/Treaty/ Commun/ListeTraites.asp?MA=7&CM=7&CL=ENG (viewed 5 January 2009). 79 For composition of the Austrian delegation, see http://www.coe.int/t/congress/ whoswho/pays_en.asp?id=12 (viewed 5 January 2009). 80 b-vg, Article 23c (4). 81 Austrian delegation in the CoR, http://cormembers.cor.europa.eu/cormembers. aspx?critName=&critCountry=AT&critFunction=MEM%7CALT&critGroup=& critDossier=&iaction=Search (viewed 5 January 2009). 82 Regulation (ec) no. 1082/2006 of the european Parliament and of the Council of 5 July 2006 on a european Grouping for Territorial Cooperation, oj, L 210 of 31 July 2006, 19–24. 83 See the work program of the federal government sworn in on 2 December 2008, “Regierungsprogramm für die xxiv. Gesetzgebungsperiode 2008–2013,” http:// www.bka.gv.at/DocView.axd?CobId=32966, accessible from http://www.bka.gv.at/ site/3354/default.aspx (both viewed 6 January 2009).

Brazil luiz cesar de queiroz ribeiro a n d s ol g a r s on b r au l e p in to The historical process of recognizing local governments as a relevant order of government has resulted in broad administrative and political autonomy for Brazil’s local governments. After a long dictatorship that commenced in 1964 and ended in a deep fiscal crisis for the national government, the democratization wave of the 1980s encouraged Brazilians to address their demands in local arenas. As a result, decentralization was identified with democratization, and the new Constitution of 1988 recognized municipalities as members of the federation with powers of selforganization. Although politically autonomous, local governments – the municipalities – still depend mostly on the federal government for financial support. Distinctly different from most federations, Brazil’s municipalities have weak ties with their home states. This weak relationship impedes cooperation between the states and municipalities on problems that stretch beyond local jurisdictions. In this chapter, we analyze the place and role of local government in the Brazilian federation and the importance of metropolitan regions. We provide an overview of political and economic aspects of the country, before exploring the historical and institutional developments of local government, in order to explain the evolution of federalism and its alternating movements of power centralization and decentralization, as well as the meaning of autonomy recognized by the 1988 Constitution. The governance role of municipal governments is treated within the framework of their legislative and operational responsibilities. The following analysis of the fiscal structure makes clear how the increasing responsibilities of the municipalities were accompanied by an increase in available revenues. Nevertheless, most municipalities are still highly dependent on federal and state transfers, showing a deep contrast between their financial situation and legal status of autonomy. Relations with other orders of government are then discussed, especially the possibilities and difficulties of

Brazil

77

cooperation, as well as the importance of local political dynamics and the instruments of popular participation. The final section draws attention to the importance of the metropolitan regions and the emerging issues and challenges relating to the role of municipalities in Brazil.

an overview of the land and its institutions Brazil has been a federal republic since 1889, encompassing a federal government (the Union), twenty-six states, a federal district (Brasília), and 5,563 municipalities (as of 2005).1 Ranked as the sixth most populated country in 2005, Brazil has 184 million inhabitants. As the fifth largest national territory in the world, it spreads over 8,514,877 square kilometres, constituting 47% of the land mass of South America. The population’s growth rate fell from an average of 2.8% per year between 1950 and 1980 to 1.6% in the years between 1991 and 2000, remaining constant since then. The Brazilian population originated largely from the indigenous peoples who mixed with the early European settlers (mainly Portuguese) and with the black African slave-labourers who were brought to the country during the colonial era. The end of the colonial era (1822) marked the beginning of a period of intense immigration to Brazil spanning more than 100 years. Immigrants came mainly from countries such as Italy, Portugal, Germany, Spain, Poland, Lebanon, and Syria, as well as Japan. Descendants from European immigrants are mainly concentrated in the south of the country and in the major city of São Paulo. Although there are no marked ethnic struggles in Brazil, social differences clearly exist, as is seen by the fact that black people, by and large, constitute the lower socioeconomic class. Portuguese is the official language, and 74% of the population subscribe to the dominant Roman Catholic faith. Protestants account for a further 15% of the population, with a steady increase in numbers. A highly urbanized country, Brazil is divided into five administrative regions: the North, Northeast, Center-West, Southeast, and South. By 1970, already 55.9% of the total population of 93 million people lived in urban areas. The Southeast had the highest urbanization rate, with 72.7% of the population classified as urban. By 2000, 81.2% of the total population of 170 million people lived in urban areas. Although the Southeast remained the most highly urbanized region, 69% of the population in the Northeast also lived in urban areas. Gross domestic product (gdp) amounted to US$794,098 million in 2005. With a per capita gdp of US$4,311,2 Brazil ranks among the countries with the highest degree of inequality in income distribution. Besides differences in household income, the country suffers from huge regional economic imbalances. In 2004 around 77 million people (43% of the population) lived

78

Luiz Cesar de Queiroz Ribeiro and Sol Garson Braule Pinto

in the four states of the Southeast, which produced 55% of the total gdp. By contrast, the Northeast, comprised of 28% of the Brazilian population, accounted for only 14% of gdp. Per capita income in the Northeast was thus 61% less than that of the wealthiest region. The country has a presidential system of government. The president serves as the head of state and head of government. The president and vice president are directly elected for a four-year term. They are chosen by an absolute majority of popular votes, and may be re-elected only once for a consecutive term. The ministers of state are appointed by the president. The federal legislature is bicameral, and all bills must be submitted to both chambers. The upper house, the Senate, has three seats per state, totalling eighty-one members; the lower house, the Chamber of Deputies, has 513 seats. Senators are elected to eight-year terms,3 and deputies are elected to four-year terms. Neither the population size nor the economic importance of a state is proportional to its political representation in these houses. For example, São Paulo, the most populous and richest state, representing 22% of the Brazilian population and 31% of gdp in 2004, has seventy representatives in the lower house, or 13.6% of 513 seats, whereas the minimum number of deputies for the smallest state is eight. This is the case of Roraima, a North region state, which accounted in 2004 for 0.2% of the total population and 0.1% of gdp yet, with eight deputies, had 1.5% of the seats. This system results in the poorer states of the North and Northeast having more representatives in the federal arena. As mentioned above, states are equally represented in the Senate. In addition to voting on all bills, the Senate is assigned exclusive competence in respect of many areas, such as the public debt of the three orders of government. This has strong implications for intergovernmental relations, with the pendulum currently swinging in favour of poorer states. In the states and the Federal District, the chief executive and the head of the government is the governor, who appoints the state secretaries. The legislative structure is unicameral, with members of the Legislative Assembly elected to serve a four-year term. Every state has its own constitution. Both the Union and the states (including the Federal District) are provided with judicial branches. The Federal Supreme Court adjudicates on all constitutional matters. It is composed of eleven judges, appointed for life by the president with the Senate’s approval. After two decades of military rule, Brazil regained democracy in 1985. Since then, the political party system has been one of the most divided in the world; since the 2006 election, there have been twenty political parties sharing the 513 seats in the Chamber of Deputies. Four major parties stand out: the Brazilian Democratic Movement Party (Partido do Movimento Democrático Brasiliero) with 90 seats, the Workers’ Party (Partido dos Trabalhadores) with 83 seats, the Brazilian Social Democracy Party

Brazil

79

(Partido da Social-Democracia Brasiliera) with 64 seats, and the Democrats (dem) with 62 representatives. Besides the fragmentation of the party system, which would suggest systematic resistance to presidential legislative proposals, the effects on governability of the distribution of powers between the federal executive and the legislature set by the 1988 Constitution have been the subject of much controversy among scholars. For Argelina Cheibub Figueiredo and Fernando Limongi, on the one hand, the Constitution recovered the powers of the Congress, weakened during the dictatorship (1964–85).4 On the other hand, the executive branch retained its legislative powers, which assures that the president’s legislative agenda is received favourably. Most bills have been presented by the executive, which has counted on the strong support of a disciplined governmental party coalition to achieve a considerable degree of success. During the period 1989–94, 1,259 federal laws were enacted, 79% of which originated from the executive branch and just 14% from the legislature. The remaining 7% came from the judicial branch, in accordance with its prerogatives. Different perspectives are shared by political scientists, like David Samuels and Fernando Luiz Abrucio and Barry Ames,5 among others, for whom the power of the state governors over their state representatives in the Congress may constitute an obstacle to federal executive-branch initiatives.

structures, institutions, and historical development of local government Notwithstanding the political importance of local government in Brazilian history, it was only in 1988 that municipalities, the political and administrative units of local government, were recognized as constituent members of the federation. This was the result of a movement that identified democratization with decentralization. To explain the role of local government, the evolution of federalism and its alternating movements of power centralization and decentralization are described briefly. It is worth noting that distributions of authority between the federal government and the subnational governments have oscillated since the founding of the republican era at the end of the nineteenth century. Municipalities originate from the Portuguese comunas of the colonial era (1500–1822). The vilas were local governments assigned a reasonable degree of autonomy, a model chosen by the Portuguese metropolis to occupy the land and to expand its political and administrative powers. The first towns were founded along the coast to serve as commercial centres for exports. The local chambers were basically in charge of government, and their members were the richest rural landlords and judges, some of whom had been sent to Brazil by the Portuguese Crown.

80

Luiz Cesar de Queiroz Ribeiro and Sol Garson Braule Pinto

Although the imperial Constitution of 1824 stressed the responsibility of local councils for municipal government, they remained subject to provincial governments. The centralization of power during the Second Empire (1831–89) evolved into a federal structure adopted by the first Constitution of the Republic in 1891. A two-tier federation was formed, with the old provinces transformed into states and organized in a way that ensured the autonomy of municipalities in “all the matters related to their peculiar interest.”6 By the end of the nineteenth century, urbanization had started to expand. Beginning in São Paulo, the leading state in coffee production, a network of urban centres extended to the neighbouring states of Rio de Janeiro and Minas Gerais. Only in the twentieth century did urbanization become widespread. Subordinated to the states and lacking financial resources, municipalities had a purely formal autonomy. Revenue was decentralized to the states. This, however, benefited only the more powerful states, to which control of export taxes (in a country based on the export of primary products) was transferred. Once the first phase of military republican governments had passed by 1898, regional oligarchies – groups with strong economic and political power in the major states of Minas Gerais and São Paulo – extended their political power over the entire country. As Celina Souza states, the Brazilian federation has always been characterized by regional and social inequality.7 The power of governors stemmed from the kind of political ties they had in their states. Their relationship with the local chieftains – commonly referred to as the “Colonels” – assured them control over the elections. In return for the support of official candidates appointed to state and national offices, the “Colonels” were given complete freedom in all matters related to local government, including the nomination of candidates for public jobs in their areas. During the period 1932–45, while the country was under Getúlio Vargas’s rule, federal features of the political system were suppressed. Administration of states and municipalities was placed entirely under central control. The authoritarian regime, however, made some moves toward compromising with local economic groups. Whereas the agrarian structure, based on highly inefficient rural properties covering large areas, remained practically intact, the demands of the business sector – chiefly that of São Paulo – caught the attention of the federal bureaucracy. Municipal autonomy has been debated since imperial times. Administrative and political decentralization, ideas inspired by Alexis de Tocqueville, were at the heart of what came to be known as the “municipalist” ideology. According to Marcus André B.C. de Melo, the adoption of this ideology during the Vargas administration would have been seen as a paradox.8 The Constitution of 1937 was a profoundly centralizing one, restraining any financial

Brazil

81

autonomy of the municipalities. Surprisingly, it was this very political project of the authoritarian elites – based on strong political, administrative, and financial centralization – that allowed a direct relationship between the national government and the municipalities, thus removing any intermediary from that relationship. With the fall of the Vargas dictatorship, the Constitution of 1946 restored a federal structure and reinstated elections for state executives and legislators, as well as for mayors and councillors. As a consequence of industrialization and the building of roads, railways, and new ports, the 1940s saw increased territorial and market integration. The 1945 redemocratization movement gave rise to the so-called “Municipalist Campaign.” At the 1946 Constituent Assembly, opponents as well as supporters of Vargas agreed on local-autonomy issues. According to Melo, those in favour of conservative agrarian demands constituted one group.9 They argued against Vargas’s industrialization, which had concentrated activities and population in only a few urban centres, supposedly harming rural areas and resulting in unequal development of municipalities. On the other side were the opponents of centralization and the loss of autonomy by states and municipalities. Article 28 of the 1946 Constitution resurrected the issue of municipal autonomy, permitting the election of mayors10 and councillors and restricting state intervention to situations of default in respect of debt repayment. The military government that came into power in 1964 centralized public revenue according to the directives set in the new 1967 Constitution. As compensation to the states and municipalities for their loss of revenue, special funds were created that redistributed part of the federal revenues, mainly to poorer units. In 1970, 55.9% of the population already lived in urban areas. Since the 1930s investment in infrastructure – mainly energy and transport – had been concentrated in the Southeast, creating jobs and attracting population from the poorer regions. Migrants were mostly unskilled workers who came to the periphery of large cities, and by 1970, 72.7% of the population in the Southeast was urbanized. The crisis for the authoritarian regime began in 1974 with significant defeats in the state and federal legislatures. The state and municipal elections of 1982 were the first to be held through direct vote since 1965, allowing governors to recover some of their sources of power, either through alliances with local political leaders or through strong support from the urban masses. The democratization wave in the context of the national government’s fiscal crisis encouraged citizens to address their demands to the subnational governments closest to them.11 The theory that associated redemocratization with decentralization reached its pinnacle in discussions held at the Constituent Assembly in 1988. Faced with a weakening central power, governors and

82

Luiz Cesar de Queiroz Ribeiro and Sol Garson Braule Pinto

mayors united to fight for a larger share of public revenue. The redistribution of functional responsibilities and roles within the federation did not, however, receive the same attention. Local governments provide a large range of public services, such as health, education, and refuse collection. The symmetric approach adopted in the 1988 Constitution was highly criticized by experts on public policies because it implied a high degree of rigidity in managing the provision of goods and services. In the absence of institutions to encourage intergovernmental cooperation, decentralization thus proceeded in a disorganized way. Institutional difficulties, like the lack of coordination and the absence of mechanisms of cooperation, continued after the 1988 Constitution was adopted. As Fernando Rezende points out, although the attempts to resolve the regional conflict through intergovernmental transfers reversed the vertical imbalance in sharing the country’s tax revenue, it had the effect of increasing horizontal inequality.12 The revenue-sharing system has not succeeded as an efficient instrument of financing demands for public services according to their spatial location. States are entirely divided into municipalities. In 2007 there were 5,563 municipalities spread across the twenty-six states. The number of municipalities varies from 15 in the northern state of Roraima to 853 in southeastern Minas Gerais. Municipalities also vary widely in size of population, from the smallest, Nova Castilho (close to 1,000 people), to the largest, São Paulo (10.9 million people). The distribution of the municipalities according to size shows a high concentration of small units: 24.4% have up to 5,000 people, and another 23.5% range in population from 5,000 to 10,000. Together, these two groups account for only 7.6% of the population. Comprising a third group are thirty-four municipalities, mostly state capitals, with more than 500,000 people each, accommodating up to 50.5 million people. Metropolitan regions, created by federal and state law, are not dependent on any special institution of territorial management, as discussed in more detail in the final section. Brasília, the Federal District, is the capital of the country, located in the Center-West region. With a population of 2.3 million in 2005, it has state status.13 The Federal District has a governor and performs the tasks of both a state and a municipality. In 2000 the indigenous population amounted to 734,000 people. According to the federal Constitution, the Union may establish specific areas to be occupied by indigenous people. Although mostly concentrated in the Amazon, this population group is dispersed throughout the country. Whereas much of the population is integrated into the regional or national economies, some groups still live in relative, or complete, seclusion. The indigenous people are considered to be part of, and are recognized as members of, a culturally differentiated community.14 In 2004, 50% of Brazil’s gdp was generated in the sixty-eight richest cities, where one-third of the country’s population live. Irrespective of high

Brazil

83

diversity among the cities, a symmetric approach is generally adopted to deal with municipal issues. As a result, solutions and approaches to municipal problems are not conditioned by specific features, such as population size, agriculture, and urban activities, or by the metropolitan characteristics of many of the major cities. In addition, small municipalities are created by dismemberment from larger ones on the initiative of local elites. Such an initiative, aimed either at controlling the financial resources transferred by the state and federal governments or at gaining political control of votes, quite often leads to the establishment of administrative units with poor political, institutional, and financial capabilities. According to Article 18 of the 1988 Constitution, the establishment, merger, fusion, and dismemberment of municipalities were to be effected by means of a state law, following consultation by plebiscite of the population of the municipalities “directly interested” in the dismemberment. This has meant that only the district (an administrative division of municipalities) interested in the separation would vote. The creation of a multitude of new municipalities is ascribed to this rule, as demonstrated by the fact that the number of municipalities increased from 4,189 in 1988 to 5,437 by the end of 1995. Since 1996, following Constitutional Amendment No. 15, the status quo has changed. The establishment, merger, fusion, and subdivision of municipalities are now effected by means of a state law, within a framework set forth by a supplementary federal law. Municipal feasibility studies must be presented and published according to the law. The publication of these studies, and subsequent consultation (by plebiscite) with the population of the municipalities concerned, must take place as a prerequisite of the state law. These constitutional directives aimed at deterring the creation of new municipalities – most of which would be entirely dependent on the federal government – have been successful, despite the fact that the federal complementary law, which is expected to define both the necessary period for the change and the content of the feasibility studies, has not yet been approved by the Congress. However, for municipalities that had initiated the process of subdivision before the enactment of Constitutional Amendment No. 15, a local plebiscite could suffice, with the result that the number of municipalities increased from 5,437 by the end of 1995 to the present 5,563. The opposite movement, the merger or fusion of municipalities, is not considered a politically viable alternative, even when it can be shown to make sense in terms of management efficiency.

constitutional recognition of local government Local government autonomy stands out as a constitutionally entrenched characteristic of Brazilian federalism. Although the 1891 Constitution first

84

Luiz Cesar de Queiroz Ribeiro and Sol Garson Braule Pinto

established that the organization of municipalities should be considered a matter of state legislation, provision was nevertheless made for a degree of autonomy for municipalities. Since then, the many constitutions (except under the Vargas dictatorship) have progressively set limits on the rights of states to interfere in municipalities. 15 It was only in the 1988 Constitution, however, that municipal autonomy was entrenched in Articles 1, 29, and 30, prohibiting its suppression or any kind of restriction, not even by means of constitutional amendment.16 Article 1 asserts that municipalities, states, and the Federal District are indissolubly united, forming the Federative Republic of Brazil. Article 29 provides that municipal autonomy is based on the right of municipalities to govern according to their own organic laws, thus preventing federal and state rulers from intervening in their internal affairs. An organic law must be voted for and approved by two-thirds of the councillors. Article 29 further defines the political organization of municipalities and sets rules for the elections of the mayor, deputy mayor, and councillors, while outlining the parameters for their remuneration. In spite of the precepts established in Article 29, Sergio Ferrari notes that many state constitutions refer to municipalities as though states still retain the power to organize local governments, whereas other state constitutions show a tendency to minimize municipal competences.17 Needless to say, these are unconstitutional provisions. The Constitution of 1988 introduced deep-seated changes to the structure of Brazilian federalism. Souza highlights the creation of a new institutional environment involving an increase of political and taxing powers of subnational governments and the empowerment of local communities in decision making on public policy.18 Article 30 of the Constitution grants municipalities the power to enact laws on matters of local interest and to supplement federal and state legislation. The same article states that municipalities are entitled to organize and render, directly or by concession or permission, public services of local interest, as well as to promote, wherever fitting, adequate land use, by means of planning and control of urban land use, apportionment, and occupation. Most municipalities, however, are highly dependent on other orders of government. In spite of their economic and social differences, symmetric treatment is almost absolute. Articles 29 to 31 (and some others in the Constitution) prescribe in a detailed way the legal regime of the municipalities, with no distinction being made between the size of the population or any other special feature of individual municipalities. This notwithstanding, it is acknowledged that strong economies and the size of a population may translate into political power and, in some cases, into better technical capability of public servants. Although they do not have a seat within the federal government, some municipalities feel entitled to negotiate directly with it, not only on issues concerning public policy but

Brazil

85

also in respect of their capacity to borrow from national public institutions as well as from foreign banks and multilateral institutions. Smaller municipalities depend mostly on their state congressmen, who play the role of “federal councillors” in trying to solve municipal problems with the help of the national government. The historical process of recognizing municipalities as a relevant order of government culminated in broad administrative and political autonomy for localities. There are, however, cases when intervention of the state or the Union in a municipality is permitted. According to Article 35 of the Constitution, two defined instances where intervention is permissible are (1) failure to render proper accounts and (2) failure to assign a minimum amount of revenue to health and education, as required by the Constitution (15% and 25% of own taxes and main transfers, respectively). According to Ferrari, the right to self-organization is the most important legal feature of municipal status.19 This right prohibits states from interfering in the direct organization of municipalities. Municipalities are constituent units, deriving both their legal and operational competences directly from the federal Constitution. The political autonomy of municipalities, therefore, is legally asserted. Among other principles, the Constitution includes the right of residents to elect their local officials – the mayor, the deputy mayor, and the councillors – without interference from the federal or state governments. In addition, municipal autonomy entails legislating on matters of local interest (e.g., land use) and deciding how to provide public services, organize territory, and use municipal financial resources (i.e., the municipal budget). This no doubt serves the dual purpose of enhancing the accountability of municipalities as the order of government closest to the people. After twenty years of constitutional recognition, we may say that there are positive results. Cities, mainly the larger ones, try to modernize tax administration in order to increase the collection of municipal tax revenues. There are, however, other consequences of municipal autonomy. A reduction of state powers may lead to greater difficulty in developing cooperative actions, as states lack the necessary instruments to coordinate action within their territory. This may result in perverse outcomes, especially in metropolitan regions, where the impact of the decisions of one municipality cannot be contained within its boundaries. Inadequate institutional arrangements constitute an important obstacle to the integration of investments and services, while also reducing the efficiency of public initiatives, as is clearly seen in the metropolitan areas.

governance role of local government The division of competences among the three orders of government must be analyzed within the framework of their legislative mandate and of their

86

Luiz Cesar de Queiroz Ribeiro and Sol Garson Braule Pinto

operational responsibilities. The rigid division of legislative competences in the Constitution favours the federal government, to which most legislative competences are allocated.20 Among them are civil and commercial law, credit policy, transport and traffic, mineral resources, immigration, and social security. When concurrent competences are assigned, as is the case with tax, budgetary, financial, economic, and urban legislation, the role of the Union is limited to setting general directives. Nevertheless, federal legislation frequently goes into much detail, leaving almost no room for supplementary state or local legislation. Operational responsibilities are shared more flexibly, following the historical trend of decentralization. Social areas, such as education, health, and social assistance (with the exception of social security),21 fall in the category of concurrent competences of the three orders of government. Federal laws, such as the 1990 Health Organic Law and the 1993 Social Assistance Organic Law, have established mechanisms and instruments for cooperative federalism. These legal instruments, mainly regulating the social areas, partially fill the gap created by the lack of a complementary law, which is expected to set the rules for cooperation between the three orders of government in respect of concurrent competences.22 Despite their creation by state law, municipalities are entitled, under Article 29 of the Constitution, to the right of self-organization. As a result, the administrative structures to provide municipal services (be they secretariats, public enterprises, or foundations, among others) must be established in terms of each municipality’s organic law. Municipal operational responsibilities may be performed exclusively by municipalities or may be shared by the three orders of government, although not necessarily through cooperation. Exclusive competences, listed in Article 30, include the collection of local taxes, the provision of local services directly or under concession/ permission, including collective transportation in inner cities and setting directives for, and inspection of, land use. Concurrent competences, listed in Article 23, include health and social assistance, including help for disabled people; protection of the environment and of historical, artistic, and cultural assets; guarantees of access to culture, education, and science; incentives for agriculture and cattle breeding and the organization of food distribution; development of housing programs, including house improvements and sanitation utilities; combating poverty and social marginalization; inspection of concessions for research and exploitation of hydro and mineral resources; traffic safety; and the promotion of tourism and sports. According to Article 211, the municipalities should prioritize basic education (ages 7 to 14), preschool (ages 4 to 6), and assistance to daycare centres (ages 1 to 3). With regard to basic education, although municipalities are increasingly assuming responsibilities, in 2006 states were still responsible for a

Brazil

87

large proportion of enrolments (almost 40% of the total), whereas federal participation was not significant. In 2005 municipalities had 4.5 million employees, constituting 2.4% of the country’s total population and 5% of the national labour force.23 Smaller municipalities may employ a larger proportion of their population; 15% of municipalities with fewer than 5,000 people employed more than 7.5% of their population. The Constitution empowers local governments to grant concessions (i.e., contracts) for the provision of services of local interest, such as public transportation and waste collection and disposal. Intermunicipal transportation is a competence of the states, therefore requiring state and municipal agencies situated in high-density regions to work together to implement a joint plan for the transportation network.24 Municipalities have increasingly been joining efforts through consortia for the provision of public services.25 According to the federal bureau of statistics, the Brazilian Institute of Geography and Statistics (ibge), public consortia are widespread. Although associations began before 2005, it was only in that year that a law was passed clarifying the legal structure for public associations and setting a sound legal basis for public consortia to manage public utilities, which may encompass the Union, the states, and the municipalities. Intermunicipal consortia are most common in the health sector, stimulated by federal regulation of the Unified Health System (sus) and by regular and significant resource transfers. As a result, 34.2% of all municipalities participate in health consortia. In the case of municipalities with fewer than 5,000 inhabitants, the total reaches 43.2%. In the environment sector, consortia involve 7% of municipalities, whereas consortia for the operation of sewage systems, waste disposal and treatment, and tourism have the support of 6.3% of municipalities. Consortia between municipalities and states include the areas of health (21% of municipalities), education (20.1%) and social assistance (15.6%). Municipalities may also participate in consortia with the federal government, and again it is in the area of health where this is most frequent (21% of municipalities participating), followed by education (13.8%) and social assistance (11.9%). In evaluating the impact of consortia on the functioning of municipalities, the importance of a new regulatory framework for intergovernmental cooperation should be stressed. Consortia in the health sector in the State of Minas Gerais have proved to be a valuable instrument in a sector that requires large investments to provide complex services. Cooperation in the State of Bahia entails sharing equipment and the cost of paving and repair of municipal neighbourhood roads. The management of water catchment areas has encouraged the formation of consortia in São

88

Luiz Cesar de Queiroz Ribeiro and Sol Garson Braule Pinto

Paulo that went beyond their initial objectives and resulted in the promotion of regional development. Private-sector participation in the provision of public services continues to face political obstacles. There is a widespread perception that the transfer of essential public services by means of concession or privatization may hinder low-income families from accessing these services. It has been argued that they would be unable to pay the service charges necessary to fairly remunerate the invested capital. Politicians have thus been cautious not to advocate for an expanded role of private investment in essential services such as sanitation.26 In 2000 the federal Fiscal Responsibility Law (lrf) was passed to improve planning, control, transparency, and accountability in the public sector. Although certain provisions of the lrf may be viewed as creating short-term constraints on spending, over the medium and long term, they are expected to contribute to public savings. This framework may also yield new possibilities for increased private-sector participation in financing and supplying urban services, while facilitating essential partnerships to provide certain key urban services.27 In Brazil the political institutions of a municipality are very similar to those of the Union. The mayor is the chief executive of a municipality, entitled to appoint the municipal executive. The legislative structure is also unicameral, with members of the municipal chamber elected to four-year terms. Mayors traditionally rule in a way similar to that of the president of the country. He or she is the spokesperson for local demands and interests before the municipal chamber and other orders of government, as well as before different interest groups in the community. As head of the executive, the mayor has political, executive, and administrative functions. The mayor may initiate or propose bills for approval by the municipal chamber. As a leader, he or she also deals with community organizations and other organized groups, as well as with grassroots leaders, looking for support when necessary and consulting with them to better understand their aspirations and needs, all in an effort to enhance local governance. The number of councillors, which is proportional to the municipality’s population, ranges from nine to fifty-five persons.28 The municipal chamber is assigned three basic functions: the legislative function of adopting laws on matters of exclusive municipal competence, a supervisory function of controlling local administration, and an administrative function in relation to the domestic organization of the chamber itself. A Court of Accounts is responsible for the external supervision of the chamber, including the management of its financial resources. Mayors, as well as councillors, are full-time officials. Although they receive salaries, they are not entitled to pension benefits. Their salary levels are regulated by the municipal chamber in terms of the limits set by the Constitution.29

Brazil

89

financing local government Although decentralization since the 1980s has been accompanied by an increase in available revenue to municipalities, pressures for the expansion of public services have been evident. It is important to note that municipal revenue has grown not only because of an increase in transfers but also through efforts to collect local taxes. Total available revenue of municipalities was equal to 3% of gdp in 1988, of which 0.6% of gdp (or 20% of all municipal revenue) resulted from own-source tax collections. By 2006 these totals had risen to 6.2% and 2% of gdp (or 32.2% of all municipal revenue), respectively. During that year, municipalities were responsible for 5.7%, and states for 26%, of total tax collection. The total tax burden was 22.4% of gdp in 1988, rising to 35.5% in 2006.30 Local government expenditure is mainly financed by taxes and transfers from the federal and state governments.31 Additional revenue comes from user charges, financial investments, and loans, among others. All governments are legally obliged to levy and collect the taxes assigned to them by the Constitution. Municipalities cannot create new taxes, only fees. They manage their revenue collection and are entitled, within limits, to set their own tax rates. Taxing powers, as well as the revenue-sharing system, are clearly defined in Articles 145 to 156 of the Constitution. Tax bases are broadly defined in the Constitution and detailed in the Federal Tax Code. Local governments levy taxes on urban land and property (iptu), on real estate transfers (itbi), and on services (iss).32 They also impose municipal fees – usually on waste collection, licences, and the like. Municipalities may also collect a levy to finance street lighting.33 iptu is collected in most municipalities. The amount collected, however, is often much lower than expected due to problems related to property valuation, which is not updated regularly. The iss is mostly collected in large cities where highvalue technologically advanced services are employed, but it requires a great effort in respect of tax administration. Although a new federal complementary law was recently approved, many conflicts over the levying of taxes persist, often leading to intermunicipal fiscal wars where some municipalities reduce taxes to attract enterprises. The borrowing powers of municipalities (as well as of the Union and the states) are governed by the Senate and the Fiscal Responsibility Law of 2000. The goal of macroeconomic stability has resulted in strict control over state and local indebtedness. Since the promulgation of the lrf in 2000, the federal government has been prohibited from assisting state or local governments that experience debt-related problems. Tough limits on the access of states and local governments to loans granted by federal financial institutions have narrowed their ability to overcome budget constraints through borrowing.34 Although the total indebtedness of Brazil’s

90

Luiz Cesar de Queiroz Ribeiro and Sol Garson Braule Pinto

municipalities is not substantial, 2.5% of gdp in December 2005 (less than 5% of total public debt), it is highly concentrated, with around 75% occurring in the three capital cities of São Paulo, Rio de Janeiro, and Salvador (capital of Bahia). Many of the constraints on borrowing, however, are not direct legal constraints. Bureaucratic requirements to be fulfilled by the borrower constitute real barriers, especially for medium-sized and smaller municipalities, whose debts are generally low in relation to current revenue.35 The finances – revenues, expenditure, and debt – for federal, state, and municipal governments have steadily improved in the recent past, largely as a result of the federal government’s commitment to a sound fiscal climate. Attaining this sustainable position, however, has required an increase in the tax burden from 29% of gdp in 1999 to about 35.5% now. High interest rates have also prevailed, and actual interest rates are generally higher than 8% a year. Although states and municipalities have secured increased tax revenues, the federal government has benefited the most. Intergovernmental transfers to municipalities have increased as a result of continuing decentralization. During the period 1995–2003, transfers received by municipalities from the Union accelerated at an annual real rate of 9.1%, whereas transfers from states to municipalities grew at a rate of 2.6% per year. Given the strict restrictions placed on the use of the funds so transferred, some researchers and politicians have viewed this as a new wave of centralization. Government officers argue, however, that restrictions are useful to keep control of the use of resources, given the great variance in technical capabilities among municipalities. Transfers to municipalities have especially increased for health (from the Union) and education (from the states). This explains the increase in current expenditure, as both health and education are generally intensive in personnel and operating costs. Municipalities were responsible for 24.1% of total public expenditure on personnel in 2003 (up from 18.3% in 1995) and for 44.6% of other current expenditure (up from 34.3% in 1995). In 2003 the states were responsible for 42.2%, and the Union for 33.6%, of personnel expenditures. In relation to other current expenditures, the respective contributions of the states and the Union were 30.8% and 24.6%. It is worth noting that municipal capital investment was half of all public investment in 2003, whereas the states’ portion amounted to 35.3% and the Union’s to 17.6%. Overall, in 2004 local governments were responsible for 15% of all government expenditure, and states and the Union for 26.1% and 58.9%, respectively.36 The municipal budgets in 2005 gave a clear picture of intergovernmental relations.37 Own taxes and fees amounted to 20.4% of total municipal revenue, whereas intergovernmental transfers accounted for 63.4%. Another 13.7% came from other current revenues (e.g., sale of services and

Brazil

91

financial transactions). Capital revenues (e.g., proceeds from loans and capital transfers) represented the remaining 2.5% of the total. The most important transfer in 2005 came from the constitutionally mandated share in the state value-added tax (icms) (comprising 18.7% of municipal revenue) and from the Federal Redistributive Fund for Participation of Municipalities (15.4%).38 Earmarked transfers for education (fundef)39 and health were also significant – 10.1% and 8.2% of the total revenue, respectively. Due to strict credit control, the proceeds from borrowing were less than 0.5% of the total. Although part of the federal and state transfers serves a redistributive function, there is no equalization system. On the contrary, horizontal imbalances have grown since the 1988 constitutional dispensation. The composition of municipal budgets (and, in particular, that of revenue) is clearly affected by the population size of municipalities. Larger cities rely on their own taxes (accounting for 39.1% of total revenue), which are sourced mainly from the tax on services (iss). They also receive a significant amount of shared tax revenue (40.1% of total revenue) and benefit especially from the state value-added tax (11%).40 Capital revenues account for 3.9%, and other current revenues for the remaining 16.9% of the total. In contrast, small municipalities rely heavily on intergovernmental transfers – accounting for 88.7% of the total revenue of municipalities with populations below 5,000 inhabitants. These municipalities exhibit a poor performance in tax collection, which accounts for only 3.6% of their total revenue, almost equal to their capital revenues of 3.3%. Other current revenues represent another 4.4% of the total. The composition of per capita revenue also differs according to the size of the municipality. Transfers to small cities can amount to 24 times the amount of taxes and fees they collect. This quite often makes their per capita revenue appear much higher than that of medium-sized cities and even some densely populated dormitory cities. The average per capita revenue of towns with up to 5,000 people was 1.6 times that of cities with populations ranging between 100,000 and 500,000 people. The economies of these medium-sized cities are not strong enough to offer a wide tax basis. In addition, these cities do not derive much benefit from redistributive revenue sharing, posing an acute problem in metropolitan cities where deep social problems and violence are often concentrated. On the expenditure side, payroll and other current expenditure accounted for 44.3% and 43.1%, respectively, of total expenditure in 2005, with no significant variation according to the municipalities’ population size. Whereas the burden of social security benefits for retired employees (approximately 10% of personnel expenditure) is much lower for municipalities than for states and the federal government, it becomes more significant in larger cities. This situation may get worse since local governments,

92

Luiz Cesar de Queiroz Ribeiro and Sol Garson Braule Pinto

following their constitutional mandate, may take over the functional area of primary education without having built sound social security systems. Debt service represented an average of 4% of municipal expenditure. However, municipalities with a population of over 2 million assigned an average of 10% of their budgets to debt service. Capital investment constituted an average of 8.6% of total municipal expenditure and was financed mainly from surpluses in the current fiscal year because long-term loans are scarce. Expenditure according to functional areas shows a large proportion of resources devoted to social areas: 24.7% to education and 22.5% to health. As mentioned above, according to the Constitution, municipalities should direct no less than 25% of tax revenue and major grants to education and 15% to health. Municipalities count on substantial additional amounts of earmarked transfers for these areas. Urban services and capital investment are a third priority – constituting 10.8% of total expenditure. Besides such activities as street paving and upkeep of urban areas, this appropriation may include the upgrading of poor neighbourhoods, particularly in slum areas. Expenditure by the municipal chambers is relatively high, accounting for 3% of total expenditure, which exceeds expenditure on social assistance and social security in small cities, where it may be even higher than own tax revenue. Expenditure on transport (2.9% of the total) is more investment intensive and, as such, changes over time. Expenditure on police services (0.7% of the total) tends to increase over time, mostly in the more populated cities.41 Notwithstanding this, municipal guards operate independently from the state police service, very rarely overlapping in their operational areas. The budget composition of municipalities shows a deep contrast between their financial status and their political autonomy, as described above. The smaller the municipality, the larger is the gap between political and financial autonomy. Even major cities (where own revenue is more significant) cannot be considered financially autonomous, due to extensive revenue earmarking by the Union and states. The result is a lack of efficiency and accountability, as the quality of service delivery varies according to available resources, not the dictates of the needs of the population. There is substantive recognition of the fact that the high tax burden is not translated into corresponding services for the people. Notwithstanding the large amount of public expenditure, the quality of these services is considered poor. The uneven distribution of institutional capacity among subnational governments contrasts with a continuing process of decentralization. Among the reasons for inefficiency are the rigidity of the budget composition, the lack of consistent programs to improve management, and the difficulties of the orders of government in cooperating on the provision of public services.42

Brazil

93

supervision of local government Supervision of local government is a task shared by the federal executive, the states, the municipal chambers, and the courts of accounts. The federal government, however, performs the main supervisory function. The federal Ministry of Finance has developed a system of control to ensure compliance with legal requirements related to federal taxes and social security payments, limits for debt and credit operations, limits on personnel expenditure, and assignment of own resources to education and health, among others. According to the Fiscal Responsibility Law, compliance with those requirements is necessary as a prerequisite to receiving discretionary transfers from the federal government. Other ministries, like health and education, monitor the use of funds transferred to municipalities to develop specific federal policies and programs. In addition, the Federal Court of Accounts, in charge of monitoring the federal government, may audit the use of federal funds transferred to states and municipalities. According to Article 31 of the Constitution, supervision of a municipality shall be exercised by the municipal chamber but through outside control. Article 71 appoints the courts of accounts as ancillary bodies of the chamber to monitor budget execution and examine the accounts of the mayor, as well as to enforce the specific legal requirements for hiring of personnel, concessions of pensions, procurement, intergovernmental transfers, competitive public bidding, and fiscal responsibility. The Constitution enlarged the competence of these courts, granting them the power to impose fines on both elected and nonelected public officials. Although not technically part of the judicial system, the courts operate as quasiindependent judicial authorities. These institutions have a number of features typical of judicial bodies, such as applying the right of reply, strict procedural rules, collegial decision making, security of tenure of their board members, and civil-service status for their employees.43 There is a Court of Accounts in each state to supervise and monitor both the state and the municipalities. In some of these states, however, there is one court to supervise the state and another to deal with all the municipalities. The municipalities of São Paulo and Rio de Janeiro have courts of accounts dedicated only to them. Due to the political autonomy of municipalities, states do not exercise any kind of regular supervision of them. However, they may monitor specific aspects of municipal affairs, such as the use of discretionary transfers following agreements between the municipalities and their states.

intergovernmental relations The 1988 Constitution, and the institutional and policy initiatives following in its wake, reasserted the widespread conception that local government is a

94

Luiz Cesar de Queiroz Ribeiro and Sol Garson Braule Pinto

necessary partner in the implementation of national policies. This is particularly true in respect of policies aimed at correcting power imbalances and at achieving distributive justice by means of advancing certain key social rights. At the same time, given the proximity of local government to citizens, emphasis was placed on increasing efficiency in the spending of scarce public resources, particularly expenditure related to social welfare. Relations between the federal government and municipalities are thus geared toward achieving specific outputs, which necessitates close cooperation. Sharing tax revenue, for example, is aimed at compensating for the huge regional economic imbalances. Cooperation between the Union and subnational governments on specific public policies, such as health and education, is aimed at ensuring that basic social welfare is accessible to all citizens, notwithstanding the region where they live. Cooperation in specific areas, such as the National Health System (sus), may be governed by federal legislation. Other joint initiatives may also be developed through voluntary agreements (e.g., environmental protection). Another component of federal-municipal relations relates to municipal institutional development. This often takes the form of training civil servants in the design of city management plans or urban multiyear plans. The federal government has developed new channels of communication with local governments. A Ministry of the Cities was created in 2003 to deal with urban development policies, sanitation, and transportation. In addition, the Secretariat of Institutional Relations, directly linked to the presidency, works as a communication link between the federal government, states, the Federal District, and municipalities. Some mechanisms of cooperation may emerge from initiatives of the Ministry of the Cities. In 2004 the ministry created the Council of the Cities to design a national policy for urban development. The council has eighty-six members, of whom forty-nine represent civil society and thirty-seven the Union, states, and the municipalities. In 2003 and 2005 two cities conventions were convened to debate urban problems. Since 1994, when the fiscal stability Real Plan was first launched, intergovernmental relations were restructured to such an extent that the type of federalism that emerged in the wake of the 1988 Constitution has been redesigned. By controlling subnational debt, the federal government was able to impose fiscal supervision. Treating highly indebted municipalities in the same way as those with low or nonexistent debt, it harmed municipal autonomy. In addition, faced with increased earmarking of resources (such as the minimum investment thresholds in health in 2000), local governments have lost their leeway to creatively seek solutions and prioritize the needs of their citizens. However, restrictions and co-responsibility of municipalities in maintaining sound fiscal regimes may force local governments to seek greater rationality and efficiency in managing public

Brazil

95

resources. The procedures and limits set by the lrf (e.g., on personnel expenditure and on the amount of debt, among others) stimulate diffusion of good bureaucratic practices and conformity to law. This notwithstanding, restrictions may have the adverse effect of discouraging innovation in public policy. In addition, strict limits on the use of resources may harm efficiency because governments, instead of providing the services required by their populations, will offer those legally prescribed with the resources available to them. Cooperation of state governments with municipalities is generally restricted to the revenue-sharing system, in terms of which resources are transferred according to federal legislation. Although part of the state value-added tax is shared according to a state law, this law is not used by the states as an instrument to enforce cooperative policies. As discussed above, states lack the institutional capacity to coordinate municipalities. States, therefore, have to resort to, and rely on, the political alliances of governors with mayors, which are clearly inadequate mechanisms to sustain longterm project development. In attempting to push a shared agenda, municipalities have formed representative institutions through which their concerns are voiced collectively. These institutions have enabled municipalities to exert political influence on various orders of government but more so on the federal government. At present, mayors convene in national associations, two of which are particularly important. The Frente Nacional de Prefeitos (fnp) represents mainly the mayors of major cities, and the Confederação Nacional de Municípios (cnm) represents those of small municipalities. These associations have direct access to the president, the Congress, and state governors. Councillors also meet in organizations in defence of municipal autonomy and municipal chambers, but these organizations are much less active than the fnp and cnm. In addition, associations of municipal secretaries (who are appointed by the mayor) mobilize for their specific sector to address problems in the areas of health, education, and tourism, among others. In addition to national associations, state and microregional organizations meet regularly to exchange management experiences and to fight for common municipal interests. It is worth noting that these initiatives to organize local government have proved more successful in the southern states, where the European heritage is stronger.

p olitical culture of local government The federal Constitution guarantees the political autonomy of municipalities. Mayors, deputy mayors, and councillors are elected directly in municipal elections held simultaneously throughout the country. These elections for a four-year term fall in the middle of the four-year term of the president,

96

Luiz Cesar de Queiroz Ribeiro and Sol Garson Braule Pinto

state governors, the Congress (senators and federal deputies), and state deputies. This means that every two years, Brazilians vote for political representatives, either local or national and state. Municipal elections, even in small municipalities, are contested by the same political parties that contest the national and state elections. The parties are formally organized nationally, with no local or regional parties. Nevertheless, the power of regional and local interests has transformed the many national parties into confederations of political forces. This has caused a municipal political dynamic that has an important impact on the Chamber of Deputies and Senate elections. Nelson Rojas Carvalho estimates that about 50% of deputies are elected according to highly localized support patterns; 65% of their votes come from only one city within a constituency.44 Campaigning for votes locally may be the starting point for a political career in the national arena. Often mayors of large cities and important capital cities pursue nomination as candidates for state governments and even the presidency.45 Although voting has been obligatory since 1932, Brazil has experienced increased political participation through the electoral system. According to a comprehensive survey carried out by the ibge in 1988, only 10.5% of the voting-age population were not enrolled as voters, a percentage that varies from region to region. The South (the richest, with the highest standard of formal education) has the highest rate of enrolment. In the Northeast 16% of adults were not enrolled. In addition to higher rates of voter registration, there has also been a significant fall in invalid votes (blank and spoilt). As far as gender representation is concerned, 91.9% of mayors were male in 2005, whereas in the municipal chambers only 12.6% of the members were women. However, in the Congress they are less represented: only 8.9% of the members of the Chamber of Deputies and 8.6% of the senators are women. Local electoral behaviour reflects an overlapping of the three classical theoretical models of culture politics formulated by Gabriel A. Almond and Sidney Verba in 1963: the parochial, the subject, and the participative.46 Values and traditional attitudes, such as personalism, clientelism, and patrimonialism, form the political base of many cities. In many local governments, efficiency and commitment to popular needs are conditioned by the local elite’s capacity to control the parties, electoral system, and local politics. This local power dynamic has national impacts, for it allows such traditional elites to control the municipal votes, giving them bargaining power when seeking favours through parliamentary proposals in the state and federal budgets. The 1980s, however, brought new trends of expansion and strengthening of the civic culture of municipal government, and with these changes came participatory values, attitudes, and institutions. Democratic municipal

Brazil

97

governance was one outcome, in terms of both procedures (universalism, transparency, and public interest) and efficient public administration. There are many examples of local governments that have adopted innovative practices in these directions, especially in the more urbanized areas, and at the most elevated level of development. As Luiz Cesar de Queiroz Ribeiro points out, by introducing the concept of local democratic administration, the 1988 Constitution created four instruments of popular participation, the first being specific to municipalities and the others applying to all orders of government.47 The first instrument takes the form of the organic laws of municipalities, which must establish “the cooperation of the representative associations in municipal planning.”48 The 1988 Constitution also makes provision for public initiative “in presenting bills of specific interest to the city or to the neighbourhoods, by means of the support of at least 5% of the electorate.”49 However, plebiscites and referenda, which according to law help to guarantee the sovereignty of the people,50 are rarely used. Last but not least, writs of injunction have also become important instruments in ensuring the enforcement of constitutional rights.51 Following the expansion of a civic culture of participatory democracy, two further important instruments of participation have increasingly been used in local governance: municipal councils and participatory budgeting. Municipal councils, created after 1988, are distinct from elected municipal chambers; they are local institutions comprising citizens or civil-society representative organizations. Their members are not elected but appointed in a number of ways to represent citizens directly in designing, managing, and monitoring specific public policies. Federal legislation requires that municipal councils be instituted in areas that receive specific federal transfers, such as for children and youth, health, social assistance, and education. In the past thirty years, social movements and nongovernmental organizations have achieved increased relevance. This has resulted in enhanced societal participation in the public sphere and the proliferation of municipal councils. Between 1990 and 1996 the number of private nonprofit foundations and nongovernmental organizations grew by 157%, reaching 275,895 institutions. The main difference between municipal councils and previous examples of people’s participation initiatives is that the latter were concerned with only specific government projects. The previous initiatives, generally geared toward opening channels of dialogue between the government and specific popular organizations, were often the product of initiatives of innovative public officers, which made them susceptible to discontinuity. The municipal councils, however, have become a permanent nationwide institution. There are strong expectations that this new vehicle of interaction between

98

Luiz Cesar de Queiroz Ribeiro and Sol Garson Braule Pinto

office bearers and society will represent an important institutional innovation in social policy management. Municipal councils, therefore, are seen as effective civic participation channels leading to a new standard of accountabilitybased democratic management. Participatory budgeting is the second innovative institution having the potential to initiate new arrangements for democratic and efficient local government.52 It has been used as an instrument to engage the many people’s organizations, government secretariats, and councillors as the key actors playing a strategic role in local decision making. There is no uniform national standard regulating how participatory budgeting is to be implemented. At present, participatory budgeting takes the form of meetings for discussion and joint deliberation with the residents of each district of a city about priorities for capital investment. Participatory budgeting works as an incentive for the accumulation of social capital, conceived of as a crucial resource for promoting collective action for the common good. Studies carried out on the impact of participatory budgeting show the redistributive effects of this process, not only among citizens but also among different areas within a city.53 Because public resources remain scarce, intense negotiation between competing interests is part of the budgeting process. The quality of communication and dialogue between the community and local office bearers is enriched when elected representatives of each district (as part of an exchange) visit each other to discuss the problems experienced in other districts. This exercise has proved to be a good instrument in promoting accountability in setting priorities in the municipal budget. It should be noted that in many cities, participatory budgeting goes beyond merely placing demands on the budget; it also encompasses monitoring budget execution.

e m e r g i n g i s s u e s a n d tr e n d s In addition to being highly urbanized, Brazil has a complex urban system with twenty-eight urban agglomerations legally constituted as metropolitan regions (mrs). The history of these institutions is marked by two phases. In the 1970s the federal government, in an attempt to support national development planning, created nine mrs to be managed and controlled by state governments. The mrs were supposed to play an administrative coordination role, both in the provision of services of common interest to the states and municipalities and in regional and local planning. Within a framework of high federal centralization, however, they had no decision-making power. The second phase commenced with the enactment of the 1988 Constitution. Its decentralization drive implied important changes in the management of metropolitan regions. Municipalities were elevated to

Brazil

99

members of the federation with a status similar to that of states. The competence to create and organize metropolitan areas, however, was transferred from the national government to the states, a move politically inconsistent with the new status of municipalities. Insofar as states cannot interfere with municipal autonomy, the mrs created to oversee organizational and operational integration of public services remained mere administrative institutions having no political status and lacking legislative power. Without the effective means to enforce coordination, a state government cannot prevent conflicting and overlapping policies from arising between municipalities in an mr and between those municipalities and the state. There are no legal criteria or specific norms to guide the identification of urban agglomerations with metropolitan functions that should be classified as MRs. Political interests of state governors and mayors prevail in defining the boundaries of metropolitan areas. As a consequence, the twentyeight MRs comprise a highly differentiated set of urban areas that include more than 450 municipalities. Examining the metropolitan reality in 2005, Observatório das Metropóles conducted a national study of major urban spaces, in particular those nucleated around state capital cities, assessing the importance of these agglomerations in the national and regional urban network.54 Only fifteen urban agglomerations, where population and wealth as well as the direction and coordination of the national economy are concentrated, were identified as real metropolitan regions, which is nearly half the number officially labelled mrs. The economic relevance of these fifteen urban agglomerations, each of which includes a large number of municipalities, is remarkable. In 2004 about 67 million people lived in their 295 municipalities, within 154,000 square kilometres. Although this represents only 1.8% of the country’s surface, it hosts 39% of the economically active population and 43% of the labour force in the manufacturing industry. Yet these are the same areas where unequal social conditions often exhibit their most perverse face. Notwithstanding their economic and social importance, institutional arrangements and public policies to boost state and local government coordination in metropolitan areas have not yet been developed. The result is a gap between deep social needs and the institutional capacity to formulate and implement feasible solutions. For example, in 2005 the population of the Metropolitan Region of Rio de Janeiro, comprising seventeen municipalities, was 11.4 million people – 75% of the state’s population. The State of Rio de Janeiro considers it to be an mr merely for administrative purposes, and there is no institution (a secretariat or other body) to coordinate actions in this area. Even though metropolitan municipalities devote a reasonable amount of their revenues (10% on average) to infrastructure investment, it is inadequate

100

Luiz Cesar de Queiroz Ribeiro and Sol Garson Braule Pinto

to meet the demand for public services. The lack of long-term funds for capital investments is incompatible with the long-term nature of the infrastructure projects. Furthermore, the lack of incentives for cooperation between municipalities (and between them and the states) induces autarchic behaviour when confronting problems that have impacts beyond jurisdictional borders. Thus, to enhance metropolitan management, it will be necessary to provide the metropolitan institutions with means to induce effective cooperation. In the mid to late 1990s, new issues were added to the debate on decentralization. In the context of economic stabilization, the responsibility for meeting growing social demands is increasingly assigned to local governments. Local politics also contribute to a competitive environment in which there is a clear drive toward modernizing city management. Direct citizen participation, and the assignment to local governments of the role of providing constitutionally entrenched social rights, created conditions conducive for self-government and effective cooperative federalism. However, several challenges remain. Regardless of regional inequality in respect of economic and technical capabilities, municipalities have the same status as political and administrative units and thus are given symmetric treatment in respect of their rights and duties. A second challenge is that of scarce resources. As discussed above, budget constraints are further exacerbated by the challenge of earmarked transfers. These transfers from the federal government and the states reduce the room for decision making in local policies aiming to fulfil the specific needs of the population. In addition, elected representatives are rarely able to, or interested in trying to, gain an understanding of the processes surrounding the public budget, as well as public-sector management. A third challenge involves the activities of municipal councils and the inherent difficulties of trying to mobilize people. Sustainable and consistent livelihoods are scarce. The added burden of informal work and labour market instability make it difficult to rally people into forming local associations or to engage communities in meaningful participatory practices. According to surveys carried out by the ibge in 1997, it is estimated that only 27% of the population above eighteen years old has some link with civil-society organizations. Those with higher levels of education and income are more inclined to become part of such organizations. Data from a survey carried out by Observatório das Metrópoles concerning municipal council members show significant inequality in respect of education and income, with civil-society representatives being more disadvantaged than their municipal counterparts.55 Local social and political participation has manifested itself in different trends. On the one hand, citizens have shown less interest in local elections as compared to national elections. As a result, voters distance themselves from councillors. Often petty interests, patronage, and pork-barrel policies prevail locally, changing professed social rights into favours and benefits

Brazil

101

provided by councillors. By managing local executive and nongovernmental institutions of social assistance (mostly established by themselves), councillors seek to keep their voters faithful. This practice strengthens a tendency toward a nonpolitical relationship between citizens and governments. Nevertheless, the reforms brought about in 1988 have contributed to changing the status quo. Access to direct popular participation in local government decision making, as well as the diffusion of practices (e.g., amendments to the budget) as a result of people’s direct participation, have gradually created institutional conditions for building more democratic and efficient models of local governance. A few additional remarks should be made about local political systems and the internalization of economic forces in the cities. Brazilian cities are increasingly being incorporated into the dynamics of the global economy. This has extended not only to the major cities of São Paulo and Rio de Janeiro (which are already considered by some analysts to be global cities) but also to the north-eastern capital cities,56 which are being integrated into international economic circuits such as tourism and entertainment. Even cities located in the border areas of the modernization expansion (in the Center-West and in parts of the North) have joined the organized production of commodities in agro-businesses. This has had an enormous impact on the consolidation of local self-government and has encouraged competition instead of cooperation among municipalities, spurring tax exemptions that may weaken financial autonomy. Brazilian tradition in the functioning of local political systems has led quite often to a prevalence of microlocalized interests and politics. Initiatives by major cities to cooperate with one another have so far proved to be too limited, by far, to prevent fiscal warfare among municipalities, which, in practice, translates into trying to avoid being outbid by your neighbour’s local tax exemptions. Present-day Brazil still lacks the strong institutions necessary to ensure intergovernmental cooperation, such as is needed to tackle the country’s deep regional and interpersonal inequalities. It is widely recognized that building social and territorial pacts to support metropolitan governance, and to overcome excessively polycentric trends of power, is of paramount importance.

notes 1 For general background, see Celina Souza, “Federal Republic of Brazil,” in Constitutional Origins, Structure, and Change in Federal Countries, ed. John Kincaid and G. Alan Tarr, 76–102 (Montreal and Kingston: McGill-Queen’s University Press, 2005); Marcelo Piancastelli, “Federal Republic of Brazil,” in Distribution of Powers and Responsibilities in Federal Countries, ed. Akhtar Majeed, Ronald L. Watts, and Douglas M. Brown, 66–90 (Montreal and Kingston: McGill-Queen’s University Press, 2005); and

102

2

3 4

5

6 7

8 9 10 11 12

13

14

Luiz Cesar de Queiroz Ribeiro and Sol Garson Braule Pinto

Fernando Rezende, “Federal Republic of Brazil,” in The Practice of Fiscal Federalism: Comparative Perspectives, ed. Anwar Shah, 74–97 (Montreal and Kingston: McGillQueen’s University Press, 2007). See also Fernando Rezende and José Roberto Afonso, “The Brazilian Federation: Facts, Challenges and Perspectives,” in Federalism and Economic Reform: International Perspectives, ed. Jessica S. Walack and T.N. Srinivasan, 143–88 (New York: Cambridge University Press, 2006). Calculated by taking annual gdp in reais divided by the average rate of exchange in 2005 (US$794,098 million), which is then divided by the population (184,184,000 people). According to an estimate of purchasing power parity (ppp) by the International Monetary Fund, the per capita gdp amounts to US$8,561. As the term of the senators is eight years, there are rounds of elections for twothirds of the Senate every four years and for one-third four years later. Argelina Cheibub Figueiredo and Fernando Limongi, “Constitutional Change, Legislative Performance and Institutional Consolidation,” Revista Brasileira de Ciências Sociais 29 (October 1995): 175–200, http://www.scielo (viewed 12 March 2007). David Samuels and Fernando Luiz Abrucio, “Federalism and Democratic Transitions: The ‘New’ Politics of the Governors in Brazil,” Publius: The Journal of Federalism 30 (Spring 2000): 43–62; Barry Ames, The Deadlock of Democracy in Brazil: Interests, Identities, and Institutions in Comparative Politics (Ann Arbor: University of Michigan Press, 2000). Constitution of the Republic of 1891, Article 68. See Celina Souza, “Brazil: The Challenges of Constitutional Implementation,” in Dialogues on Constitutional Origins, Structure, and Change in Federal Countries, ed. Raoul Blindenbacher and Abigail Osten, 13–15 (Ottawa: Forum of Federations and iacfs, 2005), 14; and Celina Souza, “Brazil: The Prospects of a CenterConstraining Federation in a Fragmented Polity,” Publius: The Journal of Federalism 32 (Spring 2002): 23–48. Marcus André B.C. de Melo, “Municipalismo, Nation-building e a Modernização do Estado no Brasil,” rcbs 8, no. 23 (October 1993): 85–100. Ibid., 90. Except for some cases where municipalities are considered, by law, to be of importance for national defence. See generally, Frances Hagopian, Traditional Politics and Regime Change in Brazil (New York: Cambridge University Press, 1996). Fernando Rezende, “O Financiamento das Políticas Públicas: Problemas Atuais,” in A Federação em Perspectiva: Ensaios Selecionados, ed. Rui de Britto Álvares Affonso and Pedro Luiz Barros Silva, 241–59 (São Paulo: fundap, 1995). The Constitution of 1988 sets forth guidelines relative to “territories” in areas where there would be a state government. Nevertheless, the Constitution transformed previously existing federal territories into states. Brazil now has 5,564 municipalities, including Brasília, a city-state. For more information, see https://www.planalto.gov.br/publi_04/COLECAO/ INDIOP.htm (viewed 25 April 2007).

Brazil

103

15 Rezende, “O Financiamento das Políticas Públicas.” 16 Constitution of 1988, Article 60, para. 4, I. 17 Sergio Ferrari, Constituição Estadual e Federação (Rio de Janeiro: Lumen Juris, 2003), 169. 18 Celina Souza, “Sistema Brasileño de Gobierno Local: Innovaciones Institucionales y Sustentabilidad,” http://bibliotecavirtual.clacso.org.ar/ar/libros/edicion/ diseno/souza.pdf (viewed 14 July 2006). 19 Ferrari, Constituição Estadual e Federação, 283. 20 Constitution of 1988, Article 22. 21 The federal government manages the Social Security General System. States and municipalities may have their own public-servant pension schemes. 22 Constitution of 1988, Article 23. 23 See http://www.ibge.gov.br/english/presidencia/noticias/noticia_impressao. php?id_noticia=514 (viewed 31 January 2008). 24 Fernando Rezende and Sol Garson, “Financing Metropolitan Areas in Brazil: Political, Institutional, Legal Obstacles and Emergence of New Proposals for Improving Coordination,” Revista de Economia Contemporânea 10, no. 1 (January-April 2006): 5–34. 25 According to Law 11.107 of 6 April 2005, the Union, the states, the federal district, and the municipalities may participate in public consortia, which are associations of governments with the objective of developing a common activity or pooling their resources for achieving a common goal. Public consortia must be established by contract. 26 Rezende and Garson, “Financing Metropolitan Areas.” 27 Ibid. 28 The composition of a municipal chamber follows the provisions of the municipality’s organic law, within the limits set by the federal Constitution. Maintenance of the chambers, including the monthly payments to councillors (within the limits set by federal law), is guaranteed by transfers from the municipal budget. 29 Article 29 of the Constitution limits councillors’ salaries according to the population of the municipality. Amounts may vary within a range of 20% to 75% of the salary of the members of the state Legislative Assembly. The limit of the mayors’ salaries follows Article 37 of the Constitution. This article sets the amount received by the ministers of the federal Supreme Court as the ceiling for the direct or indirect public administration of any of the powers of the Union, the states, the federal district, and the municipalities. 30 Estimated by Secretariat of Fiscal Affairs (bndes) and updated by José Roberto Afonso and Beatriz Meirelles for 2006. 31 See also José Roberto Afonso and Erika Amorim Araújo, “Local Government Organization and Finance: Brazil,” in Local Governance in Developing Countries, ed. Anwar Shah, 381–418 (Washington, DC: World Bank, 2006). 32 Except for services of communication and interstate and intermunicipal transportation, which are subject to the state value-added tax (icms).

104

Luiz Cesar de Queiroz Ribeiro and Sol Garson Braule Pinto

33 This contribution replaced a previous fee due to judicial problems relevant to a prohibition on levying fees for indivisible services. 34 Rezende and Garson, “Financing Metropolitan Areas.” 35 Ibid. 36 Afonso and Araújo, “Local Government,” 397, table 11.4. 37 Data include information for 4,355 municipalities, corresponding to 78% of the total, comprising a population of 156 million people (85% of the total population). All capital cities are represented, with the sole exception of Brasília, the Federal District. Data are available on the site of the Secretariat of the National Treasury of the Ministry of Finance: http://www.stn.fazenda.gov.br (viewed 12 February 2007). 38 The Fund for Participation of Municipalities (fpm) is financed out of a 22.5% share of federally collected income tax as well as a tax on industrialized products. 39 fundef is a fund for education constituted from earmarked percentages of transfers from the revenue-sharing system. These transfers guarantee a specified minimum amount of spending per student enrolled in public primary schools all over the country. Proceeds are distributed according to the number of students enrolled in municipal or state-owned primary schools. If the money collected from the above sources is not enough to guarantee the minimum spending established by law, the federal government provides supplementary transfers. Municipalities, in general, benefit greatly from the fund. 40 About 25% of the state-collected icms is shared among municipalities according to the value added in economic transactions within their territories, and the remaining 75% is shared among the municipalities. 41 The Constitution defines the distribution of powers related to police services. Municipal guards were created to protect property and municipal assets, but they are increasingly operating as a public-safety force. According to the ibge, 786 municipalities (14.1% of the 5,564 existing in 2006) had a municipal guard, mostly in the populous cities, but only 127 of them used firearms; see http://www.ibge.gov.br/ english/presidencia/noticias/noticia_impressao.php?id_noticia=514 (viewed 31 January 2008). In Brazil fire services are a state competence. 42 Space does not permit further exploration of this theme. See further, among others, the work of Luiz Carlos Bresser Pereira and Armando Castelar. See also, Marcos Mendes, ed., Gasto Público Eficiente: Propostas para o Desenvolvimento do Brasil (Rio de Janeiro: Topbooks Editora e Distribuidores de Livros, 2006). 43 Carlos Mauricio Figueiredo, Marcus André Melo, and Carlos Pereira, “Political and Electoral Uncertainty Enhances Accountability! A Comparative Analysis of the Independent Courts of Accounts in Brazil,” paper presented at the 9th Annual Conference of the International Society for New Institutional Economics (isnie), Barcelona, Spain, 22 to 24 September 2005. 44 Nelson Rojas Carvalho, E o Início eram as Bases: Geografia Política do Voto e Comportamento Legislativo no Brasil (Rio de Janeiro: Editora Revan, 2003). 45 Marco Antônio Carvalho Teixeira, “O Jogo Político nos Municípios e as Eleições,” in Os Municípios e as Eleições de 2000, 99–124 (São Paulo: Fundação Konrad Adenauer, 2000), 99.

Brazil

105

46 Gabriel A. Almond and Sidney Verba, The Civic Culture: Political Attitudes and Democracy in Five Nations (Princeton, nj: Princeton University Press, 1963; reprint, Newbury Park, London, and New Delhi: Sage, 1989). 47 Luiz Cesar de Queiroz Ribeiro, “O Município e a Reforma Urbana: Os Desafios da Política Urbana Redistributiva,” Revista Proposta 22, no. 62 (September 1994): 5–13. 48 Constitution of 1988, Article 29, XII. 49 Ibid., Article 29, XIII. 50 Ibid., Article 14, I and II. 51 A writ of injunction is an order issued by a court compelling someone to do something or prohibiting some Act. The order aims at preventing the possibility of irreparable harm. Examples may include compelling a municipality to hire disabled people for some public employment (after they have passed a public examination), prohibitions against cutting trees or polluting a stream, and others. 52 See generally, Gianpaolo Baiocchi, Militants and Citizens: The Politics of Participatory Democracy in Porto Allegre (Palo Alto, CA: Stanford University Press, 2005); Yves Cabannes, “Participatory Budgeting: A Significant Contribution to Participatory Democracy,” Environment and Urbanization 16, no. 1 (April 2004): 27–46, at 27; and Brian Wampler, “A Guide to Participatory Budgeting,” October 2000, http://www.internationalbudget.org/resources/library/GPB.pdf (viewed 28 November 2007). See also, Brian Wampler, “Private Executives, Legislative Brokers and Participatory Publics: Building Local Democracy in Brazil,” n.d., http://www.democraciaparticipativa.org/pg_biblioteca.html (viewed 31 January 2008). 53 Celina Souza, “Participatory Budgeting in Brazilian Cities: Limits and Possibilities in Building Democratic Institutions,” Environment and Urbanization 13, no. 1 (April 2001): 159–84, at 177; Kees Koonings, “Strengthening Citizenship in Brazil’s Democracy: Local Participatory Governance in Porto Alegre,” Bulletin of Latin American Research 23, no. 1 (2004): 79–99. 54 Observatório das Metropóles is a virtual institute committed to the study of metropolitan problems, comprising over 200 researchers working at fifty-one institutions, such as government agencies and nongovernmental organizations, under the joint coordination of the Urban and Regional Planning and Research Institute (ippur) at the Federal University of Rio de Janeiro and the Federation of Social and Educational Assistance Agencies (fase). 55 Orlando Santos Junior, Luiz Cesar de Queiroz Ribeiro, and Sérgio Azevedo, Governança Democrática e PoderLocal (Rio de Janeiro: Revan, 2004). 56 For instance, Salvador (Bahia), Recife (Pernambuco), Fortaleza (Ceará), and Natal (Rio Grande do Norte).

Canada robert young

The story of municipal government in the Canadian federation is largely one of success. Stable local governments administer a wide range of services and provide public goods within a framework of democratic accountability. Canada has a long tradition of local control of municipal governments, which generally function adequately and efficiently. Nevertheless, there are always strains on the system, and current strains have produced the most lively debate in decades. Despite pressures and some substantial changes, however, the essence of the system remains unaltered: the provincial governments control municipalities and what they do. It is inaccurate to speak of “the system” of municipal government. The defining institutional characteristic of Canadian municipalities is their constitutional position as a competence of the provincial governments. As the wellworn phrase has it, they are “creatures of the provinces.” Hence there are ten provincial-municipal systems (with three more in the northern territories of Yukon, Nunavut, and the Northwest Territories), and there have been sharp differences across these systems. But there have also been commonalities, and one political constant is the chafing of local governments against constraints imposed by provincial governments and irritation with unilateral action from above. Led by the larger cities, local governments have sought more autonomy and – a universal demand – more resources. Recently, they have also turned to the federal government in Ottawa, seeking funds and a “seat at the table” to discuss policies important to municipalities. Municipal issues have risen on the Canadian policy agenda in part because of demographic pressures. Immigration from abroad is producing explosive growth in the larger centres, while smaller, peripheral municipalities must cope with population stagnation or decline.1 Also, there is a sense that cities are vital for national competitiveness in the globalized economy as loci of human capital and innovation.2 In urban centres, citizens’ concerns about pollution, crime, poverty, and inadequate infrastructure resonate with

108

Robert Young

politicians at all levels of government. Finally, as the big agglomerations grow steadily, interdependencies multiply, and the question of how to deal with them becomes more important. So several issues are prominent in Canada. How can local governments get more money and more autonomy? How should the federal and provincial governments deal with municipalities that vary greatly in size and policy capacity? How should the provincial and federal governments help with the problems of the metropoles (e.g, social exclusion, poverty, the cost of infrastructure, and sprawl) while mitigating the problems of decline in the periphery (e.g., unemployment and costly services)? Is it sensible to use intergovernmental approaches, despite their complexity, or are disentanglement and clear accountability preferable?

overview Canada covers 9,017,700 square kilometres. With a population in 2006 of 31,612,897, the country seems very sparsely settled, with 3.51 inhabitants per square kilometre.3 But this is misleading because, in effect, Canada is a long, thin country, with about two-thirds of the population located within 200 kilometres of the southern border. In fact, fully 80% of Canadians live in urban areas, with almost 23% living in the big metropolitan areas of Montreal, Toronto, and Vancouver.4 Even so, substantial numbers live in the towns and rural parts of the Atlantic provinces, in the northern mining and forestry towns and the fertile southern farm regions of Ontario and Quebec, across the agricultural Prairies, and in the resource-producing areas of central and northern British Columbia. In addition, more than 100,000 people live in the three northern territories.5 Canada has always been a settler country. The indigenous population comprises many Indian bands – First Nations – throughout the South and the Inuit peoples of the North. Today, they are small minorities in a population derived from the first French settlers (1604–1750) and from waves of American Loyalists (1774–1800), English and Scots (early 1800s), Irish (mid1800s), and western Europeans and Ukrainians (1890–1920). Recent settlers have come from all over the world, and Canada, with annual immigration rates just below 1% of the total population, is highly multicultural. French remains the mother tongue of 23% of Canadians and English of 58%, and Chinese, German, Italian, and Punjabi each make up well over 1%.6 Canada is a rich country. In 2006 its gross domestic product (gdp) was about $41,200 per capita.7 An advanced industrial country, with 63% of business-sector gdp arising from services, it is also resource-rich. Manufacturing accounts for 17.l% of total gdp, but primary-sector activities in agriculture, forestry, fishing, hunting, mining, and energy account for another 14%.8 Over the past decades, the relative fiscal presence of government

Canada

109

has diminished, as the federal government’s outlay was 19.35% of gdp in 1980 but just 16.05% in 2005, while other governments’ shares were stable.9 Government debt per capita is about $20,000, with the federal government responsible for about two-thirds of this total, which has been declining since 1997.10 Overall, Canada has a relatively simple structure of government.11 It remains a constitutional monarchy. The British queen is the head of state, represented in Canada by the governor general and provincially by lieutenant governors. The system is parliamentary. The parliaments are unicameral in the provinces, but there is an appointed Senate complementing the House of Commons in Ottawa. The legislatures are elected through the single-member plurality mechanism, which usually produces strong majority governments. The position of prime minister is particularly powerful in the Canadian context.12 The checks on executive power come from opposition parties, the Senate, the media, and the courts, which have expansively interpreted the Canadian Charter of Rights and Freedoms since it became part of the Constitution in 1982. As well, there is an alert and generally well-educated citizenry. Since the Second World War, Canada has had a relatively stable threeparty system, with the mainstream Liberal and Progressive Conservative parties alternating power, while the New Democratic Party, a social-democratic formation, has retained substantial support. In 1993 this system fragmented, but it has now returned to past form, except that the Quebecbased Bloc Québécois, a sovereigntist party, has won a majority of seats in the province since 1993, and the major centre-right party is now the Conservative Party. Overall, the Canadian political system is comparatively stable, with the major force to the contrary being the sovereigntist movement in Quebec.13 Politics traditionally revolves around the cleavages of region and ideology more than class, while issues of social cohesion and other urban problems have emerged more recently.

h i s t o r y, s t r u c t u r e s , a n d i n s t i t u t i o n s of local government Local government in Canada is complex. Most Canadians have a core understanding of it as an authority that operates over a limited territory, providing a range of services to inhabitants. But the concept is contested. Some citizens, analysts, and participants stress how local governments provide services and accommodate the choices made by individuals and firms; others emphasize local democracy and the representation of citizens’ preferences about the shape of their community.14 There is a wide range of local government structures in Canada, reflecting different provincial conditions. However, a core model from which

110

Robert Young

variations can be understood is the Ontario system, instituted by the Municipal Act of 1849, which was both an administrative solution and the culmination of a struggle for democratic control of governing institutions. The basic units, equipped with elected councils, were the townships, towns, and villages (all “lower-tier” entities), with “upper-tier” county governments carrying out more general functions throughout the territory, such as waste disposal, libraries and land-use planning, and maintaining major roads. The Act also provided for self-governing “separated towns” and cities, which provided all their own services. Originally, this system was largely reproduced in other provinces, with variations about towns being included in counties and about how county councillors were chosen. Where populations were sparse, as in most of western Canada, there was only one tier, and local authorities had more limited powers.15 These structures suited agrarian societies where municipalities carried out a few basic functions, even in the commercial centres. After the late 1800s, urbanization and industrialization provided the usual challenges about public health, housing, and transit. Later, the transition to an advanced industrial society, overwhelmingly urban, brought new concerns about infrastructure, social diversity, and environmental sustainability. Structural reforms ensued, but it is remarkable that much of the basic system remains intact. Local government does not blanket Canada. In rural areas, several provincial governments provide some services, and direct government of rural areas by the province has occurred, as when New Brunswick abolished its counties in 1967.16 Large tracts of “Crown land” across the country are owned and administered by the provinces. Elsewhere, local government prevails. Nowhere does it enjoy the larger powers of provinces, as do the German city-states, although occasional demands for provincial status are heard from big cities.17 However, some cities are predominant within their provinces: Winnipeg makes up 55.2% of the population of Manitoba, while Halifax (31%), Calgary (30%), Montreal (21.5%), and Toronto (20.2%) comprise large proportions of Nova Scotia, Alberta, Quebec, and Ontario respectively.18 This weight confers political strength, despite municipalities’ constitutional weaknesses. It is difficult to know the total number of municipalities in Canada because there is no comprehensive listing of them. As well, there are many quasi municipalities in the sparsely inhabited parts of the country, and in some provinces, regional authorities provide services across broad geographic areas that include other incorporated and nonincorporated entities. Finally, there are Aboriginal peoples who live under a wide range of local organizational forms, especially in the three northern territories. Nevertheless, rough estimates can be reached. Excluding quasi municipalities, unincorporated settlements, and First Nations’ reserves, but including

Canada

111

“upper-tier” bodies that provide a substantial number of services, the Canadian total is about 3,800 municipalities. Across the provinces, there is much variation in numbers. Quebec, for instance, has four times as many municipalities as Ontario on a per capita basis. New Brunswick, with a population of 730,000, has 102 municipalities, whereas Saskatchewan’s 968,000 people are served by 801 municipalities (with 97% having fewer than 2,000 inhabitants). But the larger municipalities dominate. Of the whole Canadian population, 30.1% live in the ten largest municipalities, and 52.7% live in the ten largest census metropolitan areas (cmas). About 80% of Canadians live in centres with populations greater than 5,000. Municipalities are not the only components of local government. Most municipalities have spun off agencies, boards, and commissions that fulfil specialized functions. The most ubiquitous are school boards, normally elected. Originally, their boundaries approximated those of municipalities, but the drive to attain economies of scale and deliver specialized services produced massive consolidation. The public, English-language system in Ontario has only fifty-six school boards and authorities, while New Brunswick has fifteen and Nova Scotia has only eight. Other specialized agencies provide many services. Edmonton, Alberta, is an extreme example. An extensive public transit system is run by a department of the municipal government, and there are agencies for public health, housing, economic development, police, libraries, and nonprofit housing, as well as a public enterprise that handles water supply, wastewater, and electrical generation, transmission, and distribution.19 Agencies in other cities manage parks, recreation, planning, and tourism. Some of these were created to insulate administration from political pressures (e.g., policing) and to allow expertise to dominate (as in public health). In other cases, flexible, single-purpose agencies allow for intermunicipal cooperation to capture externalities and economies of scale.20 In fact, most municipalities engage in joint institutions and cooperative arrangements. In the Province of Newfoundland and Labrador, for instance, twenty regional economic development boards bring together municipalities and other stakeholders within development zones.21 There are many such cooperative institutions across Canada, some provincially mandated, that link municipalities in a horizontal fashion. As well, contractual arrangements for providing particular services across municipal boundaries are common. Canadian municipalities operate within vertical tiers of government. Multilevel structures are commonplace. County systems or their equivalents are found in the big provinces of Ontario, Quebec, and British Columbia. In large metropolitan regions, the problem of scale has found three answers.22 The first is the flexible regional authority, of which the Greater Vancouver Regional District (gvrd) is the prime example. The city of Vancouver proper has a small population (only 27.5% of its cma,

112

Robert Young

which includes twenty-one other municipalities and three Indian reserves). But the gvrd manages regional water supply, sewage, parks, and solid waste, as well as planning for regional transportation, land use, and air quality. Like the other regional districts in British Columbia, the gvrd encourages intermunicipal cooperation and is flexible in that municipalities may opt in for particular functions. The second solution is amalgamation – that is, internalizing all functions within a single, larger city. Here, the most notable examples are Halifax, Ottawa, Winnipeg, and Calgary, all of which largely encompass their cmas within the footprint of one city government. The third is to establish metropolitan authorities where an upper-tier government provides certain common services. The prototypical Canadian cases were Metropolitan Toronto, established in 1954, and the Montreal Urban Community, created in 1970. These institutions delivered common services, including arterial roads, policing, transit, and, in Toronto, water supply and sewers. Both have been abolished, ostensibly to improve efficiency and increase visibility. In 1998, through a massive amalgamation, the City of Toronto came to operate over the whole area that was served by Metro Toronto. In 2002 all the municipalities on the Island of Montreal were amalgamated into the City of Montreal, though subsequently a new Quebec government permitted secession referenda, and some municipalities did de-amalgamate.23 But tiered government remains necessary. The enlarged City of Toronto remains too small to manage regional transport and land-use planning, so the province has taken the lead. In Montreal the core city is part of the Conseil d’Agglomération, which provides important services to all municipalities on the island, and also of the Communauté Métropolitaine de Montréal, which covers the whole Montreal conurbation and has responsibilities for transportation infrastructure, promotion, and planning.24 There are no formal structures through which Aboriginal people participate directly in local councils in southern Canada.25 Where reserves are near municipalities or within them, there is consultation about matters such as water supply and waste management, and when new urban reserves are established within city boundaries, intensive negotiations involve municipal officials.26 Courts have recently affirmed that local governments have a “duty to consult” with First Nations when action might affect Aboriginal peoples’ interests.27 Representatives of Aboriginal governments sometimes sit on committees managing particular programs or projects, as in Saskatchewan, where the Aboriginal population, over 13% of the provincial total, is increasingly urbanized.28 Finally, jurisdiction over off-reserve Aboriginals living in municipalities is unclear. The federal government does not take responsibility, so the costs of services for them are generally borne by provincial and local governments.

Canada

113

constitutional recognition of local government Canadian municipalities have no constitutional recognition as an order of government. Instead, since 1867 “Municipal Institutions in the Province” have fallen into the category of matters about which provincial legislatures “may exclusively make Laws.”29 This fact is fundamental to understanding municipal government in Canada. Local governments are entirely subject to the dictates of provincial governments, which can alter municipal responsibilities, finances, and boundaries as they see fit. Provincial departments enforce the laws and regulations that govern municipal activities. Often provincial power has been used to good effect, establishing regional cooperative bodies, for example, and reining in destructive intermunicipal competition (as in the longstanding Ontario prohibition of municipal concessions to industry). But provincial constraints and sudden changes to structures and functions have irritated many municipal leaders. This lack of autonomy has also instilled in some local politicians and officials a sense of dependence and complacency as well as a tendency to blame provincial authorities for difficulties.30 Canadian provinces do not have separate constitutions; therefore, the framework within which municipalities operate is established by normal legislation, which may be amended at any time. Municipal Acts (or their equivalents) lay out the governance structures of municipalities and enumerate their functions. Traditionally, the responsibilities of local governments were defined narrowly, with some activities prescribed and others proscribed, but over the past decade reforms have been contemplated in all provinces and implemented in some, notably Alberta, British Columbia, Ontario, and Manitoba. The broad thrust has been to increase municipal autonomy through laying out general purposes for local government, defining wide spheres of jurisdiction rather than narrow functions, and conferring “natural person” powers that allow more latitude in business matters.31 In British Columbia the Community Charter Act of 2004 reduced provincial oversight, stipulated that amalgamations would require the consent of affected communities, and mandated consultation with the Union of BC Municipalities prior to making major functional or financial changes.32 In Ontario amendments have broadly empowered municipalities to foster “the current and future economic, social and environmental well-being of the municipality.”33 Some argue, however, that aspects of these reforms were designed to promote a corporate model for local government; moreover, provincial governments can still override municipalities to achieve their objectives.34 Some special legislation has focused on big cities. The 2003 City of Winnipeg Charter, for example, groups the city’s powers into fourteen

114

Robert Young

broad categories and allows the city to act in these areas without prior provincial approval. It also permits more business activities, strengthens planning power, and increases the city’s capacity to promote neighbourhood revitalization, which is very important for Winnipeg.35 The 2006 City of Toronto Act strengthens the office of the mayor, widens the scope for levying new taxes, and generally “recognizes the importance of providing the City with a legislative framework within which the City can build a strong, vibrant and sustainable city that is capable of thriving in the global economy.”36 Nevertheless, the provincial government retains its control over the city. For example, although Toronto can now establish a mechanism to hear appeals of planning decisions, the provincial minister of municipal affairs and housing can withdraw any and all appeals from the city’s purview and send them to the provincially appointed Ontario Municipal Board.37 So some constraints have been eased, but provincial supremacy remains. A summary judgment about recent reform is that “neither the fundamental purpose of municipal governance nor the fundamental nature of the constitutional status, functions, or finances of municipal governments has been radically transformed.”38 Still, municipal autonomy has been expanded incrementally in several provinces. Moreover, the courts have recently affirmed “benevolent construction” as a principle in determining the scope of municipalities’ powers and have adopted a demanding standard to strike down municipal bylaws for conflicting with provincial or federal legislation.39 Achieving more power will depend on how the big cities perform as their economic and demographic weight increases and on whether citizens identify more strongly with more active and visible local governments.

governance role of local government Canadian local governments are important. In 2005 municipalities spent $42.5 billion, and school boards expended another $33.1 billion – a combined total of 6.88% of gdp, or about $2,400 per capita.40 Direct employees of municipalities – 390,650 people – represent 12.5% of the public-sector workforce, and when school boards and local public enterprises are included, this figure rises to 32.4%.41 Municipalities carry out important functions, ones visible to citizens. In all provinces, municipalities are primarily responsible for:42 • •

• • •

roads and traffic control solid-waste collection and disposal (except in Prince Edward Island, where the province does it) land-use planning and regulation and building regulation economic development and tourism promotion parks, recreation, cultural facilities, and libraries

Canada • • •

115

business licensing and the regulation or provision of cemeteries fire protection and emergency planning and preparedness fencing, drainage, animal control, and pesticide regulation

In addition, urban municipalities fulfil the following functions: policing, public transit, water purification and distribution, and sewage collection and treatment. It is striking that Canadian municipalities have only very limited responsibilities for social services (except in Ontario). Public utilities such as electricity and natural gas are provided through various mechanisms, while tax collection is generally a local responsibility and tax assessment is mostly done provincially. It should be stressed that municipalities vary substantially in their organization and service delivery across the provinces, so comparison is difficult, as it is within provinces. Inevitably, some functions are shared with other governments. Rather than joint administration, this normally means dividing responsibility at the margins of matters – such as city roads (municipal) and highways (provincial) – or sharing costs. It is more common for municipalities to serve as agents in implementing the will of the provincial and federal governments. Here, the federal government is a small player. Its policies may shape the problems local governments have to manage, such as homelessness, but it does relatively little in consort with municipalities, nor, except in declared emergencies, can it dictate municipal action. By contrast, local governments are used to implement many provincial government policies. They enforce building codes, for example, and have to provide policing, libraries, roads, and other goods and services according to provincial guidelines and standards. The list of prescribed activities grows steadily, with environmental measures and emergency planning being relatively recent additions. Sometimes the costs of these functions are shared with the provinces, but a development that always alarms municipal authorities is the imposition of new responsibilities without new financing. Within the range allowed by provincial regulation, local governments have discretion, and this has generally been increasing to allow more flexibility in implementation. There is a clear but contested trend toward contracting out services and forming public-private partnerships (P3s).43 This trend has not proceeded as far in most Canadian provinces as in many countries because of public skepticism, the power of unionized municipal workforces, and rather mixed results, at best.44 In personnel matters, local governments have long had autonomy, but the provinces regulate the qualifications of skilled tradespeople and professionals. They also impose strict rules about police training and sometimes provide it. As for internal governance, municipal councillors in Canada are elected, either citywide or in wards (which sometimes have multiple members). The choice of system is made locally. In upper-tier governments, such as

116

Robert Young

counties, representatives are normally selected from those elected in lowertier municipalities. When upper-tier councillors have been directly elected, the result has been more conflict between the two tiers.45 The terms of councils vary between two and four years, as set by provincial legislation. The franchise is restricted to Canadian citizens, though there is some pressure in large cities to allow permanent residents or landed immigrants to vote. The right to vote is no longer restricted to property owners, but in a majority of provinces Canadians owning property in any municipality are entitled to vote in each. Councils have final authority over all policy (subject to provincial dictates and court decisions). Generally, councils legislate bylaws and leave their execution to the municipal staff. In smaller local governments, councillors can closely supervise staff, while in the cities, functional council committees allow for both deliberation (and recommendations to council) and oversight of officials. In some cities, there is an executive committee. Montreal, for example, has a very large council – sixty-four members plus the mayor – but there is an executive committee of twelve that can grant some contracts, manage personnel and real estate, and prepare bylaws and budgets for presentation to the full council. Mayors in Canada are formally rather weak. However, they are elected directly, and winning a citywide vote can confer much legitimacy and power. The current mayor of Toronto, for example, received over 332,000 votes in the 2006 election – far more than any other politician in the country. In some places, the mayor is designated the chief executive officer, but more power flows from his or her staff resources and presence on the job (because serving as councillor is a part-time position, except in most large cities). Mayors also have close relationships with senior administrators, especially the chief administrative officer (cao). Managerially, the trend in Canada is toward the cao system, although most councils maintain direct contact with departmental officials.46

financing the governance role of local government The framework of local government finance is established by provincial law. Typical is Nova Scotia, where the Municipal Government Act contains 544 substantive sections that establish the structure and functioning of the province’s municipalities. Sections 54 to 167 cover financial matters such as borrowing, purchasing, financial statements, payment of taxes, appeals, and so on.47 Extensive regulations flesh out the Act, and at least eight other provincial statutes cover aspects of municipal finances. All municipal authority flows from such statutes; Canadian municipalities have no constitutional revenue-raising powers.

Canada

117

Within these limits, municipalities have some autonomy in taxation policy. In particular, they control property-tax rates, if not the assessment of the base. They also have latitude in setting user fees for services, though provincial regulatory agencies often supervise the setting of rates for utilities. What irks ambitious municipal leaders is the refusal of the provincial and federal governments to grant them access to taxes that grow with the economy, notably sales taxes and the income tax.48 Consequently, Canadian municipalities are unusually dependent on the property tax. In 2004 municipal governments had total revenues of $39.7 billion, or $1,216 per capita. Of this, the real property tax produced 44.2% and property-related taxes another 9.1%.49 Other taxes brought in only 1.4%. Other own-source income, mostly from sales of goods and fees for services, accounted for 29.4% of revenue, and transfers made up the remaining 15.9%. Of transfers, the greatest part (73.5%) was from provincial governments in the form of specific-purpose transfers (“conditional grants”), which fund programs where the province determines how the money will be used. General-purpose provincial grants made up 18.6% of transfers. Specific-purpose transfers from the federal government (mostly payments in lieu of property taxes) made up just 7.9% of transfer payments and only 1.3% of municipal revenues. There is considerable variation in revenues across the provinces. In Ontario total municipal revenues in 2004 were $1,505 per capita. In Quebec the figure was about $1,023, similar to the prairie provinces and British Columbia. In the smaller Atlantic provinces, the range was from $869 in Nova Scotia to $336 in tiny Prince Edward Island, because provincial governments fulfil more functions directly. The Ontario figures stand out because only there do municipalities still have substantial responsibility for social services – a portion of the costs of public health, social assistance, and social housing. These figures have changed over time in important ways. First, albeit from a minuscule base, federal transfers to municipalities have recently been increasing substantially. Second, everywhere except in Alberta, specific-purpose transfers from provincial governments dropped sharply over the period 1994–2004, for a national decline of 31.4%. Hence the financial autonomy of municipal governments increased, but they have become no less dependent on the property tax over time. There are few formal revenue-sharing arrangements between governments in Canada. Except in Manitoba, important taxes such as the federal and provincial sales and income taxes are not shared with municipalities. In 2005, however, the federal government undertook to share its tax on gasoline, with transfers to municipalities that will reach $1.6 billion per year in 2009–10. Gas-tax sharing is also practised in Ontario, Quebec, British Columbia, and Alberta, mainly to finance public transit.

118

Robert Young

Municipal spending makes up 4.1% of gdp. Federal spending in 2004 was $4,649 per capita (19.6% of gdp), and the provinces spent $5,780 per capita (24.9% of gdp).50 Is there a fiscal gap in Canada – a vertical fiscal imbalance? There certainly is one in the view of provincial governments. The federal government has excess revenue relative to its responsibilities, whereas the provinces have insufficient revenues to meet growing demands, especially for their major responsibilities of health and education. Provincial governments have pressed this claim vociferously.51 The municipalities also argue strenuously that they suffer from a vertical fiscal imbalance; in particular, they cannot raise enough revenue to close the “infrastructure deficit” caused by the combination of rapid growth and old, deteriorating infrastructure.52 As well, very costly expansions of public transit in the cities require federal and provincial support. These needs are genuine, but some observers argue that municipalities could issue more debt (as interest charges make up only 4% of local government spending).53 Others claim that the property tax is underutilized and that it may be less “inelastic” than is sensed by municipal politicians seeking reelection.54 Nevertheless, some municipal financial distress results from provincial policy (housing and social assistance) and federal policy (immigration), and this lends legitimacy to local governments’ entreaties for higher transfers. Local government spending in Canada is under close provincial surveillance. Municipalities report in detail about their financial flows, and there are limits on municipal debt. In Ontario, for example, the Ministry of Municipal Affairs and Housing annually sends all municipalities their “financial obligation limit.” The limit essentially caps the proportion of the normal revenue flow that can be devoted to interest payments. If capital projects would cause payments to exceed the limit, then permission for borrowing must be sought from the Ontario Municipal Board.55 Other provinces, mindful of municipalities that went bankrupt in the Great Depression of the 1930s (and of some more recent cases), have comparable controls. But these controls do not explain the relatively low level of borrowing by Canadian municipalities. Overall, local self-government has produced very strong financial accountability. Municipalities report to provincial governments, which supervise them closely. They are also accountable to taxpayers, who tend to resist increases in taxes. Despite this, it is not obvious that municipalities are as efficient as they could be. Their workers are heavily unionized, for example, and in many cases “contracting-out” could reduce costs. However, there are forces tending toward efficiency, namely intergovernmental competition between municipalities and the supervision of provincial governments. Whether policy accountability and democratic control of municipal governments are as strong as financial accountability is another matter.

Canada

119

supervision of local government by other orders of government The federal government of Canada exercises no routine supervisory role over local government. But when the federal government signs agreements with municipalities, there are arrangements for financial and managerial accountability. These can be quite complex, as in the cases of the gasoline-tax-sharing agreements and special tripartite (municipal-provincialfederal) agreements.56 In theory, provincial governments have complete authority over local governments. In practice, consultation makes the formal override of municipal bylaws rare. Municipal decisions about planning, land use, and other matters can be appealed to provincial agencies or cabinets and to provincial and federal courts. The strongest sanction that provincial governments can exercise over municipalities – short of abolishing them through amalgamation – is to take over their administration. This has happened in cases of bankruptcy, notably when local economies collapsed during the 1930s. This still occurs when major employers fail and tax collection becomes problematic. Hence, for example, the Saskatchewan Municipal Board, which rules on applications to issue long-term debt, has as its foremost mission “to maintain financial credibility” for the province’s local governments.57 In Ontario, municipalities in financial distress can be taken over by the Ministry of Municipal Affairs and Housing. Provincial governments are under no legal obligation to bail out municipalities, but in practice they do, and healthy municipal credit ratings partly reflect this expectation. Provincial governments can also intervene when councils become dysfunctional because of personal or partisan wrangling. This happened recently in Sherwood, Saskatchewan, when the province dismissed what was left of the council and appointed a public servant to run the municipality until new elections could be organized.58 Such events, however, are highly exceptional. Although municipalities have considerable autonomy and in some provinces the sphere of independent action has grown, municipal action is ultimately constrained by provincial policy, which prescribes many activities and prohibits others. Changes to the provincial policy framework are perennial, and local governments must ceaselessly adapt to provincial policy innovations, which arise not only from the main supervisory ministry but also from many other departments and agencies, such as those concerned with environmental protection, agriculture, and natural resources. Many provincial agencies have responsibilities that impinge on local government activities. Moreover, provincial governments occasionally undertake major changes to their municipal systems. At times, there is pressure for amalgamation. In Quebec, for example, the number of municipalities dropped

120

Robert Young

from 1,400 in 1990 to 1,147 in 2006. In Ontario, amalgamations between 1996 and 2000 reduced the number of municipalities from 850 to 445. Such consolidations are contested vigorously, and there is little clear evidence that efficiencies either result at all or offset diminished local control if they do.59 Further, functions are sometimes reallocated in a wholesale fashion, as in the “local services realignment” exercise conducted by the Ontario government in the late 1990s.60 Such events make normal municipal governing difficult. Metropolitan regions are supervised closely. In 1988, for example, the Government of Ontario created an Office of the Greater Toronto Area, headed by a deputy minister, to support a coordinating committee that comprised officials from all thirty-five municipal governments in the region.61 Currently, within the Ontario Ministry of Public Infrastructure Renewal, the Ontario Growth Secretariat sets planning policy for the entire Greater Golden Horseshoe, which includes the cmas of Peterborough, Oshawa, Toronto, Barrie, Hamilton, St Catherine’s-Niagara, Brantford, and Kitchener, with a combined population of 7.4 million.62 Similarly, in Quebec, the Contrat de ville de Montréal specifies precise policy engagements by ten provincial government departments to help manage the sustainable development of the city.63 In Vancouver the provincial government’s responsibility for the 2010 Winter Olympics and its interest in Pacific Gateway infrastructure to improve oceanic trade have led it to take a strong hand in planning and management.

intergovernmental relations with the provincial and federal governments In Canada municipalities’ primary relationships have always been with the provincial governments. These relationships cover almost every aspect of local government activity, and provincial governments clearly dominate. Relations with the federal government – which are often mediated by provincial governments – cover a much narrower range of policy areas. There is no regulation involved here, except that municipalities have to adhere to federal guidelines concerning matters like airport safety and policing for national security. Normally, the relationship involves local governments qualifying for federal spending programs. The relationships of municipal governments with “senior” governments – and municipal leaders strongly dislike the term “senior” – are top-down. Local government representatives may insist that they constitute a co-equal order of government, but in reality they are policy takers, not full partners. However, some recent initiatives discussed below have involved municipalities in joint planning, and their associations continue to press for fuller participation in policy development.

Canada

121

Local-Provincial Relations Formally, and practically as well, municipal-provincial relations are hierarchical. The strongest illustrations of this are the amalgamations that have sometimes been forced upon very resistant local governments, as well as sweeping provincial moves to reallocate functions. In the normal course of affairs, provincial officials set and enforce standards that delineate the contours of municipal activity. But the relationship is not all top-down. Although they are “creatures of the provinces” and subject to provincial control, municipalities are also in a deeper sense a responsibility of provincial governments. It is incumbent on the latter to ensure that the municipal system is viable, so provinces must pay attention, ultimately, to municipal representations about emerging problems. Where big cities are concerned, provincial governments must be especially solicitous. Not only is their economic vitality of province-wide concern, but large cities with dynamic mayors can press provincial politicians on particular issues, with public support. As one analyst of the Ontario scene observed, “[c]urrently, the City of Toronto has twenty-two members of parliament, twenty-two members of the provincial legislature, and one mayor. It is not difficult to figure out who will speak with the greatest authority about the needs of the people of Toronto.”64 Given the paucity of large cities in individual jurisdictions, one cannot claim that provincial governments have “urban policies,” but they must be attentive to big-city requirements. There are a great many avenues for municipal-provincial interaction. The normal channel for most business is the responsible department. The breadth of these departments’ mandates varies, and local government matters are often combined with other branches of activity.65 Where the mandate scope is narrow, and in any case for a lot of other business, municipalities deal with the many functional departments that affect them – environment, recreation, heritage, natural resources, transportation, and so on. This official-to-official interaction is by far the most common form; indeed, it is routine. But there are other avenues. Larger municipalities have specialists in intergovernmental relations who report either to the chief administrative officer or to the mayor. Their role is to fix problems by dealing with provincial officials and politicians. At the political level, mayors often communicate with local members of the provincial legislature. Mayors can sometimes conduct business with ministers and ministerial aides. Another political channel is to appear before legislative committees when these bodies are considering measures that affect all municipalities or particular ones. These are formal occasions but also lend themselves to quiet lobbying. To make known their collective views about policy, local governments depend on provincial associations of municipalities. The associations have

122

Robert Young

expertise, with professional staff supporting a range of committees concerned with particular issues. Some associations act as umbrella groups for others. The Association of Municipalities of Ontario (amo), for example, includes regional and rural affiliates, an association for municipal administrators, and a bulk-purchasing company. But the associations vary in strength. In some provinces, such as Alberta, they are split between urban and rural municipalities. There are also linguistic groupings in New Brunswick, Manitoba, and Ontario. Undoubtedly, population size is the major cleavage among Canadian local governments, and it has led to serious divisions. Both Montreal and Toronto have dropped out of their provincial association. Within provinces, there are also specialized associations grouping officials like police chiefs and municipal treasurers, and these liaise regularly with provincial officials. However, it is the major representative associations that attract politicians’ attention and have the expertise to convey municipal opinion to provincial bureaucrats. This occurs formally at annual meetings, where association members pass resolutions, mostly recommending changes to provincial policy. Many of these have already been processed through committees and the executive and have supporting documentation prepared by staff; others arise from individual municipalities. For example, the Union of British Columbia Municipalities at its annual convention routinely deals with dozens of formal resolutions, concerning issues ranging from tire recycling to the length of councillors’ terms, and in due course, in a single document, the provincial government formally replies to each one of them.66 Many provincial ministers appear at the annual amo conference, and there is an institutionalized process for local governments to petition to have a delegation meet with them.67 These associations are the main force organized by Canadian municipalities to represent their interests to provincial governments, and they are often effective. Of course, the province has the final word. Overall, though the municipal-provincial relationship is sometimes conflictual, and tense episodes attract much attention, it must be judged as generally cooperative. Each government tries to rally support for its demands and objectives, but neither one can afford sustained conflict. The local governments cannot alienate the centre of so much power over them. In turn, provincial governments need to maintain a healthy municipal system, and for reasons both administrative and political, they must stay attuned to general municipal needs. After all, municipalities are repositories of expertise in important fields like planning, physical infrastructure, waste management, and recreation. As well, they have established relationships with all kinds of local nongovernmental organizations (ngos), which are increasingly important in governance. Politically, ill-advised provincial decisions can galvanize voters, especially in smaller municipalities, to the

Canada

123

peril of provincial politicians. So the provincial governments must listen. Nevertheless, for prudential reasons and to deliver their own policies, they have traditionally supervised municipal behaviour rather closely. These fetters have irritated, especially where finances are concerned, but most municipalities quietly adhere to a modest role of providing services to residents and their properties. So the provincial-municipal relationship continues to be one of cooperation and incremental change through asymmetric mutual accommodation. Local-Federal Relations Local government is well organized to deal with the federal government. Although a federated structure is characteristic of most Canadian associations (including ones interested in specialized areas of municipal government), the Federation of Canadian Municipalities (fcm) has direct membership. It represents over 90% of all municipalities and is the main interlocutor of the federal government on municipal affairs. It has a large board of directors, an extensive set of committees dealing with particular policy areas, and a substantial professional staff. Although there are subgroupings within it, notably the Big City Mayors’ Caucus, the fcm leadership believes that its considerable power and success derive from its broadly representative character. Direct relations between the federal government and local authorities are much less pervasive than provincial-municipal relations for jurisdictional reasons and because of historic caution on the federal side about initiatives that could lead to a plethora of demands. (An exception to federal nonintervention is the National Capital Commission, or ncc, a public enterprise that plans and promotes the National Capital District; however, given provincial and municipal sensitivities, the ncc has operated pragmatically through consensus and the federal spending power.)68 But there has been much recent change in municipal-federal relations. Due to restructuring, fiscal strain, and demographic pressures, Canadian municipalities have demanded assistance and recognition from the federal government. All municipalities want more money, many seek consultation about policies affecting them, and some want greater autonomy and power.69 The cities’ case has been advanced by influential think-tanks and business organizations.70 The federal government responded to early pressures with several initiatives. Programs to build infrastructure (broadly defined), with funding from all three orders of government, were launched in 1993.71 When the Liberal government headed by Paul Martin was in power (2003–06), the prime minister boldly announced a “New Deal” for cities and communities, with new respect for the municipal “order” of government, funding

124

Robert Young

for transit, a full rebate of the federal sales tax on municipal expenditures, and transfers of a portion of the federal gasoline tax.72 As well, new initiatives addressed homelessness, urban Aboriginal people, the social economy, and poverty, all requiring federal involvement with municipalities and community groups.73 Finally, renewed tripartite agreements that were signed with Vancouver (and British Columbia) and Winnipeg (and Manitoba) to attack particular problems in those cities seemed to presage the spreading of urban-development agreements to other cities.74 There is no federal ministry responsible for dealing with municipal governments. A Ministry of State for Urban Affairs was established in the 1970s, but it had little clout in Ottawa and irritated the provincial governments, so it withered away.75 In 2003 a Cities Secretariat was established within the federal Privy Council Office, and in 2004 as part of the New Deal, there was established a Ministry of State for Infrastructure and Communities. Ministry officials negotiated the gasoline-tax arrangements with the provinces and aimed to create new urban-development agreements. But the Conservative administration led by Stephen Harper (2006– present) rolled the unit into the Transport, Infrastructure and Communities Portfolio, a downgrading that reflected the government’s general view of federalism – namely that the federal government should respect the constitutional division of jurisdiction.76 Another federal department linked to municipalities is Human Resources and Social Development Canada, which runs many programs focused on community development, labour, and homelessness. These are delivered within municipalities, though implementation often involves social groups rather than organs of local governments.77 Many other federal departments interact with municipal governments, often through lowvisibility bureaucratic channels. Indeed, beyond the big intergovernmental initiatives exists a largely unexplored world of municipal-federal contacts. These occur in many areas of joint interest, such as labour-market and business development, federal property, arts and culture, immigrant settlement, and urban Aboriginal problems. New principles of public management have increased officials’ discretion at all levels of government, and transgovernmental coalitions can assemble to undertake particular projects. Local politicians also meet freely with their federal counterparts. Still, municipalities sometimes complain that there is no central portal for dealing with the federal government. Provincial governments mediate the contacts between “their” municipalities and Ottawa. At one extreme is Quebec, which sequesters its local governments. By law, no municipal government can enter agreements with Canada, other provinces, or other countries without the authorization of the Quebec government – and this is enforced.78 It helps municipalities’ bargaining power while preserving the province’s sovereign prerogatives.

Canada

125

(Nevertheless, Quebec’s position does not preclude fruitful interaction, as in greater Montreal, where efforts to attract investment and stimulate key sectors are coordinated through Montréal International, an organization that has five provincial and five federal ministries as partners, along with many municipalities and firms.)79 Quebec is special, but all provinces mediate municipal-federal relations. Although constitutional power gives provinces the upper hand in these dealings, the federal purse and municipal demands make tri-level bargaining more complex. Depending on the province’s situation and the policy at issue, provinces may simply monitor municipal-federal interactions. Or they can advocate for municipalities, broker between the parties, regulate the interaction, or join as a partner. This can be done through tripartite mechanisms or by the province alone through line departments or central agencies, including the premier’s office.80 Tri-level negotiations are not a simple game. The governments of large cities have separate relations with the federal government. Mayors and senior officials have access to top-ranking federal bureaucrats, and they can also meet with ministers. As well, a longstanding federal tradition is to name a “political minister” for each province to handle sensitive issues, and big-city politicians use this channel; in fact, recent governments have designated political ministers with special responsibilities for Montreal, the Greater Toronto Area, and Vancouver. The rising demands of all municipalities and the increasing assertiveness of the big cities and their allies have posed challenges for federal governments. But Canadian local government is certainly not a full partner in the federation, despite the promises of the New Deal. Provinces control municipalities, and there are good, self-interested reasons for the federal government to cleave to this. Naturally, federal governments want their activities to have a high profile in municipalities and especially big cities (for currently, 85 of 308 House of Commons seats are in the cmas of Montreal, Toronto, and Vancouver), but this need not require much interaction with municipal governments per se. Essentially, then, intergovernmental relations in Canada still mean provincial-municipal interactions on the one hand and federal-provincial ones on the other. Where this distinction has been breached, in the view of some observers, a flexible and “place-based” federal orientation has produced better policies, ones more suited than usual to local conditions.81 A parallel argument is that new federal transfers are but the harbinger of an imperative national effort to keep Canadian cities competitive.82 So intergovernmental relations may continue to become more dense and widespread. But there are costs attached to tri-level policymaking. Negotiations can delay policy and generate high transaction costs, and management structures can be overly complex, especially when ngos are involved.

126

Robert Young

Accountability is an issue when responsibility is widely shared. New federal initiatives involving municipalities can create both federal-provincial tensions and dissatisfaction within the provincial-municipal relationship (especially when large and small municipalities are treated differently). In the end, Canadian municipalities may serve themselves best not by approaching the federal government but by focusing demands for money and power on their jurisdictional masters – the provinces.

political culture of local governance Municipal politics in Canada has a relatively low profile. This stems in part from the sense that local governments exist merely to provide a limited range of rather banal services, a perception that is weaker of course in the big cities. As well, there are few political parties operating in the local arenas. Municipal parties exist in Quebec, encouraged by provincial legislation, and in British Columbia, where politics are polarized between left and right, and there have been parties and party-like “slates” of candidates in several other cities.83 But the major federal and provincial parties are largely distinct, even when they share the same label, and the party system does not extend to municipal politics. So the tradition of local nonpartisanship prevails, even though many municipal politicians are known to be members of federal or provincial parties and mayors and councillors are often recruited by parties to seek provincial or federal office.84 Nonpartisanship probably diminishes electoral participation and certainly weakens collective accountability; as well, intergovernmental relations lack the partisan connections that can sometimes smooth relations and sometimes obstruct them but that always help to organize them. The public’s interest in local elections is relatively low. Turnout rates vary, and no centralized statistics are available, but on average perhaps 35% to 45% of the electorate vote. This is substantially below federal and provincial turnout rates, which have typically been about 60% to 75%. However, there are other participatory mechanisms. Because Canada is a developed and stable society, municipalities contain dense webs of voluntary associations – ngos – through which people can participate in governance. There are business associations, churches, service clubs, recreational associations, and groups representing many special interests. The ngos are vehicles for citizen input into policymaking. (They are also conduits for policy implementation because they harness volunteer energy and sometimes assemble people who are the objects of policy; hence many social policy initiatives bypass municipal governments altogether and work through ngos.) Individuals also have ample opportunities to express their views. Contact with politicians and officials is simple and personal in smaller municipalities. In larger places, committees of council meet publicly to discuss issues, and residents can often

Canada

127

speak their minds. When budgets are presented and community plans and zoning are at issue, more extensive participatory exercises occur, though turnout at these sessions is often low. Participatory opportunities are exploited most by business interests (especially developers), special-interest groups (like patrons of cultural facilities), “ratepayers’ associations” (which aim for low taxes), and residents opposing particular development projects. Broad and sustained engagement in civic issues is not the norm. In Canadian politics, gender is always an issue. Despite expectations that more women would stand for election and be more successful in the local races than in others, this does not seem to be true.85 Obstacles remain, including unequal sharing of domestic work and “old boys’ networks” that groom male candidates. The Federation of Canadian Municipalities and local groups are campaigning for increased representation of women.86 Visible minorities (i.e., non-Caucasians) are also underrepresented in municipal government; moreover, urban constituencies in Canada, where most recent immigrants live, contain more voters than the overrepresented rural areas, thus attenuating the weight of visible minorities in federal and provincial politics.87 Municipal political culture does affect intergovernmental relations. Local politicians tend to be cautious and oriented toward the status quo as long as economic growth proceeds. In small and medium-sized municipalities, which emphasize nonpartisan service provision, provincial governments are regarded with a mixture of deference and irritation. For most municipalities, the federal government is far away. The provincial associations and the fcm are effective and strongly supported, but demands necessarily reflect the broadest possible consensus and are not visible to citizens. The big-city mayors are outspoken but intermittently and nonideologically. For most municipalities, therefore, intergovernmental relations are subdued and often technical, not political. The most common municipal stance is one of deserving supplication.

e m e r g i n g i s s u e s a n d tr e n d s Municipal governments in Canada and their relations with the provincial and federal governments are relatively stable. This is because of long tradition and because the system has worked reasonably well; moreover, the economic environment has been highly favourable for sixty years, with only occasional recessions and none since 1992. The biggest issue facing municipalities, in their view, is a shortfall of resources. They depend heavily on the property tax for revenue, and municipal politicians believe that tax increases cause hardship to some citizens, reduce competitiveness, and are politically damaging. So they have turned to other revenue sources, and they have argued the case for larger provincial

128

Robert Young

and federal transfers. The federal government has responded with significant new transfers, but these came when the “cities agenda” was a national priority. More federal funding is unlikely, so inevitably the municipalities will turn to their provincial masters. Recently, only the governments of Quebec and Alberta have produced more generous systems, although others have provided some access to new revenue sources. In the medium term, if municipal needs keep growing, provincial governments will probably extend more financial aid. If one provincial government made a substantial move, the pressure on others to do the same would be intense.88 Another major problem is coping with disparities among municipalities. For a very long time, the legislative framework for local government was essentially uniform in each province. But now conditions have diverged. In the cities, there is growth pressure from large immigrant flows, which bodes well for their economic futures but creates social, economic, and environmental stresses. In contrast are declining towns and rural municipalities that face major problems of sustainability. Overall, a move is underway to grant cities increasing autonomy and access to revenue sources. As legal frameworks broaden, it is likely that local authorities will occupy new functions and revenue sources when they are ready to do so, perhaps even tackling the challenges of sprawl, immigrant integration, and poverty. The process may be one of “opting in” to new powers, which is quite in line with the Canadian tradition of incremental change.89 The distress of communities in decline, however, will not be solved by more powers. Money is required. In the longer term, if the demographic and economic dominance of big municipalities – city-regions – continues to increase, Canadians may debate the roles and relative powers of cities and provinces. Suggestions have been made that constitutional changes should enshrine a new status and powers for cities, but this is highly improbable, as there is little appetite for any constitutional amendment in Canada. An alternative view is that functions necessarily will be devolved to economically dominant cities from the federal and especially the provincial governments; this could lead to an “hourglass federalism,” with strong municipalities and a strong centre.90 But there is no reason in principle to accept this economic determinism; instead, more assertive and powerful municipalities may evolve as citizens increasingly identify with their cities. In practice, however, there is much evidence that provincial power, cemented in the Constitution, is shaping the future of city-regions. Quebec governments have forced amalgamations and allowed de-amalgamations; the Province of British Columbia runs the two greatest projects afoot there; and Toronto’s new powers pale beside sweeping provincial initiatives to manage development in the Greater Golden Horseshoe region. In the face of city-regions’ economic strength and their growing, loyal populations, the provinces will not fade away. On the contrary, their pivotal role in the Canadian intergovernmental system will continue long into the future.

Canada

129

notes 1 Larry S. Bourne and Damaris Rose, “The Changing Face of Canada: The Uneven Geographies of Population and Social Change,” Canadian Geographer 45, no. 1 (Spring 2001): 105–19. 2 Thomas J. Courchene, A State of Minds: Toward a Human Capital Future for Canadians (Montreal: Institute for Research on Public Policy, 2001). 3 Canada, Statistics Canada, “Population and Dwelling Counts, for Canada and Census Subdivisions (Municipalities) with 5,000–Plus Population, 2006 and 2001 Censuses – 100% Data,” http://www12.statcan.ca/english/census06/data/popdwell/ Table.cfm?T=307&S=3&O=D&RPP=699 (viewed 25 June 2007). 4 “Urban” is defined as an area with a population of at least 1,000 and a density of at least 400 people per square kilometre, a definition that includes rather small towns. 5 Canada, Statistics Canada, “Portrait of the Canadian Population in 2006, 2006 Census, Population and Dwelling Counts,” catalogue no. 97–550–XIE, March 2007. 6 Canada, Statistics Canada, “2001 Census of Population (Provinces, Census Divisions, Municipalities), 2001 Languages, Mobility and Migration,” http://estat. statcan.ca/cgi-win/CNSMCGI.EXE?Lang=E&DBSelect=SD2001_4 (viewed 25 June 2007). 7 Canada, Statistics Canada, “Gross Domestic Product, Expenditure-Based (Quarterly),” http://www40.statcan.ca/l01/cst01/econ41.htm (viewed 25 June 2007). Throughout the chapter, all figures are in current US dollars. 8 Canada, Statistics Canada, “Canadian Economic Observer: Historical Statistical Supplement 2005/06,” catalogue no. 11–210–XIB, July 2006, table 4. 9 Canada, Statistics Canada, E-Stat Online Database, tables 380–0016 and 380–0022, http://cansim2.statcan.ca/cgi-win/CNSMCGI.EXE (viewed 26 June 2007). 10 Canada, Statistics Canada, “Public Sector Statistics: Financial Management System 2005–2006,” catalogue no. 68–213–XIE, July 2006, tables 5–1 and 1–7. 11 For basic information, see Rainer Knopff and Anthony Sayers, “Canada,” in Constitutional Origins, Structure, and Change in Federal Countries, ed. John Kincaid and Alan Tarr, 103–42 (Montreal and Kingston: McGill-Queen’s University Press, 2005); Richard Simeon and Martin Papillon, “Canada,” in Distribution of Powers and Responsibilities in Federal Countries, ed. Akhtar Majeed, Ronald L. Watts, and Douglas M. Brown, 91–122 (Montreal and Kingston: McGill-Queen’s University Press, 2006); Thomas O. Hueglin, “Canada,” in Legislative, Executive, and Judicial Governance in Federal Countries, ed. Katy Le Roy and Cheryl Saunders, 101–34 (Montreal and Kingston: McGill-Queen’s University Press, 2006); and Robin Boadway, “Canada,” in The Practice of Fiscal Federalism: Comparative Perspectives, ed. Anwar Shah, 98–124 (Montreal and Kingston: McGill-Queen’s University Press, 2007). 12 Donald J. Savoie, Governing from the Centre (Toronto: University of Toronto Press, 1999).

130

Robert Young

13 Robert A. Young, The Secession of Quebec and the Future of Canada (Montreal and Kingston: McGill-Queen’s University Press, 1995). 14 This tension is explored throughout C. Richard Tindal and Susan Nobes Tindal, Local Government in Canada, 6th ed. (Toronto: Nelson, 2004). Also useful is Katherine A. Graham and Susan D. Phillips, with Allan M. Maslove, Urban Governance in Canada: Representation, Resources, and Restructuring (Toronto: Harcourt Canada, 1998). 15 See Kenneth Grant Crawford, Canadian Municipal Government (Toronto: University of Toronto Press, 1954), 19–47. 16 Robert A. Young, “Remembering Equal Opportunity: Clearing the Undergrowth in New Brunswick,” Canadian Public Administration 30, no. 1 (Spring 1987): 88–102. 17 Mary W. Rowe, ed. Toronto: Considering Self-Government (Owen Sound, on: Ginger Press, 2000). 18 Statistics Canada, source as in note 3. The metropolitan areas of these cities, which sometimes share their interests, are even weightier as a percentage of provincial populations: Winnipeg, 60.5%; Halifax, 40.8%; Calgary, 32.8%; Montreal, 48.2%; and Toronto, 42%. 19 See http://www.edmonton.ca/portal/server.pt/gateway/PTARGS_0_0_265_ 210_0_43/http%3B/CMSServer/COEWeb/city+government/civic+agencies/ list+of+civic+agencies (viewed 26 June 2007). Typically, such agencies are controlled by the municipality, but their boards of directors often include ordinary citizens, experts, and representatives of business and nongovernmental organizations. 20 For the general argument contrasting special-purpose and multipurpose authorities, see Lisbet Hooghe and Gary Marks, “Unraveling the Central State, but How? Types of Multi-Level Governance,” American Political Science Review 97, no. 2 (May 2003): 233–43. 21 See http://www.intrd.gov.nl.ca/intrd/economicboards.htm (viewed 15 May 2008). 22 Andrew Sancton, “Metropolitan and Regional Governance,” in Urban Policy Issues: Canadian Perspectives, 2nd ed., ed. Edmund P. Fowler and David Siegel, 54–68 (Don Mills, on: Oxford University Press, 2002). 23 Andrew Sancton, “Fusions et défusions municipales au Québec et en Ontario,” in Le parti Libéral: Enquête sur les réalisations du gouvernement Charest, ed. François Pétry, Éric Bélanger, and Louis M. Imbeau, 321–38 (Quebec: Les Presses de l’Université Laval, 2006). 24 Pierre Hamel, “Municipal Reform in Quebec: The Trade-Off between Centralization and Decentralization,” in Municipal Reform in Canada: Reconfiguration, Reempowerment, and Rebalancing, ed. Joseph Garcea and Edward C. LeSage Jr, 149–73 (Don Mills, ON: Oxford University Press, 2005). It should be noted that Montreal is divided into arrondissements (boroughs), each with a mayor and council, so the governance structure there is particularly complex. 25 For arrangements in the northern territories, see Katherine A.H. Graham, “Municipal Reform in the Northern Territories: Now for Something Different,” in Municipal Reform in Canada: Reconfiguration, Re-empowerment, and Rebalancing, ed. Joseph

Canada

26

27 28

29 30

31

32

33 34

35 36

37 38 39

131

Garcea and Edward C. LeSage Jr, 269–86 (Don Mills, ON: Oxford University Press, 2005). Teresa M. Dust, “The Impact of Aboriginal Land Claims and Self-Governance on Canadian Municipalities,” Canadian Public Administration 40, no. 3 (Fall 1997): 481–94. Signa A. Daum Shanks, “Municipalities and First Nations Reserves: What’s the Connection?” Municipal World (January 2007): 31–2, 42. Joseph Garcea and Ken Pontikes, “Federal-Municipal-Provincial Relations in Saskatchewan: Provincial Roles, Approaches, and Mechanisms,” in Canada: The State of the Federation 2004: Municipal-Federal-Provincial Relations in Canada, ed. Robert Young and Christian Leuprecht, 349–50 (Montreal and Kingston: McGill-Queen’s University Press, 2006). Canada, Constitution Act 1867, Section 92(8). David Siegel, “Recent Changes in Provincial-Municipal Relations in Ontario: A New Era or a Missed Opportunity?” in Canada: The State of the Federation 2004: MunicipalFederal-Provincial Relations in Canada, ed. Robert Young and Christian Leuprecht, 181–97 (Montreal and Kingston: McGill-Queen’s University Press, 2006). See also David Siegel and C. Richard Tindal, “Changing the Municipal Culture: From Comfortable Subordination to Assertive Maturity,” part 1, Municipal World (March 2006): 37–40; part 2, Municipal World (April 2006): 13–17. Joseph Garcea and Edward C. LeSage Jr, “Municipal Reform Agendas and Initiatives: Analytical Framework and Overview,” in Municipal Reform in Canada: Reconfiguration, Re-empowerment, and Rebalancing, ed. Joseph Garcea and Edward C. LeSage Jr, 3–22 (Don Mills, on: Oxford University Press, 2005). Patrick J. Smith and Kennedy Stewart, “Local Government Reform in British Columbia, 1991–2005: One Oar in the Water,” in Municipal Reform in Canada: Reconfiguration, Re-empowerment, and Rebalancing, ed. Joseph Garcea and Edward C. LeSage Jr, 25–56 (Don Mills, on: Oxford University Press, 2005). Ontario, Municipal Act, Section 2.c, in Statutes of Ontario 2001, ch. 25. Smith and Stewart, “Local Government Reform,” 38–46; Christopher Leo and Mark Piel, “Municipal Reform in Manitoba: Homogenizing, Empowering, and Marketing Municipal Government,” in Municipal Reform in Canada: Reconfiguration, Reempowerment, and Rebalancing, ed. Joseph Garcea and Edward C. LeSage Jr, 106–26 (Don Mills, on: Oxford University Press, 2005). Leo and Piel, “Municipal Reform in Manitoba.” Ontario, Stronger City of Toronto for a Stronger Ontario Act, Schedule A, Preamble, in Statutes of Ontario 2006, ch. 11. The title of the Act indicates a major change in the orientation of the provincial government toward its major metropolis. Ibid., Section 115.16. Garcea and LeSage, “Municipal Reform Agendas,” 16–17. Canada, Supreme Court of Canada, Nanaimo (City) v. Rascal Trucking Ltd., 2000 scc 13 [2000] 1 scr 342. See also 114957 Canada Ltée (Spraytech, Société d’arrosage) v. Hudson (Town), 2001 ssc 40 [2001] 2 scr 241, upholding the power of a

132

40 41

42

43

44

45 46 47 48

49

50

51

52

Robert Young

municipality to regulate for health purposes. The courts, however, have not taken an expansive view of municipal revenue-raising powers; instead, they have protected provincial control over direct taxation and have required that user fees fairly reflect the cost of the service provided. Statistics Canada, source as in note 9; and http://www40.statcan.ca/l01/cst01/ govt34a.htm (viewed 15 May 2008). Canada, Statistics Canada, E-Stat Online Database, table 282–0012, http://www. statcan.gc.ca/estat/estat-eng.htm (viewed 26 June 2007); and http://www40. statcan.ca/l01/cst01/govt54a.htm (viewed 26 June 2007). Andrew Sancton, “Introduction,” in Foundations of Governance: Municipal Government in Canada’s Provinces, ed. Andrew Sancton and Robert Young (Toronto: University of Toronto Press, forthcoming). See British Columbia, Ministry of Municipal Affairs, “Public Private Partnership: A Guide for Local Government,” May 1999, http://www.cserv.gov.bc.ca/lgd/ policy_research/library/public_private_partnerships.pdf (viewed 26 June 2007). See Pierre J. Hamel, Public-Private Partnerships (P3s) and Municipalities: Beyond Principles, a Brief Overview of Practices, study commissioned by the Federation of Canadian Municipalities (Montreal: INRS-UCS, 2007). Sancton, “Metropolitan and Regional Governance,” 60. Tindal and Tindal, Local Government in Canada, 277–84. Nova Scotia, Municipal Government Act, in Statutes of Nova Scotia, 1998, ch. 18. Federation of Canadian Municipalities, Big City Mayors’ Caucus, “Our Cities, Our Future: Addressing the Fiscal Imbalance in Canada’s Cities Today,” June 2006, http://www.fcm.ca/english/documents/bcmcfinal.pdf (viewed 27 June 2007). See also Harry M. Kitchen and Enid Slack, “Special Study: New Finance Options for Municipal Governments,” Canadian Tax Journal 51, no. 6 (June 2003): 2215–75. An exception to this pattern is Manitoba, where 4.15% of the personal and corporate income-tax revenue is distributed to municipalities. Statistics Canada, CanSim II, tables 385–0024 and 385–0004, http://cansim2. statcan.ca/cgi-win/cnsmcgi.exe?LANG=E&RegTkt=&C2Sub=&C2DB=PRD& ROOTDIR=CII/&LangFldr=&ResultTemplate=CII/CII_FLst&CIITables=3059 (viewed 27 June 2007). Ibid., tables 385–0001, 051–0001, 379–0017, and 379–0020, http://cansim2. statcan.ca/cgi-win/cnsmcgi.exe?CANSIMFile=CII/CII_1_E.HTM&RootDir=CII/ &LANG=E (viewed 27 June 2007). Canada, Council of the Federation, Advisory Panel on Fiscal Imbalance, “Reconciling the Irreconcilable: Addressing Canada’s Fiscal Imbalance,” March 2006, http://www.councilofthefederation.ca/keyinitiatives/AdvisoryPanel.html (viewed 27 June 2007). Federation of Canadian Municipalities, “Building Prosperity from the Ground Up: Restoring Municipal Fiscal Balance,” June 2006, http://www.canadascities.ca/ pdf/2006_FCM_Building_Prosperity_from_the_Ground_Up.pdf (viewed 27 June 2007).

Canada

133

53 Richard M. Bird and Duan-jie Chen, “Federal Finance and Fiscal Federalism: The Two Worlds of Canadian Public Finance,” Canadian Public Administration 41, no. 1 (Spring 1998): 51–74. 54 Jack M. Mintz and Tom Roberts, “Running on Empty: A Proposal to Improve City Finances,” C.D. Howe Institute Commentary, no. 226 (February 2006): 1–36. 55 Government of Ontario, Ontario Regulation 403/02, under the Municipal Act 2001, made 18 December 2002, http://www.e-laws.gov.on.ca/DBLaws/Source/ Regs/English/2002/R02403_e.htm (viewed 27 June 2007). 56 See, for example, Canada, Infrastructure Canada, Canada-New Brunswick, “Agreement on the Transfer of Federal Gas Tax Revenues under the New Deal for Cities and Communities 2005–2015,” 25 November 2005, http://www.infrastructure. gc.ca/communities-collectivites/agreements-ententes/gas-essence_tax/gt_can_ nb_e.shtml (viewed 27 June 2007); Canada, Western Economic Diversification Canada, “Canada-Manitoba-Winnipeg Agreement for Community and Economic Development,” 20 May 2004, http://www.wd.gc.ca/ced/urban/agreements/ may2004/default_e.asp (viewed 27 June 2007). 57 Government of Saskatchewan, Saskatchewan Municipal Board, “Annual Report 2004,” n.d., 4, http://www.smb.gov.sk.ca/documents/ar_2004.pdf (viewed 27 June 2007). 58 John Intini, “That’s enough arguing: You’re all out of here,” Maclean’s, 5 March 2007, 33. 59 Pierre J. Hamel et al., “Les administrations municipales au Québec: Organisation, fonctionnement et tendances,” in Foundations of Governance: Municipal Government in Canada’s Provinces, ed. Andrew Sancton and Robert Young (Toronto: University of Toronto Press, forthcoming); David Siegel, “Ontario: A Province in Steady Transition,” in Foundations of Governance: Municipal Government in Canada’s Provinces, ed. Andrew Sancton and Robert Young (Toronto: University of Toronto Press, forthcoming). See also Andrew Sancton, “Reducing Costs by Consolidating Municipalities: New Brunswick, Nova Scotia, Ontario,” Canadian Public Administration 39, no. 3 (Autumn 1996): 267–89; and Andrew Sancton, Merger Mania: The Assault on Local Government (Montreal and Kingston: McGill-Queen’s University Press, 2000). 60 Katherine A. Graham and Susan D. Phillips, “‘Who Does What’ in Ontario: The Process of Provincial-Municipal Disentanglement,” Canadian Public Administration 41, no. 2 (Summer 1998): 175–209. 61 Tindal and Tindal, Local Government in Canada, 109. 62 See Government of Ontario, Ministry of Public Infrastructure Renewal, Places to Grow: Growth Plan for the Greater Golden Horseshoe (Toronto: Queen’s Printer for Ontario, 2006); and information at http://www.pir.gov.on.ca/english/growth/ contact.htm (viewed 27 June 2007). 63 Ville de Montréal et Gouvernement du Québec, “Contrat de Ville de Montréal, 2003–2007,” 2003, http://www2.ville.montreal.qc.ca/ocpm/pdf/PD05/3j.pdf (viewed 26 June 2007). 64 Siegel, “Recent Changes,” 191.

134

Robert Young

65 In Ontario the responsible department is the Ministry of Municipal Affairs and Housing; in British Columbia it is Community Services (Local Government Department); in Nova Scotia it is Service Nova Scotia and Municipal Relations; in Manitoba it is Intergovernmental Affairs (Municipal Finance and Advisory Services); in Nunavut it is Department of Community and Government Services; and so on. 66 See the two documents at http://www.civicnet.bc.ca/siteengine/ActivePage.asp? PageID=208 (viewed 27 June 2007). 67 This is arranged by the Ministry of Municipal Affairs and Housing; see http:// www.mah.gov.on.ca/Page4760.aspx (viewed 27 June 2007). 68 David L.A. Gordon, “Ottawa-Hull and Canberra: Implementation of Capital City Plans,” Canadian Journal of Urban Research 11, no. 2 (Winter 2002): 179–211. 69 Robert Young, “The Politics of Paying for Cities in Canada,” in Paying for Cities: The Search for Sustainable Municipal Revenues, ed. Paul Boothe, 83–97 (Edmonton: Institute for Public Economics, 2003). Demands for funding and federal assistance also surfaced in the late 1800s, the 1930s, and the 1960s. 70 Toronto-Dominion (td) Bank Financial Group, A Choice between Investing in Canada’s Cities or Disinvesting in Canada’s Future, td Economics Special Report, 22 April 2002; Toronto City Summit Alliance, Enough Talk: An Action Plan for the Toronto Region, April 2003; Conference Board of Canada, Mission Possible: Successful Canadian Cities, The Canada Project, Final Report, vol. 3, February 2007. 71 Loleen Berdahl, “The Federal Urban Role and Federal-Municipal Relations,” in Canada: The State of the Federation 2004: Municipal-Federal-Provincial Relations in Canada, ed. Robert Young and Christian Leuprecht, 25–43 (Montreal and Kingston: McGill-Queen’s University Press, 2006). 72 Paul Martin, “Address by Prime Minister Paul Martin to the Conference of the Federation of Canadian Municipalities,” St John’s, Newfoundland and Labrador, 5 June 2005. 73 Neil Bradford, Whither the Federal Urban Agenda? A New Deal in Transition, Canadian Policy Research Networks, Family Network, Research Report F/65, February 2007. 74 For a detailed study of the Vancouver Agreement, see Michael Mason, “Collaborative Partnerships for Urban Development: A Study of the Vancouver Agreement,” working paper, Department of Geography and Environment, London School of Economics and Political Science, London, uk, http://eprints.lse.ac.uk/692 (viewed 27 June 2007). New agreements, smaller in scope, were signed with the Province of Saskatchewan and the cities of Regina and Saskatoon in 2005. 75 Lionel D. Feldman and Katherine A. Graham, Bargaining for Cities (Montreal: Institute for Research on Public Policy, 1979). 76 Robert Young, “Open Federalism and Canadian Municipalities,” in Open Federalism: Interpretations, Significance, by Keith G. Banting et al., 7–24 (Kingston: Institute of Intergovernmental Relations, 2006). 77 Neil Bradford, Place-Based Public Policy: Towards a New Urban and Community Agenda for Canada, Canadian Policy Research Networks, Family Network, Research Report F/51, March 2005.

Canada

135

78 Quebec, An Act Respecting the Ministère du Conseil Exécutif, Section 3.11, in Revised Statutes of Québec (Quebec: Éditeur Officiel, 2002), ch. M-30. 79 Montréal International, “Partner in Greater Montréal’s Prosperity – Report of Activities 2006,” http://www.montrealinternational.com/docs/2007/ Rapport2006En.pdf (viewed 27 June 2007). 80 This is based on Garcea and Pontikes, “Federal-Municipal-Provincial Relations in Saskatchwan.” These authors also provide a useful (and unique) compendium of collaborative programs and projects in Saskatchewan. 81 Christopher Leo, “Deep Federalism: Respecting Community Difference in National Policy,” Canadian Journal of Political Science 36, no. 2 (September 2006): 481–506. 82 Thomas J. Courchene, “Global Futures for Canada’s Global Cities,” Institute for Research on Public Policy, Policy Matters 8, no. 2 (June 2007). 83 Tindal and Tindal, Local Government in Canada, 315–31. 84 In the 2007 House of Commons, 39% of the 306 sitting members had experience in local government, usually as councillors and mayors but sometimes as members of school boards; see http://www2.parl.gc.ca/Parlinfo/Lists/ParliamentarianAge. aspx?Menu=HOC-Bio&Chamber= 03d93c58–f843–49b3–9653–84275c23f3fb (viewed 27 June 2007). 85 See Elisabeth Gidengil and Richard Vengroff, “Representational Gains of Canadian Women or Token Growth? The Case of Quebec’s Municipal Politics,” Canadian Journal of Political Science 30, no. 3 (September 1997): 513–37. 86 The FCM estimates that women make up 21.7% of all municipal councillors, just slightly higher than their proportion in the current House of Commons. See fcm, “Women in Municipal Politics,” http://www.fcm.ca/english/policy/big.pdf (viewed 27 June 2007); and for information on the fcm campaign, see http:// www.fcm.ca/english/policy/women.html (viewed 27 June 2007). 87 Michael Pal and Sujit Choudhry, “Is Every Ballot Equal? Visible-Minority Vote Dilution in Canada,” irpp Choices 13, no. 1 (January 2007). 88 Courchene, “Global Futures,” 33. 89 Kari Roberts and Roger Gibbins, “Apples and Oranges? Urban Size and the Municipal-Provincial Partnership,” discussion paper, Canada West Foundation, October 2005. 90 Thomas J. Courchene, “Hourglass Federalism – How the Feds Got the Provinces to Run Out of Money in a Decade of Liberal Budgets,” Policy Options 25, no. 4 (April 2004): 12–17.

Federal Republic of Germany martin burgi

Overall, and despite several difficulties, local authorities have a comparatively strong legal and political standing within the German federal system due to their constitutionally enshrined right to self-government and to their significant administrative role.1 Nonetheless, they have no direct and constitutionally recognized role in respect of federal legislation, although they have to implement most of it. Moreover, the increasing extent of socalled “delegated duties” has left local authorities with little to no budget room for actual self-government.2 Recent reforms of the federal system have aimed at improving at least their financial situation. The constitutional order of the Federal Republic of Germany is defined by the Basic Law (bl), which came into force in 1949. The federation established after the German reunification in 1990 consists of sixteen states (Länder), each of which has its own constitution, parliament, and government. Local authorities are considered a constituent part of the Länder; thus, in legal terms, they are not a separate order of government in the federal system.3 Local authorities and their right to self-government are constitutionally recognized in principle in Article 28(2) bl. However, local autonomy is granted only “within the laws”; therefore, it is subject to limitations by federal and Land legislation. Furthermore, as local authorities are considered a constituent part of the Länder, they possess a hybrid character;4 they serve not only as self-governing units but also, depending on the issue at hand, as the most subsidiary unit of Land administration. In this capacity, they are used to implement federal and Land legislation. In fact, most administrative tasks and services with direct implications for citizens are administered by local authorities. This sphere of delegated responsibilities (delegated sphere) has grown continuously over the years. However, as administrative duties have increased, local government resources have become strained. In particular, with the expansion of the welfare state, local governments

138

Martin Burgi

have had to assume increasing responsibilities for providing (costly) social welfare services, leaving fewer assets for actual self-government. Not surprisingly, finance is one of the top issues for local governments.

politic al and socio-economic background With a territory of 357,021 square kilometres and a population of about 82.5 million people, Germany is the largest and, with roughly 231 inhabitants per square kilometre, also one of the most densely populated countries in Europe.5 In economic terms, Germany is the largest country in the European Union (eu) and the third largest in the world. Its gross domestic product (gdp) in 2006 amounted to €2,307 billion (US$2,958 billion), and the gdp per capita was €28,153 (US$36,103).6 Nevertheless, Germany’s debt burden in 2005 totalled €1,447,505 billion (US$1,447,505 billion),7 and unemployment rates have been very high for years. However, the annual gdp growth rate rose from 0.9% in 2005 to 2.7% in 2006,8 and prospects for 2007 were equally good. Furthermore, unemployment rates (among those aged twenty and over) declined from 12.9% in April 2006 to 10.6% in April 2007, although they still remain at very high levels, particularly in eastern Germany, with an average of roughly 18%. Compared to some other European countries, Germany’s population is fairly homogeneous in cultural and linguistic terms.9 Historically, there have been only a few ethnic minorities (e.g., Danes in northern Germany, Frisians in the Northwest, and Sorbs in the East).10 Due to immigration from other eu countries and, to a greater extent, from countries outside the European Union, this population make-up has changed slightly. Today, some 90% of the people are ethnic Germans, whereas 7.3 million people come from foreign countries. About 53 million people profess to be Christian (26 million Protestants, 26 million Catholics, and roughly 900,000 who belong to Orthodox churches), and there are around 3.3 million Muslims, mostly of Turkish origin (1.8 million), 230,000 Buddhists, and 90,000 Hindus.11 Largely on account of immigration from the former Soviet Union, the Jewish community has grown again in recent years; today, it amounts to roughly 108,000 people. However, this is still only about one-fifth of the German Jewish population before the Holocaust. The political system established under the Basic Law has proven very stable. Two parties, the Christian Democrats (cdu/csu) and the Social Democrats (spd), usually each win between 30% and 45% of the total number of votes, whereas two smaller parties, the Liberal Free Democrats (fdp) and the Greens (Bündnis 90/Grüne), each attract between 5% and 10% of all voters.12 The cdu/csu and the spd have alternated in power in the federal arena as well as in the Länder. Apart from some local or Land elections, where they at times have won an absolute majority, both major parties usually

Federal Republic of Germany

139

depend on a smaller party as a coalition partner. Following reunification in 1990, the Party of Democratic Socialism (pds) emerged as a new leftist party, which had evolved from the Socialist Union Party (sed), the ruling communist party of the former German Democratic Republic; it continues to attract around 20% of voters in the East German Länder and is equally strong in local elections. Just recently, the pds merged with the newly established Electoral Alternative for Labor and Social Justice (wasg) in the hope of forming a far-leftist party (Die Linke) with nationwide appeal. Their success in the last federal election in 2005 (8.7% of the votes) was one of the main reasons for the cdu/csu and the spd to form, for only the second time, a so-called “grand coalition” in the federal arena.

h i s t o r y, s t r u c t u r e s , and institutions of local government Historically, the German concept of local (self-)government looks back on a long tradition, although the standing of local authorities has continuously improved, particularly over the past 200 years. Cities emerged as an important political, cultural, and economic force as early as the Middle Ages, at times forming powerful alliances and leagues; the historically unparalleled Hansa (with more than ninety member cities and towns) and the League of Rheinish Towns (comprising more than seventy member cities) are prominent examples from this period. With industrialization rapidly gaining pace over the course of the nineteenth century, people migrated in large numbers to urban areas, which led to a dramatic increase in the urban population over just a few decades. Following the French Revolution and Napoleon’s defeat of Prussia, liberal ideas increasingly gained ground. In 1808 the reform-minded Prussian secretary of state, Baron vom und zum Stein, introduced local self-government into the Prussian Municipal Code in an effort to increase popular participation in public administration and thereby reduce the distance between the state and citizens. Henceforth, municipalities could run their affairs in their own name and on their own responsibility. An elected municipal council (Stadtverordnetenversammlung) would make the decisions and elect a collective body of magistrates (Magistrat) to implement them; state authorities, however, remained in charge of policing but could also delegate this responsibility to the magistrates. Thus was introduced, for the first time, the division of duties between state and local authorities, which remains a distinctive feature of German local governance to this day.13 However, local governance reached its strongest legal and political standing with the coming into force of the Basic Law in 1949. The current, constitutionally entrenched status of local governments was a direct reaction to Nazi rule, which had abolished Länder and local self-governance as

140

Martin Burgi

early as 1933 (through a process termed Gleichschaltung) to gain control of all public authority and keep it in line with party directives. After the end of the Second World War, federalism was re-established and so was local (self-)governance. Apart from historical tradition, it was the experiences under Nazi rule that made a decentralized federal state most appealing. The Allied Forces built the Federal Republic of Germany from the bottom up by re-establishing the Länder first. Even before that, however, it was local communities, with the assistance of the Allied Forces and under their supervision, that started to rebuild Germany. In the Soviet zone of occupation, which in 1949 became the German Democratic Republic (gdr), local elections were held in 1946. However, election results for the communist party, the sed, did not meet the expectations of the Soviet occupying force. As a result, local self-government was deemed to be in conflict with communist party rule and thus was eclipsed effectively over time, although it still existed on paper. A new municipal code was introduced in 1957, which adhered to the principle of “democratic centralism.” Similarly to the situation under Nazi rule, local authorities were formally diminished to mere executive bodies that had to fall in line with sed directives. After the German reunification in 1990, local self-governance was reintroduced in the “new” East German Länder using the municipal codes of West German Länder as a blueprint. In Germany local government is administered through counties and municipalities. No areas fall directly under federal or Land rule; the entire country is subject to local government. However, as jurisdiction over the organizational powers of local authorities lies with each of the sixteen Länder, “local government” may come in different shapes; this is particularly true for its internal organization but may equally be said of its precise powers and responsibilities. Nevertheless, some general trends may be discerned. Large municipalities with more than 100,000 citizens are usually assigned the status of “independent city” (i.e., “county-free”).14 Because of their size, these municipalities can offer public services through the city administration as a single unit. In rural areas, by contrast, public services are provided by counties as well as by their constituent (smaller) municipalities. Again, the precise division of duties between counties and their municipalities is laid down in Land statutes and may therefore vary. As a general rule, the division of responsibilities depends on the capacities of the individual local unit; for reasons of administrative efficiency, counties will regularly assume the execution of duties that cannot be handled effectively by their constituent municipalities. For instance, hospitals will usually be run by the county, whereas administrative duties, such as residential citizen registration, may remain with the constituent municipalities. Very small municipalities have become rare as repeated territorial reforms have redrawn municipal boundaries and amalgamated these communities

Federal Republic of Germany

141

with adjacent (larger) municipalities (through a process termed Eingemeindungen) in an effort to increase the administrative capacities of individual local units. From a functional perspective, counties could be described as the rural-area equivalent to independent cities. Overall, there are roughly 12,241 municipalities, only 116 of which are “county-free” independent cities, whereas the overwhelming majority are constituent municipalities of the 313 counties: 39.9% of municipalities (representing only 2.9% of the overall population) have fewer than 1,000 inhabitants, and roughly 12% of municipalities (representing 42.1% of the overall population) have between 10,000 and 100,000 citizens; only 0.3% of municipalities have 200,000 to 500,000 or more citizens (representing 23.3% of the population).15 The concept of local self-governance, as enshrined in Article 28(2) bl (see further below), implies the general competence of local authorities to attend to all affairs of importance to the local community (so-called Allzuständigkeit, or general competence). This means that, in principle, local authorities may (and are supposed to) attend to all issues of local importance (see below). As this concept of Allzuständigkeit is a main characteristic of local governments,16 there is no such thing as “single-purpose” local governance. Nonetheless, local authorities may, of course, agree among themselves to join forces and create joint administrative units to serve just one purpose, in what is called interkommunale Zusammenarbeit. For instance, they may, having regard to capacity and cost effectiveness, share their resources and establish a joint administrative body to take care of sewage and/or waste disposal. Such joint administration is particularly common between smaller communities but is equally practised within larger conurbations, as well as between counties and independent cities. However, it is important to emphasize that such joint administrative units have no right to self-government because only their constituent members are considered “local government” in the constitutional sense; only they enjoy local autonomy. As regards metropolitan regions, one has to distinguish Berlin, Hamburg, and Bremen, which are historical peculiarities because they have always been recognized as Länder. However, all three city-states possess institutions and administrative structures that are somewhat similar to those of municipalities. Berlin, for instance, possesses the institutions of mayor and senate, which constitute the Land executive, and the so-called house of representatives (Abgeordnetenhaus), which is the Land parliament. However, due to Berlin’s double nature as a city-state, the mayor, senate, and the house of representatives equally serve as “local government”; in fact, there is no separate level of local government apart from the said institutions because Berlin’s famous districts (Bezirke) are mere subdivisions of the main city-state administration and have no legal personality of their own.17 Due to their double nature, city-states may, at times, serve

142

Martin Burgi

as important mediators in political debates between local governments and the Länder. Apart from city-states, one can distinguish further metropolitan regions or conurbations with structures of regional administration (e.g., agglomeration Frankfurt/Main and the Ruhr region),18 although they are quite diverse and heterogeneous.19 In some cases, new administrative entities have been established to cope more effectively with specific problems arising from the relationship between large cities and their surrounding areas (e.g., Verband Region Stuttgart and Region Hanover).20 In North RhineWestphalia, and to some extent in Lower-Saxony, one finds so-called höhere Kommunalverbände (i.e., higher level associations of municipalities), which are regional government institutions on top of the local governments (in North Rhine-Westphalia they are called Landschaftsverbände).21 These associations are created as public corporations formed by their member cities to fulfil local public tasks; their roots go back to the nineteenth century, and they are nowadays mostly charged with responsibilities of a social and cultural nature, such as youth and disabled welfare or museum maintenance. A further example of a newly created strong city-region governmental arrangement is the so-called Regionalverband Ruhr; it is also a public corporation formed by the cities and counties of the Ruhr region.22 Although its current competences are limited mainly to planning, business development, and public relations, it might, nonetheless, represent an “institutional nucleus” for an unconventional model of regional administration for a metropolitan region. The Regionalverband Ruhr is promoted (in typically German fashion) “top-down” as a result of governmental initiative, in contrast to privately initiated institutions, such as the Initiativkreis Ruhrgebiet, which is a voluntary association of major (mostly private) business enterprises of the region aiming to promote the region’s image by supporting ventures of symbolic value, such as the European City of Culture 2010 project. On the one hand, this arrangement produces some advantages for local government, particularly because for most major business enterprises the maxim “think global, act local (regional)” applies, whereas the position of state and local authorities is rather to “think regional, act regional, and promote acting globally.” Furthermore, institutions such as the Regionalverband Ruhr represent a model of how to create a strong shared public governmental institution and might give impetus to the further creation of such shared public service agencies with possibly broader competences. On the other hand, such entities face considerable reservations on the part of municipalities and counties. Such political reservations against a large-scale institution are always made by those institutions that will be terminated as a result of the establishment of the new institution and are subject to interorganizational jealousies. Additionally, the concern has been raised that the establishment of such “mixed

Federal Republic of Germany

143

administration” leads to problems of legitimacy, transparency, and above all, accountability. Another point made is the danger of weakening the power of the local authorities, as well as local civil-society projects. However, the competences of these regional entities are still few, and their legal status remains mostly unclear. Legally, as well as politically, large cities and counties, therefore, continue to play the predominant role within those regional areas.

constitutional recognition of local self-government As has been mentioned, the right of local authorities to self-government is constitutionally enshrined in Article 28(2) bl. Further reference to local governments is made in Articles 105(5) and 106(6) (regarding tax-raising powers and apportionment of revenues) and in Article 115c(3) bl (concerning the extension of the federation’s legislative powers during a state of defence). However, these additional provisions only supplement the principle that is basically set forth in Article 28(2) bl. The latter is mostly self-explanatory and reads in full: Within the limits prescribed by law, municipalities shall be guaranteed the right to regulate all local affairs on their own responsibility. Within the limits of their responsibilities as defined by law, associations of municipalities shall equally have the right of self-government according to the laws. The guarantee of self-government shall include the basis of financial autonomy; it shall comprise the right of municipalities to a source of tax revenues that corresponds with their economic ability and the right to fix the rates at which these sources shall be taxed.

Provisions similar to those of Article 28(2) bl are also contained in the constitutions of the sixteen Länder, thus reinforcing the constitutional recognition of local authorities and their right to self-government. This legal and constitutionally enshrined status is primarily the same for all municipalities regardless of their size and socio-economic importance, although larger municipalities (especially independent cities and conurbations) will, without doubt, regularly have more political influence. Even Berlin, despite being the capital of the Federal Republic of Germany, enjoys no particular constitutional status apart from its Land status, which is not in any way connected to its function as the capital city and is no different from the status of Hamburg or Bremen. By contrast, the constitutional standing of counties is somewhat weaker; above all, the reason for this is that, in view of the self-government competences of their constituent municipalities, they may not attend to all affairs of local importance but are granted the right to self-government only “within the limits of their responsibilities as defined by law.”23

144

Martin Burgi

It is important to stress that Article 28(2) bl, as well as the corresponding Land constitutional provisions, grant local autonomy only as an institutional guarantee, not as a basic right.24 This means that local autonomy is guaranteed (only) in principle, while its precise scope is subject to legislative modelling and, therefore, cannot be deduced directly from the Basic Law. Local self-government exists only “within the laws.” Thus the federal and Land lawmakers define the precise extent and limitations of local selfgovernment; metaphorically speaking, they are (at the same time) “friend and foe” regarding local autonomy. As has been mentioned, the German concept of local self-governance, as entrenched in Article 28(2) bl, implies that local authorities have the general competence to regulate all affairs of importance to the local community (a concept termed Allzuständigkeit). This fundamentally means that, in principle, local authorities may (and are supposed to) attend to all issues of local importance. They may, for instance, run public libraries, museums, theatres, opera houses, or concert halls but may equally provide airport facilities, energy/water supply, and waste/sewage disposal, as well as run hospitals, kindergarten facilities, or homes for the elderly. Of course, these vast competences do not go unchecked; local authorities may engage in such activities only within their financial capacity, and in all their activities, local authorities must observe the laws and limitations set by the federal and Land parliaments. However, contrary to the Anglo-Saxon concept of ultra vires,25 the concept of Allzuständigkeit means that local authorities do not act illegally if they take measures in areas that do not belong to the powers explicitly transferred to them by legislation. Local authorities require a legal basis only for those measures that regulate and restrict the rights and freedoms of individuals (Eingriffe in Eigentum und Freiheit); in all other cases, in view of their general competence, they need not be empowered specifically to take action locally.26 In practice, the sheer volume of (sometimes very detailed) federal and Land statutes has considerably limited local autonomy and, at times, made it questionable. It should be mentioned, too, that many of these restrictions on local autonomy originate from eu legislation, which plays a major role in many local government activities (e.g., local planning and public procurement). As a result, the promise of far-reaching powers, which the concept of Allzuständigkeit might imply, is at times described as a “mere fiction” in light of factual developments.27 However, as local autonomy is constitutionally guaranteed in principle, Article 28(2) bl protects local authorities against excessive or immoderate restrictions of local autonomy and preserves a “core sphere” (Kernbereich) of responsibilities that must remain with local communities (i.e., finances, local planning, personnel matters, organizational autonomy, and the freedom to engage in joint administration with neighbouring communities). In addition, Article 28(2) bl protects local authorities to

Federal Republic of Germany

145

some extent against the revocation of responsibilities they have hitherto assumed (Aufgabenentzug). As the Basic Law adheres to a principle of decentralized allocation of powers, such revocation of responsibilities in order to reallocate them to a higher (more centralized) administrative level (Hochzonung) must be justified by an overriding public interest. As a result, only very substantial gains in cost efficiency, for instance, may justify the removal of responsibilities from local communities. Where federal or Land statutes have infringed upon the constitutional guarantee, local authorities may invoke their right to self-government before the Federal Constitutional Court (Bundesverfassungsgericht) or the respective constitutional courts of the Länder and seek the annulment of these statutes in a proceeding called Kommunalverfassungsbeschwerde. This proceeding is in some ways similar to the Verfassungsbeschwerde, the process for hearing the constitutional complaints of individuals, who may invoke their basic rights before the Federal Constitutional Court. The essential motives for the constitutional recognition of local selfgovernment have been to enable bottom-up democracy through the participation of citizens and thus enhance the freedoms and liberties of individuals. The very notion of “self-governance”28 implies that citizens may participate in public administration and attend to the affairs and issues that are relevant to their lives and directly affect them; it equally implies that citizens enjoy some degree of autonomy as to “whether” and/or “how” they want to attend to those affairs. Self-governance typically increases efficiency, as it brings administration within increased proximity to the people and the issues it has to address. It also allows for more self-determination and, hence, promotes individual freedom and democracy. The Federal Constitutional Court has aptly stated that “the very nature and intention of local selfgovernment is to activate people to get involved with their affairs.”29 It is broadly perceived by the general public as well as scholars that these main purposes behind the constitutional recognition of local self-government (i.e., more democracy, more individual freedom, and more effectiveness) are largely being attained. Local governments are generally deemed to be more in touch with local issues, less politicized, and more effective. These benefits from administration through local governments have remained undisputed ever since the Basic Law was enacted in 1949, and they are broadly acknowledged across all political parties. Furthermore, as part of recent administrative reforms, most Länder have transferred additional responsibilities to local authorities (through a process termed Kommunalisierung, or municipalization). As has been mentioned, local authorities not only serve as self-governing units but are also used to implement federal and Land legislation. In this capacity, they greatly relieve federal and Land administrations. In most cases where additional responsibilities have been transferred to local authorities, this has been done with explicit reference to their more efficient and more costeffective performance of administrative tasks.30

146

Martin Burgi

Although mayors and county administrators are democratically elected, along with their respective councils, genuine legislative powers are vested only in the parliaments of the federation and of the Länder. Local authorities, by contrast, are primarily considered to be executive; thus their legislative powers are relatively weak. However, as the notion of “self-governance” implies, they are not merely executing legal provisions but may also determine such provisions and regulate local affairs in a meaningful manner. They mainly do so through so-called Satzungen, or municipal bylaws.31 Such bylaws, however, have to observe the legal delimitations defined by federal and Land laws. Furthermore, if such bylaws are to restrict the rights of citizens or enterprises, they need – according to the rulings of the Federal Constitutional Court – a legal basis in federal or Land statutes.32 In conclusion, it is worth stressing that a very substantial number of administrative tasks with direct implications for citizens are carried out by local authorities, a tendency that is increasing. This may be illustrated clearly by the fact that roughly 1,277,795 civil servants work for local governments (compared to 481,372 federal and 2,076,852 Land employees), which is equal to about 33% of all civil servants.33 Moreover, local government spending usually amounts to about 15% of overall government spending. Taking into account that local governments are not responsible for military expenditure, pensions, and health insurance, these figures are even more impressive; in fact, leaving social insurance aside, local government spending makes up roughly 28.6% of overall government spending.34 At the same time, however, local autonomy is increasingly limited by federal and Land statutes as well as by EU legislation. Nevertheless, local authorities have, due to their constitutionally enshrined right to self-government and their significant administrative role, a comparatively strong legal and political standing within the federal system. In fact, this finding is underlined by international studies of political scientists that attest to the fact that local authorities in Germany have “the highest” degree of autonomy and achieve the best level of effective performance.35

governance role of local authorities The German concept of local self-governance, which is directly inferred from Article 28(2) BL, implies that local authorities have, within the limits of the law, the general competence to attend to all affairs of importance to the local community (the concept of Allzuständigkeit) and do not need to be empowered specifically by federal or Land legislation to take action locally. As has been pointed out, this constitutional “starting point” is basically the same for all municipalities, regardless of their size. However, a substantial part of local administration stems from the delegated sphere and thus has the quality of “state nature.” As has been

Federal Republic of Germany

147

explained, local authorities possess a hybrid character. Not only do they serve as self-governing units, but they also implement federal and Land legislation. In this capacity, they act as the most subsidiary unit of a decentralized Land administration.36 As local authorities may provide public administration at the greatest proximity to the citizens concerned, it is broadly held in most Länder that local authorities generally perform more efficiently and more cost effectively than superior Land authorities. As far as delegated duties are concerned, the extent of assigned powers and responsibilities largely depends on the size and capacity of the individual local unit and is laid down in Land statutes; from this background, the distinction is derived between independent (“county-free”) cities, on the one hand, and counties and their constituent municipalities, on the other. In addition, considering local autonomy, two kinds of delegated duties have to be distinguished: some delegated duties leave no autonomy to local authorities (so-called Pflichtaufgaben nach Weisung), whereas in other cases, local authorities are assigned autonomy as to how they perform the delegated duties (so-called Pflichtaufgaben ohne Weisung). For instance, they are obliged to organize waste or sewage disposal but are left with a certain degree of discretion to determine the most expedient way to do so. Depending on the degree of assigned autonomy, local authorities are subject either to more or to less detailed orders from Land authorities (see further below). In terms of their organizational structure, local governments consist of an elected executive body (i.e., the mayor or county administrator) and an elected collective body (council). It should be stressed that this organizational structure is exactly the same in small municipalities as in large cities such as Frankfurt and Munich. Whereas mayors (and county administrators) are full-time officials and get a salary that depends on the size of the local community,37 councillors are only part-time officials who receive some financial compensation for their time and effort.38 In some Länder mayors were previously elected by the municipal councils. However, in an effort to boost citizen participation and to increase the democratic legitimacy of mayors, municipal councils and mayors are nowadays elected directly by the people in all major Länder; by contrast, county administrators are sometimes still elected by the county council. In general, the fact that mayors are elected directly by the citizens has made them more independent of municipal councils and has increased their political influence; usually, their direct election has led to a more local agenda less influenced by party politics.39 In recent years, the implementation of reforms has occasioned some further reallocations of power.40 In particular, with the expansion of the welfare state, the extent of delegated duties (delegated sphere) has grown continuously; as a result, the finances of local governments have become

148

Martin Burgi

more and more strained. These financial strains have forced local authorities to reassess their activities and to focus on their core business. Partly following international models of “lean government” and New Public Management, there has been a shift from the concept of a “providing state” to a more “enabling state.” Particularly with regard to such activities as water and energy supplies as well as waste and sewage disposal, which are characterized by the provision of services (as opposed to those administrative tasks that regulate and restrict the rights and freedoms of individuals), there has been a tendency toward privatization. Apart from that, and as a result of what in Germany is called Neues Steuerungsmodell (a variant of New Public Management),41 a shift in the perception of public administration has taken place; that is, administrative tasks and services are now perceived as “products” and are assessed more rigorously with regard to their cost impact. Thus, although the objectives of public administration have remained the same (i.e., serving the public interest instead of maximizing profits), public administration has been likened somewhat to running a private business. In addition, increased output orientation has introduced more self-responsibility in budgetary and other matters. Overall, as a result of these developments and due to the outsourcing and privatization of activities, the executive powers of mayors (and county administrators) have generally expanded. However, if deemed necessary, councils may still intervene. Moreover, most Länder have enhanced the possibilities for residents to influence decisions directly through local polls and referendums (Bürgerbegehren and Bürgerentscheid). In a number of cases, these forms of citizen participation have been initiated to oppose privatization. In some cases, cities and municipalities have also reversed the privatization of activities without such initiatives, contrary to the overall trend. Electoral rights (i.e., the rights to vote and to run in local elections) extend to all people of German nationality and are equally enjoyed by nationals from other eu member states if they have had local residency over some period of time (usually after a few months); this flows from Articles 17(2) and 19 of the European Community (ec) Treaty and from Article 28(1), sentence 3, bl. However, nationals from foreign countries outside the eu are not entitled to take part in local elections. In this regard, the Federal Constitutional Court has ruled that such electoral rights would contradict the Basic Law.42 As regards public servants, local authorities may employ or dismiss whomever they consider appropriate or inappropriate. As part of their right to selfgovernment, they enjoy complete autonomy in personnel matters.

financing local government Finances are a major issue for local governments. Throughout Germany, many municipalities are unable to balance their budgets and have run up

Federal Republic of Germany

149

large deficits. There is a tendency to take up loans (Kassenkredite) just to cover current expenditures. Thus the debt burden is increasing without investments being made for future benefits. To give some figures: whereas overall loans have risen dramatically from around €1 billion in 1992 (US$1.276 billion)43 to €27.6 billion in 2006 (US$35.39 billion), overall investment expenditures have fallen from roughly €34 billion in 1992 (US$43.38 billion) to around €19 billion in 2006 (US$24.37 billion).44 Not surprisingly, there is general concern about a “crisis” of local (self-) governance, although only in financial terms and not with regard to the political and administrative benefits associated with it. In fact, there is consensus that the financial difficulties did not arise solely from excessive spending on the part of local authorities. Instead, these difficulties are, apart from the weak economy, mostly of a structural nature. Over the past decades, local governments have been given increasing numbers of cost-intensive responsibilities. In particular, in a practice called Bundesdurchgriff, the federal government was allowed, with the consent of the Länder, to delegate such responsibilities directly to local authorities without being obliged to provide sufficient funding. Prominent examples of such delegated duties are social welfare services for children and youth, for the elderly, and in particular, for the unemployed,45 where local authorities cover 70% of the expenses for housing and heating assistance.46 Only recently has the Basic Law been amended in the hope of preventing such practices in the future. As part of their right to self-government, local governments are, in principle, entitled to manage their finances according to their own discretion (the principle of so-called Finanzhoheit). For this reason, they possess various sources of income; above all, they have a constitutional right to their own source of tax revenues, namely the property tax (Grundsteuer) and the commercial tax (Gewerbesteuer). It should be mentioned, however, that the property tax generates only a small proportion of the overall tax revenue. Thus the commercial tax is local governments’ main source of tax income,47 and they may themselves fix its rates.48 However, due to Germany’s weak economy in recent years, commercial tax revenues withered dramatically, adding to the financial difficulties of local governments. Only when the economy picked up again did revenues from the commercial tax rise substantially (by 18.7%), increasing from €23.42 billion in 2005 (US$28.65 billion) to €27.8 billion in 2006 (US$35.65 billion), and prospects for 2007 were equally good.49 In addition to the said taxes, local authorities may charge fees (Gebühren) for public services. Based on Articles 106(6) and 105(2a) bl, they may also create new types of local excise taxes (örtliche Verbrauchs- und Aufwandssteuern) in the exercise of what is called their Steuerfindungsrecht; examples of such local excise taxes include entertainment taxes, dog-licence fees, and second-residence taxes. All such taxes and levies are laid down in

150

Martin Burgi

municipal bylaws (Satzungen). Apart from these cases, local authorities lack the right to introduce new taxes or to raise taxes by themselves. In addition to the above, however, local authorities are constitutionally entitled to a certain share of so-called “joint taxes” (e.g., income tax, corporate income tax, and value-added tax). However, for these taxes, they depend completely on decisions made by federal or Land officials. Despite there being substantial financial distributions (Finanzzuweisungen) from the federation and the Länder, which stem from these “joint taxes,” these revenue equalizations have often proven insufficient to finance all the delegated administrative tasks that local governments have to perform as the lowest level of Land administration. Such insufficient funding is also not compensated for by financial transfers between local authorities; contrary to the position in some other federal countries, there is no obligation for such mutual financial solidarity between local governments under German law. However, the special financial circumstances of cities in conurbations (inter alia, due to their high spending for cultural activities, etc.) will most likely be taken into account to some extent in future financial distributions on the part of the Länder, although details remain unclear. It has to be mentioned that, apart from the said financial transfers, taxes, levies, and fees, a substantial part of local governments’ income is generated through commercial activities. In fact, many municipalities run partly profitable public enterprises, sometimes alone, sometimes jointly with neighbouring municipalities, and sometimes with private partners (i.e., in a public-private partnership). Quite regularly, profits made from services, such as energy/water supply and waste/sewage disposal, are used to crosssubsidize less profitable activities, such as public transport. This may again illustrate the “multipurpose” approach of the German concept of local self-governance, which aims to attend universally to all affairs of local importance. According to the statutes of all Länder, commercial activity on the part of local authorities is admissible only if it is “in the public interest.”50 In addition, Land statutes provide that such activity must also be “required,” as the public interest in question may not be attained to the same degree by private companies. However, there is generally a rather broad understanding of the notion of “public interest” as including more or less everything from creating jobs to securing water and energy.51 In some cases, public enterprises offer their services not just locally but also on a European and, at times, even global scale. This is partly a result of the more “business-minded” approach related to New Public Management. However, this dilutes the true approach of local authorities, which is to universally attend to local affairs.52 In 2006 overall annual budgets (of all local authorities taken together) were balanced for the first time in years, even showing a slight surplus of €1.75 billion (US$2.24 billion), with overall revenues at roughly €158 billion

Federal Republic of Germany

151

(US$202.6 billion) and overall expenditures at roughly €156.25 billion (US$200.4 billion);53 however, this result was mainly achieved by drastic cuts in public spending (e.g., investments and personnel expenditures) over recent years (table 5.1). Although overall annual budgets were balanced in 2006, the financial situation is improving only slightly, as the debt burden from past borrowing is still immense and many municipalities are far from consolidating their overall budgets; to give some figures, the overall debt burden of German municipalities amounted to roughly €88 billion (US$112.85 billion) by the end of 2006.54 This is particularly true for local governments in the East German Länder, which generally still trail behind economically. In this context, it should be mentioned that Land statutes do not provide for bailouts of bankrupt local governments. In fact, local governments are not legally capable of falling into insolvency because their assets are not to be liquidated.55 Instead, if local authorities do not manage to balance their budgets and have to take up additional loans, they need the prior approval of specially assigned Land authorities, which supervise local governments’ public spending.56 They have to prepare a plan (called a Haushaltskonsolidierungs- oder -sicherungskonzept), which also needs approval,57 indicating how they intend to consolidate their budgets in the near future (mainly by cutting spending). However, supervising authorities have often tacitly approved of (sometimes questionable) additional borrowing to prevent immediate collapse.58 Apart from taking up loans, numerous municipalities have also engaged in so-called “US cross-border leasing.”59 The latter implies a “lease and lease back” arrangement between two parties that are situated in different countries. Its aim is to make use of the tax laws of different jurisdictions. Basically, it depends on the fact that, for tax purposes, some countries assign the taxable ownership of an asset to the entity that has legal title to it, whereas other countries (like the United States) assign the taxable ownership (and the depreciation allowances that come with it) to the party that has the most indicia of tax ownership, legal title being only one of several factors to be considered. Thus, if a leasing arrangement lasts for a sufficiently long time (e.g., ninety-nine years), these jurisdictions will treat the lessee as the effective owner of the asset, although the lessee has no legal title to it and is only leasing it (to lease it back to the lessor). By way of example, local authorities in Germany might lease their sewage infrastructure to a US investor, only to lease it back and partially benefit from the depreciation allowances of the US investor. As the practice of “US cross-border leasing” leaves property relations unscathed, it was unclear whether it needed prior approval on the part of the supervising authorities.60 Following a change in US tax regulations, however, the practice of cross-border leasing largely lost its practical importance.

152

Martin Burgi

Table 5.1 Local government finance 2006: Percentage of revenue sources and expenditures Source of income (€158 billion; US$202.6 billion) Taxes

Percentage of total income

Expenditure items (€156.25 billion; US$200.4 billion)

Percentage of total expenditure

38.3

Personnel

25.7

•

commercial tax

17.6

Operating

20.0

•

share of income tax

12.8

Social-welfare services

23.9

•

share of value-added tax

1.8

Administration fees

10.0

Federal/Länder transfers

27.3

Capital-related financial distributions (federal/ Länder) Other income

4.7 19.7

Loan interest

3.0

Capital expenditure

12.1

•

construction

9.3

•

new assets

2.8

Miscellaneous

15.3

Investments (inter alia)

12.1

Construction measures

9.3

Purchase of assets

2.8

Source: Translated and adapted from “Kommunale Finanzen 2005 bis 2007 – Prognose der kommunalen Spitzenverbände,” press release, 9 February 2007, http://www.staedtetag.de/10/ presseecke/presse-dienst/artikel/2007/02/09/00441/index.html (viewed 28 January 2008).

By way of summary, it should be stressed once more that, overall, local governments are extremely dependent on financial transfers from the federation and Länder. In the past, these transfers have proven insufficient on many occasions, which has considerably undermined the autonomy of local governments. There is consensus that the Föderalismusreform I (see further below) must be followed by a second set of constitutional reforms, the so-called Föderalismusreform II, which are supposed to tackle the financial arrangements of the Basic Law in order to provide steady and adequate funding for all orders of government in light of their respective duties.61 As the commercial tax has proved to be a rather unreliable source of revenue in economically weak times, there has been some debate about whether it should be abolished altogether.62 However, there is broad consensus – in line with the constitutional provisions of Article 28(2) bl – that the commercial tax should then be replaced by another (hopefully steadier) source of tax revenue that would give local governments equal financial influence over the local economy and allow them to set a municipal rate.63

supervision of local governments Local authorities are highly regulated and have to observe numerous legal provisions. However, their activities are monitored very cautiously. In fact, there is hardly ever a case where a superior Land authority would take

Federal Republic of Germany

153

formal action and, for instance, take over a local government or replace a democratically elected council or its decisions. Instead, in a predominant number of cases, supervision takes place in an informal, cooperative, and advisory manner, whereas formal supervisory actions are considered a “rule of last resort.”64 One of the main reasons for this is the close political ties between the local and Land authorities, which, however, are mostly independent of party affiliations and based more on good personal working relations. This is particularly true for local governments in metropolitan regions and large cities. Regarding the extent of supervisory powers, the kind of local activity at issue has to be distinguished.65 Where local authorities enjoy autonomy, orders from superior Land authorities must respect this sphere of autonomy. Thus, with regard to mere self-governance and those delegated duties whose most expedient fulfilment is largely determined by the local authority (Pflichtaufgaben ohne Weisung), superior authorities may assess only the lawfulness of a local decision. By comparison, with respect to those delegated duties where local authorities enjoy no autonomy (Pflichtaufgaben nach Weisung), the local authorities are subject to detailed instructions regarding the lawfulness and usefulness of their activities. Where formal supervisory measures are taken, there may be some dispute about whether the supervising authorities have correctly defined the legal delimitations of local autonomy and their degree of discretion or whether they have infringed on local autonomy by defining these delimitations too narrowly. Therefore, local governments may challenge such supervisory measures in the administrative courts by invoking their right to self-government and claiming that they have exercised their autonomy in accordance with the laws.

i n t e r g o v e r n m e n t a l r e l a t i o n s 66 Constitutional and political developments since 1949 have left the Länder with relatively few competences in legislation apart from local government, police functions, and general culture. The federation, by contrast, has assumed major responsibility for legislation via three sources: exclusive legislative powers (Art. 71 bl), concurrent legislative powers (Art. 72 bl), and framework legislative powers (Art. 75 bl). One of the major goals of the 2006 federalism reform was to redistribute these powers in such a way as to give the Länder additional responsibilities and thereby strengthen the role and status of the Land parliaments.67 Federal legislation is enacted through the Bundestag, which is the directly elected federal parliament representing the entire German electorate, and the Bundesrat, which represents Land executives.68 Within this bicameral parliamentary system, there is no (constitutionally recognized)

154

Martin Burgi

institution to represent local governments. Hence, they depend on the Länder to mediate their interests through the Bundesrat. The same is true as regards the legislation of the European Union, of which Germany is a member state. As the political process in the European arena falls within the competence of the federation as a whole, local authorities, once again, depend largely on the Länder to mediate their interests. Whereas legislative powers are concentrated in the federal government, administrative powers rest mainly with the Länder, which implement not only their own statutes but also the largest part of federal legislation. This allocation of powers creates a high degree of interdependence between the different orders of government. Cooperation between local municipalities plays an important role and is especially common between small rural municipalities that are close to one another as well as within major conurbations. Some of the most common fields of intermunicipal cooperation are information technology, waste disposal, water supply, public transport, regional marketing, and tourism promotion.69 Cooperation is mostly created on a contractual basis or by means of joint institutions (Zweckverbände).70 The latter usually are responsible for only a few specific purposes (e.g., waste disposal and public transport). It is interesting to note that in the field of building law, Section 2(2), phrase 1, of the Federal Building Code (Baugesetzbuch) even contains a legal obligation for neighbouring municipalities to mutually consider and harmonize their urban planning.71 Furthermore, municipal planning authorities have to conform to regional and federal planning principles; on the other hand, the federal and regional planning authorities should take account of local planning needs (so-called Gegenstromprinzip).72 Relations between local authorities and Länder are governed by the constitutions of the respective Länder.73 In each Land, the Ministry of the Interior is responsible for the relations between the Land authorities and local governments. These relations are primarily hierarchical and provide the possibility for supervision, although the latter is exercised only sparingly. However, as previously mentioned, local authorities may, to some extent, participate in Land legislation.74 Agreements of cooperation between local authorities and other orders of government are particularly important for implementing infrastructure projects, especially those (partly) financed by the eu. As regards the relationship between local authorities and the federation, it is important to remember that local government is not seen as a separate third order of government but as a constituent part of the Länder.75 Legislative competences are exercised solely by the federation and the Länder, whereas administrative responsibilities are shared among the federation, the sixteen Länder, and the local authorities. However, no federal authorities are directly responsible for local governance, not even in large cities. Nonetheless, in a practice called Bundesdurchgriff, the federal government

Federal Republic of Germany

155

was allowed, under the previous Article 84 bl and with the consent of the Länder, to delegate specific tasks directly to local governments by means of federal legislation without being obliged to finance or reimburse them. Land governments often gave their required assent because they then benefited from additional influence in the federal lawmaking process. However, local government finances suffered as a result, and many municipalities are still struggling with immense debt.76 The recent reform of the federal system, the Föderalismusreform I, which came into force in the autumn of 2006, might bring some relief. The amended Article 84 bl clearly states that this practice is no longer legitimate. Under the amended Article 84 bl, only Land governments may delegate administrative tasks to local authorities. Land constitutions, however, stipulate that financial funding appropriate to the tasks delegated must be allocated to local governments (so-called Konnexitätsprinzip).77 As a result, the Länder now more often take sides with local authorities and together urge more federal funding.78 For instance, municipalities, Länder, and the federation are in a dispute about the financing of the targeted 750,000 new preschool and kindergarten placement options that should be created in Germany by 2013.79 Because local authorities have no constitutionally recognized role in the passing of federal legislation, they have formed three major associations to jointly articulate and lobby their interests: the German Association of Cities,80 the German Association of Towns and Municipalities,81 and the German County Association.82 The largest is the German Association of Cities, comprising more than 5,500 cities and towns with a total of 51 million citizens.83 Local governments play a major role in implementing federal (and Land) legislation and therefore possess, as is widely acknowledged, significant experience and expertise. By expressing their views through the above associations, they make themselves heard and may have a noticeable impact on the political debate in the federal arena, although only in an informal manner. In coordinating their work, the associations have also formed a joint working committee at the federal level: the Federal Union of Local Government Central Associations. Repeatedly, local authorities and their associations have requested an official role in the federal lawmaking process and a formally recognized voice in impact assessment; however, the Föderalismusreform I did not take up these reform proposals.84 To date, only some Länder85 have assigned an official role to local authorities in the Land lawmaking process.86 To lobby their interests in the eu, the above associations in 1991 established a Common Bureau in Brussels (Europabüro der deutschen kommunalen Selbstverwaltung). However, of the twenty-four seats Germany holds in the eu’s Committee of the Regions,87 the largest share goes to Land representatives; the associations of local authorities have obtained only three

156

Martin Burgi

seats. Moreover, these three seats were obtained only after political intervention by the German chancellor and the Bundestag. Overall, the Common Bureau in Brussels hardly compensates for the rather weak institutional role of local authorities in the European political arena. Thus local authorities, once more, depend largely on the Länder to mediate their interests. In conclusion, it should be stressed that, despite the recent reforms of the federal system, local governments still depend on the Länder to mediate their interests in the federal and European arenas. Länder, however, will often have their own interests (financial or other) at stake and will try to promote these. Nevertheless, the issue of local self-government often makes relations between federal and Land governments more difficult.

p o l i t i c a l c u l t u r e o f l o c a l g o v e r n a n c e 88 All political parties that are established in the federal or Land arenas are also active in local government. In most municipalities or counties, mayors (or county administrators) come from the major political parties. Nonetheless, local governments are generally less influenced by major party politics. Local politics tends to be less ideologically charged and more issue-related.89 Most politicians decide early whether they want a political career in local government or in the federal and/or Land arenas. Although there are no reliable statistics available on gender representation, it can be said that mayors and county administrators are predominantly male. Women will more often serve as council members, as the attendant duties are more easily combined with family life. Thus gender representation comes down to the general difficulties encountered by women in pursuing a professional career alongside their family obligations. In several Länder, so-called “free voters’ associations” play an important role locally. These are associations of citizens who belong to no political party. Voter associations have the right to be treated on an equal basis with conventional political parties.90 As their political agenda and significance are limited to the local sphere, however, they do not receive public funding, unlike the parties. Nonetheless, this practice does not lead to significant competitive disparities because, in general, candidates for local office have to provide for most of their campaign costs themselves. Therefore, this practice is generally in line with the Basic Law.91 A common problem, seen not only in the local arena, is that political parties find it difficult to recruit people to become involved in politics. Thus it is not surprising that voter turnout at local elections is alarmingly low, even lower than that for federal and Land elections, and is declining even further. For instance, in North Rhine Westphalia, voter turnout dropped from over 80% in 1975 to 54.4% in 2004; in other Länder the figures are similar. More recently, in April 2007, only 36.5% of the eligible

Federal Republic of Germany

157

voters in Saxony-Anhalt cast their ballots. By comparison, voter turnout for the 2005 federal election (Bundestagswahl) was 77.7%. In addition to the above, the three local government associations play an important role in Land and federal political debates, although only in an informal, but no less effective, manner.

e m e r g i n g i s s u e s a n d tr e n d s The role of local government has been inseparably intertwined with the federal system since the beginning of the Federal Republic of Germany. By far, the greatest part of administration occurs in local arenas. In addition, the responsibilities of local governments are to increase even further in the years to come due to administrative reforms in all Länder.92 Financial issues were a concern in the past and led, inter alia, to the abolition of the Bundesdurchgriff as part of the Föderalismusreform I. Fiscal issues will continue to play a role in the proposed second set of constitutional reforms, the Föderalismusreform II, which will, among other things, tackle the financial arrangements of the Basic Law and the distribution of tax revenues in order to provide steady and adequate funding for all orders of government in light of their respective duties.93 Immigration from foreign countries, especially from outside the eu (inter alia, from Turkey and from other Muslim countries), has been a social, cultural, and political issue in Germany. Immigrants have included refugees (temporary or permanent), ethnic Germans from the former Communist bloc, and “guest workers” with their families, many of whom have obtained permanent residence. The administrative and financial responsibilities to regulate their legal affairs lie with local governments. As many immigrants are low-skilled and thus more likely to be unemployed than German residents, they often draw a disproportionate share of social assistance and, in some cities, have become a financial burden.94 However, although local governments must cope with the local outcomes of national policies, the legislative competences to regulate migration and the issues associated therewith lie with the federation and the Länder. Locally, immigration-related cultural problems and public controversy have arisen repeatedly in connection with the construction of mosques95 and Muslim community centres.96 Although Germany has no strong regional structures (apart from the Länder) either in the government sphere or in civil society, metropolitan regions are evolving, and new appropriate forms of local self-government are developing on a regional level. But these promising developments are still under way, and they are still met with skepticism on the part of municipalities. In addition, there are sister-city arrangements all across Europe, and there is a good deal of cross-border cooperation between

158

Martin Burgi

neighbouring cities. One such example is Region Bodensee around the Lake of Constance. Its aim is mainly to coordinate the activities of adjacent Swiss, Austrian, and German municipalities as regards, for instance, public transport and transportation infrastructure (be it streets or a common network of bicycle roads for tourists) and educational/cultural activities and festivals. Such cooperation is mostly informal and aims to jointly promote the region as a whole (e.g., as a business location and tourist destination), enhancing, at the same time, a transfrontier regional identity. In certain cases, transfrontier cooperation may also take the institutionalized form of a cross-border joint administrative unit to provide public services (e.g., waste treatment); however, as the creation of such joint administrative units implies a transfer of sovereign rights, and as municipalities are not subjects of international law, they may not engage in such cooperation merely on the basis of their right to selfgovernment under Article 28(2) bl. Instead, according to Articles 24(1a) and 32 bl, they depend on the federation and their Land to consent and to sign the relevant international (framework) agreement. 97 Apart from that, as mentioned above, some public enterprises are offering their services (e.g., energy supply or waste disposal) not only locally but also on a European and, at times, even global scale.98 The standing of local governments within the eu is rather weak. Comparable to the situation with regard to federal legislation, local governments largely depend on the Länder to represent their interests.99 Although the eu’s Committee of the Regions represents the interests of federal subentities, Germany has sent only a few local government representatives; instead, the representatives of the Länder dominate the German delegation. By way of summary, it can be stated that local governments would have a much stronger standing within the federal system if there were no Länder, whereas the sixteen Länder would hardly be in a position to exercise administrative tasks without the base of local authorities. However, as legislation rests with the Länder (or the federation), it is the Länder (not local governments) that make all major decisions. In the process, they do not always protect local governments from disadvantageous federal action.

notes 1 For general information regarding local governments and the German federal system, see, for instance, Arthur B. Gunlicks, Local Government in the German Federal System (Durham, nc: Duke University Press, 1986); Arthur B. Gunlicks, “Constitutional Law and the Protection of Subnational Governments in the United States and West Germany,” Publius: The Journal of Federalism 18, no. 1 (Winter 1988): 141– 58; Charlie Jeffery, ed., German Federalism Today (Leicester, uk : Leicester University

Federal Republic of Germany

2

3

4

5

6 7 8 9 10 11

12 13 14

15 16

159

Press, 1991); Jutta A. Helm, “Introduction: German Cities between Globalization and Unification,” German Politics and Society 16, no. 4 (Summer 1998): 7–17; Vincent Hoffmann-Martinot and Helmut Wollmann, eds, State and Local Government Reforms in France and Germany: Divergence and Convergence (Wiesbaden: Verlag für Sozialwissenschaften, 2006). For further reference regarding the financial arrangements of the German Constitution, see Lars P. Feld and Jürgen von Hagen, “The Federal Republic of Germany,” in The Practice of Fiscal Federalism, ed. Anwar Shah, 125–50 (Montreal and Kingston: McGill-Queen’s University Press, 2007), 125. See Hans-Peter Schneider, “Federal Republic of Germany,” in Distribution of Powers and Responsibilities in Federal Countries, ed. Akhtar Majeed, Ronald L. Watts, and Douglas M. Brown, 123–54 (Montreal and Kingston: McGill-Queen’s University Press, 2005), 129. See also Jutta Kramer, “Federal Republic of Germany,” in Constitutional Origins, Structure, and Change in Federal Countries, ed. John Kincaid and G. Alan Tarr, 143–78 (Montreal and Kingston: McGill-Queen’s University Press, 2005). For further reference, see also Stefan Oeter, “Federal Republic of Germany,” in Legislative, Executive and Judicial Governance in Federal Countries, ed. Katy Le Roy and Cheryl Saunders, 155–64 (Montreal and Kingston: McGill-Queen’s University Press, 2006). For further information, see “Facts about Germany,” produced in cooperation with the Federal Foreign Office of Germany, http://www.tatsachen-ueber-deutschland. de/en (viewed January 2008). Exchange rate on 1 June 2006: €1 = US$1.2824; see http://www.destatis.de (viewed 28 January 2008). Exchange rate on 1 June 2005: €1 = US$ 1.2234; see http://www.destatis.de (viewed 28 January 2008). Annual growth rates have been low for years: 1.2% in 2001, 0% in 2002, -0.2% in 2003, and 1.2% in 2004; see http://www.destatis.de (viewed 28 January 2008). See Oeter, “Federal Republic of Germany,” 139. See Schneider, “Federal Republic of Germany,” 125. For further information, see “Facts about Germany,” produced in cooperation with the Federal Foreign Office of Germany, http://www.tatsachen-ueber-deutschland. de/en (viewed January 2008). See Oeter, “Federal Republic of Germany,” 138. See further, Martin Burgi, Kommunalrecht (München: C.H. Beck, 2006), § 3 margin no. 4ff. However, depending on the relevant Land statutes, there are cities with more than 100,000 citizens that are not “independent,” and there are independent cities with fewer than 50,000 inhabitants. See “Tabelle: Kreisfreie Städte, Landkreise und Gemeinden nach Größenklassen,” http://www.dstgb.de (viewed 28 January 2008). See Burgi, Kommunalrecht, § 6 margin no. 27, with reference to the rulings of the Federal Constitutional Court referred to below in note 26.

160

Martin Burgi

17 For greater detail, see Andreas Musil and Sören Kirchner, Das Recht der Berliner Verwaltung – unter Berücksichtigung kommunalrechtlicher Bezüge (Heidelberg: Springer, 2002). 18 The Ruhr region comprises an area of about 4,435 square kilometres with over 5.3 million inhabitants. It is Germany’s largest conurbation, its major centres being Duisburg, Essen, Bochum, and Dortmund. It is part of the even greater metropolitan Rhine-Rhur region (including Dusseldorf, Cologne, and Bonn) with an area of roughly 10,000 square kilometres and a total population of more than 10 million people. 19 For further reference, see also Arthur Benz and Anna Meincke, “Sub-National Government and Regional Governance in Germany,” in State and Local Government Reforms in France and Germany: Divergence and Convergence, ed. Vincent HoffmannMartinot and Helmut Wollmann, 59–74 (Wiesbaden: Verlag für Sozialwissenschaften, 2006), 65. 20 Verband Region Stuttgart comprises an area of 3,654 square kilometres with a population of about 2,566,950; see http://www.region-stuttgart.org (viewed 28 January 2008). Region Hanover consists of an area of 2,290 square kilometres with a population of 1,127,908 people; see http://www.hannover.de/de/buerger/ wahlen/zahlen_daten/index.html (viewed 28 January 2008). 21 For more detail, see Martin Burgi and Bettina Ruhland, Regionale Selbstverwaltung durch die Landschaftsverbände in Nordrhein-Westfalen im Spiegel von Rechtsprechung und Rechtsliteratur (Frankfurt: Frankfurter Verlagsgruppe, 2003); and Janbernd Oebbecke, Gemeindeverbandsrecht Nordrhein-Westfalen (Stuttgart: Deutscher Gemeindeverlag, 1984). 22 See Section 1 of the Law Regarding the Regionalverband (Gesetz über den Regionalverband Ruhr) of 3 February 2004 (gv nrw S. 96), last amended on 5 April 2005 (gv nrw S. 351). 23 See Article 28(2) bl. See further, Burgi, Kommunalrecht, § 20 margin no. 12ff. 24 For further reference, see Franz-Ludwig Knemeyer and Matthias Wehr, “Die Garantie der kommunalen Selbstverwaltung nach Artikel 28 Abs. 2 GG in der Rechtsprechung des Bundesverfassungsgerichts,” Verwaltungsarchiv (VerwArch) 92 (2001): 317–43; Friedrich Schoch, “Der verfassungsrechtliche Schutz der kommunalen Selbstverwaltung,” Jura (2001): 121–33. 25 See Veith Mehde, “Steering, Supporting, Enabling: The Role of Law,” Local Government Reforms, Law and Policy 28, no. 2 (April 2006): 164–81, at 165. 26 See Entscheidungen des Bundesverfassungsgerichts [Decisions of the Federal Constitutional Court] (BVerfGE) 79, 127 (146); and BVerfGE, Neue Zeitschrift für Verwaltungsrecht (NVwZ) 2003, 850 (851). 27 See for further reference, Mehde, “Steering, Supporting, Enabling,” 168. 28 For further reference regarding the concept of “self-governance,” see Janbernd Oebbecke, “Selbstverwaltung angesichts von Europäisierung und Ökonomisierung,” Veröffentlichungen der Vereinigung der Deutschen Staatsrechtslehrer (VVDStrL) 62 (2003): 366–405; and Martin Burgi, “Selbstverwaltung angesichts von Europäisierung und Ökonomisierung,” Veröffentlichungen der Vereinigung der Deutschen Staatsrechtslehrer (VVDStrL) 62 (2003): 406–57.

Federal Republic of Germany

161

29 See BVerfGE 11, 266 (270). 30 For further reference, see, for instance, Gerhard Banner, “Local Government – A Strategic Resource in German Public Management Reform,” in State and Local Government Reforms in France and Germany: Divergence and Convergence, ed. Vincent Hoffmann-Martinot and Helmut Wollmann, 125–44 (Wiesbaden: Verlag für Sozialwissenschaften, 2006), 139. 31 For further reference regarding municipal bylaws (Satzungen), see Eberhard SchmidtAßmann, Die kommunale Rechtssetzung im Gefüge der administrativen Handlungsformen und Rechtsquellen (München: Vahlen, 1981); and Hartmut Maurer, “Rechtsfragen kommunaler Satzungen,” Die Öffentliche Verwaltung (DÖV) (1993): 184–94. 32 See BVerfGE 33, 125. See further Burgi, Kommunalrecht, § 15 margin no. 36ff. 33 See “Finanzen und Steuern – Personal des öffentlichen Dienstes – Fachserie 14 Reihe 6, 2005,” January 2007, http://www.destatis.de (viewed 28 January 2008). 34 See “Rechnungsergebnisse des öffentlichen Gesamthaushalts – Fachserie 14 Reihe 3.1, 2004,” October 2006, http://www.destatis.de (viewed 28 January 2008). 35 See Mike Goldsmith, “Local Politics in Europe,” in Les Nouvelles Politiques Locales, ed. Richard Balme, Alain Faure, and Albert Mabileau, 149–161 (Paris: Presses de Sciences Po, 1999), 149; and Jefferey Sellers, “The Nation-State and Urban Governance: Toward Multilevel Analysis,” Urban Affairs Review 17, no. 5 (2002): 611–41. 36 Oeter, “Federal Republic of Germany,” 155. 37 In small municipalities with fewer than 10,000 inhabitants, this salary will total from €4,226 to €5,370 (US$5,680 to US$7,218); in municipalities with 60,001 to 100,000 citizens, it amounts to roughly €7,430 (US$9,987); and in cities with more than 500,000 citizens, it totals roughly €10,600 (US$14,248). Exchange rate on ß1 June 2007: €1 = US$1.344; see http://www.destatis.de (viewed 28 January 2008). 38 In Northrhine-Westfalia, by way of example, these monthly financial compensations amount to between €184 (US$247) in municipalities with fewer than 20,000 inhabitants and €501 (US$673) in cities with more than 450,000 inhabitants. 39 For further reference, see Burgi, Kommunalrecht, § 10 margin nos 5 and 8. 40 Jörg Bogumil, “Die Umgestaltung des Verhältnisses zwischen Rat und Verwaltung – das Grundproblem der Verwaltungsmodernisierung,” Verwaltungsarchiv (VerwArch) 93 (2002): 129–48. 41 Jörg Bogumil, Stephan Grohs, Sabine Kuhlmann, and Anna K. Ohm, Zehn Jahre Neues Steuerungsmodell – Eine Bilanz kommunaler Verwaltungsmodernisierung (Berlin: Edition Sigma, 2007); Veith Mehde, Neues Steuerungsmodell und Demokratieprinzip (Berlin: Duncker & Humblot, 2000). The concept of New Public Management was probably first articulated by David Osborne and Ted Gaebler, Reinventing Government: How the Entrepreneurial Spirit Is Transforming the Public Sector (Reading, ma: Addison-Wesley, 1992). 42 See BVerfGE 83, 37ff; and BVerfGE 83, 60ff. 43 Exchange rate on 1 June 1992: €1 = US$1.2760; see http://www.destatis.de (viewed 28 January 2008).

162

Martin Burgi

44 See German Association of Cities, press release concerning the financial situation of local governments, 9 February 2007, http://www.staedtetag.de/10/presseecke/ pressedienst/artikel/2007/02/09/00441/index.html (viewed 28 January 2008). 45 For further reference, see Martin Burgi, “Künftige Aufgaben der Kommunen im sozialen Bundesstaat,” Deutsches Verwaltungsblatt (DVBl) (2007): 70–8; Friedrich Schoch, “Die Verfassungswidrigkeit des bundesgesetzlichen Durchgriffs auf Kommunen,” Deutsches Verwaltungsblatt (DVBl) (2007): 261–9. For a basic portrayal of the financial situation of the municipalities within Germany, see Hans Günter Henneke, Hermann Pünder, and Christian Waldhoff, Recht der Kommunalfinanzen (München: C.H. Beck, 2006). 46 See “Aktuelle Finanzlage der Städte – Rückblick auf 2006 und Prognose für 2007,” press release, 9 February 2007, http://www.staedtetag.de/10/presseecke/pressedienst/artikel/2007/02/09/00441/index.html (viewed 28 January 2008). 47 The commercial tax can be considered a German peculiarity. Basically, it is a tax on profits, but profits are assessed in a standardized manner (with assumed profits and allowances) in an effort to assess the so-called “objective,” and thus comparable, “earning capacity” (objektive Ertragskraft) of an enterprise. 48 See Articles 106(6) and 28(2) bl. 49 See “Kommunale Finanzen 2005 bis 2007 – Prognose der kommunalen Spitzenverbände,” press release, 9 February 2007, http://www.staedtetag.de/10/presseecke/ pressedienst/artikel/2007/02/09/00441/index.html (viewed 28 January 2008). 50 See also Matthias Ruffert, “Europarecht zwischen Liberalisierung und Stabilisierung öffentlicher Daseinsvorsorgeaufgaben: Zur Bedeutung des Art. 295 egv,” in Kommunale Perspektiven im zusammenwachsenden Europa, ed. Hans-Günter Henneke, 10–32 (Stuttgart: R. Boorberg Verlag, 2002). 51 By contrast, it would be inadmissible for local authorities to run their own car-production facility – see olg Hamm, “Wettbewerbsverstoß: Erwerbswirtschaftliche Betätigung einer Gemeinde in nrw,” Deutsches Verwaltungsblatt (dvbl) (1998): 792–4 – or, for instance, to run a “public bakery,” as there is no need for such activity in the public sector. For a critical overview of the political implications, see Martin Burgi, “Die Repolitisierung der Staatswirtschaft,” in Der Wandel des Staates vor den Herausforderungen der Gegenwart – Festschrift für Winfried Brohm zum 70. Geburtstag, ed. Carl Eugen Eberle, Martin Ibler, and Dieter Lorenz, 35–49 (München: C.W. Beck, 2002); and recently, Joachim Suerbaum, “Durchbruch oder Pyrrhussieg? Neues zum Schutz Privater vor der Kommunalwirtschaft,” Die Verwaltung 40 (2007): 29–51. 52 See also Janbernd Oebbecke, “Die örtliche Begrenzung kommunaler Wirtschaftstätigkeit,” Zeitschrift für das gesamte Handels-und Wirtschaftsrecht (zhr) 164 (2000): 375–93; Matthias Ruffert, “Grundlage und Maßstäbe einer wirkungsvollen Aufsicht über die kommunale wirtschaftliche Betätigung,” Verwaltungsarchiv (VerwArch) 92 (2001): 27–57. 53 See “Kommunale Finanzen 2005 bis 2007 – Prognose der kommunalen Spitzenverbände,” press release, 9 February 2007, http://www.staedtetag.de/10/presseecke/ pressedienst/artikel/2007/02/09/00441/index.html (viewed 28 January 2008).

Federal Republic of Germany

163

54 See Deutscher Städte und Gemeindebund, “Lang- und kurzfristige Verschuldung der Gemeinden von 1999 bis 2006 (in Milliarden ?),” press release, 21 March 2007, http://www.dstgb.de (viewed 28 January 2008). 55 See, for instance, Article 77(3) of the Bavarian Municipal Code or Section 128(2) of the North Rhine-Westphalia Municipal Code. However, there has been debate in recent years on whether local governments should be given the right to file for bankruptcy. For further reference in this regard, see Angela Faber, “Insolvenzfähigkeit für Kommunen?” Deutsches Verwaltungsblatt (DVBl) (2005): 933–46. 56 In general, such supervision is carried out by the regular Land authorities; in the case of Northrhine-Westphalia, for instance, supervision is done by a specialized Land authority called Gemeindeprüfstelle (see Burgi, Kommunalrecht, § 18 no. 24). 57 See, for greater detail, Dörte Diemert, Das Haushaltssicherungskonzept (Stuttgart: Deutscher Gemeinden GmbH, 2005). 58 For further references regarding this assessment, see Schoch, “Die Verfassungswidrigkeit.” 59 See further Roman Jordans and Ellen Roser, “Aktuelle Aspekte des US-CrossBorder-Leasing,” KommJur (2004): 208–14; Claus Pegatzky, “Cross-Border-LeasingTransaktionen und staatliche Zuwendungen,” Neue Juristische Wochenschrift (njw) (2004): 324–7; Peter Smeets, Helfried Schwarz, and Daniel Sander, “Ausgewählte Risiken und Probleme bei US-Leasingfinanzierungen,” Neue Zeitschrift für Verwaltungsrecht (NVwZ) (2003): 1061–71. 60 The Administrative Court of Gera, for instance, has ruled that US cross-border leasing needed prior approval of the monitoring body, as it implied transactions and risks similar to taking up credits; see VG Gera, “Unzulässigkeit eines Bürgerbegehrens gegen Cross-Border-Leasing- Genehmigungsbedürftigkeit des Cross-Border-Leasings durch Kommunalaufsicht,” Die Öffentliche Verwaltung (döv) (2004): 931–2. 61 See, for more detail, Ferdinand Kirchhof, “Den zweiten Schritt wagen! – Die Novellierung der Finanzverfassung als notwendige zweite Stufe der Föderalismusreform,” Zeitschrift für Gesetzgebung (zg) (2006): 288–300. 62 In this regard, see Paul Kirchhof, “Die Reform der kommunalen Finanzaustattung,” Neue Juristische Wochenschrift (njw) (2002): 1549–50. 63 See Kirchhof, “Die Reform der kommunalen Finanzaustattung.” 64 For further reference in this regard, see also Gerhard Banner, “Local Government: A Strategic Resource in German Public Management Reform,” State and Local government Reforms in France and Germany, ed. Vincent Hoffmann-Martinot and Helmut Wollmann, 140–51 (Wiesbaden: Verlag für Sozialwissenschaften, 2006). 65 See further Janbernd Oebbecke, “Kommunalaufsicht – Nur Rechtsaufsicht oder mehr?” Die Öffentliche Verwaltung (döv) (2001): 406–11. 66 For an overview of different legal problems arising from the distribution of competences in Germany, see Eckhard Pache, “Verantwortung und Effizienz in der Mehrebenenverwaltung,” Veröffentlichungen der Vereinigung der Deutschen Staatsrechtslehrer (VVDStrL) 66 (2007): 106–44; Thomas Groß, “Bundesstaat und Europäische Union zwischen Konflikt und Kooperation,” Veröffentlichungen der Vereinigung der Deutschen

164

67

68 69

70

71

72 73 74

75

76

77

78

79

Martin Burgi

Staatsrechtslehrer (VVDStrL) 66 (2007): 152–80; and Hans Günter Henneke, ed., Verantwortungsteilung zwischen Kommunen, Ländern, Bund und eu (Stuttgart: R. Boorberg Verlag, 2001). See also Oeter, “Federal Republic of Germany,” 155ff. See Arthur Gunlicks, “German Federalism Reform: Part One,” German Law Journal 8, no. 1 (2007): http://www.germanlawjournal.com/article.php?id=792 (viewed January 2008). Regarding the German bicameral system, see Oeter, “Federal Republic of Germany,” 141ff. Hans Gerd von Lennep, “Organisationsformen Interkommunaler Zusammenarbeit,” in Handbuch Interkommunale Zusammenarbeit in Nordrhein-Westfalen, ed. Bernd Jürgen Schneider, 19–27 (Stuttgart: Deutscher Gemeinden Verlag, 2005), 27. For a full description of the different forms of cooperation between municipalities, see Bernd Jürgen Schneider, ed., Handbuch Interkommunale Zusammenarbeit in Nordrhein-Westfalen (Stuttgart: Deutscher Gemeinden Verlag, 2005). See Reinhard Hendler, “Interkommunale Zusammenarbeit im Bau- und Planungsrecht,” in Kommunale Verwaltungsstrukturen der Zukunft, ed. Hans Günter Henneke, 45–57 (Stuttgart: R. Boorberg Verlag, 2006). Winfried Brohm, Öffentliches Baurecht (München: C.H. Beck, 2002), § 36 margin no. 4. Burgi, Kommunalrecht, § 1 margin no. 12. See, for example, Article 83(7) of the Bavarian Constitution, Article 71(4) of the Constitution of Baden-Württemberg, Article 57(4) of the Constitution of Lower Saxony, and Article 97(4) of the Constitution of Brandenburg, which provide that either the municipalities themselves or their leading associations must be heard in the lawmaking process. Klaus Rennert, comment on Article 28 bl, in Grundgesetz Kommentar, ed. Dieter Umbach and Thomas Clemens (Heidelberg: C.F. Müller, 2002), Article 28 margin no. 70. This is stated clearly in Article 106(9) bl, which reads: “revenues and expenditures of municipalities (associations of municipalities) shall also be deemed to be revenues and expenditures of the Länder”; see Burgi, Kommunalrecht, § 2 margin no. 3. By the end of 2006, the overall debt burden of German municipalities amounted to roughly €88 billion (US$112.85 billion); see Deutscher Städte und Gemeindebund, “Lang- und kurzfristige Verschuldung der Gemeinden von 1999 bis 2006 (in Milliarden ?),” press release, 21 March 2007, http://www.dstgb.de (viewed 28 January 2008). See, for example, Article 83 (3) of the Bavarian Constitution, Article 71(3) of the Constitution of Baden-Württemberg, and Article 97(3) of the Constitution of Brandenburg. Similar provisions can be found in the other Länder constitutions. For more details on Konnexitätsprinzip in Germany’s most populated state, North Rhine-Westphalia, see Alexander Schink, “Wer bestellt, bezahlt – Verankerungen des Konnexitätsprinzips in der Landesverfassung Nordrhein-Westfalen,” NordrheinWestfälische Verwaltungsblätter (NWVBl) (2005): 85–91. See Markus Söbbeke, “Föderalismusreform – Eine Betrachtung aus kommunaler Sicht,” KommJur (2006): 404–41; and Henneke, Pünder and Waldhoff, Recht der Kommunalfinanzen. See Deutscher Städte und Gemeindebund, press information of 15 May 2007, http://www.dstgb.de (viewed January 2008).

Federal Republic of Germany 80 81 82 83 84 85

86

87 88 89 90 91 92 93

94

95

96 97

98 99

165

See http://www.staedtetag.de (viewed January 2008). See http://www.dstgb.de (viewed January 2008). See http://www.kreise.de/landkreistag/start (viewed January 2008). See http://www.staedtetag.de (viewed January 2008). See Söbbeke, “Föderalismusreform,” 406. See, for instance, Section 129 of the Municipal Code of Rheinland-Pfalz and the examples given above (note 77). For further reference in this regard, see also Stephan Weinberg, “Der kommunale rat in Rheinland-Pfalz- Eine Bilanz der Arbeit des bundesweit einzigartigen Gremiums,” Zeitschrift für Gesetzgebung (ZG) (2004): 373–82. Local governments usually invoke these provisions as an example of what works well and still hope that their reform proposals might be reconsidered as part of the ongoing debate on constitutional reform, the Förderalismusreform II, which is to address the financial relations between the Länder and the federation; see Söbbeke, “Föderalismusreform,” 406. ec Treaty, Article 263. For further details, see Jörg Bogumil and Lars Holtkamp, Kommunalpolitik und Kommunalverwaltung (Wiesbaden: Verlag für Sozialwissenschaften, 2006), 66ff. See ibid., 222. See Burgi, Kommunalrecht, § 11 margin no. 16. See BVerfGE 85, 264 (328); and BVerfGE 99, 84ff. For tasks in the social sector, see Burgi, “Künftige Aufgaben der Kommunen,” 70ff. See, inter alia, Hans-Günter Henneke, “Steuerbeteiligung der Kreise – ein notwendiges Element einer soliden Basis für Kommunalfinanzen,” Der Landkreis (2006): 251–8. For further reference regarding the content of the Föderalismusreform II, see http://www. bundestag.de/parlament/gremien/foederalismus2/index.html (viewed 28 January 2008). See, for instance, Jutta A. Helm, “Introduction: Geman Cities between Globalization and Unification,” German Politics and Society 16, no. 4 (1998): 7–18, at 7, 12; and for more detail, Barbara Schmitter Heisler, “Immigration and German Cities: Exploring National Policies and Local Outcomes,” German Politics and Society 16, no. 4 (1998): 18–41. One very recent example is the fierce public debate about the construction of a very large mosque in Cologne. See, for instance, http://www.3sat.de/kulturzeit/ themen/109158/index.html (viewed 28 January 2008). For further reference, see, for instance: http://www.tagesspiegel.de/berlin/ ;art270,2274523 (viewed January 2008). For further reference, see Burgi, Kommunalrecht, § 19 margin no. 7; Horst Heberlein, “Grenznachbarschaftliche Zusammenarbeit auf kommunaler Basis,” Die Öffentliche Verwaltung (döv) (1996): 100–9; Erich Röper, “eu-Demokratisierung mittels der eu-Regionen/Euregios,. ” Verwaltungsarchiv (VerwArch) (2004): 301–4. For more details, see Werner Hoppe and Michael Uechtritz, eds, Handbuch kommunale Unternehmen (Cologne: Dr Otto Schmidt Verlag, 2004). See Schneider, “Federal Republic of Germany,” 124, 129.

Republic of India g e or ge m at h e w a nd r a k e sh h o o ja

Although community governance has existed in India since ancient times, local self-governments in modern form were introduced only in the late nineteenth century during British rule, and it took independent India more than four decades to accord constitutional status to rural local governments (panchayats) and urban local governments (municipalities). This chapter examines the evolution of local government as an institution and discusses the current system in India as well as the two key constitutional amendments that led to the empowerment of local government institutions. It also examines the impact of this change on India’s polity, governance, and socio-economic development. The chapter concludes with an analysis of the functioning, deficiencies, and prospects for the future of local government. Despite numerous developments – whether constitutional Acts and statutes or government orders – state governments, members of Parliament and state assemblies, and political elites have strongly resisted any move to increase the powers and autonomy of local governments. In sum, although the local bodies are defined in the Constitution as “institutions of self-government,” they do not function as such in practice. India became independent from British rule on 15 August 1947 with a territory spanning 3,287,260 square kilometres, making it the seventh largest country in the world. India is the second most populous country in the world with a population of 1.4 billion (2007). According to the Census of India (2001), 72.2% of India’s population live in rural areas and 27.8% dwell in urban areas. The population comprises 85% Hindus, 13.4% Muslims, 2.3% Christians, 1.9% Sikhs, 0.8% Buddhists, 0.4% Jains, and 0.6% others. It is a country with striking ethnic, cultural, and religious diversity.1 India has an expanding economy with a growth rate of over 9.4% (2007). It is the fourth largest economy in the world after the United States, China, and Japan in terms of purchasing power parity (ppp). It is the tenth largest economy in the world in dollar terms with a gross domestic product (gdp) of US$1 trillion.

168

George Mathew and Rakesh Hooja

Currently, the Republic of India is a union of twenty-eight states – with populations varying from 0.6 million to 170 million – and seven Union Territories.2 The states differ vastly in terms of their natural resource endowment, development, language, ethnicity, and political culture. The Census of India (2001) lists 114 spoken languages, 22 of which have official constitutional status. Hindi is the official language of the Union, and provision exists for the continuation of the use of English for official purposes. India is a parliamentary democracy with a multiparty system.3 There is a bicameral Union legislature. The members of the lower house of Parliament, known as the Lok Sabha (House of the People), are elected directly by the people. The members of the upper house, the Rajya Sabha (House of the States), are elected by the state assemblies through a proportional representation system. The president of India is elected by the members of Parliament as well as the state assemblies. The prime minister can be from the lower or upper house of Parliament and is elected in accordance with the Westminster parliamentary system. The states have their own elected legislatures; of these, five – Bihar, Maharashtra, Karnataka, Uttar Pradesh, and Jammu and Kashmir – are bicameral. The chief minister of each state is elected by the legislators of the political party or the coalition that commands a majority. The entire electoral machinery functions under the Election Commission of India, which possesses autonomy of functioning under Article 324 of the Constitution. The Election Commission, as an impartial, autonomous body, plays a significant role in strengthening democratic practices and conventions in the country. It enforces a code of conduct at the time of each election to ensure a free and fair election. The commission is responsible for the elections of the Union bodies – president, vice president, and Parliament (Lok Sabha and Rajya Sabha) – and the legislatures of the states and Union Territories. Local government elections are conducted through state election commissions. The Indian National Congress, which fought for India’s independence, dominated the political scene for several decades. It was the ruling party in the Union arena and in almost all the states for nearly a quarter-century after the first general election of 1952. Since the mid-1970s, coalition governments have become the norm, both in the Union arena and in the states. There are 886 registered political parties in India, of which the Election Commission of India recognizes 6 as national and 53 as state parties. Despite the occasional fractured mandate and the interplay of caste, religion, and region, the workings of the multiparty parliamentary system have resulted in an inherent resilience of a democratic political culture that is embedded in the broad framework of a constitutional scheme. Moreover, the role played by regional parties in several states and their decisive say in the affairs of the Union (due to the strength of their numbers in Parliament and

Republic of India

169

state legislatures) have strengthened the federal structure of India. The states have progressively asserted their autonomy within the existing system while asking for more powers; consequently, the Union is more attentive now than ever to the political sensibilities of the subnational units. India is a federal republic, but the term “federal” does not appear in the Constitution. The Supreme Court of India has used “federal” to characterize the “basic structure” of the Constitution, and this structure was declared by the Supreme Court in 1973 to be unamendable. For a vast country like India, administering the states and Union Territories, which have expansive and, at times, bewildering diversities, is a daunting task. The Seventh Schedule of the Constitution outlines the division of legislative jurisdiction between the Union of India and the states. The Union List includes matters such as defence, foreign affairs, foreign jurisdictions, citizenship, railways, posts and telegraphs, telephones, wireless, broadcasting and other like forms of communication, airways, banking, coinage, currency, and Union duties and taxes. The State List includes, for example, public order, police, public health, local government, agriculture, land, rights in or over land, land tenures, land improvement, alienation of agricultural land, fisheries, markets and fairs, money lending and money lenders, and relief of agricultural indebtedness, as well as certain duties and taxes. The Concurrent List includes items on which the Union and the states can act, such as criminal law, criminal procedure, administration of justice, constitution and organization of all courts (except the Supreme Court and the high courts), marriage and divorce, adoption, wills, forests, economic and social planning, population control and family planning, social insurance, and the welfare of workers. The residual legislative power rests with the Union Parliament, which has exclusive power to make any law with respect to any matter not enumerated in the Concurrent List or State List. It may be noted that Parliament can make laws with respect to any matter enumerated in the State List if it becomes necessary or expedient to do so in the national interest. The Constitution provides that nothing prevents Parliament from making at any time any law with respect to a State List matter, including a law adding to, amending, varying, or repealing the law so made by the legislature of a state. Each state government has districts as its basic unit of administration. A district is a territorial unit that hosts almost all state agencies and departments while serving as the point of interaction between the government and the citizen. India has 607 districts, of which 55 have populations that are more than half urban. The populations of districts vary from 0.2 million to 2 million, and the areas of districts vary significantly. The district collector (also referred to as deputy commissioner or district magistrate in some states), an office of the Indian Administrative Service (ias), is the administrative head, or fulcrum, with responsibility for coordination and

170

George Mathew and Rakesh Hooja

supervision of a number of district offices. In fact, the office of collector was initially assigned a pivotal position in local administration by the British in 1786. All local bodies in India exist at district or subdistrict levels.4 Mechanisms of intergovernmental relations include the National Development Council (ndc), set up in 1952 by a Cabinet resolution to consider matters relating to economic development and fiscal policy, and the Inter-State Council (isc). The isc was set up under Article 263 of the Constitution on 28 May 1990 by a presidential order to look into better coordination of policy and action between the Union and the states. There has, however, been debate about how to facilitate fuller utilization of the potential of these institutions.5 The legal system is based on English common law. The Constitution provides for a single integrated judicial system at the central level. At the apex is the Supreme Court. The chief justice of India is appointed by the president on the recommendation of the prime minister. There are twenty-five judges of the Supreme Court, who are also appointed by the president on the recommendation of the chief justice. The Supreme Court is the protector of the fundamental rights of the citizens and the guardian of the Constitution. The judiciary is an independent institution and enjoys considerable trust of the people. The Constitution confers on the Supreme Court the power to declare any legislation of Parliament unconstitutional, thereby creating an important check on the government of the day and ensuring the supremacy of the Constitution. The independent working of some of the national statutory commissions, such as the National Human Rights Commission, the National Women’s Commission, and the National Minority Commission, has added to the vitality of India’s democratic system. The media also enjoy full freedom and autonomy. The free media have given Indian democracy an institutional depth and vibrancy.

h i s t o r y, s t r u c t u r e s , a n d i n s t i t u t i o n s of local government The history of the panchayat (meaning “assembly of five persons”), which looked after the affairs of the village, stems from ancient India. The panchayats had both policing and judicial powers. Prevailing custom and religion elevated them to a sacred position of authority at the head of the hierarchical caste system, where they ensured that persons belonging to a particular caste adhered to its code of social conduct and ethics. Although this was a general pattern in the Indo-Gangetic plains in the North, the village panchayats in southern India generally each had a village assembly whose executive body consisted of representatives from various groups and

Republic of India

171

castes. These village bodies, in both the North and the South, have been the pivot of administration, the centre of social life, and above all, a focus of social solidarity. These characteristics of the village panchayats remained unchanged even during the medieval and Mughal periods. Although, with their caste-ridden feudal structure of those days, the village panchayats left much to be desired, Sir Charles Metcalfe, the British provisional governor general of India (1835–36), called them “the little republics.”6 The municipal council for towns in India, in the sense of an accountable institution, was the creation of British colonial rule. The British were concentrated mainly around the trading centres. As a result, their interest was limited to the creation of local governments of nominated (and not elected) members in the major towns for purposes of revenue collection. The members were nominated by the district collector on behalf of the provincial governments. Thus, as early as 1687, a municipal corporation was set up in Madras, structured on the British model of the town council. Representing local government of a sort, these bodies continued over the years to comprise nominated members, with no elective element whatsoever. After the first municipality came into being, it took the British rulers nearly 200 years to pass a resolution for decentralization of power, thereby bringing about administrative efficiency in meeting the demands of the people, and to add to the financial resources available to local government. Although this resolution by Viceroy Lord Mayo’s council in 1870 was largely a result of fiscal compulsion, it was nevertheless a landmark development. Another landmark in the same year was the revival of the traditional village panchayat system in Bengal through the Bengal Chowkidari Act. This Act empowered district magistrates to set up panchayats of nominated members in the villages who could levy and collect taxes to pay for the watchmen engaged by them. Another milestone was the British government resolution of 18 May 1882, passed during the viceroyalty of Lord Ripon. It provided for the establishment of rural local boards, two-thirds of whose members were to be elected representatives, presided over by nonofficial chairmen. This marked the period during which the term “self-government” began to gain currency. In 1909 the Royal Commission on Decentralisation, constituted by the British government, recommended that “it is most desirable, alike in the interests of decentralisation and in order to associate the people with the local tasks of administration, that an attempt should be made to constitute and develop village Panchayats for the administration of local village affairs.” However, the commission visualized certain difficulties with regard to the success of local governments because of “caste and religious disputes” or the influence of the landlords with large estates, which “may prevent free action by the tenantry.” The conclusion of the commission, however, was that these difficulties were “far from insurmountable.”7

172

George Mathew and Rakesh Hooja

Furthermore, the Montagu-Chelmsford Reforms of 1919 continued the process of decentralization. Under the proposed scheme of diarchy, areas such as public health, education, and local self-government were to be brought under the domain of Indian ministers in the provinces. To make local self-governments fully representative and responsible, it was envisioned that they would be subject to complete popular control. By 1925, in almost all provinces and in a number of native states, Acts were passed for the establishment of formally constituted panchayats. These statutory panchayats covered a limited number of villages and generally had a limited number of functions. The Government of India Act 1935, which inaugurated provincial autonomy, marked another important stage in the evolution of panchayats. With popularly elected governments in the provinces, almost all provincial administrations felt duty bound to enact legislation for further democratization of local self-government institutions, including the village panchayats.8 It must be noted that village panchayats were central to the ideological framework of India’s freedom movement. Mahatma Gandhi defined his vision of village panchayats as a complete republic based on perfect democracy and individual freedom.9 Despite this strong ideological framework, when the Constitution of India was written, panchayats were relegated to a place in the Directive Principles of State Policy,10 which are nonjusticiable principles. India’s development in the early 1950s ignored Gandhi’s idea of panchayats. The folly of this approach was soon realized. The 1957 report of the Team for the Study of Community Projects and National Extension Service recommended that “participation in community works should be organised through statutory representative bodies.”11 This provided impetus to address the prevailing vacuum and accelerated the pace at which local governments were constituted in all the states. Prime Minister Jawaharlal Nehru inaugurated the first panchayat at Nagaur in the State of Rajasthan on 2 October 1959, hailing the system as “the most revolutionary and historical step in the context of new India.”12 The thinking in India was then that democracy at the top would not be a success unless it was built from below. S.K. Dey, minister for community development in Nehru’s Cabinet and the architect of panchayats, viewed democracy as arising from an organic and intimate relationship between the gram sabha (village assembly) and the Lok Sabha. By 1959 nearly all the states had passed panchayat legislation, and by the mid-1960s panchayats had reached almost all parts of the country. On average, a panchayat covered a population of about 2,400 in two to three villages. Younger and better leadership was emerging in the local governments, whose functioning was met with a fairly high degree of satisfaction among the people.

Republic of India

173

The 1978 report of the Committee on Panchayati Raj Institutions, which suggested measures to strengthen the rural local governments in order to enable a decentralized system of planning and development, was a turning point in the concept and practice of panchayats. It was a seminal document seeking to make panchayats an organic, integral part of India’s democratic process. The West Bengal government in 1978, followed by the states of Andhra Pradesh, Jammu and Kashmir, and Karnataka, revised their panchayat Acts and gave new life to the panchayats. During this phase, the panchayat was transformed from a development agency into a political institution. The prerequisites for panchayats and municipalities to function as institutions of self-government are (1) clearly demarcated areas of jurisdiction, (2) adequate power and authority commensurate with responsibilities, (3) necessary human and financial resources to manage their affairs, and (4) functional autonomy within the federal structure. This could not, however, be achieved in full measure because the local governments were not designated a place in the operational part of the Constitution. Therefore, drawing from the lessons and experiences of about four decades, the 73rd and 74th Amendments to the Constitution came into effect in April and May 1993. They marked a remarkable transformation in the nature and substance of the local government system in the country. The adoption and content of these two amendments will be examined in the following section. The focus on decentralization and urban governance in India has been an offshoot of the increasing urban population and of the concentration of major development activities in the cities. The increase in urban population over the decades (table 6.1) has been due to a natural increase in the population, reclassification of new towns, and rural-urban migration. During the period 1991–2001, the urban population grew by 31.48%. Most of the growth occurred in the Class I cities (populations of more than 100,000). The share of Class I cities of the total urban population of the country grew from 26% in 1901 to 68.7% in 2001. There are 383 Class I cities today, of which 35 are metropolitan cities with populations of 1 million or more. The population of the metropolitan cities comprises as much as 38% of the total urban population. Migration has been a major factor in the growth of the urban population, especially in large cities. Metropolitan cities are part of larger urban agglomerations having regional dimensions. They encompass not only the main city, which has municipal-corporation status, but also a number of other urban and rural local governments surrounding the main-city corporation. The Kolkata metropolitan area, for example, covers not only the city of Kolkata but also forty other municipal bodies and several panchayats spread over three adjacent districts. The 74th Constitution Amendment Act defines a metropolitan area as “an area having a population of one million or more comprised of one or

174

George Mathew and Rakesh Hooja

Table 6.1 India: Trends in urbanization Year

Urban population (millions)

Percentage of total population

Percentage of decadal growth

Percentage of contribution to gdp

1981

159.46

23.34

46.10

47

1991

217.61

25.71

36.47

55

2001

286.12

27.82

31.48

60

Source: Census of India (2001).

more districts and consisting of two or more Municipalities or Panchayats or other contiguous areas.” The multimunicipal character is therefore an essential requirement of a metropolitan area. According to the Census of India (2001), thirty-two urban agglomerations with a population of 1 million or more fulfil this criterion. The remaining three are principally single-municipality corporations (table 6.2). Metropolitan areas with a population above 300,000 are known as city corporations. They have stronger institutional arrangements and better access both to resources and to infrastructure. They have the necessary resources for development-related activities, and some of the municipal corporations also have the capacity to access capital markets from domestic as well as international sources. These are the cities that have attracted most of the emerging business and economic activities during the past decade of economic liberalization, leaving the smaller towns with extremely limited financial and human resources to lag behind.

constitutional recognition of local governments The experts, the activists, as well as the followers of Gandhi’s philosophy of village republics have analyzed the Indian experience and concluded that constitutional recognition of local governments is a necessary condition for their effective functioning. Because there was no constitutional support for the panchayats and municipalities in India, the state governments did not take them seriously. Therefore, from the early 1980s, a demand for constitutional recognition began to come from social activists, intellectuals, and panchayats themselves. As a result, by the end of 1988 a subcommittee of the Consultative Committee of Parliament for the Ministry of Rural Development recommended that panchayats be constitutionally recognized. It was against this backdrop that on 15 May 1989 the 64th Constitution Amendment Bill on panchayats was introduced in Parliament,13 followed by the 65th Amendment Bill on municipalities on 7 August 1989. Although

Republic of India

175

Table 6.2 India: Top ten metropolitan cities in 2001 Rank

City

State

Population (millions)

1

Greater Mumbai

Maharashtra

16.4

2

Kolkata

West Bengal

13.2

3

Delhi

Delhi

12.9

4

Chennai

Tamil Nadu

6.6

5

Bangalore

Karnataka

5.7

6

Hyderabad

Andhra Pradesh

5.7

7

Ahmedabad

Gujarat

4.5

8

Pune

Mahashtra

3.8

9

Surat

Gujarat

2.8

Kanpur

Uttar Pradesh

2.7

10

Source: Government of India, Ministry of Urban Development and Ministry of Urban Employment and Poverty Alleviation, Jawaharlal Nehru National Urban Renewal Mission (jnnurm ), 2005.

the 1989 bills were a welcome step, there was serious opposition to them on two basic grounds as a result of their political overtones. First, the bills overlooked the states and were seen as an instrument of the Union to deal directly with the local government institutions. Second, the bills were imposing a uniform pattern throughout the country instead of permitting individual states to legislate the details, keeping in mind the local circumstances. The bills failed to meet the required majority by three votes in the upper house on 13 October 1989. By 1991 all political parties through their statements and manifestos supported a constitutional amendment to strengthen panchayats, and a propanchayati raj climate was created in the country. On 23 December 1992 two Constitution amendment bills – one for the panchayats and the other for the municipalities – were passed by Parliament. They came into force as the Constitution (73rd Amendment) Act 1992 on 24 April 1993 for the panchayats and as the Constitution (74th Amendment) Act 1992 for the municipalities on 1 June 1993. The 73rd Amendment provided for each state to constitute panchayats at village, intermediate, and district levels, and the 74th Amendment provided for the constitution by individual states of nagar (or urban) panchayats for areas in transition from a rural to an urban character, municipal councils (often popularly referred to as town municipalities) for smaller urban areas, and municipal corporations (also at times referred to as city corporations) for large urban areas. In many states, such local bodies were already in existence before the state enacted implementing Acts.

176

George Mathew and Rakesh Hooja

Today, there are 537 district panchayats, 6,094 block/tehsil/mandal panchayats at the intermediate level, and 23,293 village panchayats in rural India. The urban local governments, which cater to about 30% of the population, are classified according to the size of the urban population, structures, and economic conditions. The total number of urban local governments is 3,551. Of these, 2,009 are nagar panchayats for areas in transition from rural to urban, 1,430 are municipal councils for smaller urban areas, and 112 municipal (city) corporations serve the larger urban areas. There are sixty-four cantonment boards, equivalent to a local municipal body, for areas controlled by the military. These boards function under the aegis of the Ministry of Defence. The cantonment boards are statutory bodies having a mix of ex-officio members, nominated members, and elected members. It may be noted here that in Jammu and Kashmir, the Acts enacted by Parliament do not apply unless the state legislature passes them. The State Panchayat Act of Jammu and Kashmir 1989 was amended twice, on 15 January 2002 and subsequently on 17 December 2003, to include the features of the 73rd Amendment to the Constitution. Also, provisions of the Constitution amendment Acts do not apply to the tribal areas mentioned in the Fifth and Sixth Schedules of the Constitution, as they are entitled to special privileges and status. Under the Sixth Schedule, in the states of Meghalaya, Mizoram, and Nagaland, as well as in the hill areas of Manipur, the traditional tribal-village and district councils work as local governments. However, they do not have the economic and political advantages enjoyed by the panchyati raj governments in the rest of the country. They have limited funds and are under no obligation to hold regular elections and reserve seats for women. Moreover, they are dominated by bureaucrats. Fifth Schedule areas are in the states of Andhra Pradesh, Bihar, Chattisgarh, Gujarat, Himachal Pradesh, Jharkhand, Madhya Pradesh, Maharashtra, Orissa, and Rajasthan.14 Parliament extended the 73rd Amendment Act to these areas on 24 December 1996 by legislating the Panchayats (Extension to the Scheduled Areas) Act 1996. The Extension Act is notable for the vast powers given to the tribal local governments. Thus the journey of India’s local government system from the “local selfgovernment” idea of Lord Ripon to the “institutions of self-government” concept in the Constitution took more than a century. Because the constitutional amendments opened possibilities for fulfilling these conditions, the new panchayati raj was seen as the “third order of governance,” the Union and the states being the first and second orders, respectively. An important aspect of the Constitution amendment Acts is that the democratic base of the Indian polity has widened. Before the amendments, the democratic structure, through elected representatives, was restricted to the two houses of Parliament, the state assemblies, and the

Republic of India

177

assemblies of the Union Territories. The magnitude of the institutions of local government is best appreciated in the context of the governance institutions of the Union and states (fig. 6.1).

governance role of local government The 73rd Amendment empowered the states to “endow Panchayats with such powers and authority as may be necessary to enable them to function as institutions of self-government.”15 Such a law “may contain provisions of the devolution of powers and responsibilities upon Panchayats at the appropriate level, subject to such conditions as may be specified therein with respect” to the preparation and implementation of plans and schemes “for economic development and social justice” in respect of the twenty-nine subjects listed in the Eleventh Schedule.16 A similar provision applied to municipalities in respect of eighteen subjects.17 Subjects brought under the domain of the panchayats include economic development, employment generation, poverty alleviation, education, health, social welfare (including women and child development), and infrastructure development. Subjects brought under the domain of municipalities are urban planning, including town planning; planning for economic and social development; roads and bridges; water supply for domestic, industrial, and commercial purposes; public health, sanitation conservancy, and solidwaste management; urban poverty alleviation; and public amenities, including street lighting, parking lots, bus stops, and public conveniences. The subjects for the panchayats are specific to rural areas, and the subjects suggested for municipalities are applicable only in the urban context. Because there is a wide gap between urban and rural India, these differences are significant, and the specially applicable subjects are therefore allocated to the panchayats and municipalities on the basis of geographical area. Although forty-seven subjects are thus listed to be transferred to the panchayats and the municipalities, no state has yet transferred all these powers to the local bodies. A major problem regarding the transfer of functions from a state government to local government institutions is the nature of the subjects. The subjects are so broad in scope that in certain instances all the spheres of government – Union, state, and local – will have to undertake some implementing responsibility in varying degrees. Furthermore, no power has been given outside the subjects listed in the Eleventh and Twelfth Schedules. Except in a few states, the local bodies and their elected members do not have adequate assigned functions; nor do they have sufficient functionaries and funds provided by the state governments. The total expenditure of local governments as a proportion of the combined expenditure of the Union, states, and local governments amounted

178

George Mathew and Rakesh Hooja

Figure 6.1 India: Local government system under federal polity Union of India (first order) Two Houses of Parliament: Lok Sabha (EM – 543) and Rajya Sabha (EM – 250) Total: EM – 793

States and Union Territories (second order) 28 states and 7 Union Territoriesa Total: EM – 4,508

Local governments (third order)

All panchayats: 239,544 EM – 2,828,779 WM – 1,038,989 WP – 79,378 SC/ST – 853,931

Municipalities’ urban local bodies at all levels: 3,551 EM – 68,554

District panchayats: 537 EM – 15694 WM – 5779 WP – 198

City corporations: 112 WP – 34

Intermediate panchayats: 6,094 EM – 156,609 WM – 58,094 WP – 1,970

Town municipalities: 1,430b WP – 476

Village panchayats: 232,913 EM – 2,656,476 WM – 975,116 WP – 77,210

Nagar panchayats: 2,009 WP – 670

Gram sabha (village assembly)

Ward committees

Autonomous councils for tribal and special areasc EM = elected members, WM = women members, WP = women presidents, SC/ST = Scheduled Caste and Scheduled Tribe members. a Of seven Union Territories, only two have an assembly. b Smaller urban area: population under 300,000. c Autonomous councils have been created in West Bengal, Jammu and Kashmir, and Assam for the administration and development of tribal areas with special features, but they also have statutory local governments.

Republic of India

179

to 6.4% in 1998–99 and 5.1% in 2002–03. The decline in the expenditure of panchayats (which covers nearly 70% of the population) from 3.9% in 1998–99 to 3.3% in 2002–03 is a matter of concern.18 Institutions of Local Government The institutional arrangement of local authorities varies according to the type of institution, but there are some common features. For rural local governments, there is a three-tier system at the village, intermediate (block/taluk), and district levels. Smaller states with a population below 2 million have only two tiers at the village and district levels. Seats at all levels are filled by direct election, and seats are reserved for the Scheduled Castes (scs) and Scheduled Tribes (sts) in proportion to their population. One-third of the total number of seats is reserved for women. One-third of the seats reserved for scs and sts are also reserved for women. Moreover, one-third of the offices of chairpersons at all levels is reserved for women. For all local governments, there is a uniform five-year term of office, and elections to constitute new bodies must be completed before the expiry of the term. In the event of dissolution, elections must be held within six months. An independent election commission in each state is responsible for superintendence, direction, and control of the electoral rolls and for conducting local government elections. Although responsibility for changing the size/boundaries of a panchayat rests with the state government, some states have delegated the power to their state election commission. Provisions for an assembly of all eligible voters in a panchayat, popularly known as a gram sabha, and for the ward committees in the municipalities are aimed at ensuring direct democracy. These forums offer equal opportunity to all the citizens of a village or town to discuss, criticize, and approve or reject proposals of the local governments and to assess their past performance. The village assembly also has the power to identify beneficiaries of various poverty-alleviation programs, propose an annual plan, discuss budget and audit reports, and review progress. It is a grassroots watchdog of democracy. The village assemblies and ward committees are statutory bodies, and they are expected to meet at least three times a year. However, they have not been able to achieve the status and position they should have attained by now because most state governments have failed to devolve specific functions to village assemblies and ward committees that would enable them to play a significant role in local self-government. There is no local government staff cadre for a panchayat. Only the lowestlevel functionaries are directly recruited or paid by the local governments. All other functionaries are deputed state government employees working in various departments of the government. There is a strong demand to create local government staff cadre at various levels, but this is yet to be implemented in practice.

180

George Mathew and Rakesh Hooja

The executive power of the panchayats rests with the president or chairperson at all three levels. He or she, in consultation with council members, acts as a political executive. A village panchayat, which is the first level, has a population size ranging from 1,200 in Punjab to 15,000 in West Bengal and up to 30,000 in Kerala. The intermediate-level panchayats are elected directly, with members electing the chairperson. The average membership of the intermediate panchayats is between fifteen and twenty persons. Mayors and councillors are not full-time officials,19 so they do not receive salaries or wages, nor do they have pension benefits. The social status and power associated with the posts, however, are more significant than the remuneration they receive, which is meagre, although they have perks and staff as well as meeting and transport allowances, which vary from state to state. Many people get elected again and again, and local elected offices are becoming stepping stones for those who want to get elected to state assemblies and the Union Parliament. Historically, the commissioner system (popularly known as the Bombay Model) has been developed for managing municipal corporations. Under this system, the state-appointed commissioner, by virtue of his or her position as the administrative head and due to his or her statutory position in the municipal authority structure, wields enormous executive power. The mayor, unlike his or her Western counterparts, is devoid of powers and authority to decide on the municipal agenda. He or she remains merely a ceremonial head. There is no democratic control over the commissioner. The municipal statutes provide the commissioner with enough power to work independently in discharging municipal tasks and to cover a wide range of subjects. The elected councillors principally have advisory roles and discharge these roles through various standing committees. Even though such committees can make decisions on certain matters, they have no authority to oversee execution of the decisions. Such power rests with the commissioner, who draws his or her authority from the statute itself. The elected councillors can only draw the attention of the executives to any lapse in the implementation of municipal tasks. For the past several decades, voices have been raised, especially by the All India Council of Mayors (aicm), against such a bureaucratic authority structure because it marginalizes the mayor. The emergence of the mayorin-council (mic) system for municipal governance, which is modelled on the cabinet system of government, was a response to the essentially bureaucratic nature of municipal government. West Bengal was the first state to deviate from the Bombay Model and to introduce the mic system in the Kolkata Municipal Corporation (kmc) and the Howrah Municipal Corporation (hmc) through the Kolkata and Howrah Municipal Corporation Acts of 1980. The mic was constituted in Kolkata and neighbouring Howrah for the first time after the municipal elections in

Republic of India

181

1984. The kmc is the body corporate with 141 elected members. The mic is composed of the mayor, deputy mayor, and ten elected councillors of the corporation nominated by the mayor. The corporation elects the mayor and the chairperson at its first meeting. The mayor has a five-year tenure and is the administrative head entrusted with the power and authority to run the corporation and provide guidance and supervision through his or her mayor-incouncil. The chairperson functions like the speaker of the state assembly and presides over the meetings of the corporation. The mayoralty of the kmc, even though not subject to direct election, has emerged as an effective and strong position, unlike in Mumbai and Delhi. The kmc’s mayor has a very crucial role to play in the day-to-day administration of the corporation. Each member of the mic is in charge of a certain functional department and serves as its administrative head. The officials of the department report to him or her. All important decisions are made by the mic at weekly meetings. Because of the mic system, the kmc is not required to have various statutory and special committees for decision making, as is the case in other metropolitan cities like Chennai, Delhi, and Mumbai. It has only one statutory committee, the Municipal Accounts Committee (mac), consisting of five to seven persons elected from among the councillors by themselves (by means of a single transferable vote) and two experts with special knowledge of financial matters. As a separate statutory body, it oversees the functions of the mic to ensure financial propriety. West Bengal introduced the mic system to other municipal corporations in 1995 and extended it to other municipalities through a similar system, that of the chairperson-in-council. In Madhya Pradesh the mayor-in-council system for corporations and the president-in-council system for other municipalities were introduced in 1998. The mayor is elected directly by the people. The ten mic members are selected by the mayor from among the elected councillors. The post of the deputy mayor has been replaced by that of speaker of the corporation, who presides over all the meetings of the corporation, including mic meetings. In 1998 the mic was introduced in Maharashtra in the two municipal corporations of Mumbai and Nagpur on an experimental basis for one year, but it was discontinued after the initial period. The corporations reverted to the old Bombay Model in 1999.20 Delhi, the capital city of the country, was designated the National Capital Territory (nct) of Delhi in 1995 by the National Capital Territory Act 1991. The population of Delhi, as per the Census of India (2001), is 13.8 million, of which the urban population constitutes 93%. The capital city’s governance is shared between the Union government and the state government. The Delhi Jal (Water) Board, a parastatal body, is responsible for water supply, sanitation, and drainage. Electricity is provided through a public-private partnership.

182

George Mathew and Rakesh Hooja

The nct of Delhi has an area of 1,483 square kilometres. Three local bodies look after the civic needs of Delhi: the Municipal Corporation of Delhi (mcd) (1,397.3 km2), the New Delhi Municipal Corporation (ndmc) (42.7 km2), and the Delhi Cantonment Board (dcb) (approximately 43 km2). The mcd is an elected body, and the ndmc and the dcb are nominated by two ministries of the Union government: Home Affairs and Defence, respectively. Whereas the executive head of the mcd is the municipal commissioner, the ndmc and the dcb are headed by the chairperson and the chief executive officer, respectively. The chief executives of the mcd and ndmc are appointed by the Ministry of Home Affairs, whereas that of the dcb is appointed by the Ministry of Defence. The chief minister and the ministers of health and urban development in the nct government do have some responsibilities to ensure that basic civic services are provided satisfactorily in the capital so that public health and hygiene are maintained. In other respects, the Delhi state government functions like the government of any other state, handling power supply, transport, industrial development, and revenue administration. However, the planning and development of land, as well as the maintenance of law and order, are not in the hands of the state government but are dealt with directly by the Union government. The Delhi Development Authority, which is the single largest landholding, planning, and development agency in the country, works under the Union Ministry of Urban Development. Thus institutional responsibilities are diffused in Delhi, with a multiplicity of organizations having overlapping functions but no nodal agency to ensure coordination between them. The Metropolitan Planning Committee (mpc), discussed below, could have fulfilled the role of the nodal agency. Delhi has to date, however, not constituted the mpc. There are different levels of elected representatives who share the political turf in Delhi, such as members of Parliament (7), members of the state legislative assembly (70), and also members of the municipal corporation (160 elected and nominated). On average, a state assembly constituency in Delhi covers two municipal wards. The demands of, and expectations from, the voters being the same, both the members of the legislative assembly (mlas) and the municipal councillor have to ensure that their respective support bases are maintained. Hence in Delhi, unlike in other cities, the councillors and the mlas compete to secure funds for their constituencies. The rural areas of the nct of Delhi have a two-tier system of panchayati raj, the second tier being an advisory body at the block level. The panchayats have been virtually nonfunctional in Delhi since 1989 because after the 73rd Constitutional Amendment Act, no conformity legislation was passed by the legislative assembly of the nct of Delhi. Over the years, the village panchayats in Delhi have essentially confined themselves to the management of gaon (village) land.

Republic of India

183

Generally, the metropolitan areas fall within one state. In the case of Delhi, a broad area of over 30,000 square kilometres, consisting of the nct and a few other towns and rural areas around it, was conceived to be developed as a metropolitan region. This is known as the National Capital Region (ncr). This area cuts across four states, namely Uttar Pradesh, Haryana, Rajasthan, and Delhi. A National Capital Region Planning Board (ncrpb) has been constituted with representatives of all the above states and others. It has the mandate to prepare plans for the development of the metropolitan region and to coordinate and monitor implementation of such plans. The ncrpb is a unique institution in the country, for it is engaged in developing a region that is governed not only by multiple local governments but also by several state governments and by agencies of the Union government. Planning for development has been an important function of the Union and state governments ever since the first five-year plan was launched in 1951. However, a persistent criticism of the planning exercises has been that the plans are made from above by the Union government or the state governments, with priorities being conceived and decided, as Rajiv Gandhi succinctly pointed out, “at ethereal heights, far removed from the realities of the ground.”21 One of the key objectives of empowering local government institutions through constitutional amendments was to put an end to this “paternalistic planning” from above and to initiate a bottom-up process that would ensure people’s participation and reflect responses to realities on the ground. To realize this objective, the Constitution made two important provisions. First, as mentioned, it mandated the panchayats and municipalities to prepare development plans for their respective areas. Second, under Article 243zd, it introduced a new institution called the District Planning Committee (dpc), consisting principally of persons elected by the members of panchayats and municipalities from among themselves. In the dpc there may be some nominated members, who may be drawn from among experts or social activists, but the number of such nominated members cannot exceed one-fifth of the total. The constitutional mandate for rural and urban local government planning institutions is thus a milestone in institutionalizing decentralized planning. The core approach is that, at the micro levels of panchayats and municipalities, plans are to be prepared with people’s direct participation. At the district level, both the individual panchayat and municipal plans would be consolidated by the dpc for preparation of the development plan for the entire district. In preparing such a district plan,22 the dpc also has to oversee matters of common interest between panchayats and municipalities, including spatial planning, sharing of physical and natural resources, the integrated development of infrastructure, environmental conservation, and assessment of the extent and type of available resources.

184

George Mathew and Rakesh Hooja

A metropolitan region cuts across the jurisdiction of multiple local governments – urban and rural. The major city within such a region exerts considerable pressure on fringe areas in several ways. An integrated approach is necessary to address the development needs of such regions. Against this background, Article 243ZE of the Constitution provided for the establishment of a Metropolitan Planning Committee (mpc) for each designated metropolitan area. The mpc is the ultimate planning organization in a metropolitan area. It prepares a metropolitan plan after consolidating the plans of each municipality and panchayat within that metropolitan area. Like the dpc, it also oversees matters of common interest between the rural and urban areas. These include spatial planning, sharing of water and other physical resources, integrated development of infrastructure, and environmental conservation. In preparing the metropolitan plan, the mpc also takes into account investments likely to be made in the metropolitan area by agencies of the Government of India and of the state government.23 Managing growth in metropolitan agglomerations involves several departments and agencies of both the Union and state governments. Because of the variety of tasks, multiple organizations have the responsibility to discharge various functions; therefore, such multiplicity is inevitable. The mpc has been conceived as an intergovernmental, interorganizational collaborative platform involving the local, state, and federal governments for preparation of a development plan for a metropolitan area in association with its main city. Although fifteen states have metropolitan areas, only eight states (Karnataka, Kerala, Maharashtra, Punjab, Rajasthan, Tamil Nadu, Uttar Pradesh, and West Bengal) have passed enabling laws for the constitution of mpcs. The Kolkata Metropolitan area in West Bengal was the first to set up an mpc in 2001. As a case study, let us examine its functioning. The Kolkata Metropolitan Planning Committee (kmpc) consists of sixty members, forty of whom are representatives elected from among all the elected councillors of the forty municipalities and from among the chairpersons of the 133 village panchayats, intermediate panchayat samitis, and district parishads within the Kolkata Metropolitan Area (kma). Of these forty elected members, six belong to rural areas and the rest to urban ones. The remaining twenty members are nominated by the Union government, state government, and other organizations related to planning and development. The Kolkata Metropolitan Development Authority (kmda) – a professional organization created originally for planning and implementing schemes for the Kolkata Metropolitan Area – is the secretariat of the kmpc, and the secretary of the kmda has been appointed as its secretary. The Executive Committee of the kmpc is headed by the urban development minister of the state government. The kmpc has five sectoral committees for (1) drainage, sewerage,

Republic of India

185

and sanitation; (2) traffic, transportation, railways, and waterways; (3) water supply; (4) education, health, employment, and bustees (slums); and (5) environment, wetlands, urban amenities, and heritage.24 Apart from the local government institutions and the mpc, some other bodies, such as the West Bengal Housing Board and the Housing and Infrastructure Development Corporation, pursue their own programs within the metropolitan area. Coordination between them and the mpc is an important issue. To mitigate the problem, the kmda has formulated a vision document and a perspective plan, which all the agencies, including the local government institutions, have to keep in mind when preparing their own development plans.

financing local government Under the Constitution, state governments are required to endow the panchayats and municipalities with financial powers and functional responsibilities.25 It is thus the state governments that decide the fiscal resources available to both rural and urban local governments in the form of the taxes, duties, tolls, and fees they collect as well as the grants-in-aid they receive. The revenue of local government may be broadly classified as deriving from four sources: (1) the consolidated fund of the state as per the recommendations of the State Finance Commission, (2) the Union government through Union-sponsored schemes, (3) grants-in-aid as per the recommendations of the Union Finance Commission, and (4) own-source revenue. Own-source revenue contributes the least to the coffers of local governments. There are a number of taxes that local governments may impose, with much interstate variation. By and large, the main own sources of revenue for rural local governments are the professional tax, property tax, cess (i.e., assessment over and above the existing tax) on land revenues, surcharge on additional stamp duty, tolls, advertisement tax, octroi (i.e., tax on goods entering a municipality/panchayat), non-motor-vehicle tax, and user charges. These sources contribute only 6% to 7% of their total expenditure. Village panchayats have powers to levy most of the taxes, but a few items are given to intermediate and district panchayats.26 In general, the tax base covers property, persons, and business. There are also a large number of fees, charges, and other non-tax-revenue items. For municipalities, the main sources of income are taxation, grants-inaid from the state governments, shares of taxes levied and collected by state governments, and nontax revenue from municipal undertakings. The taxes are mainly on property, buildings, land (including open land), vehicles, animals, boats, professions, trades, callings, and employment. There is also a terminal tax on passengers, including the pilgrimage tax, and there is the theatre or show tax. In most states, the property tax and the share of

186

George Mathew and Rakesh Hooja

receipts from the entertainment tax form the main sources of income. Nontax revenue consists of fees, fines, and income from public undertakings, such as tramways, buses, and distribution of electricity. The finances of local governments are not in good shape. The own tax revenue of the local governments of fifteen major states as a percentage of these states’ own tax revenue plus local tax revenue was only 3.97% in 2002–03. The own-source revenue (i.e., tax and nontax revenue) of local governments (panchayats and municipalities) as a proportion of combined tax and nontax revenue of the federal, state, and local governments for 1998–99 was 1.9%, and it remained so in 2002–03. The authority of local bodies to levy taxes is determined by the state government concerned, which also decides whether it wants to share revenue from certain taxes with local bodies. For example, in Kerala, stamp-duty and land-tax revenue is shared between the local governments and state government. The potential for local governments to tap local revenue sources remains unexploited. According to a study conducted by the Centre for Development Studies on the mobilization of resources by panchayats, even in Kerala, which is a front-running state with regard to fiscal decentralization, less than 40% of the revenue potential from property tax, professional tax, and entertainment tax is mobilized.27 Andhra Pradesh, Haryana, and Punjab have not yet exploited the huge potential of land-tax revenue. It may be noted that the poor tax performance of local governments can be attributed mainly to the following factors: inadequate tax assignments, the less elastic nature of those taxes, low tax rates imposed by the state or local governments, the absence of adequate staff support for tax collection, and the unviable size of village panchayats. Overall, local government institutions are not free to change the tax policy. The same applies to local borrowing, with local government institutions having very limited borrowing powers. State governments have the flexibility to determine the framework within which local governments can borrow from the market. Urban local governments are permitted to borrow from state finance institutions as well as from the market. Rural local governments, however, do not have the freedom to borrow from the market, but interstate variations in respect of their freedom to borrow from the state financial institutions do exist. Some state Acts (e.g., the Kerala Panchayati Raj Act) empower panchayats to borrow from finance institutions, subject to clearance by the state government. In West Bengal prior approval from the state government is not required for panchayats to borrow from financial institutions. In a few states, panchayats are not permitted to borrow from any financial institution. Borrowings by a municipality were governed by the Local Authorities’ Loan Act 1914, which specified the purposes for which local bodies may take out a loan, its

Republic of India

187

amount, duration, repayment procedures, and so on.28 Today, several other statutes – such as the Public Debt Act 1944 and the Companies Act 1956 – and regulations of the Securities and Exchange Board of India control local government borrowings. Up to the mid-1990s municipalities raised loans primarily from financial institutions. In 1996, for the first time, the Credit Rating Information Services of India assigned an A+ credit rating to a bond of 1 billion rupees (US$28.5 million) issued by the Ahmedabad Municipal Council in Gujarat. Since then, urban local governments have tapped capital markets by issuing municipal bonds. Whereas some of them issue municipal bonds with a state government guarantee, the municipal corporations of Ahmedabad, Kolkotta, Ludhiana, Nagpur, and Nasik access the capital markets without a state government guarantee. Experience shows that only bigger municipalities are in a position to mobilize resources from the market and financial institutions, whereas medium-sized and smaller municipalities are unable to do so.29 Local governments receive both tied and untied grant funds. As most of the revenue comes from the Union government and the states, key institutions in the financing of municipalities are the Union Finance Commission and the various state finance commissions. The Union Finance Commission suggests measures needed to augment the consolidated fund of a state in order to supplement the resources of local government on the basis of the recommendations made by the finance commission of the state.30 The grant allocation for rural local governments by the Union Finance Commission is based on certain criteria, which have varying weightings, such as (1) population, (2) geographic area, (3) the difference between a rural locale’s per capita gross domestic product (gdp) and the highest per capita gdp among all the rural locales in a state, (4) own-source revenue efforts of the municipalities in a state, using the state’s own-source revenue as an indicator, (5) own-source revenue efforts of the municipalities in a state, using the state’s gdp as an indicator, (6) index of decentralization, (7) distance, (8) revenue efforts, and (9) deprivation index. It is mandatory for the state governments to constitute state finance commissions (sfcs) under Articles 243I and 243Y of the Constitution.31 The sfc determines for its state the principles on the basis of which financial allocations can be made by that state to the panchayats and municipalities. The sfcs recommend transfers of financial resources from state governments to local governments in the forms of tax shares, grants-in-aid, and tax assignments. The sfcs review the finances of local bodies in accordance with their functional responsibilities and fix the size of the divisible pool based on the functional domains of the state, panchayats, and municipalities. They evaluate the vertical gap, taking into account the tax assignments and expenditure assignments. The objective of every sfc is to reduce the horizontal fiscal imbalance in the state. sfcs recommend measures for improving the financial position

188

George Mathew and Rakesh Hooja

of both rural and urban local governments, and these recommendations are mainly related to assignments and sharing of taxes, duties, tolls, and fees. They also recommend the distribution of grants from the consolidated funds of the states. In all the states the first and second sfcs have submitted their reports, and in a few states the third sfc reports are also ready. To a large extent, the recommendations of the sfcs have been accepted by the state governments. Even so, most of the state governments have not cared to implement the recommendations. By and large, local governments are still at the mercy of the states. All states have empowered the local governments to levy taxes, such as on property, professions, and entertainment, but the rates are not fixed by them, nor is provision made for any exemptions. The composition of the state finance commissions does not follow any specific pattern, nor is there any criterion for it, as there is in the case of the Union Finance Commission, for which a separate Act exists. The sfcs use different means to determine the resource requirements of the local governments and to accommodate the horizontal fiscal balance. But in the absence of clear expenditure assignments, sfcs face problems as far as such assessments are concerned. For example, village panchayats in Andhra Pradesh, Madhya Pradesh, and Rajasthan neither impose nor collect the taxes that they are authorized to levy because they perceive such actions as unpopular with the people. It may be noted that the Twelfth Union Finance Commission devoted much attention to strengthening the fiscal domain of local government. It discouraged the reluctance of various local governments to generate their own sources of revenue. The commission held that “the principle of equalization extended to the local governments would mean that while lack of fiscal capacity at the State level as well as the local level can be made up, lack of revenue effort should not be made up.”32 The total expenditure of local governments (both panchayats and municipalities) as a proportion of the combined expenditure of federal, state, and local governments amounted to about 6.4% in 1998–99 and 5.1% in 2002–03.33 State variations are quite visible in respect of the controls that state governments exert over the expenditure of local government institutions. For example, local governments in Kerala are required to maintain a minimum of 5% of the total budget as surplus every year. By and large, huge unspent balances are left with local governments in most states and Union Territories. A significant share of the available funds remains unutilized in two Union Territories – Chandigarh as well as Andaman and Nicobar Islands – due to a lack of both functions and functionaries. Municipal expenditures on salaries and wages in many states exceed the revenue received by them from taxes, levies, and duties. These states

Republic of India

189

include Himachal Pradesh, Madhya Pradesh, Rajasthan, Uttaranchal, Uttar Pradesh, and West Bengal. Moreover, more than 50% of municipal expenditure is on salaries and wages, leaving a small amount for providing basic services. Several states have set up local fund-audit departments to conduct regular audits of the accounts of local governments. In fact, Article 243J of the Constitution provides for the audit of the accounts of panchayats; similarly, Article 243Z provides for the audit of the accounts of municipalities. The accountant-general in a state, who is the principal officer of the comptroller and auditor-general of the Government of India, gives technical support to many local fund-audit departments to improve the quality of their audits. In addition, the accountant-general occasionally conducts the audit of the accounts of local government institutions that have a budget size above a prescribed level. Moreover, a social audit and an independent evaluation of the performance of local governments also function in several states. The independent evaluation is conducted by committees of eminent citizens, constituted by the people. Fiscal relations between the states and local governments remain complex. The asymmetry in their functional and fiscal jurisdictions is a major area of concern. State laws limit the autonomy of municipal governments in deciding their tax policies, including tax rates, charges, fees, and exemptions. The absence of autonomy in matters related to tax policies, staff salaries, and borrowings is a major handicap of local governments in managing their finances. In many cases, panchayats must get permission from the local authorities to even spend the available funds. In some states, expenditure beyond a specified amount is subject to clearance. For instance, village panchayats in Kerala can undertake a project worth up to rs100,000 (US$2,064) without any clearance.34

supervision of local government The Union Parliament set the broad parameters of local governance by passing the two constitutional amendments. The extent of the Union government’s supervision is to monitor whether the state governments are following the constitutional provisions, such as the basic composition of local governments (i.e., reservation of seats) and their duration. For the settlement of all disputes, and to obtain clarification of the Constitution, the Union government has to approach the judiciary. Local government functions under the state governments. The latitude of freedom of local government is severely restricted because the Constitution gives the state governments all powers over local government. For instance, the legislature of a state may, by law, make provision for all aspects of panchayats, from their composition to their financing.

190

George Mathew and Rakesh Hooja

Senior officers of the Indian Administrative Service are the administrators of districts, which fall directly under the state governments. Several states have given the district collector supervisory powers over the local governments; they can set aside panchayat decisions and even dismiss the local governments and appoint administrators in their place. State civil servants and district collectors often compete with elected representatives of local governments; thus they are not keen to devolve functions and powers from the states to the local governments. Broadly, the checks and balances in terms of state control over local government institutions can be categorized as follows: • • • • • • •

power to cancel or suspend a resolution of a local body power to take action when a gram panchayat is in default power to remove elected representatives power to dissolve panchayats power to give direction to panchayats power to call for records and inspection power to conduct an enquiry

The state panchayat Acts empower government officials at various levels to remove elected members and presidents of panchayats or other functionaries. There have been instances of elected representatives being removed by authorities designated for this task under the relevant state laws. The circumstances warranting removal include grave misconduct, financial irregularities, and failure to carry out instructions. The correctness of such removal has often depended on whether procedures have been adhered to. In Kerala, although the power of removal rests with the state government, an enquiry by the office of the state ombudsman and its ensuing advice are prerequisites for removal. The issue of removal is often legally suspect, and many cases challenging such state action are pending in the courts. As a result, serious questions are being raised about whether a democratically elected member or president should be removed by a state government official. Although the “no confidence motion” is the accepted democratic norm to remove a president, rivalry between the ruling and opposition parties very often results in state officials taking steps to remove elected members or presidents of panchayats.

intergovernmental relations Since the enactment of the 73rd and 74th Amendments to the Constitution, rural and urban local governments have had well-defined domains of governance. Owing to the mismatch between the powers of taxation and responsibilities in the three orders of government, the Constitution calls

Republic of India

191

for the Union to transfer resources to local administrations. The path for the devolution of funds has been clearly laid out; it is from the Union to states and from the states to the rural panchyats and urban municipalities. The state planning boards with chief ministers as chairpersons look into the issues related to the development and finance of local governments. Overall, however, intergovernmental relations are exclusively between the state governments and local governments. Organized local government is as yet underdeveloped in India. Since 1960 there have been concerted attempts to bring the leaders of panchayats and municipalities together in a forum. The oldest forum is the All India Panchayat Parishad, followed by the All India Council of Mayors. Since the 73rd and 74th Amendments came into force, there have been attempts to set up state-specific associations, as well as associations based on various categories, such as women, dalits (“untouchable” caste), and tribes. The latest development was the registration of the Association of the Local Governance of India (algi) in May 2007. These are forums for demanding rights and also for engaging the state governments on issues related to the functioning of the panchayats and municipalities.

political culture of local governance When India became independent, there was a powerful idea, inspired by Mahatma Gandhi, that panchayats should be “nonpolitical,” meaning that political parties should be kept out of the functioning of local governments and their elections. Consensus was considered the best way to arrive at decisions. Gandhians were critical of political parties because they believed that parties impede the spirit of self-government and the liberation of local initiative. But another school of thought believed that the participation of political parties in local elections is both healthy and educative because unanimity and consensus mean continuation of domination by the traditional authorities and suppression of the new spirit of the youth. The Report of the Committee on Panchayati Raj Institutions (1978) unequivocally stated that political parties should be allowed to participate effectively in all spheres of government because it “would make for a clearer orientation towards programmes and would facilitate healthier linkages with higher level political processes.”35 It is further argued that the participation of political parties in local elections would “provide constructive outlet” for the parties that are not in power in the state sphere, enabling them to chalk out plans for program-based contests in the districts. This process, therefore, offers greater scope for weaker sections of society to avail themselves of the opportunities offered by the political system. Today, the accepted principle is that when the whole nation is ruled by political parties, local governments cannot exist and grow in a nonpolitical

192

George Mathew and Rakesh Hooja

set-up. Given that all governance is local, and since local governance is inextricably linked with the national, no panchayat or municipality can engage the crucial issues of the social and economic forces of the day without support from the political class. In a multiparty democracy, then, when local governments are envisaged as the basic units of the democratic edifice, they are destined to be political. After all, issues of economic development and social justice emanating from local governments are not devoid of any ideological orientation. The first state to hold local elections with official political party candidates was West Bengal. Today, in almost all the states, candidates with political-party affiliation, directly or indirectly, contest elections in all arenas – from the village to the district. As a result, the discussions and debates about local issues in public places are elevated to the level of political ideologies, and assessments are made of the balance sheets of political parties and the track records of political leaders. Local government elections are proving to be a churning process of ideas and action that creates a high level of political awareness. In fact, local governments are seen as nurseries for political leadership. Young blood is often attracted to local government institutions, as elections are based on political currents and ideology and inspired by state, as well as national, leadership. Wherever official parties have been involved in local governments, the enthusiasm of local people has been high; the percentage of voting has been unprecedented. Now, every five years, about 2,897,333 representatives, of whom 1,059,989 are women, are elected by the people through the democratic process. Women head about 198 district panchayats, 1,970 block/tehsil/ mandal panchayats, and about 77,210 village panchayats. Likewise, 34 city corporations, 476 town municipalities, and 670 nagar panchayats have women chairpersons. A large number of excluded groups and communities are now included in decision-making bodies. According to the Census of India (2001), the Scheduled Castes comprise 16.2% of the total population, and the Scheduled Tribes account for 8.2%. Presently, 853,931 members (29.47%) are elected to the panchayats from the sc/st communities. The national, state, and numerous other registered political parties play a significant role in the election process. On average, three times the number who are elected contest the elections, either directly with official party symbols or indirectly with party support. Prior to the constitutional amendments of 1992, the democratic institutions in India were more like a superstructure without a base, but now democracy has become deep-rooted, with an attractive edifice giving it a wider base and stronger foundation. Elections to panchayats attract the largest number of voters. For instance, in the latest elections held in the five states of Chattisgarh, Karnataka, Madhya Pradesh, Rajasthan, and Haryana, the average turnout was

Republic of India

193

73.2% (with Haryana showing 80%).36 The elections for Parliament and the state assemblies record lower voter turnout. The 1999 parliamentary election had a 59.99% turnout, and in 2004 it was 58.07%. The state assemblies’ average turnout, according to the latest estimate, is 62.94%, ranging from Jammu and Kashmir with 43.7% to West Bengal with 81.97%.37 Because of the political nature of elections, violence is frequently observed in local government elections. However, the rate of violence in the context of elections appears to be decreasing. For instance, in 1978 when panchayat elections were held in Bihar, 750 persons lost their lives, but in the 2001 elections the number came down to 136, and in the 2006 elections it was 50. Although proximity of people to the candidates, their conflicting interests, and party affiliation, as well as traditional rivalries, play a role in the escalation of violence, positive changes have been taking place as a result of the healthy democratic process.

local government’s role in the evolution of the federal system The 73rd and 74th Amendments have had a major impact on India’s concept of federalism. India is slowly becoming a multilevel federation with elected local governments at the district level and below. But only when the subjects mentioned in the Eleventh and Twelfth Schedules (listing local government functional areas) are removed from state control will these schedules assume a status equal to that of the Union and State Lists of functional areas in the Seventh Schedule. However, the qualitative change that has come about in the Indian federal structure is a matter of debate and discussion today.38 The strong undercurrent of thinking and advocacy vis-à-vis local government has been that a genuine federal structure hinges on decentralization to substate arenas.39 Multilevel arrangements in India, therefore, represent the ongoing search for new modes of adaptation to the pressure created by democratic development and contribute to making the federal system more responsive. India is opening up the possibilities for moving from a two-order federation (Union and states) to a multiorder one. The Constitution does not mention anywhere that panchayats and municipalities are the third order of government. Therefore, de jure, the Union and the states constitute the federal system, but de facto, the local governments have become the third order of governance because they have been defined as the institutions of self-government. The autonomous councils could be considered additional orders of government because they are de jure and de facto federal units created to satisfy substate aspirations. However, they are located only in certain areas, are

194

George Mathew and Rakesh Hooja

selectively applied, and are at varying stages of autonomous functioning. Even so, all these innovative substate arrangements helped to give new meaning and content to Indian federalism when panchayats and municipalities became institutions of self-government throughout the country. There is a view that the 1992 Constitution amendment Acts only strengthen administrative federalism and nothing more. The argument is that the amendment Acts strengthen administrative federalism in order to facilitate and encourage the states’ delegation of administrative and financial powers to local governments. However, the administrative powers and responsibilities of local governments, and their financial resources to exercise these powers and to discharge their responsibilities, are entirely derived from legislation that will have to be passed by the states. As they have no definite executive, legislative, financial, or judicial powers, then according to this school of thought, merely having constitutional status or regular elections does not confer on them the status of the third order of governance. However, one can say that the scope of the democratic and political processes that have taken place hitherto in the political structure have gone beyond administrative federalism. States, in contrast to their claims for autonomy in their federal-state relations, are reluctant to devolve powers to their intrastate institutions. The states have not complied with the requirements of transferring “functions, functionaries and funds” to local governments. There have even been instances when funds received from the Union government and earmarked for local governments have been diverted by state governments for their own immediate needs. As a result of the growing frustrations of the Union and local government institutions in this regard, there was even a move to ensure that the Union government fund the district panchayats directly.40 On 29 June 2004 the prime minister of India, at a meeting of the Conference of Chief Ministers and State Ministers in Delhi, proposed that the Union government adopt a system of providing block grants directly to district local governments. In response, there were protests from the states, which argued that it would take away the constitutional power of the states.41 That is to say, in India’s federal structure, there is no room for the Union government to deal in any manner – be it in the design of programs, fund allocation, or monitoring – directly with local governments. On the other hand, to bypass the local governments, the Union ministries and state departments concerned with various rural development programs, such as agriculture, health, education, women, child development, and welfare, are setting up parallel structures, mostly parastatal bodies, at the district level. They are registered societies, and funds are placed at their disposal, enabling them to undertake many Union-sponsored or state-sponsored schemes. They have staff, who belong to the state departments, going right down to the villages. Some of the active parallel structures

Republic of India

195

are district rural-development agencies, watershed-development programs, joint forest-management committees, district primary education programs, and several other state-specific institutions and programs. All these are controlled by a minister from the state government, members of the legislative assembly, and members of Parliament (in their electoral constituencies), along with the district collector and other officials. Panchayat presidents or representatives may also be members but without any power. In this context, the National Commission to Review the Working of the Constitution (2003) recommended further amendments to the Constitution to make panchayats and municipalities effective “institutions of self-government.” Devolving exclusive functions, assigned to them with financial resources (separate tax domains) to enable them to function as viable local government institutions, was the thrust of the commission’s recommendation.42 The constitutional amendments were a necessary condition for bringing local government to centre stage. But in order to implement them, both in letter and in spirit, and to effect the desired results, political will was the most important factor. However, in many situations the absence of political will on the part of the ruling parties has unfortunately left the local government system as a form without content. Local government comes under the domain of the states, and members of the legislative assemblies are unwilling to devolve powers to local governments. The provisions of the Constitution have not sufficiently provided for an integrated administration that works under the elected bodies, from villages and towns to the Union. The division between rural and urban local governments, effected by the two amendments, has created serious administration and governance problems. Management and administration of institutions in a district, maintenance of services, transfer of administrative staff, and several other related issues are creating unfavourable situations for panchayats and municipalities. A major issue is that of coordination between rural and urban local governments, as well as between the Union and various state government agencies operating in the local area or in the district. Many local functions, including law and order, are performed by the district administration, which is part of the structure of the state government. The historical significance of India’s multilevel federalism is not yet understood in its entirety by those concerned with the nation’s governance. In 2007, while India was celebrating the sixtieth anniversary of its independence, there was a call from civil-society organizations for a new culture of governance. Bottom-up planning has not been institutionalized in the majority of states, and district planning commissions have still not been set up. Therefore, on 24 October 2005 and 25 August 2006 the Planning Commission of

196

George Mathew and Rakesh Hooja

India sent circulars to all state governments outlining detailed guidelines on bottom-up planning through panchayats, municipalities, and district planning committees, in conformity with the constitutional provisions.43 Today, because of the new local government system (and in spite of stiff opposition), there is much greater recognition of gender equality, women’s position in society, and women’s participation in decision making. In the latest elections for the local governments in Bihar, 54% of those elected were women, a statistic that many consider to be a trendsetter. In fact, the theme of women’s representation in Parliament and state assemblies was triggered by the affirmative action in panchayats and municipalities. Since the new generation of panchayats became operational, the hopes and aspirations of the poor and deprived have risen. Their participation in village assemblies and in elections is relatively higher than participation by the members of other sections of society. The poor and marginalized are moving to centre stage, although the pace is slow. It is no small achievement that nearly 800,000 men and women from the former untouchable castes and tribes are being elected every five years and that thousands of them are heading panchayats and municipalities where they themselves, or an earlier generation, were not even allowed to sit on a chair. India’s once hierarchically ordered society is slowly but steadily adjusting to egalitarianism. Many innovative ideas and programs have followed the new local governments. The People’s Plan in Kerala, e-governance in village panchayats, the idea of social audits, new accountability mechanisms, and so on have all been made possible through the atmosphere created by the new panchayats. There is also more awareness about the need for checks and balances to make local governments free from corruption. One of the most discernible impacts of the panchayati raj system is on governance, which is now more structured, accountable, and transparent. The right to information has created a transparency mechanism, which has a bearing on corruption. As a result, the new system has fared better than before panchayats and municipalities acquired constitutional status. Apart from official audits, there are village assemblies in panchayats and ward meetings in municipalities where citizens can question the working of local government. Social auditing is now in vogue throughout the country. Because local governments are nearer to the people, the local community is better able to connect with them. But the change has not been uniform across the country. Last but not least, local government has become the subject of debate and discussion. If at one time it was a matter of concern to only a few thinkers and idealists, it is now of central concern not only to the nearly 3 million people who are elected but also to political parties, civil-society organizations, university departments, bilateral and multilateral organizations, and above all, the common people.

Republic of India

197

notes 1 Government of India, Ministry of Information and Broadcasting, India 2007 (Delhi: Government of India, Publications Division, 2007), 1. 2 The Union Parliament has powers to create states and Union Territories (uts), to merge states and uts, and to change their boundaries. uts are directly governed by the Union government. They include the National Capital Territory of Delhi, which has special status as a state. The total area of the seven uts is 8,998 square kilometres, and the population is 1,696,131. The uts were created for those small and far-flung areas having special colonial and cultural heritage (i.e., Andaman and Nicobar, Dadra and Nagar Haveli, Daman and Diu, Lakshadweep, and Puducherry), as well as for an area coming under interstate dispute (i.e., Chandigarh). 3 For detailed discussions of various aspects of Indian federalism, see Akhtar Majeed, “Republic of India,” in Constitutional Origins, Structure, and Change in Federal Countries, ed. John Kincaid and G. Alan Tarr, 180–207 (Montreal and Kingston: McGillQueen’s University Press, 2005); George Mathew, “Republic of India,” in Distribution of Powers and Responsibilities in Federal Countries, ed. Akhtar Majeed, Ronald L. Watts, and Douglas M. Brown, 155–80 (Montreal and Kingston: McGill-Queen’s University Press, 2004); Rajeev Dhavan and Rekha Saxena, “Republic of India,” in Legislative, Executive, and Judicial Governance in Federal Countries, ed. Katy Le Roy and Cheryl Saunders, 165–97 (Montreal and Kingston: McGill-Queen’s University Press, 2006); and M. Govinda Rao, “Republic of India,” in The Practice of Fiscal Federalism: Comparative Studies, ed. Anwar Shah, 155–77 (Montreal and Kingston: McGill-Queen’s University Press, 2007). 4 Rakesh Hooja and Sunil Dutt, eds, Evolving Role of Collector and District Administration (New Dehli: Kanishka, 2008). 5 Rekha Saxena, Situating Federalism: Mechanisms of Intergovernmental Relations in Canada and India (New Delhi: Manohar, 2006), 250–312. 6 Quoted in H.D. Malaviya, Village Panchayats in India (New Delhi: All India Congress Committee, Economic and Political Research Department, 1956), 144. 7 Quoted in ibid., 221. 8 George Mathew, “Panchayati Raj in India: An Overview,” in Status of Panchayati Raj in the States and Union Territories of India, 2000, ed. George Mathew, 3–22 (New Delhi: Institute of Social Sciences and Concept Publishing Company, 2000), 5. 9 M.K. Gandhi, “My Idea of Village Swaraj,” Harijan, 26 July 1942. 10 Constitution, Article 40. 11 Report of the Team for the Study of Community Projects and National Extension Service (New Delhi: Government of India, 1957), 23. 12 Hindustan Times (New Delhi), 3 October 1959. 13 K.C. Sivaramakrishnan, Power to the People (New Delhi: Centre for Policy Research and Konark Publishers, 2000), 42. This book gives the inside story of the constitutional amendment saga.

198 14 15 16 17 18 19 20

21 22

23

24

25 26

27

28

29 30 31

George Mathew and Rakesh Hooja

Constitution, Article 244(1). Constitution, Article 243G. Ibid. Constitution, Article 243W. M.A. Oommen, “Fiscal Decentralization to the Sub-State Level Governments,” Economic and Political Weekly, 11 March 2006, 898. Only very recently, the West Bengal government issued an order saying that mayors and presidents must be employed full time. Archana Ghosh, “Mayor-in-Council System in a Comparative Perspective: Issues and Recommendations,” in Mayor–in-Council System in a Comparative Perspective, ed. Archana Ghosh, 1–6 (New Delhi: Institute of Social Sciences, 2000), 3. Speech of Prime Minister Rajiv Gandhi introducing the 64th Amendment Bill in the Lok Sabha on 15 May 1989; see Lok Sabha, Debates, vol. 52, 38. Rakesh Hooja, “Decentralised Planning and the District Level,” in Decentralised Planning in Multilevel Framework, ed. Rakesh Hooja and B. Yerram Raju, 3–29 (Jaipur: Rawat, 1993); Rakesh Hooja and Meenakshi Hooja, Democratic Decentralization and Planning (Jaipur: Rawat, 2007). Prabhat Datta, Urbanisation and Urban Governance in West Bengal (Kolkota: Government of West Bengal, Department of Municipal Affairs, Institute of Local Government and Urban Studies, 2000). Archana Ghosh and Anurima Mukherjee Basu, “Urban Governance in Kolkata: Actors, Policies and Reform,” paper presented at the “Seminar on Urban Actors, Policies and Governance in Four Indian Mega-Cities,” Indo-European Research Programme, New Delhi, 23 to 24 January 2007. Constitution, Articles 243H and 243X. M.A. Oommen, “Basic Services, Functional Assignments and Own Revenue of Panchayats,” Occasional Paper Series No. 33, Institute of Social Sciences, New Delhi, 2004. R.P. Nair, “Mobilisation of Resources by Panchayats: Potential and Feasibilities, a Case Study of Six Selected Panchayats in Kerala,” Discussion Paper No. 70, Centre for Development Studies, Trivandrum, 2004. Om Prakash Mathur, “Local Government Organization and Finance: Urban India,” in Local Governance in Developing Countries, ed. Anwar Shah, 169–204 (Washington, DC: World Bank, 2006). Abhay Pethe and Lalvani Mala, “Towards Economic Empowerment of Urban Local Bodies in Maharashtra,” Economic and Political Weekly, 18 February 2006, 635–41. Constitution, Article 280(3bb) and (3c). The governor of the state appoints or constitutes the State Finance Commission for a term of five years. The creation of a Finance Commission was inspired by Article 280 of the Constitution, which provides for a Finance Commission to be set up every five years by the president of India to make recommendations about the division between the Union and the states of the net proceeds of the taxes and about other related financial measures.

Republic of India

199

32 Government of India, Report of the Twelfth Finance Commission (2005–10) (New Delhi: Government of India, 2004). 33 Oommen, “Fiscal Decentralization.” 34 Shikha Jha, “Panchayats: Functions, Responsibilities and Resources,” paper presented to the National Institute of Rural Development, Hyderabad, 23 January 2004. Exchange rate at 1 June 2007. 35 Government of India, Ministry of Agriculture and Irrigation, Report of the Committee on Panchayati Raj Institutions (New Delhi: Government of India, August 1978), 52. 36 Institute of Social Sciences, Panchayati Raj Update (2005). 37 Reports of the Election Commission of India. 38 Balveer Arora, “Adapting Federalism to India: Multi-Level and Asymmetrical Innovations,” in Multiple Identities in a Single State: Indian Federalism in Comparative Perspective, ed. Balveer Arora and Douglas V. Verney, 71–104 (New Delhi: Konark Publishers, 1995). 39 George Mathew, “Institutions of Self-Government in India: Towards Multilevel Federalism,” Review of Development and Change 2, no. 2 (July-December 1997): 276–93; Nirmal Mukarji, “The Third Stratum,” Economic and Political Weekly, 1 May 1993, 859–62. 40 United Progressive Alliance, “Common Minimum Programme,” 27 May 2004, 9. See also “Power to Panchayats,” editorial, Times of India (New Delhi), 1 July 2004. 41 Institute of Social Sciences, “Panchayati Raj Update,” June 2004; The Hindu, 21 July 2004. 42 Report of the National Commission to Review the Working of the Constitution (New Delhi: Universal Law Publishing Company, 2003). 43 Rakesh Hooja, “Reflections Occasioned by New Guidelines for District Planning by Panchayati Raj Institutions,” Man and Development 28, no. 4 (December 2006): 115–28.

United Mexican States boris graizbord

The election of an opposition candidate to the presidency of Mexico in 2000, after seventy-one years of one-party rule, was probably the climax, but not the end, of a long transition to a democratic, decentralized polity in the country. Despite many social changes and constitutional amendments during the second half of the twentieth century, subnational governments (particularly municipalities) have not yet achieved the full political autonomy required by a federal order. This chapter highlights some of the pressing issues related to local governments and metropolitan areas that have emerged during this transition period. In addition, identifying and exploring the obstacles, challenges, and opportunities facing municipalities in changing political, economic, demographic, and social contexts are key to the ongoing development of local government in Mexico. This development was brought about by two principal factors. First, the country is experiencing a political and economic transition. In fact, an economic Pandora’s box was opened when the national government, responding to recurring political and economic crises in the 1980s and 1990s, opened up the economy after signing the North American Free Trade Agreement (nafta) in 1993. This transition has had a profound effect on decentralization, leading to a reemergence of the states and municipalities. Second, institutional changes involving constitutional amendments reinforced the role, and widened the functions, of local governments while also reducing their dependence on the state and national governments. Despite these amendments, local government’s autonomy has not yet been fully consolidated, as both formal and informal constraints inhibit its administrative performance. Thus administrative, political, and fiscal changes are necessary to achieve a federal order in which the principle of subsidiarity is implemented and the constitutional principle of a “free municipality” (municipio libre) is attained.

202

Boris Graizbord

From 1980 to 2004, Mexico doubled its gross domestic product (gdp) from US$345.6 billion to US$619.5 billion. At the same time, it almost quadrupled its external trade account, expanding exported and imported manufactured goods and services, mainly to and from its northern neighbour, the United States. This expansion reflects a growing and diversified economy, which was previously based almost exclusively on primary goods, such as agriculture, mining, and oil production. The economic expansion, however, has not been reflected in people’s income; the country’s income distribution is one of the most unequal in the world. Moreover, the per capita gdp increased by less than 20% during the same period, from US$5,114 to US$5,968, mainly due to population growth. Whereas in 1980 the country’s population was 67 million, by 2005 it had reached 104.9 million, almost 8% of whom belong to fifty-six ethnic groups speaking languages and dialects other than Spanish. Growth was concentrated in urban centres (areas with 15,000 or more inhabitants), and the urban population constituted more than 65% of the country’s total population, with nearly 20% living in Mexico City, the capital. Although Mexico has been politically organized as a federal republic for more than 150 years, it is still a young democracy.1 The federal government is constitutionally organized into three branches: executive, legislative, and judicial. The country’s 1,964,375 square kilometres are divided into thirty-one states and a Federal District (Distrito Federal, or df) as well as 2,445 municipalities (as of 2006). The present Constitution of the United Mexican States, approved on 31 January 1917 and made operational on 1 May 1917, was influenced by the United States’ federal Constitution and the Spanish Constitution of Cádiz (1812). The allocation of powers contained in the Constitution defines and limits the role of the executive vis-à-vis the legislative and judicial branches. The federal legislative branch (Congreso de la Union) comprises two chambers: the Chamber of Deputies and the Senate. The Chamber of Deputies comprises 300 directly elected representatives from constituencies covering the country’s territory (divided into 300 electoral districts) and 200 additional deputies from party lists based on proportional representation. The Senate consists of 128 senators, two for each of the thirty-one states and the Federal District, plus thirty-two elected through a first-party minority system with one for each state, and thirty-two on the principle of proportional representation from lists that parties present for national elections.2 At the apex of the judiciary is the Supreme Court of the Nation, which has exclusive jurisdiction in all but territorial disputes between the states,3 between authorities within and among state governments, and between one or more states and the federation. Individuals can enforce constitutional guarantees through a writ of relief (juicio de amparo).

United Mexican States

203

The country’s transition to democracy and decentralization began before the defeat of the Partido Revolucionario Institucional (pri) in the 2000 presidential elections. During this period, the pri, in power since 1929,4 had allowed certain local candidates from parties other than the pri to take turns in office in certain small municipalities. But in 1989 a gubernatorial candidate from the Partido Accion Nacional (pan) won the state of Baja California for the first time ever. This was followed by Guanajuato in 1991, Chihuahua in 1992, and Jalisco in 1995, all governed by pan candidates. In 1997 the Partido de la Revolucion Democratica (prd) won the first election held for the head of the Federal District’s government. By the end of the decade, six states were governed by the pan, four by the prd (including the Federal District), and one by a pan-prd coalition. In some people’s eyes, the federal presidential elections of 2000 favouring the pan represented a clean break with the past. In 2000 the electorate voted freely to end the pri hegemony by choosing Vicente Fox, the pan candidate, to be president of Mexico. But the pri’s monopolistic control of the Congress, the states, and most of the municipalities had begun to be eroded a few years earlier. In fact, by 1999 the pri controlled only 57% of all municipalities, the prd 12%, the pan 11.5%, and other parties – including the indigenous local governments (usos y costumbres) in Oaxaca State – 19.4%. Most important was that the pan controlled the municipalities in which state capitals were located, as well as the majority of those with the most important cities. The exception was Mexico City, which was in the hands of a prominent prd party member. A fragmented political landscape emerged in which states and their capitals were governed by different parties. In the case of state legislatures, there were none in which a single party dominated with a two-thirds majority.5 This condition not only triggered an interesting process of negotiation and coordination by the state legislature members but also highlighted the relative power of elected minorities. These events also relaxed the de facto subservient relationship that prevailed in the federal government between the legislative and judicial branches and the executive. Other changes also stand out. It is now acknowledged that a new kind of political competition between parties has been inaugurated, civil society’s options and organization have been strengthened, and there are now real possibilities of a free press and freedom of speech. Some centralist and undemocratic practices that affected individual liberties and maintained discretionary decisions and actions in the hands of federal and state authorities came to an end. At the same time, formal decentralization measures and instruments were reinforced. However, centralist practices and many political vices imbedded in the system are still present, mainly affecting local government. The transition period has thus been complex, with new political actors emerging, particularly in local and community arenas, and with the

204

Boris Graizbord

country’s political geography totally different from what it was at the end of the twentieth century.

h i s t o r y, s t r u c t u r e , and institutions of local government In Mexico the idea of a local authority is rooted in pre-Hispanic history, as well as in the Castilian tradition of provincial and municipal tiers of government imposed during the Spanish Conquest. The first municipality was the Villa Rica de la Vera Cruz (now Veracruz), established in 1519 as soon as Hernán Cortés landed in what was later referred to as New Spain. Years later, in 1524, as the Aztec capital Tenochtitlan was destroyed, the first town council (ayuntamiento) in the Valley of Mexico was established by colonial rule. But it was also during the colonial period that the rights and powers of the municipalities, both colonial and indigenous, which lasted until the seventeenth century, were reduced by Spain. At the end of the War of Independence (1810–21), a federation was introduced in the first Mexican Political Constitution of 1824, based on the idea of provincial deputies in the Spanish Constitution of Cádiz of 1812. On the basis of the latter, a federal government system was envisioned by the constitution makers, led by Ramos Arizpe, the representative of a northern province, in the midst of a tense debate in which provincial independence seemed imminent.6 Despite its ups and downs following monarchist efforts such as the 1836 and 1843 centralist constitutions, the liberal Constitutional Charter of 1857 recognized states as part of the federal pact but did not explicitly mention municipalities. The federal system of government for the country was reaffirmed in the Constitution of 1917.7 The Constitution also stated that the municipio libre (free municipality) was the country’s basic territorial unit and that its authorities were to be elected by direct popular vote. Today, the municipality is a multipurpose, single-tier institution, with no intermediate entities between it and the state government. Consequently, urban areas within a municipality’s territory have no autonomous or formally elected administrations. The importance of municipalities varies politically, economically, and geographically but not legally. Legally, their governmental and political structures are consistently similar and are regulated by the Constitution. Nevertheless, for specific administrative functions, municipalities follow state constitutions and other municipal laws and rules generated locally by the ayuntamiento, or town council. Municipalities in which the state capitals are located suffer from the prevailing political milieu favouring the state governor but are also recipients of public investment directed to enhance the states’ capitals. In economic

United Mexican States

205

terms, there are significant differences among municipalities. More than 80% of the country’s gdp is concentrated in only 20% of the municipalities. Some municipalities are at an advantage due to the agglomeration of economic activities or the presence of natural endowments in their territory. Geographical attributes increase the differences between municipalities. Their relative location is important; for example, some northern border municipalities adjacent to US cities take advantage of their population’s disposable income and purchasing power. Size differs widely: Baja California Sur with its almost 75,000 square kilometres is divided into only 3 municipalities, whereas the State of Puebla, with roughly 34,000 square kilometres, has 218.8 Their population density also shows considerable variance; some jurisdictions in the Federal District have more than 6,000 inhabitants per square kilometre, whereas in Quintana Roo there are only 5 per square kilometre. Since the 1960s, urban areas have expanded physically and demographically while incorporating several municipalities. This urbanization process experienced during the second half of the twentieth century has concentrated more than 50% of the total population in fifty-five officially classified metropolitan areas comprising 309 municipalities. Despite this number, there have been only a few initiatives for consolidating municipalities, and when intermunicipal cooperation does occur, it is based on, and maintained by, ad hoc voluntary efforts by the participating local authorities. The largest metropolitan areas (Mexico City, Guadalajara, Monterrey, and Puebla) incorporate nearly eighty municipalities and sixteen delegaciones (the basic local subdivisions in the Federal District) and account for over one-quarter of the country’s population. Twenty-one per cent of urban dwellers live in medium-sized cities of between 100,000 and 499,999 people, with another 21% inhabiting towns and cities of between 5,000 and 49,999 people. The rest of the population is considered rural, living in more than 180,000 scattered rural settlements, comprising the majority of the country’s municipalities. Mexico City is located in the Federal District. The df houses less than half the population of the Mexico City Metropolitan Area (mcma), which now totals more than 18 million inhabitants. A constitutional reform in 1928 eliminated the municipal subdivision in the df, creating the Federal District Department, the head of which was nominated and removed from office by the president.9 The df was subdivided into an area comprising Mexico City and twelve delegaciones. By 1970 Mexico City proper had been divided into another four delegaciones, as a result of which the df comprised a total of sixteen delegaciones. In 1987 the df’s political status was changed by the creation of a representative body comprising forty directly elected representatives and another twenty-six elected by proportional representation. This Assembly of Representatives

206

Boris Graizbord

(Asamblea de Representantes) acted as a local legislative body able to enact ordinances and rules as well as to approve the nomination of judges and submit initiatives to the federal legislature on local matters. Following the 1993 constitutional reform of Article 122.VI, the president could still nominate the head of the df but now had to choose a candidate from the elected majority in the assembly. In 1994, at the end of a lengthy attempt to democratize the df government, the Federal District, through its Organic Law, was given the status of a state, and in 1997, for the first ctime ever, its citizens elected their head of government by universal, direct vote. Municipalities with a significant indigenous population have the right to elect their authorities based on traditional indigenous practices (usos y costumbres). In 1990 this right was incorporated into Article 39 of the Oaxaca State Constitution: “the Law will respect democratic electoral practices of indigenous communities and will protect their traditions.” This article neither mentioned municipalities nor specified democratic electoral practices. But in 1995, another amendment, this time to Article 25.II, stated: “The Law will protect those indigenous communities that have so far used traditions and democratic practices for electing their local authorities.” The State Electoral Institute (Commission) was then charged with the tasks of deciding which municipalities might elect their authorities through this consuetudinary system, acknowledging electoral results, and declaring the validity of elections. Article 29 of the Oaxaca State Constitution accepts that these authorities are elected as a result of their traditions and “democratic practices” yet stipulates that their period in office should not exceed the three years the Mexican Constitution dictates for all local governments.10 In 2006, 421 of the 570 municipalities in Oaxaca were governed by local authorities elected according to traditional indigenous practices.

constitutional recognition of municipalities According to the Constitution, the federation consists of the union and the states. Article 40 thus proclaims that Mexico is “a representative, democratic federal Republic composed of free and sovereign States in all that concerns their internal affairs.” In the Fifth Title, devoted to states and the Federal District, municipalities are posited as the basis of the states’ territorial divisions, placing their regulations firmly under state control but within a broad framework prescribed by the Constitution. The key provision is Article 115, which has undergone various reforms and amendments (1933, 1947, 1976, 1977, 1983, 1992, and 1999) incorporating, reflecting, and acknowledging the evolution of social and political life during the twentieth century.11 Article 115 reads: “The states shall adopt for their internal rule the republican, representative, and popular form of government, with the ‘Free

United Mexican States

207

Municipality’ (Municipio Libre) as the basis of their territorial division and political and administrative organizations.” Article 115 then provides a set of principles to be implemented by the states.12 The first principle establishes not only the democratic nature of municipalities but also the fact that there will be no other intermediate authority between them and the states.13 Limitations are placed on the tenure of office bearers, and a council may dissolve itself, in which event the state legislature may appoint a substitute council. Article 115.II establishes the principle that the administration of municipalities takes place in terms of state laws, which have to deal with a number of issues, such as the requirement of a twothirds majority in the council when the council concludes certain contracts as well as the fact that a state may intervene by assuming a municipal function or service that a municipality is unable to perform. State legislatures should also regulate the settlement of any disputes arising either between municipalities or between the latter and the state government. Article 115.III provides a list of functions and public services for which municipalities are responsible, including water, public lighting, sanitation and waste disposal, and public security. However, having listed the functions, Article 115.III, paragraph 2, asserts the pre-eminence of other orders of government: “Without prejudice to their constitutional competences, in the discharge of their functions and providing services that are their responsibility, municipalities must observe provisions of federal and state laws.” In terms of Article 115.III, paragraph 3, local authorities may also establish intermunicipal agreements in order “to deliver public services more efficiently or to ensure the most professional exercise of the functions.” Where such an agreement involves municipalities in different states, the consent of the states must be obtained. This provision offers an initial solution for cases where two or more municipalities from two or more states, as in the case of the mcma, face spillover effects and other spatial phenomena requiring economies of scale. However, only with the respective state legislature’s approval can a municipality associate with other municipalities inside or outside its state. Therefore, in the context of a metropolitan region, intermunicipal cooperation cannot occur on the initiative of municipalities only, but must involve the state and the federal governments. Article 115.IV further establishes the important principle that “[m]unicipalities shall freely administer their finances.” This principle, based on the 1983 and 1999 amendments, was probably the basis for administrative decentralization, understood as an effort to strengthen the local bases of the federal government in the country. It also opened the Pandora’s box of democratization, representative government, and citizen participation that have taken place over the past three decades. The “free administration of finances,” however, takes place within a legislative framework provided by

208

Boris Graizbord

the states. The taxes and rates municipalities may collect are established by the states, a power that federal laws may not limit. In the case of property taxes, councils must propose to their state legislature the fees and tariffs applicable to taxes, licences, building permits, and the valuation of land. In general, states must establish the tax laws of municipalities14 and scrutinize their financial accounts.15 However, municipalities approve the way resources are to be spent, according to their available income. Although Article 115.V establishes the scope of municipalities’ powers in respect of land-use planning and urban development, this must take place according to federal and state laws. Land-use planning is an important competence of local authorities, but here the legal gap that exists between what the law says and what is done to implement it is particularly obvious to any observer of Mexico’s chaotic landscape, both urban and rural, which reflects an absence of planning. Article 115.VI emphasizes the associative needs municipalities face as regards urban centres in their territories, which tend to form a continuous area of population. In these cases, “the Federation, the federated entities, and their respective municipalities, within the limits of their competences, shall plan and regulate the development of these centers in a joint and co-ordinated manner, in keeping with federal law.” Article 115.VII deals with regulations related to the municipal police and with cases in which the state governor may take control and intervene with additional forces to restore public order.16 Lastly, Article 115.VIII institutes the principle of proportional representation in the election of the councils of all municipalities. Although the dual nature of the Mexican federation is paramount and the dominant position of states over municipalities is clearly established, there is still indirect acknowledgment of the fact that municipalities form the third sphere of government, with their own set of competences that may overlap with those of the union and the states. In the outline of the powers of the Congress in Article 73, a number of provisions recognize the need for cooperation between the three spheres. Article 73 establishes the power of the Congress to enact laws to coordinate the actions of the federal government, the Federal District, and the states and municipalities in relation to public security, education, human settlements, and ecology. Article 122 expansively regulates the Federal District government regarding the organization and responsibilities of its local organs. However, the structure and functions of the Asamblea de Representantes (the df’s legislative body) and the power of the Mexican president to appoint the head of the police, after the proposal of three candidates by the head of government of the Federal District, are based on the Federal District’s government statutes. Prior to the 1983 and 1999 amendments to Article 115, municipalities had few administrative responsibilities. With the 1983 amendment,17 the

United Mexican States

209

municipalities were given relative autonomy to govern their communities and to strengthen their finances. With the second amendment, the municipio became an order of government in the federal system, and just like the federation and the states, it acquired juridical autonomy, allowing municipalities to organize local public administration, regulate all matters related to the provision of public services, and assure citizens’ participation at the neighbourhood level. It should now be evident that municipalities are constitutionally free but not yet politically autonomous. Self-government, as understood in the United States, has not been incorporated into any of the twelve or so amendments to Article 115. Instead, efforts have been aimed at improving or consolidating financial and administrative autonomy. State legislatures have an enormous amount of power over municipal life, passing legislation on behalf of municipalities. State legislatures are able not only to suspend or remove from office the ayuntamiento (town council) as a whole, or any of its members, including the mayor, but also to delimit their territories and create or abolish them.

governance role of local government In terms of Article 115.III, municipalities are responsible for the following public services: • • • • • • • •

drinking water, drainage, sewage, and wastewater treatment street lighting cleaning, collection, transfer, treatment, and final disposal of waste markets and supply centres cemeteries public walkways streets, parks, and gardens and their maintenance public security, municipal preventive policing, and traffic18

Despite the fact that these powers are listed in the Constitution, they must nevertheless be enacted through state legislation. Although Article 115 of the Constitution is fairly unequivocal about the powers and responsibilities of the municipalities, the implementation of these powers in state constitutions is done in a variety of ways. In some state constitutions, such as that of Chihuahua, the conferral of powers is conceptualized as a bottom-up approach: “those powers not expressly given to the municipalities are understood as being reserved for the state.”19 In Yucatan the approach is a top-down one, giving municipalities only residual powers: “those powers not granted explicitly to the federal authorities or established in this constitution as exclusive of the state are understood to be exercised by the municipalities.”20

210

Boris Graizbord

Article 115.V also grants municipalities a number of functions and powers that must be exercised in terms of relevant state and federal laws, but which in practice depend on their own financial capacity. They include: •

• • • •

• •

•

•

formulating, approving, and administering urban development plans in their territory participating in creating and administering territorial reserves participating in federal and state regional development plans authorizing, controlling, and monitoring land use within their jurisdiction intervening – with the federal authorities – in the regulation of urban land ownership granting construction licences and permits participating in creating and administering ecological reserves (i.e., protected natural areas) intervening in the formulation and implementation of public transport programs within their jurisdiction concluding agreements for the administration and protection of federal zones

In exercising these powers, municipalities may enact regulations and administrative rules where necessary.21 It should be noted, however, that the status of a “law” is reserved only for the statutory instruments of the Congress and the state legislatures; the municipalities’ legislative capacity is restricted to administrative regulations.22 Municipalities vary greatly in their income and, therefore, in their capacity to respond to their population’s needs and to all the mentioned mandates placed on them by the federal and state governments. Central municipalities in most metropolitan regions are able to spend a larger proportion of their income on public works, but in most small, poor, peripheral municipalities, public expenditure is largely used to pay for administrative costs and to cover the salaries and wages of their limited staff and operational personnel in public utilities and services. According to the 12th General Population Census of 2000, the federal, state, and municipal governments, collectively, employed 1.4 million people, with approximately 800,000 coming from municipalities.23 States’ expenditure is almost one-third that of the federal government. Although the municipalities’ share of public expenditure has grown, and even more than doubled over the past few years, it is still a fairly insignificant proportion of the total, accounting for no more than 6% to 7% of total public expenditure on average (table 7.1). Municipalities increased their expenditures from 1996 to 2005. But at the same time, local governments have been given increasing mandates and responsibilities by the federal and state governments, without a corresponding increase in fiscal autonomy.24

United Mexican States

211

Table 7.1 Mexico: Percentage distribution of expenditure by order of government, 1996–2005 Year

Federal

State

Municipal*

1996

85.4

12.2

2.4

2000

71.2

23.7

5.1

2005

65.4

27.8

6.8

* Based on total revenues, including subsidies and federal and state transfers. Source: International Monetary Fund (imf), Government Finance Statistics, 2002; and Instituto Nacional de Estadística, Geografía e Informática (inegi), El Ingreso y el Gasto Público en México, 2007, http://www.inegi.gob.mx (viewed 30 January 2008).

Covering administrative costs is the main public expenditure of local governments. The percentage of investment in public works and social infrastructure was less than 30% of the total expenditure of all municipalities over the past five years. Little variation is observed in this trend. In 2000 all municipalities spent nearly 23%, in 2003 just over 25%, and in 2005 a little over 23%. It is worth mentioning that during this period, municipalities outside of the metropolitan areas spent more than the latter on this item. Local governments in metropolitan areas bear a heavier administrative burden than the rest due to, among other things, a population that is more exposed to public security risks and that demands more amenities. In addition to the provision of public services, the other main function of local governments is development planning. Within the framework described above, the rights and powers of municipalities are constrained by a lack of both political and economic autonomy. In an urban context, this lack of a “modern” administrative system has allowed development to spin out of control. Good examples of this are the squatter areas found on the periphery of many cities. Long-range planning is the responsibility of each municipality’s planning department. Recently, however, in some municipalities with large and medium-sized cities, the long-range planning function was transferred to a relatively autonomous agency called the Instituto Municipal de Planeación (Municipal Planning Institute, or implan) or the Instituto de Investigación para la Planeación (Institute of Planning Research, or inip). implan operates as a relatively independent local body, whose director is appointed by, and directly answerable to, the mayor yet is separate from the local government sectors in charge of economic development, public works, parks and recreation, urban administration, and transportation, thereby jeopardizing effective administrative and planning performance. In some cases, such as in the northern border municipality of Tijuana, implan has been incorporated as a department within the municipality’s administrative structure and made financially dependent on its budget. In

212

Boris Graizbord

general, these institutes focus only on internal issues within the municipal jurisdiction; they have nothing to do with the state or other municipal authorities. In some cases, when it is able to mobilize civil society and incorporate local stakeholders, implan can operate and make decisions on long-term projects with their support. Institutions of Power In Article 115.I the Constitution prescribes the broad framework for the governance of municipalities as follows: “Each Municipality will be governed by a town council (ayuntamiento, also called cabildo) elected [for three years] by direct popular vote and comprising a mayor (presidente municipal) and a number of councillors (regidores) and trustees (síndicos) determined by law.” The article further provides that the mayor and all council members may not be re-elected for the immediately following term. In local elections, síndico or regidor candidates are included in a list attached to the name of a party’s mayoral candidate. Thus, when voting, citizens are choosing a head of the municipality together with his or her team. The number of councillors the mayor can include in his or her government is proportional to the votes he or she obtained. The remaining councillors come from competing parties’ lists according to the proportion of the votes. The mayor is the representative and executive officer of the municipality. The síndico (usually one but sometimes two, depending on each state’s constitution and local municipal laws) is a member of a commission in charge of the municipal treasury. He or she helps to draw up the budget, and thus audits local public expenditure, and is also the legal representative of the municipality. The regidores are in charge of one or more portfolios (commissions) concerned with the welfare and economic development of their municipality. Their number varies from eight to twelve according to the size of the municipality’s population and its economy. The different officials within the municipality, such as the council’s secretary, treasurer, and other heads of department (e.g., police, street lighting, public works, slaughterhouse, and parks) are simply administrative authorities. When the regidores and síndicos, presided over by the mayor, meet for a working session, the cabildo is officially constituted.25 The cabildo, equivalent to a legislative body, is the centre of political life in the municipality. It can approve policies, plans, programs, and projects as well as the budget. The cabildo can also enact regulations, make administrative decisions, and implement measures for the provision of public services. The cabildo meets at least once a month in sessions open to the public. For it to make valid decisions, at least half of its members must be present. In the absence of the mayor, the sindico presides over the cabildo. All members have full voting rights, but the

United Mexican States

213

mayor, who has no veto power, can cast a vote in case of a tied vote. Still, the cabildo acts as a counterweight to the mayor and to the administrative employees, appointed by the mayor, who are in charge of departments. The quality of administration varies considerably between municipalities. Some municipalities with a population of several million in their jurisdiction, with formally educated policymakers and a highly sophisticated administrative infrastructure, contrast sharply with administrations in rural areas. Fewer than 40% of all municipalities have budget planning and evaluation units, computerized accounts, internal administrative codes, or regulations based on updated geographic information.26 The well-known fact of the unequal administrative condition limits the ability of municipalities to “run at the same pace.” The lack of these attributes means that there is no guarantee of proper administration or planning across the country. Relying on the 2000 National Survey of Municipal Institutional Development, Enrique Cabrero argues that the most important issue facing local authorities is perhaps the modernization of administrative procedures and keeping their geographic information systems updated.27 Without these attributes, there is no basis for proposing planning rules, regulating investment in public works, or designing development plans. Without an updated property register, it would be impossible to charge property tax directly, which results in levying far less than what could be levied. Municipalities’ administrative capacities are, to say the least, weak. But these capacities vary with size and also within an urban-rural divide. Although in 100% of metropolitan municipalities the most important financial administrative decisions are made by university graduates, the proportion varies in small urban municipalities from 60% to 80% and is less than 20% in rural municipalities. In fact, it is not possible for half of these municipalities (four out of ten) to even supervise and/or evaluate expenditure or to ensure that their budgeted income equals their needs. In certain instances, municipalities even lack the skills to use their available financial resources. One contributing factor is that one-sixth of municipalities do not use computers for bookkeeping or office duties. An additional complexity concerning municipal administration is the relationship with citizens. It seems that a stable relationship is possible only when a local government is identified with a political party that has won successive elections. In these cases, the results have been, first, the emphasis on participatory mechanisms to involve the citizenry in decision-making processes; and second, the employment of an increasing number of party members in the local administration (so-called partidización, or the control of local politics and policy decisions by one party from within the municipal administration).28 The experience of urban and metropolitan local governments shows that, in the first case, the opportunities for citizens to intervene in the budget

214

Boris Graizbord

allocation process increased, together with their say in what kind of investments are necessary and/or desirable.29 Conversely, partidización tends to inhibit the administrative modernization and professionalization of personnel, thereby reducing the efficiency and efficacy of the local system’s management and administrative performance. Two examples will suffice. The pan won successive elections in the municipality of Tijuana, the largest urban centre on Mexico’s northern border. In an attempt to break the pri’s clientelistic tradition, the mayor eliminated the traditional participatory channels and embarked on a strategy of replacing local bureaucrats with his own party members (partidización). It is obviously the mayor’s prerogative to open the administration to public participation and to decide on the scope and modalities of such participation. However, the efforts to control politics and policy decisions through partidización have led to the elimination of a “loyal opposition”; in some notorious cases, as much as 80% to 90% of the electorate have abstained from voting, which afforded the winning candidate no legitimacy. The second example is an innovative experiment carried out by the local authorities in Nezahualcóyotl, a densely populated metropolitan municipality in Mexico City governed by the prd. This party, in office since 1996, has opened a number of participatory channels and practices, the three main ones being: (1) the creation of citizens’ committees; (2) the election of neighbourhood representatives to participate in decisions for allocating funds assigned to alleviate poverty; and (3) encouraging residents to work on local betterment schemes. These participatory mechanisms seem to balance the lack of more developed ones in which citizens are directly involved in building agreements to establish programs and in setting government goals. These are not easy tasks in Mexico, which has had only a brief pluralistic experience and, in addition, where there is limited opportunity for political diversity within the cabildo. If the elected mayor is very popular, the cabildo will be dominated by his “men” and will, therefore, be able to dictate local policies and politics.

financing local government Since the mid-1990s, Mexico has abandoned the tendency to centralize its fiscal system. Borrowing and spending decisions have been decentralized. The landmark in terms of decentralization is perhaps the 1983 amendment to Article 115 of the Constitution, which was consolidated in 1999. Article 115.IV sets out three main sources of municipal income: (1) the exclusive collection of property taxes; (2) fees derived from the provision of public services; and (3) the right to share in the revenues raised by the federal government (participaciones). Equally important, the article asserts that “[m]unicipalities shall freely administer their finances” derived from the revenue they obtain from

United Mexican States

215

taxes and other sources. In line with the dominant position of the states, the power to levy taxes and charge fees is mediated through state laws. Municipal councils are thus obliged to propose the fees and tariffs applicable to taxes, licences, building permits, and rates for property taxes to state legislatures. These legislatures, therefore, must pass laws establishing the revenue laws of the municipalities. The pre-eminence of the states is clear; Article 115.IV, paragraph 2, provides that federal laws may not limit the power of states to establish taxes or regulate the collection of service fees. The main reason for the recent acceleration of fiscal decentralization might well be the broadening of political participation and the opportunities afforded by the electoral system for opposition parties to effectively compete and win elections, not only in local and state contests but also in federal elections. Municipal income is classified in Mexico as ordinary (own direct revenues, such as local taxes, service charges, products, fees, and nonconditional federal and state transfers, or participaciones) and extraordinary (citizens’ contributions for specific benefits, loans, and earmarked grants and subsidies from the federal or state governments).30 Payroll taxes are the most important municipal tax, but they are levied in only twenty-three of the thirty-two states. Some urban local governments are able to collect local taxes amounting to perhaps half of their total income (as in the case of the Federal District). Municipalities on average are slightly less dependent than states on revenue sharing and transfers, although this varies considerably across and within states. The larger municipalities benefit from having access to additional local sources of revenue – other than the property tax (which contributes on average 10% of total revenues) – to which rural municipalities do not even have access. They also benefit from improved incentives for responsible fiscal autonomy. Local governments have no authority to change tax rates, create new taxes, or influence the tax base as a means to increase their revenues from local sources. As a result, they see themselves as being locked in a vicious cycle that limits their possibilities of improving administrative efficiency and effectiveness. What they do seem to have, in some cases, is exceptional leadership, which enables them to improve the management of local resources and the provision of public goods and services. The Constitution does not allow local governments to borrow from foreign financial institutions. State legislatures must approve any loans that states and municipalities acquire from commercial banks or national development banks, such as banobras, which manages development funds of foreign origin, such as World Bank loans. The existing data suggest an enormous increase in the amount of debt incurred by commercial banks from 1995 onward, replacing loans acquired from development banks that were used mainly to cover income deficits rather than to finance large

216

Boris Graizbord

public works. Until 2000 borrowing by states and municipalities – generally on a very small scale – was guaranteed by federal transfers as collateral, which meant that the federal government was the only stakeholder to be concerned about the creditworthiness of the states, whereas the latter had no incentive to control costs or increase their revenue.31 Transfers, the main source of revenue for states and municipalities, fall into two categories: unconditional grants and conditional grants. Instances of unconditional revenue sharing with the federation, a source created in 1980 and known as participaciones, “were originally revenues from states and municipalities [the] collection of which was delegated to the federal level in the Fiscal Pact32 for tax efficiency reasons. In practice, the federal government writes the formula for distributing these funds and increases them from federal sources such as oil revenue, so that they are different from tax sharing (revenues collected in a state that are kept there) and are more like a transfer program of a revenue-sharing type.”33 The second category of transfers consists of conditional grants and subsidies, known as aportaciones. Created in 1997 as Ramo 33, a section of the federal budget meant to resolve differences in the provision of public services and to support financial capabilities of the municipalities, they were “conceived as federal money earmarked to pay for federal commitments transferred to the states and municipalities.”34 Ramo 33, comprised of seven funds targeting education, health, and infrastructure, amounts to US$22 billion and accounts for 26% of the Federal Revenue Sharing Pool (as of 2002). The main funds are the Basic Education Fund (62% of the total), the Health Services Fund (11.6%), the Municipal Social Infrastructure Fund (9.7%, of which 90% goes to municipalities), and the Municipal Strengthening Fund (9.2%, all of which is allocated to municipalities). The latter accounts for almost 3% of the Federal Revenue Sharing Pool. It is sent directly to municipalities via the states every month and is apportioned according to the population size of each municipality. In the case of the Municipal Social Infrastructure Fund, the federal Ministry of Social Development (sedesol) is in charge of distributing funds to the states, whose legislative bodies, in turn, determine the allocation among their municipalities based on a number of variables. The National System of Fiscal Coordination (sncf) guides the distribution of resources between orders of government.35 It is a contract between the federal government and the states, but the Law of Fiscal Coordination (lcf) incorporates the municipalities into this agreement by mandating that states should transfer at least 20% of their share of federal revenue to their municipalities. A state’s own Law of Fiscal Coordination specifies the way that it must allocate these funds to municipalities. Certain allocations, however, are compulsory, such as a distribution of 20% of the share of general revenue or of the participation fund, 100% of the municipal promotion fund, 20% of the

United Mexican States

217

participation fund based on new-vehicle taxes, and 20% of the state revenues from a special tax on production and services. The criteria for distributing these funds to municipalities vary among states but involve the population size and the municipalities’ efforts to raise direct revenues, plus a compensatory element in inverse proportion to the previous components. Federal transfers are supposed to: (1) reduce the discrepancy between the expenditure needs and revenue capacity of subnational governments; (2) provide fiscal federalism with the social and political dimensions of a federal pact, thereby helping the process of decentralization; and (3) reduce regional disparities by channelling resources to ensure equal opportunities for citizens in different geographical areas (states). These objectives have not been fully accomplished. On the one hand, federal transfers have inhibited municipalities’ fiscal efforts,36 and conditional grants have affected their fiscal behaviour, corroborating the fiscalsubstitution hypothesis.37 On the other hand, as far as reducing regional disparities is concerned, participaciones directed to the Federal District were reduced between 1980 and 2000 from 23.4% to 12% of the total amount distributed, but this reduction favoured mostly those states with consolidated urban markets as opposed to those with a predominantly agricultural economic base,38 increasing the gap between the two. The standard of living in Mexico is dependent not only on the socioeconomic attributes of the population but also on the area in which the population lives. Thus the differences between rural and urban and between urban and metropolitan local governments produce a sharp bias in terms of available infrastructure and accessibility to public goods and services. Investment funds for physical infrastructure in poor marginal municipalities are provided by the federal government through the state governments. Many of these funds are allocated via the Fondo de Aportaciones para la Infraestructura Social (Social Infrastructure Transfer Fund, or fais), which enables marginal rural and urban areas to improve their infrastructure. The strength of this fiscal adjustment is based not only on the fais but also on the decentralization of funds for basic education and health, technical and adult education, and other areas, such as funds for state and municipal social infrastructure, supporting local government, a multiple transfer fund, and a public security fund. In practice, municipalities generate a minimal proportion of the tax revenue of the country, and even the states have no constitutional provision to control any source of income but do generate some taxes. Therefore, it is the federal government that has the power to handle tax revenues and to redistribute income through federal transfers that are meant to balance the country’s regional development differences. Table 7.2 shows the contributions of the various sources to municipal revenue.

218

Boris Graizbord

Table 7.2 Mexico: Percentage distribution of total municipal public income by source, 2000–2005

Total municipal income

Property tax

2000

2003

2005

85,349 million pesos1 (US$9,021 million)2

135,875 million pesos1 (US$12,604 million)2

163,841 million pesos1 (US$15,017 million)2

9.4

9.8

10.8

Other local own revenue (payroll taxes, service fees, licences, rent, fines, etc.)

21.9

22.3

23.2

Federal transfers (participaciones)

43.9

36.5

36.5

6.8

1.8

1.0

18.0

29.6

28.5

State transfers Other sources (mostly conditional grants) 1

Current pesos Exchange rate for US dollars (yearly average) was $9.46 in 2000; $10.78 in 2003; and $10.91 in 2005. Source: For 2000, see Instituto Nacional de Estadística, Geografía e Informática (inegi), El Ingreso y Gasto Público en México, 2006 (Aguascalientes, Mexico: inegi, 2006), http://www. inegi.gob.mx/prod_serv/contenidos/espanol/bvinegi/productos/integracion/sociodel/ bvinegi/productos/integracion/sociodemografico/igpm/2006/igpm2006.pdf (viewed 12 January 2009); for 2003 and 2005, see Instituto Nacional de Estadística, Geografía e Informática (inegi), El Ingreso y Gasto Público en México, 2007 (Aguascalientes, Mexico: inegi, 2007), http://www.inegi.gob.mx/prod_serv/contenidos/espanol/caJanuary 2009). 2

Revenue from local property taxes covers only a small fraction of what municipalities spend. The bulk of local revenue comes from payroll taxes, service fees, licences and permits, rent and sale of property, interest, and fines. Whereas federal transfers of participaciones have diminished, the conditional grants have almost doubled since 2000. Federal and state transfers of unconditional grants accounted for almost 50% of total local revenues until 2000, but by 2005 they represented only 37%, whereas local sources had increased slightly, from 30% in 2000 to 35% in 2005. At the same time, income from extraordinary sources – mainly conditional grants – almost doubled during the same period. The highest decrease can be observed in state transfers (participaciones), which fell from almost 7% in 2000 to 1% in 2005 as the federal government, through social-oriented policies and programs, directed transfers to municipalities.39 Some authors, however, argue that the topdown flow of taxes is designed only to maintain a centralized system in which efficiency and equity are not necessarily the distribution criteria. Despite this

United Mexican States

219

highly centralized scheme, recent data show that there is a tendency to slightly reduce the dependency on federal transfers. This might lead one to think that states and municipalities have improved their tax-collection systems. In 1987 municipalities obtained 83% of their income from federal transfers, yet by 1992 this figure had fallen to 70%. By 2000 it was 61%, and in 2005 the figure was down to 58%. These figures obscure the variation among municipalities. The income from federal transfers in 2005 was 33% of total income in metropolitan areas, 30% in the larger metropolitan areas, and only 26% in the Metropolitan Area of Ciudad Juárez, a northern border city, which was the least dependent thereon. Although property taxes during the period accounted for just above 6% of total revenue, the figure was around 9% in the larger metropolitan areas. As for direct ordinary taxes, metropolitan municipalities collect property taxes in 91% of cases (81% being the national average). Figures taken from Steven Webb show that metropolitan municipalities obtain an average of 35% of their total income from local revenues, with medium-sized municipalities securing almost 25% and small urban municipalities less than 15%, yet those classified as performing best in the three categories attain 45% or more. In rural or semi-rural municipalities, direct local income amounts to less than 5% of the total income, whereas double this amount is achieved by the best performing ones.40 According to Laura Sour, however, it is the diversity of conditions, rather than size, that explains performance and that seems to be the main variable in the tax efforts of local governments.41 She reaches this conclusion in her analysis of the way that 155 urban municipalities have responded to federal transfers. Furthermore, she has found that small and medium-sized municipalities make the most fiscal effort to get the highest possible direct revenues from their own sources vis-à-vis their economic importance in view of the disincentives produced by federal transfers.42 In fact, the ten worst performing municipalities in terms of fiscal effort are all large metropolitan municipalities in the Mexico City Metropolitan Area (mcma), in the State of Mexico, each with approximately one million inhabitants. Almost every municipality within the seven largest metropolitan areas (except for Tijuana) has a higher income from property tax revenues than the national average. At the same time, these metropolitan municipalities are less dependent on federal transfers and, in some cases, have stopped receiving state transfers, as happened with Ciudad Juarez in 2005. Improved administrative skills on the part of local authorities have undoubtedly been instrumental in this tendency. The fact that the mayor and the councillors remain in office for only one term of three years, with no possibility of re-election, is a disadvantage when trying to consolidate and assimilate these improvements.

220

Boris Graizbord

Although the responsibilities for some sectors (e.g., health and education) have been assigned to the states, whereas the maintenance of local streets and sanitation belongs to municipalities, the process was, and still is, limited. First, services such as education, health, and social assistance are concurrent federal and state competences, yet no government assumes full responsibility for functions such as maintenance, regulation, and inspection. Second, the federal government earmarks most transfers to states and municipalities and establishes how states should fulfil their obligations. Third, earmarked transfers are based on historical costs and actual input rather than on indicators of the scope of a state’s spending obligations. Fourth, municipalities are assigned relatively few responsibilities. This is paradoxical because smaller municipalities have received increased transfers with no changes in their responsibilities since the late 1990s, whereas larger municipalities, without extra financial resources, have faced political pressure to take over certain critical tasks in response to population growth and industrial decentralization. For some experts, the decentralization process is a long way from matching the political changes the country has experienced in recent years.43 Decentralization is an ongoing process and a matter not just of changing rules but also of creating a culture of devolution.44

supervision of local government Local government administration is permanently subjected to both internal and external evaluation and control. This task is accomplished by an internal audit and, externally, by state governments and federal authorities. Although the Constitution provides an overall framework for supervision, the details are filled in by the state legislatures. In terms of Article 115.IV, paragraphs 3 and 4, of the Constitution, municipal councils submit their draft budgets, which list the expenditure and income streams, including tariffs, to the state legislatures. The legislatures must approve the budgets and subsequently review the municipal councils’ public accounts. Significant variations in supervision occur among the states according to the formulation of local laws and codes as well as due to informal compliance with the laws and codes. For instance, in the case of Aguascalientes, a small state in central Mexico, both a Comprehensive Legal Code Governing Municipalities and the Urban Development (and Planning) Law are part of the regulatory framework governing intergovernmental relations. The Constitution further enables the state legislatures, by a two-thirds majority vote, to suspend municipal governments, declare that they have been dissolved, and suspend or revoke the office of any of their members for any serious violations that state law may stipulate. This intervention, however, must give the municipality a sufficient right of reply.45 Where a

United Mexican States

221

council has been dissolved, the state legislature nominates a new council to conclude the current term. Although the legal framework is set by the state legislatures, the institutional responsibilities and enforcement of compliance depend on the relative strength of the governor (and the mayors). These are also influenced by party political considerations. In the case of Puebla, for example, the formula for the distribution of revenue-sharing funds to the municipalities was recast by the pri governor in an attempt to penalize larger and better funded urban municipalities in the hands of opposition parties, mainly the pan. It is a truism that local government has traditionally been the weakest order of Mexican government, subject to the control of the states. But it is also true that these traditions began to change within the context of political reform and the decentralization initiatives expressed in the 1983 amendment, and consolidated in the 1999 amendment, to Article 115. The paradox was that even though federal funds were allocated to municipalities through the state government, it was the governor and other state authorities involved who decided which municipality would receive funding and how much. In fact, it was common for local projects to be decided by the federal executive but for the governor to decide who would be given the funds and how and where they would be spent. Thus, “from the perspective of the municipalities, domestic power is constituted by the state rather than the central government in Mexico City.”46 Politically, the municipalities’ weakness was revealed in the late 1990s when President Ernesto Zedillo declared his unwillingness to meddle in matters relating to the sovereignty of states and their legislatures and, for that matter, the municipalities. It used to be the case that the president directly appointed the “candidate” for state governor, who, in turn, would nominate municipal presidents and officials in higher positions. The selection of each municipal president occurred within the higher echelons of the pri and state government. This form of patronage, where mayors were chosen by the incumbent governor or by outside party leaders, created a source of conflict within the municipalities because these mayors were often unpopular with the general public, local politicians, and members of the municipal council. However, the appointment of municipal officers, who constitute the executive wing of the council, was one way that local leaders sought to control the externally appointed mayor. In this respect, the council became an increasingly important institution, monitoring the mayor, who had to negotiate his or her policy agenda with opposition councillors. Although it is formally the state legislatures that have the power to dissolve a municipal council, as well as to physically create new municipalities by consolidating territories from different municipal jurisdictions, it is informally the governor who exercises these powers. However, in the final

222

Boris Graizbord

instance, it is the federal executive (including all departments) that has the power to apply checks and balances to local government’s administrative performance through control of the purse strings.

intergovernmental relations Although there are no official organizations to represent the interests of municipalities in the state and federal arenas, there are three major voluntary associations representing the needs and aspirations of local government, and each is loosely affiliated with one of the three important national political parties.47 The associations – the Association of Local Authorities (aalmac), the Association of Mexican Municipalities (ammac), and the National Federation of Mexican Municipalities (fenamm) – have been able to unite municipalities around some common agendas and to further their negotiations with the other orders of government. They also have agreed to pool their resources with the formation of the National Conference of Mexican Municipalities (Conferencia national de municipios de Mexico).48 Allison Rowland notes that although these associations have become important in defining the agenda for improvements in municipal governance, they do not yet exercise a notable influence on the state and federal governments.49 At a bureaucratic level, there are the official organs, such as the National Institute for Federalism and Municipal Development (inafed) and its state counterparts; their focus is on information gathering and training rather than on representing the interests of municipalities.50 Other intergovernmental institutions include the State Development Planning Committees (coplades), which were created in 1981 to combine planning efforts by the three orders of government in order to formulate the state development plan and to provide a space for societal participation.51 Participants in these committees are representatives of federal, state, and municipal governments, social organizations, and the private sector. In each state, these institutions are chaired by the governor, and their activities are coordinated by his or her designated official. The coplade is a permanent consultation forum and a decision-making organ to support state planning. It has the technical and organizational capacity to harmonize the participation of municipalities as entities within the framework of the National System for Democratic Planning. Municipalities have the right, but not the obligation, to create a Municipal Planning Committee (coplamun). Such a committee is supposed to coordinate state and municipal development plans and programs, and to function it must comprise both state and federal entities. Local government’s primary relationship is with the states. In practice, states act as political and fiscal intermediaries between their municipalities

United Mexican States

223

and the federal government.52 The major exceptions are the conditional grants from Ramo 33, discussed above, which are directly allocated in full to the municipalities without the states’ intervention. Examples include Solidaridad in the 1990s, the Oportunidades social program during the Fox administration, and recently, the Habitat poverty-relief program with its multiple social projects, all of which are managed on a sectoral basis by the federal Ministry of Social Development (sedesol). Intergovernmental fiscal relations are also increasingly being influenced by the emerging pluralistic politics. In terms of unique fiscal relations with the Federal District and the mcma, an individual living in the federal capital receives more earmarked funds than an average person living anywhere else in the country, whereas someone living in a metropolitan municipality in the mcma receives less than the national average.53 This special treatment by the federal government in favour of the Federal District has changed drastically over the past few years because the prd has governed the Federal District since 1997, together with nearly all its sixteen delegaciones. The federal government, now controlled by the pan, is not necessarily inclined to maintain such a pattern. At the same time, formal, as well as informal, relations between these two orders of government have become distinctly, if not overtly, conflictual. Political tension reaches its peak at either the change of local authorities or when state government is in the hands of one political party and the municipality (or the delegaciones in the df) is in the hands of another. It is especially the state government that approves the municipalities’ development plans, particularly so in the case of the Federal District, which controls the delegaciones’ budgets. An important aspect of intergovernmental relations has been the governance of metropolitan regions. Federal government efforts to manage metropolitan areas date from the 1970s when commissions were created to control urban growth and other essential administrative coordination on an interstate basis. By the mid-1990s, to manage urban sprawl in the Valley of Mexico, the df and the State of Mexico signed an agreement with sedesol to create the Metropolitan Human Settlements Commission. In 1998 a bilateral agreement to create the multipurpose Executive Commission for Metropolitan Coordination replaced the previous commission as a more comprehensive framework for coordinating, evaluating, and monitoring plans, programs, and actions within the metropolitan territory of the Valley of Mexico. These efforts have not been unique, but the models are different. In the case of the Guadalajara Metropolitan Area (gma), Mexico’s second largest metropolitan region, the metropolitan council’s structure is based on singlepurpose operating agencies and includes eight municipalities and the State of Jalisco’s government.

224

Boris Graizbord

political culture of local governance Throughout the twentieth century, local politics were dominated by the centre, and during the pri era internal party politics were paramount. The party’s internal structure was dominated by the incumbent president; he could use his power to nominate candidates for state and municipal elections. This was also the case in the states. Powerful governors could control the party’s machinery and thus politics within their state, strongly affecting all stakeholders in their local arenas. They could even remove mayors and dissolve town councils. These practices, however, have begun to change since 2000, and constitutional provisions have established legal procedures that must now be followed. With the pri now an opposition party, intraparty politics have also decentralized, and local decisions are no longer dominated by that party’s central committee. Each party obviously follows its own rules, but the three largest ones (pri, pan, and prd), too, have expressed their commitment to a more democratic way of functioning. Still, it is acknowledged that little change has been wrought in the highly centralized nature of the Mexican political system.54 Most decisions concerning local government are made either within the federal government or in the state capitals. One reason for these persistent conditions is the opportunities for politicians outside the local governments to maintain clientelistic relations with their local constituencies. This is gradually changing, as an increasing number of elected local authorities have been drawn from opposition parties. This clientelistic system has also affected the distribution of federal transfers to states and municipalities because, in many instances, these funds have been allocated in a discretionary manner through the “special projects” section in the federal budget. During the pri’s hegemony, the role played by local political chiefs proved crucial to keeping the electoral machinery rolling in its favour. On their shoulders rested the effective support of urban workers and rural labourers who were controlled on the basis of personal favours they would “generously” provide. This patronage system was one of the pillars of the pri era.55 Although the system is gradually disappearing, with political space being occupied by other actors, local authorities still have to work closely with political masters in the state and federal governments. This is the case in most small, rural municipalities. But in the new governance model, most authorities have opened up their political space to the participation of the local communities and to the multiple stakeholders that play diverse, yet increasingly relevant, roles. The necessary economic and political reforms explicitly accepted under nafta in 1994 forced the federal government to comply with the

United Mexican States

225

political preferences of the electorate. The presidential victory of Vicente Fox of the pan in 2000 was followed by that of Felipe Calderón, again a pan candidate, in 2006, with a very high participation of the electorate. Despite Calderón’s extremely small margin of victory over his popular (and populist) prd competitor, the 2006 electoral results consolidated both parties’ territorial presence, changing the old political map of the country and reflecting the political plurality of governance in the states. Locally, the picture has been even more impressive. Of course, very few of the more than 2,400 municipalities in the country had previously experienced an opposition party victory. But in 2000 the landslide that accompanied Fox’s election brought hundreds of local candidates from opposition parties into office in the majority of municipalities in fifteen states and the Federal District, as well as in 421 municipalities in Oaxaca that are ruled by traditional indigenous practices (usos y costumbres). Citizens in most medium-sized and large cities were given the opportunity to choose their local authorities from parties other than the pri. Although spaces have opened up locally, local politics still function in the shadow of national political parties. Elections take place only in terms of political parties; nonaffiliated candidates are not permitted. Because the formation of new regional and local parties is very difficult, local aspiring candidates must joint existing political parties.56 With only one three-year term possible, mayors and councillors with political ambition will also use their positions as stepping stones to run for their state legislature, and in some cases a mayor from an important municipality will try to become his or her party’s candidate for governor. Despite the emerging regional and local political pluralism, public participation is declining. In the 2007 elections to choose state representatives and mayors, results were discouraging. For example, nearly 70% of the voters abstained from voting in the municipality of Juárez. Newspapers reported a generally weak presence of voters in Durango and in Zacatecas, where a prd governor was in office. The electorate’s rejection is a cause of concern; both the private sector and the church in the person of the Bishop of Durango voiced concern over the fact that 60% of the electorate in that state stayed away from the local polls. The elections also did not achieve a gender balance. The main political parties have agreed to promote gender balance, but even when this does occur, electoral lists are still dominated by men. Fewer than 4% of mayors were female in 2004, a percentage that was even lower in 2005 and 2006. However, the proportion increases slightly if one looks at local authorities (25% of regidores in 2004 were women) and state legislatures (17% were women).

226

Boris Graizbord

local government and the evolution of the federal system Most experts in Mexico argue that the problems faced by local government would be addressed if municipalities enjoyed real political autonomy. To most, this constitutes a sine qua non for improving the financial and administrative capacities of local government. Others argue that before the subnational orders of government receive attention, the Constitution should be reviewed because of the recent political changes in favour of a more democratic state and the many constitutional amendments over the years that have given rise to numerous contradictions.57 But everyone agrees that a review of Article 115 of the Constitution is required to reinforce the basic provisions that enable municipalities to respond effectively to the challenges they face. There is agreement that fiscal, financial, and administrative transformations must go hand in hand with this constitutional amendment in order to implement real local political autonomy. This approach is also theoretically sound,58 as decentralization is justified to achieve the goals of efficiency, equity, and stabilization.59 Metropolitan regions pose some of the most difficult challenges for local government, given the current social and spatial differences in metropolitan municipalities. Is the creation of a single metropolitan government, amalgamating various local governments, the solution? The mcma, for example, involves metropolitan municipalities in the State of Mexico, Hidalgo, and the Federal District. Many argue against this solution.60 It would entail a conflict of sovereignty and would be rejected by the wealthier municipalities (delegaciones) in the Federal District. Such a mega-municipality would need technical solutions that are as yet unavailable. Moreover, it would move government farther away from the people, ending the advantage of fragmented governance structures that allow for differentiated preferences, more responsive local authorities, and a variety of solutions. Furthermore, any delimitation of the metropolitan region would entail problems of defining its hinterland. Centralizing expenditure – despite certain advantages, such as the possibility of the uniform provision of services for all – would jeopardize the process of decentralization, as well as the efforts to support and consolidate local governments in their diversity. The solutions thus pursued in Mexico steer away from metropolitan government and toward more cooperative structures in the form of various commissions in which the federal and state governments’ entities take part with the municipal authorities. For the Guadalajara Metropolitan Area, comprising eight municipalities, the Guadalajara Metropolitan Council was established in 1989 as the coordinating body for intermunicipal actions. The council was recognized in 1993 by the federal government as a conurbation zone commission. It was organized into a technical secretariat

United Mexican States

227

and six single-function subcommissions in the areas of urban development, water and sanitation, transport and roads, environment, and finance. A compensatory fund has been created to finance strategic metropolitan projects involving more than one municipality. This provides opportunities for distributing benefits and burdens among jurisdictions, which are determined by the metropolitan council. This body has to establish distribution criteria, decide which strategic projects to prioritize, and monitor the evolution of the economic and social conditions of the central and peripheral metropolitan municipalities. One way to do this has been through the creation of metropolitan monitoring bodies by independent academic groups and/or municipal planning or research institutes (mentioned above) acting as technical supporters to the commission. In the context of recent financial and political differences, horizontal intergovernmental relations have not been fluent, and the role played by the council has been reduced drastically. In the case of the mcma, the State of Mexico’s constitutional amendment in 2003 acknowledged the existence of metropolitan areas and created a fund to handle transportation and environmental issues. Already in 2000, the State of Mexico and the Federal District signed an agreement requesting the federal government to create a fund for metropolitan services and infrastructure, while agreeing to assign their own resources in a “proportional manner” toward these ends. Another move in this direction was the 2006 Environmental Trust Fund for the Valley of Mexico, following efforts to reduce the greenhouse gas emissions generated by the mcma. Such examples add to the idea of creating special-purpose government entities, which can deal with activities and public services that go beyond municipal boundaries (e.g., the international airport and other transportation systems, solid-waste treatment plants, and water and sanitation systems) without creating a metropolitan government. They avoid the concomitant problems, such as amalgamation and others, already mentioned above and can involve the three orders of government, as is already the case with water and sanitation. The mcma probably needs special treatment due to its relative complexity compared to other metropolitan areas. The difference in governance structure between a centrally structured Federal District and the autonomy of metropolitan municipalities in the State of Mexico calls for a specific administrative solution. In this regard, Uri Raich suggests that, in the Federal District, a compensatory transfer system should be created to horizontally balance the fiscal fragmentation between municipalities (delegaciones). Regional metropolitan funds should be created, and special districts should be identified for the provision of certain specific services.61 Although there are a number of well-managed and innovative metropolitan and urban municipalities, they are the exception. In the face of recent

228

Boris Graizbord

government programs supported by United Nations and World Bank funds, such as Habitat (focusing on urban poverty reduction) and the Millennium Development Goals (integrating poverty with environmental actions), all municipalities in general face the following major structural and operational challenges. First, municipalities still suffer from highly centralized political and financial control by the federal and state governments. Second, the three-year nonrenewable term of mayors has resulted in short-term administrations, hindering the ability of local authorities to plan and implement long-term projects. Third, most administrative decisions must be submitted and approved by state legislatures, including contracting with the private sector for public works, assigning the provision of public services to private operators, selling public property, and setting tax rates and tariffs. Fourth, municipal revenue is dependent on transfers from the federal government because state and municipal tax powers are severely limited, despite the fact that in recent years certain federal policies have increased the level of financial resources available to subnational governments. These challenges to intergovernmental relations and governance influence the institutional effectiveness of municipalities.62 In response, a number of measures have been suggested to strengthen local authorities. First, continuity in policy design and implementation by municipalities would be enhanced by changing the three-year term of mayors and councillors and repealing the prohibition against mayors being immediately re-elected after serving one term. Second, a more differentiated approach should be followed when allocating powers and functions to municipalities, taking into account the grouping of cities by size in order to identify the key state and municipal functions they should perform in relation to urban development. Third, the role of the private sector should be defined clearly. Local government is reluctant to subcontract or outsource, but not doing so limits urban progress. Fourth, intergovernmental relations should be separated from political party links. Fifth, administrative autonomy should be consolidated to prevent state legislatures from deciding on local issues. Sixth, channels should be developed for citizens to improve their effective participation in the management of local affairs. Seventh, the financial, managerial, and technical capacities of local governments must be strengthened in order to improve their ability to recover costs for service delivery, collect property taxes, manage new resources, and determine the future of a city or an urban area in their jurisdiction. Finally, in the global arena in which Mexico is immersed, it is necessary and urgent that institutional arrangements for better governance focus on consolidating the tax base in the numerous municipalities comprising metropolitan regions. Implicit in this recommendation is the argument for a differentiated fiscal policy to reflect the vast differences between municipalities in such a region.

United Mexican States

229

Metropolitan regions will lag behind in the global context if effective mechanisms for cooperation between metropolitan municipalities are not put in place to respond to negative externalities of size and to coordinate large-scale investments involving more than one jurisdiction. Large projects are not only necessary in most metropolitan regions but are also, and will be, essential – on different scales – if the country is to become competitive globally, as the National Development Plan 2007–2012 strongly argues.63 Each metropolitan solution, however, will need a contextual response because there is no single solution for all.

notes I thank my colleagues Horacio Sobarzo and Vicente Ugalde for clarifying relevant issues. I also thank Jose Luis González, Abraham Granados, and Marlon Santillan for their support in preparing tables and searching for references. 1 For a detailed description of these aspects and other constitutional and political features, see Juan Marcos Gutiérrez González, “United Mexican States,” in Constitutional Origins, Structure, and Change in Federal Countries, ed. John Kincaid and G. Alan Tarr, 208–38 (Montreal and Kingston: McGill-Queen’s University Press, 2005); M. González Oropeza, “United Mexican States,” in Distribution of Powers and Responsibilities in Federal Countries, ed. Akhtar Majeed, Ronald L. Watts, and Douglas M. Brown, 181–206 (Montreal and Kingston: McGill-Queen’s University Press, 2006); and Yemile Mizrahi, “Mexico,” in Handbook of Federal Countries, 2002, ed. Ann L. Griffiths, 198–209 (Montreal and Kingston: McGill-Queen’s University Press, 2005). Other recent references in English are Enrique Cabrero-Mendoza, “Mexican Local Governance in Transition: Fleeting Change or Permanent Transformation?” American Review of Public Administration 30, no. 4 (2000): 374–88; Carlos L. Moreno, “Fiscal Performance of Local Governments in Mexico: The Role of Federal Transfers,” working paper no. 127, cide, April 2003, http://www.presupuestoygastopublico.org/documentos/descentralizacion/DT%20127.pdf (viewed 2 December 2008); Carlos Moreno “Analyzing the Performance of Local Governments in Mexico: A Political Explanation of Municipal Budgetry Choices” (San Diego, ca: Center for US-Mexican Studies, University of California at San Diego, 2005), http://repositories.cdlib.org/usmex/moreno_carlos (viewed 24 January 2008); and an interesting perspective from the 1960s by Leonard Cardenas Jr, “Contemporary Problems of Local Government in Mexico,” Western Political Quarterly 18, no. 4 (1965): 858–65. 2 This has been the Senate’s composition since the 1996 amendment to Article 56 of the Federal Electoral Law; see Diario Oficial de la Federacion, 22 August 1996. 3 Territorial interstate disputes are resolved by the Senate as per Article 46 of the Constitution.

230

Boris Graizbord

4 The political organization in power since 1929 was the Partido Nacional Revolucionario (pnr), which later became the Partido de la Revolución Mexicana (PRM), both of which are recognized forerunners of the pri, which adopted its present name in 1946. 5 This qualified majority is mentioned in Article 135 of the Constitution as necessary for the approval by the federal and state congresses of constitutional amendments. 6 Nettie Lee Benson, “Spain’s Contribution to Federalism in Mexico,” in Essays in Mexican History: The Charles Wilson Hacket Memorial Volume, ed. T. Cotner and C. Castaneda, 90–103 (Austin, tx: Institute of Latin American Studies, University of Texas, 1958). 7 Roberto Ortega, Federalismo y Municipio (Mexico City: Fondo de Cultura Económica, 1994). 8 The largest in size is Ensenada in Baja California State with 51,952 square kilometres and 370,730 inhabitants in 2000. The smallest is San Lorenzo Axocomanitla in Tlaxcala, a central region state, with 4.34 square kilometres and 4,368 inhabitants. 9 Constitution of 1917, Article 73.VI. 10 See http://www.oaxaca.gob.mx/images/gobierno/leyes/constitución%politica% 20de%20estado.pdf (viewed 16 January 2009). 11 Ortega, Federalismo y Municipio, 31. 12 All references to articles in the Constitution of 1917 are taken from an English translation at http://historicaltextarchive.com/sections.php?op=viewarticle& artid=93 (viewed 1 May 2007). 13 Constitution, Article 115.I, para. 1. 14 According to Article 115 of the Constitution, the Municipalities’ Income Law (Ley de Ingresos Municipales) gives the local authorities the power to collect taxes, which have to conform to the state’s constitution, the municipality’s fiscal code, and other current fiscal ordinances; see http://www.e-local.gob.mx/ELOCAL/ eloc (viewed 24 January 2008). 15 Constitution, Article 115.IV, para. 4. 16 Until the 1999 amendment to Article 115, the governors were in control of the local police in those municipalities in which a state capital was located. Now a governor will take command only in extreme cases, such as when public order is threatened. See Jorge Fernández Ruiz et al., “La Reforma Constitucional de diciembre de 1999 al Artículo 115,” Revista Mexicana de Derecho Constitucional 4 (2001): 241–77, at 274. 17 See Victoria Rodríguez, La Descentralización en México: De la Reforma Municipal a Solidaridad y el Nuevo Federalism (Mexico: Fondo de Cultura Económica, 1999), 156–61. 18 Firefighting is also a local public service. Gas for domestic use is a privatized public utility, but electricity is a state monopoly. 19 Constitución Política del Estado Libre y Soberano de Chihuahua, Article 142; amendment published in Periódico Oficial, no. 79, 1 October 1994. 20 Constitución Política del Estado de Yucatán, Article 55.XVI; see Diario Oficial del Gobierno del Estado, 14 January 1918, revised and ammended in 1938. See further,

United Mexican States

21

22

23 24 25 26

27 28

29

30 31

32

231

Máximo N. Gámiz, “Las Relaciones del Municipio, los Estados y el Gobierno Federal en México: Un nuevo Artículo 115 Constitucional,” in El Municipio en México y en el Mundo: Primer Congreso Internacional de Derecho Municipal, ed. Salvador Valencia Carmona, 91–109 (Mexico: Universidad Nacional Autónoma de México, 2005), 99. María Inés Aragón, “Autonomía Política: La Función Legislativa del Ayuntamiento en México,” in Federalismo y Regionalismo: Memorias del VII Congreso Iberoamericano de Derecho Constitucional, ed. José María Serna de la Garza, 595–605 (Mexico: Universidad Nacional Autónoma de México, 2002). Uri Raich, “Unequal Development, Decentralization, and Fiscal Disparities in the Metropolitan Zone of the Valley of Mexico” (PhD dissertation, Department of Urban Studies and Planning, Massachusetts Institute of Technology, February 2006), 129–30. Instituto Nacional de Estadística, Geografía e Informática (inegi), XII Censo General de Población y Vivienda, 2000 (Mexico: inegi, 2001). Mauricio López, Finanzas Municipales en México: En la Búsqueda de un Eficiente Comportamiento de los Egresos, Premio Gobierno y Gestión Local (Mexico: cide, 2004), 5. Centro Nacional de Estudios Municipales (cnem), El Municipio Mexicano (Mexico: Secretaría de Gobernación, cnem, 1985), 216. Enrique Cabrero, “Capacidades Institucionales en Gobiernos Subnacionales de México: ¿Un Obstáculo para la Descentralización Fiscal?” Gestión y Política Pública, 13, no. 3 (2004): 753–84. Ibid., 764–9. Eduardo García Gaspar, “Partidización y Oposición,” ContraPeso.Info, no. 48, 15 December 2005, http://www.contrapeso.info/&sa=X&oi=translate&resnum=1&ct= result&prev=/search%3Fq%3Dcontrapeso%26hl%3Den%26sa%3DG (viewed 24 January 2008). This development can be appreciated from the section “Participación Ciudadana,” in Enrique Cabrero et al., Prácticas Municipales Exitosas: Premio Gobierno y Gestión Local (Mexico: cide and Ford Foundation, 2001), and subsequent editions. At http://www.indetec.gob.mx/e-financiero1/glosario.asp?letter=i (viewed 24 January 2008). Steven B. Webb, “Decentralization,” in Mexico: A Comprehensive Development Agenda for the New Era, ed. M. Giugale, O. Lafourcade, and V. Nguyen, 709–20 (Washington, dc: World Bank, 2001), 714–15. The Fiscal Pact is understood to be a basic agreement legitimizing the role of the states and the scope of government responsibilities in the economic and social spheres. It tries to consolidate current fiscal adjustments, improve public management productivity, offer transparency in fiscal actions, promote equity, and favour the development of democratic institutions. See Comisión Económica para América Latina y el Caribe (cepal), El Pacto Fiscal: Fortalezas, Debilidades, Desafíos (Santiago, Chile: cepal, 1998). Mexico’s federal government established the Fiscal Pact in 1980, and a 1993 revision promoted the decentralization of public education and health services as well as a regulatory system for national debt. See Steven B.

232

33

34 35 36

37 38 39

40 41 42 43

44 45 46

47

48 49 50 51

52 53

Boris Graizbord

Webb and Christian Y. González, “Negociación de un Nuevo Pacto Fiscal en México,” Gestión y Política Pública 13, no. 3 (2004): 689–731. M. Giugale, V. Nguyen, F. Rojas, and S. Webb, “Overview,” in Achievements and Challenges of Fiscal Decentralization: Lessons from Mexico, ed. M. Giugale and S. Webb, 1–38 (Washington, DC: World Bank, 2000). Aragón, “Autonomía Política”, 597. The following description is taken from Raich, “Unequal Development,” appendix 1. Laura Sour, “El Sistema de Transferencias Federales en México: ¿Premio o Castigo para el Esfuerzo Fiscal de los Gobiernos Locales Urbanos?” Gestión y Política Pública 13, no. 3 (2004): 733–51. Originally pointed out by Wallace Oates, Federalismo Fiscal (Madrid: Instituto de Estudios de Administración Local, 1977), 205. Ortega, Federalismo y Municipio, 85. The federal government also directed transfers to municipalities through some changes in the Fiscal Coordination Law. See José Alberto Saucedo, “El Manejo de las Finanzas Públicas en México: ¿Hacia un Desarrollo Regional?” Gaceta Mexicana de Administración Pública y Estatal (1999): 147–78. Webb, “Decentralization,” 772. Sour, “El Sistema de Transferencias Federales,” 736. Ibid., 746. Fausto Hernández Trillo, “Los Dilemas de la Descentralización Fiscal en México, 1995–2000” preliminary version, n.d., http://www.iglom.iteso.mx/Pdf/ fhernandez.pdf (viewed 24 January 2008). Webb, “Decentralization,” 717. Constitution, Article 115.I, para. 3. Peter M. Ward and Victoria E. Rodríguez, “New Federalism, Intra-governmental Relations, and Co-governance in México,” Journal of Latin American Studies 31, no. 3 (1999): 673–710. Allison Rowland, “The Interaction of Municipal and Federal Governments in Mexico: Trends, Issues, and Problems,” in Spheres of Governance: Comparative Studies of Cities in Multilevel Governance Systems, ed. Harvey Lazar and Christian Leuprecht, 201–28 (Montreal and Kingston: McGill-Queen’s University Press, 2007), 210–11. Ibid. Ibid., 211. Ibid., 210. See Mario A. Fócil Ortega, “La Planeación en la Administración Pública Estatal: La Participación de la Sociedad en los coplades,” Gaceta Mexicana de Administración Pública Estatal y Municipal, no. 33 (1989): 61–3; and Eduardo Rivas Sosa, “Participación de los Municipios en los coplades,” Gaceta Mexicana de Administración Pública Estatal y Municipal, no. 12 (1984): 83–8. Rowland, “Interaction of Municipal and Federal Governments,” 212. Raich, “Unequal Development,” 129–30.

United Mexican States

233

54 Rodríguez, La Descentralización en México. But see Rowland, “Interaction of Municipal and Federal Governments.” 55 See Rodríguez, La Descentralización en México, 74n. 56 Rowland, “Interaction of Municipal and Federal Governments,” 216. 57 José R. Vega, “El Municipio en la Reforma del Estado Federal,” in Las Aportaciones de las Entidades Federativas a la Reforma del Estado, ed. Máximo N. Gámiz and José Enrique Rivera Rodríguez, 333–62 (Mexico: Universidad Nacional Autónoma de México, 2003). 58 Richard A. Musgrave and P.B. Musgrave, Hacienda Pública Teórica y Aplicada (Madrid: McGraw-Hill, 1992). 59 López, Finanzas Municipales en México, 8. 60 Raich, “Unequal Development,” 159. 61 The above and the following discussions follow proposals in ibid., 199–221. 62 This is pointed out by Donald Kettl, The Transformation of Governance (Baltimore, md: Johns Hopkins University Press, 2002), 129. 63 Presidencia de la República, Plan Nacional de Desarrollo 2007–2012 (Mexico: Gobierno de los Estados Unidos Mexicanos, 2007).

Federal Republic of Nigeria habu galadima

The dream of many Nigerians is to have strong, democratic local government, but nearly three decades of military rule had serious consequences for local government in Nigeria. Apart from alienating people from local government, military rule also entrenched mediocrity and a lack of accountability and transparency in local governance. Local government has become neither a local nor a governance entity; instead, it has become almost a parastatal of state governments. There is hardly a sense of ownership of local government by local residents. This chapter examines the role and place of local governments in the Nigerian federation and explores their relationship with the other orders of government, as well as their impact on Nigeria’s federal system. The relationship between local governments and the other orders of government currently favours the states and the federal government to the extent that it has been difficult for local governments to respond positively to local demands. The chapter also examines the historical development of local government and its structures, functions, and finances. The chapter concludes that unless a number of measures are put in place to empower local governments, they may not be able to carry out their constitutional responsibilities. The Federal Republic of Nigeria is located in West Africa, bordering the Gulf of Guinea, between Benin and Cameroon, and covers a land area of 910,768 square kilometres. With a population of about 140 million, it is not only Africa’s most populous state but also one of the largest federations in the world. Nigeria has more than 389 distinctive ethnic groups.1 However, the most populous and politically influential groups are the Hausa and Fulani (29% of the population), Yoruba (21%), Igbo (Ibo) (18%), Ijaw (10%), Kanuri (4%), Ibibio (3.5%), and Tiv (2.5%). English is the country’s official language. Nigeria is also religiously diverse. With Muslims constituting 50% of the population and Christians 40%, and with only 10% of the population

236

Habu Galadima

practising the African traditional religion, Nigeria is home to sub-Saharan Africa’s largest number of Muslims and Christians.2 Twelve of Nigeria’s states in the North of the country, which is dominated by Sunni Muslims, have adopted Islamic sharia (law) since 1999. This ethnic and religious diversity accounts for the multitude of religious, ethnic, and political fault lines that periodically erupt into communal violence.3 Nigeria’s gross domestic product (gdp) was US$132.9 billion in 2005. This was a 5.6% increase over 2004. It is expected that a gdp growth of around 5.5% will be recorded for 2007.4 In the past two decades, oil has supplied more than 90% of Nigeria’s export earnings and more than 80% of federal government revenue.5 In 2000 Nigeria was spending less than 1% of gdp on health and less than 1% on education, but more than 2.5% on payment of foreign debts. Nigeria’s external debt at the end of 2004 grew to almost US$36 billion. Its debt-servicing problems began around 1985 when the government’s total external debt to all creditors amounted to US$19 billion. Since then, the government has paid creditors more than $35 billion while borrowing less than US$15 billion. In 2005 Nigeria’s external debt (bilateral and multilateral) was an estimated US$37.5 billion, but at midyear, Nigeria and a group of international creditors, known as the Paris Club, proposed a first-ever buyback at a discount, which cancelled all of Nigeria’s US$18 billion of bilateral debt to the creditors in exchange for a cash payment of roughly US$12 billion. Nonbilateral debt owed to multilateral development banks and commercial banks was not affected by the agreement. Despite the country’s oil wealth, its basic social indicators place it among the world’s twenty poorest countries. Seven out of ten Nigerians live on less than US$1 per day.6 There are fears that the country will not be able to meet the targets set by the United Nations Millennium Development Goals, which call for halving poverty by 2015. Nigeria is a product of British conquest and colonialism.7 With the completion of the British Conquest in 1903 and the amalgamation of the Protectorates of Northern and Southern Nigeria into the Colony and Protectorate of Nigeria in 1914, the country was brought under the unified administrative control of Britain, and Nigeria’s identity took its geographic form. This amalgamation of territories, each with a distinct culture and history, had severe and complex implications. The country became ethnically heterogeneous and culturally diverse, making federalism a political imperative. In 1954 Nigeria formally adopted federalism as a mechanism to guarantee “self-rule” and “shared-rule.”8 Nigeria became independent in 1960, and in 1963 it adopted a republican constitution with a tripartite structure made up of the federal, state, and local governments. The military abolished the parliamentary system and replaced it with military rule on 15 January 1966. Nigeria has been ruled by the military for approximately twenty-eight of the forty-nine years since independence.

Federal Republic of Nigeria

237

Between 1966 and 1999 the military intervened three times to eliminate democratic institutions. During the periods of military rule, five separate transitions to civil rule were planned. Of these, only two resulted in a transfer of power to civilian rule – in 1979 and 1999. The country has been making strides toward democracy since 1999 but not without some intermittent turbulence. Nigeria has a multiparty system with fifty registered political parties. Since 1999 the most dominant parties have been the Peoples Democratic Party (pdp), the Action Congress (ac), and the All Nigeria’s Peoples’ Party (anpp). The pdp won the presidential elections in 1999, 2003, and 2007. It has enjoyed dominance in the Senate and the House of Representatives since 1999. No party has been able to alternate power with the ruling party (pdp). However, for the first time since independence, there was a successful handover of power from one civilian government to another on 29 May 2007. After serving two four-year terms, General Olusegun Obasanjo stepped down as the presidential flag bearer of the pdp due to very strong opposition to his attempt to continue as president for a third term. Umaru Musa Yar’adua, a member of his party, was eventually elected president. The election, however, was characterized by widespread irregularities, including inflated vote returns, ballot-box stuffing, altered results, and disenfranchisement of voters, as well as by administrative problems, such as late delivery of voting materials to a large number of polling stations, intimidation of voters and electoral officers by hired political thugs, and violence, among many others. The election result was challenged at the electoral tribunal by the opposition parties. However, Yar’adua was sworn in as president on 29 May 2007, and the country still awaits the verdict of the electoral tribunal. Despite occasional political turbulence, Nigeria has experienced a stable system of government over the past ten years. Nigeria’s political structure is similar to that of the United States. It is a federation of thirty-six states with a Federal Capital Territory, which includes the capital city, Abuja, along with 774 local governments, namely 768 local government authorities (lgas) and 6 area councils in the Federal Capital Territory. Nigeria has a presidential system of government with its attendant separation of powers as well as checks and balances. The executive consists of a president who is elected directly by the people and is restricted to serving no more than two four-year terms of office. The president appoints a cabinet, known as the Federal Executive Council (fec), subject to the approval of the Senate. The fec must be drawn from all states of the federation to provide it with a federal character. Members of the fec may not serve concurrently as members of the National Assembly, and legislators must resign elected office in the legislature to take up positions in the executive.

238

Habu Galadima

There is a legislative assembly called the National Assembly. It is bicameral, comprising the Senate, which has 109 members (three from each of the thirty-six states and one from the Federal Capital Territory), and the House of Representatives, with 360 members. Members of the National Assembly are elected directly by the electorate for a four-year term. In contrast, local government chairpersons and councillors are elected for a three-year term. The Nigerian legal system is complex, having several subsystems. English common law is applied in the state courts, and there are also Islamic and customary law courts. At least in terms of the Constitution, the federal and state governments are held accountable to citizens in a system of separation of powers that guarantees legislative oversight. The legislatures have sufficient powers to assist them in the process. They supervise the collection of public revenues and spending. Governments must submit their annual budgets for scrutiny (and public participation) to the relevant legislature at the various levels. Although the implementation of the budgets is not adhered to strictly, they are still the governments’ key policy documents and a reference point for citizens. The year-end report is a government’s key accountability document, showing compliance with the levels of revenue and expenditure authorized by the legislature in the budget. Only recently, a Freedom of Information Bill was passed in order to promote more openness and accountability to citizens. There is also the Bureau of Budget Implementation, Monitoring and Price Intelligence (bbim&pi), which seeks to ensure that all procurements and contracts undertaken by a government comply with the principles of openness, transparency, accountability, competition, cost effectiveness, and value for money.

h i s t o r y, s t r u c t u r e s , and institutions of local government Local government is constitutionally enshrined as the third order of government after the federal and the state governments. Its history and development, however, have been variegated. Like most institutions of government in many countries that were former colonies, the present system of local government has its roots in the colonial experience. In colonial times, the local government system was modelled on the British one.9 The Native Authority Ordinance of 1916, the first national legislation on local government administration, gave the governor general the authority to appoint a Native authority over any part of the country, thus establishing a system of local government known as Native Administration.10 With this enactment, the colonial administration could do away with systems employed by the precolonial states, monarchies, and communities.

Federal Republic of Nigeria

239

The British, under the Native Authority Ordinance, utilized aspects of the traditional rulership structures peculiar to each area when they realized that they needed to maintain the indigenous traditional institutions and their rulers in order to gain effective control of the communities under Native authority.11 This was referred to as the “indirect rule” system, which required that administration be carried out through traditional rulers and institutions. In areas where monarchical structures did not exist, especially among the Igbo people, the colonial officers created “warrant chiefs” in order to perfect the indirect rule on which the system of Native authority rested.12 The enactment of a second Native Authority Ordinance in 1933 gave further regulatory powers to the Native authorities to include the monitoring of migration, movement of livestock, bush burning, and registration of births and deaths within their areas of competence. Whereas the first Native Authority Ordinance recognized traditional rulers as Native authorities, the 1933 law enhanced the duties of the local authorities, although only for those traditional leaders recognized by the colonial administration. By 1946 the country had been restructured into three regions, and legal authority over local administration had been transferred to the regions. In the years 1950–55, the first largely elected local government councils based on the British Westminster model emerged in Lagos and the former Eastern and Western regions. Some changes were also effected in the Northern region through the Native Authority Law of 1954. After independence, there was a decline in the prestige and responsibilities of local authorities. Under the parliamentary system of the First Republic (1963–66), local government was strictly within the exclusive purview of the regional governments, and each regional house of assembly promulgated local government laws, which they modified from time to time in light of experience gained in their implementation. The main idea was that local government should be truly local and be tailored to meet local conditions and the social, cultural, and other peculiarities of the area. Following the military takeover of power in 1966, critical developments occurred within local administration, beginning with the restructuring of the country into twelve states in 1967. Indeed, the creation and dissolution of local councils became the responsibility of the military governors. Between 1969 and 1971, following public criticism of the local government councils (focusing mainly on the abuse of political office by officials of the local administrations), the state governments introduced reforms in their councils designed to deal with the complaints. This involved taking over the local constabulary, courts, and prisons and subsuming them under the newly created national police, judicial, and prison systems. On 19 August 1976 the Murtala/Obasanjo military regime constituted the Local Government Reform Committee. The military government decided to

240

Habu Galadima

reorganize local government in order to enhance decentralization as part of the planned transition to civilian rule.13 The program for decentralization assigned local functions on the principle of subsidiarity, seeking to vest responsibility for services in the government closest to the point of consumption and to supply financial resources for providing them. In 1976 major changes occurred with the introduction of a uniform local government system.14 Although the states retained powers to enact laws for local government administration, they were compelled to adhere to uniform guidelines under the Guidelines for Local Government Reform set by the federal military government. The guidelines introduced a uniform structure, and uniform revenue-source and personnel-management systems, across the country. The 1976 local government reforms represent a watershed in the history of the evolution of the local government system in Nigeria.15 The military handed back power to a civilian government in 1979 with a constitution modelled on the Constitution of the United States of America. The 1979 Constitution gave the government of every state the responsibility to ensure the existence of democratically elected local government councils under a law enacted by the state house of assembly providing for the establishment, structure, composition, finance, and functions of such councils,16 despite the uniform local government system introduced in 1976. During the Alhaji Shehu Shagari regime (1979–83), this constitutional provision was neglected; no elections were held, and sole administrators were appointed. During this period, many state governments sacked the local government officials and replaced them with their protégés, while the recognized local government establishment process was subverted, leading to a proliferation of local governments, with the number doubling from 301 to 600.17 In addition, local governments had their statutory funding sources reduced as many state governments took over taxes or revenue-yielding activities that were constitutionally the preserve of the local councils. Following the concerns raised by these developments, the regime of General Muhammadu Buhari (1983–84) established a Committee on the Review of Local Government Administration in 1984, which upheld the objects of the 1976 reforms.18 Implementation of the recommendations of this committee saw the direct transfer of revenue allocations from the central government to the local governments in order to prevent interference in the allocations by the states. However, there were no elections, and the local governments continued with the system of sole administrators. During the Ibrahim Babangida military regime (1984–92), certain reforms were introduced to ensure local government autonomy. In 1988 the federal government abolished the state ministries of local government and replaced them with departments or bureaus of local government matters within the deputy governors’ offices. These bureaus were to serve as information

Federal Republic of Nigeria

241

clearinghouses for local governments as well as to render technical assistance to them. By 1991, during the Babangida regime, a federal law on local government was promulgated, the Basic Constitutional and Transitional Provision Amendment Decree No. 23. This was a significant development because it affirmed local government administration as an autonomous financial unit within the federal system. A system of direct remittance of local government statutory allocations from the Federation Account was then introduced. This increased the share of the distributable pool for local governments in the Federation Account, first from 10% to 15% and then to 20% in 1992. This was the first system of direct allocation of funds to local councils. The administration of General Babangida realized that despite the protection and autonomy granted to local governments by the 1979 Constitution, the states intruded incessantly on the affairs of the local governments and rendered them impotent (a practice that has yet to change). Notably, during the military era, there were no legal, identifiable, and objective criteria used in creating local government councils, resulting in an imbalance in favour of the northern part of the country. The size of the funds allocated to states for local governments depends on the number of local governments in a state. The politics of imbalance come to the fore when one region of the country has more local governments than another without clear justification. The issue can be illustrated with reference to Kano in the northwest of Nigeria, which has a population of 9.4 million and fortyfour local government areas, and Lagos State in southwest Nigeria, which has a population of 9.1 million and only twenty local government areas. The more local governments a state has, the more the state draws from the national revenue. This has created serious disharmony, resulting in agitation for the creation of more local governments to correct the imbalance. The number of local government areas has risen steadily: from 99 in 1970 to 301 in 1979; then to 781 (1981) before reverting back to 301 (1984); followed by increases to 449 (1987), to 500 (1991), and then to the 774 currently listed in the Constitution. Yet the demand for the creation of more local governments has not abated. The increase to the current 774 was made arbitrarily by the central government during military rule, which did not respect the jurisdiction of the state governments. The history of local government has been characterized by inconsistent policy, which has given rise to conflicting reforms in the local government system.19 Much of the confusion has resulted from trying to find the proper mix between the British system of local administration bequeathed to the country and the American presidential system preferred by successive military regimes. The local government council is the only local government institution recognized in the Constitution. The 774 local government areas recognized in the Constitution vary in size and importance. The smallest of

242

Habu Galadima

them is Kolokuma/Opokuma in Bayelsa State with a population of 46,877; the largest is Ajeromi/Ifelodun in Lagos State with a population of 593,561. The average population of a local government area is 115,000, with area councils in the Federal Capital Territory residing over populations ranging in size from 21,081 to 196,021. Given the proliferation of local governments in the past, the creation of new local governments has been made very cumbersome. Although the creation and establishment of local governments are functions of the state, authority for their recognition is given to the National Assembly. A new local government is established when a state house of assembly passes a bill for the purpose of establishing a local government area.20 A request for the establishment of the local government has to be supported by at least a two-thirds majority of the members of the state house of assembly and the local government councils representing the area demanding the creation.21 A proposal for the creation of the local government area has thereafter to be approved in a referendum by at least a two-thirds majority of the people in the area where the demand for the proposed local government originated.22 The result of the referendum must then be approved by a majority of all the local government councils in the state by a simple majority in each council. The result of the referendum is finally approved by a resolution passed by a two-thirds majority of members of the federal House of Assembly. At this stage, the state house of assembly would make a law creating the local government area. After the creation of a new local government area, the federal House of Assembly must also make financial provision for it.23 This process shows that local authorities and communities exercise some control over the demarcation of boundaries by the requirement of a referendum supported by at least a two-thirds majority of the affected people of the local government area and also by a two-thirds majority of their elected representatives. The establishment of local governments has become a contentious issue. The dispute has raged over which order of government has the power to establish new local governments, given that the federal government, by an act of the National Assembly, is required to make the necessary provisions with respect to the names of the local government areas.24 The states claimed, by virtue of the Constitution,25 the right to create new local governments, but the federal government thinks otherwise. The Supreme Court’s decision in the landmark case between the Lagos State government and the federal government over the former’s exercise of local government creation and the withholding of funds by the federal government settled the point. The Supreme Court ruled that the Lagos State government’s law26 creating new local government areas was unquestionably constitutional and valid because the law complied with Sections 7(1) and 8(3) of the Constitution.27 The court pointed out that the only reservation was

Federal Republic of Nigeria

243

that the newly created local governments are left in abeyance until after the enactment of a constitutional amendment by the National Assembly pursuant to the provisions of the Constitution.28 The court also affirmed that the National Assembly’s power to legislate on local government was limited to the local governments (i.e., area councils) within the Federal Capital Territory. The Supreme Court further ruled that, once a local government has been established, the federal government has no powers to withhold the funds due to another order of government.29 Like many other federations, Nigeria has a Federal Capital Territory at Abuja, which is accorded the same status as a state.30 The city was created after the decision to move the capital from Lagos in the South to the centre of the country in 1976. The seat of government was finally moved to Abuja in 1991. Growing every day, the Federal Capital Territory has a current population of well over 5 million. It has six area councils, which are funded principally from the Federation Account. The National Assembly also makes laws on the establishment, structure, and finances of the councils, just as the state houses of assembly do in respect of the local governments in the states. The area councils are elected for a three-year term. In Nigeria local governments are all multipurpose authorities. However, there is a gradual evolution toward multilayered local government structures. A number of states have created new local authorities called “development areas” but have not yet succeeded in getting the National Assembly to give effect to these new local institutions by legislative amendment, pursuant to Section 8(3) of the Constitution. Development areas in many states have emerged as a result of the difficult process of creating new local government areas. With the return of civilian rule in 1999, a number of states decided to yield to the demands for the creation of more local governments. Following the failure to obtain the necessary approval for the creation of new local governments from the National Assembly, the newly created “local government areas” were tactically converted into development areas. Unrecognized by the Constitution, they are administrative units with some decentralized local government powers and functions that enable them to enhance rural development without replicating the physical, technical, and administrative profiles of a local government council. Metropolitan governance is yet undeveloped in Nigeria. Major cities, like Ibadan, are served by a number of local governments with no consolidated responsibility for metropolitan governance.31 However, metropolitan governance is now getting on the country’s agenda as local governments face the challenges of large conurbations with very little resources. Since early 2000 new forms of city–suburban cooperation, coordination, region-wide spatial planning, and metropolitan institutional organization have been promoted, especially in Lagos, where local jurisdictions of twenty local government councils frequently divide rather than

244

Habu Galadima

unify the urban area. Lagos is one of the fastest growing cities in the world. Its status as the first capital city of Nigeria, its access to the sea, and its role as the home of the biggest international airport in Nigeria have made Lagos the commercial and industrial hub of Nigeria. About 65% of Nigeria’s commercial activities are located in Lagos, which has well over 2,000 industries, and all financial institutions in Nigeria either have their headquarters in Lagos or are represented there. The total area of Lagos is 787 square kilometres, of which only 614 square kilometres is land.32 According to the official 2006 census, the population of Lagos stood at about 9.1 million, making it Nigeria’s most populous city. A parallel census, conducted by Lagos State in collaboration with the National Population Commission, put Lagos’s population at more than 17.5 million. The World Bank household survey, done in collaboration with the Lagos State Office of Statistics in 2006, showed that the average household size was 6, not the 4.9 that was used by the National Population Commission. Lagos State is made up of five administrative divisions, namely Lagos (Eko), Ikeja (Lagos West), Ikorodu, Epe, and Badagry (Lagos East). The divisions are further divided into twenty local government areas in order to enhance governance, development, and participatory democracy. These twenty local governments will participate in the Lagos Mega-City Metropolitan Development Authority but still retain their status as local governments. Lagos has been striving, along with the local governments in its area, to build a Lagos mega-city authority to make Lagos City more competitive in the global marketplace. On 14 February 2007 the federal government approved a draft bill for the establishment of the Lagos Mega-City Development Authority (lmcda). This body will be funded by a privatepublic partnership. The public aspect of the funding will be by tripartite agreement, with the federal government contributing 45%, Lagos State 40%, and Ogun State 15%. The bill focuses on the establishment of the lmcda, its governing board, administration, appointments, and funding, among many others. The lmcda is expected to be multipurpose, to concentrate on the provision and maintenance of infrastructure in Lagos State, and to administer common services. There are no metropolitan councils yet, but plans are under way. Traditional forms of government no longer play a direct role in governance. In the precolonial era, traditional rulers exercised effective powers in their domains. During the colonial period, traditional rulers became the instrument for enforcing British colonial policies, collecting taxes and levies, and procuring able-bodied men for forced labour services.33 The framers of Nigeria’s 1979 Constitution thought they had resolved the debate by denying traditional rulers any formal political role in the new Constitution.34 This was in sharp contrast to the 1963 Constitution, which created a legislative chamber for chiefs in each region. Following the practice initiated by the architects

Federal Republic of Nigeria

245

of the 1979 Constitution, the framers of the 1989 and 1995 constitutions did not provide any meaningful political role for traditional rulers. The 1999 Constitution did not accord any constitutional recognition to the traditional rulers. Despite the spirited denial of formal political roles to traditional rulers in the four most recent constitutions, traditional rulers continue to exercise enormous power and influence over the lives and well-being of millions of Nigerians. Indeed, they have been allocated 5% of local government’s total revenue for the upkeep of traditional institutions, which play advisory roles and are still seen as very important vehicles in the maintenance of peace and order in their respective domains.35

constitutional recognition of local government The constitutional recognition of local government has been a slow process. The 1954, 1960, and 1963 constitutions merely listed local government as a sphere of competence of the states. It was the 1979 Constitution that specifically mentioned local government as a guaranteed third order of government. The 1989 Constitution, which never came into effect, contained provisions similar to those in the 1979 Constitution and even went further to provide that federal statutory allocations be made directly to the local governments. The rationale for the constitutional recognition has been the need to make it obligatory for a state government to ensure the existence of democratically elected local governments and to protect them from arbitrary state action. The 1999 Constitution reaffirmed the basic principles of the 1989 inoperative Constitution. Section 7(1) guarantees the existence of democratically elected local government councils as follows: “The system of local government by democratically elected local government councils is under this Constitution guaranteed; and accordingly, the Government of every State shall, subject to Section 8 of this Constitution, ensure their existence under a Law which provides for the establishment, structure, composition, finance and functions of such councils.”36 Section 3(6) provides that there “shall be 768 local government areas” and “six area councils” for the Capital Territority, as listed in Parts I and II of the First Schedule, respectively. Over each local government area, a local government council exercises jurisdiction.37 The listing of the 774 local government areas by name is further constitutional recognition of each local council. The Constitution lists the powers of local governments in Section 7(2). Some of the powers are “participatory” (i.e., participating in the activities of the state government), whereas others are “exclusive” to local government. The Constitution also provides that the local governments share in the public revenue in the Federal Distributable Pool Account.38

246

Habu Galadima

The Constitution further allocates original taxing powers to local governments, but these are limited to matters within their legal and administrative jurisdictions, such as licences and fees for television and wireless radio, market and trading licences and fees, car-parking fees, and advertising fees. The Fourth Schedule lists, as one of the main functions of local governments, the power to assess privately owned homes or tenements for the purposes of levying rates, as prescribed by the state legislative assembly.39 Although local governments may collect rates,40 in reality they are set and collected by the state. The institutional arrangement of local government is not governed by the Constitution but by legislation enacted by the state legislative assemblies. All local governments are accorded the same constitutional recognition. The only special status accorded is that of the area councils in the Federal Capital Territory, which fall under the jurisdiction of the National Assembly. It is the federal House of Representatives that approves their budgets. These provisions provided limited protection for local self-government. The Constitution does not guarantee the autonomy of local governments other than the system of democratically elected local government councils. The local governments are thus at the mercy of their respective states. State governments determine the extent of autonomy they wish to grant local government councils. Local governments are tightly controlled and subordinated by state governors. However, viewed more broadly, the constitutional recognition of local government has shielded it to some extent from excessive exposure to the states. Otherwise, there would be a total absence of local self-government.

governance role of local government The allocation of local government powers is constitutionally entrenched and symmetrical. As noted above, the Constitution has set out the functions of local government to include joint or shared responsibilities with the state. These responsibilities entail participating in state functions in the following matters: the provision and maintenance of primary, adult, and vocational education; the development of agriculture and natural resources, other than the exploitation of minerals; the provision and maintenance of health services; and any other functions that the state house of assembly may assign to local government councils.41 Local governments are also expected to participate in the economic planning process of their state through membership in state economic planning boards, which most states are yet to establish. These “participatory” functions have created confusion in the respective mandates and responsibilities of the two orders of government. Although local governments’ role in economic development planning is to make recommendations to a state’s agency for economic planning, their roles are not clearly

Federal Republic of Nigeria

247

specified in respect of primary education, health, and agricultural development. The result has been that the state governments have principal responsibility for basic services, with the extent of local government participation in the execution of these responsibilities determined at the discretion of individual state governments. The constitutional existence of state discretion has led to disparities in the extent to which local governments’ responsibility for services is effectively decentralized, as well as in the degree of autonomy afforded to local governments, both within and across states. In many cases, they function as mere administrative extensions of state governments. In the face of such constitutional ambiguity, the participatory functions have caused confusion, as there are unclear assignments of responsibility for service delivery. The local governments have unclear mandates with respect to key local functions such as local development planning, primary education, health services, and the development of agriculture and natural resources. This has negatively affected service delivery. With such unclear mandates, local governments have had an uphill task resisting state interference in local functions. The fact that key social services are the shared responsibility of states and local governments also poses funding and organizational problems. State governments lay down policy and exercise administrative controls over the quality and quantity of services to be delivered but leave the funding thereof to local governments.42 The second list of exclusive activities set out by the Constitution includes establishment and maintenance of cemeteries, burial grounds, and homes for the destitute or infirm; establishment, maintenance, and regulation of slaughterhouses, markets, and motor parks; construction and maintenance of roads, streets, street lighting, parks, and gardens; and provision and maintenance of public conveniences, sewage, and refuse disposal. Their functions further include the control and regulation of outdoor advertising and hoarding; shops and kiosks; restaurants, bakeries and other places for the sale of food to the public, and laundries; and licensing, regulation, and control of the sale of liquor.43 On the face of it, local government is not loaded with the big traditional functions (e.g., water, power, roads, health, and education); these are mostly shared with the state governments. Local governments have limited internal administrative autonomy over the hiring and firing of personnel. Staffing is the joint responsibility of local governments and the State Local Government Service Commission, whose members are appointed by the state government. The responsibilities for junior staff (levels 01 to 06), including discipline, have been delegated to local governments. The councils directly recruit and promote junior staff, subject to the approval of the Local Government Service Commission, a state-appointed statutory body. Both of these commissions have the responsibility to recruit, promote, transfer, train/develop, and discipline senior staff (level 07 and above) on application by a local government council. After appointment of

248

Habu Galadima

the senior staff, the Local Government Service Commission rotates them every three to five years among the various local governments, with promotion based on merit and seniority. Notably, the local government service commissions, despite seeking to work professionally, are nevertheless under the political influence of the state governments that appoint them. This split personnel system is fraught with many challenges. Senior personnel are posted for terms of three to five years at a time in a system of rotation. Although this enables remote rural areas to obtain a fair amount of qualified staff, it gives local governments little control over their key staff.44 Salary scales of local government staff are tied to those of the civil service of the state within which they serve, with the same pay and allowances, irrespective of the revenue base of the local government. Local government expenditure was 14% of total government expenditure in 2005, whereas that for the states was 31.8% and for the federal government 54.1%.45 Although the percentage of expenditure of local government has remained relatively constant since 1999, state expenditure grew during this period at the expense of the federal government. Overall, local government’s expenditure increased from 1.8% of gdp in 1999 to 4.6% in 2005, and its share of subnational expenditure increased from 36% to 44%.46 Although the consolidated expenditure of the local government councils in 2006 rose to N665.8 billion (US$5.4 billion), an increase of 6.3% from 2005, it translated into only 13.2% of the total expenditure, relative to the other orders of government.47 Current expenditure accounted for 59.8% of the total budget. Capital expenditure, at N267.7 billion (US$2.2 billion), was 25.4% higher than the level recorded in 2005. The three main categories of expenditure have consistently been health personnel, personnel and administration, and capital projects.48 The size of the local government bureaucracy is about 620,000 persons across Nigeria, whereas the states have 540,000 and the federal government 1,107,497 employees, respectively.49 The size of the local government bureaucracy may not be a true reflection of the reality because there are “ghost” employees (nonexistent staff) on the payrolls of the local governments. The entrenchment of democratic rule in 1999 has not yet shown any remarkable transformation in the nature of local government. Local government has not been able to facilitate participatory governance at the grassroots level because it has been controlled by elites who are not accountable to the people. They have turned local government into a citadel of corruption that has defied ownership and control by the local people. The meddlesomeness of the other orders of government has further complicated the situation of local government. What is surprising, however, is that, despite the alienation of local government from the majority of the people, there has been agitation for increases in both the number and the finances of local governments.

Federal Republic of Nigeria

249

Political Institutions of Local Government Local governments in Nigeria have a presidential system of government with two separate political institutions: the legislative council and the executive council.50 The legislative council is composed of elected councillors with a speaker or leader, a clerk, and all the apparatus of a legislature. The clerk (a senior civil servant) of the legislative council manages the activities of the council.51 The legislative arm is usually statutorily charged with the functions of lawmaking; approving, and possibly amending, the annual budget, subject to the chairperson’s vote, which can be overridden by a two-thirds majority of the councillors; vetting and monitoring the implementation of projects and programs in the council’s annual budget; examining and debating the monthly statement of income and expenditure rendered to it by the executive arm; impeaching, in accordance with the Constitution, the council chairperson who has committed an impeachable offence; advising, consulting, and liaising with the chairperson who is the head of the executive arm of the local council; and performing such other functions as may be assigned to it by its state house of assembly. The executive arm consists of the chairperson, vice chairperson, secretary, supervisory councillors, and advisers. The chairperson, who is the chief executive, is directly elected by the people and appoints the secretary and supervisory councillors. The supervisory councillors oversee the departments in the local government. The director of General Services and Administration, the secretary, and the local government auditor are also members of the executive council. The chairperson, secretary, and the supervisory councillors are not members of the legislative council. The chairperson is entrusted with the task of ensuring that the administration complies fully with the checks and balances spelled out in existing guidelines and with the financial regulations governing receipts and disbursement of public funds. He is liable for any breach thereof.52 The cost of managing these political institutions appears to be very high, in that it constitutes a large proportion of local government expenditure and is a drain on the meagre resources of local government. Citizens are not directly involved in the planning process of the local government council. The chairperson, with some support from individual councillors, usually makes the key decisions on community priorities.53 Occasionally, the chairperson consults with community-based institutions, such as traditional institutions, the Community Development Association (cda), and other interest groups. These institutions may make contributions toward grassroots development, especially in areas of information dissemination, resources mobilization, public accountability, and delivery of public goods and services.

250

Habu Galadima

financing local government Local government raises very limited own-source revenue and is dependent on transfers from the federal and state governments for the bulk of its revenue.54 As noted above, local governments have limited constitutionally entrenched revenue-raising powers. Their taxing powers include shop and kiosk rates; tenement rates; liquor licence fees; slaughter-slab fees; marriage, birth, and death registration fees; market taxes; motor park levies; nonmotorized vehicle fees; cattle tax; and radio and television licences; among others.55 The tax-mobilization capacity of local government is very weak. In practice, only one tax source (i.e., market licences and fees) is exploited by local government. Property taxes and tenement rates, although considered potentially high-yielding revenue sources, have been exploited only by a handful of local governments. Reasons for this limited utilization range from statutory problems in obtaining the necessary enabling state legislation to technical problems with valuation and assessment. Lack of enforcement of the provisions of the tax laws, due to either ignorance or low commitment, is also partly responsible.56 Local governments are allowed to borrow and even float bonds. Local governments are encouraged to raise additional financing (where needed) through the capital markets for projects that will achieve economic and infrastructural development in their areas. However, borrowing cannot take place without the authority of the state government, which guarantees the debt.57 The incidence of borrowing has thus been low. The self-generated revenue efforts of local government councils have also been declining. In 1993 local governments were able to internally raise about 5.2% of their annual revenue. The internal revenue increased to 9.3% of total current revenue in 1996 but plummeted to 4.8% in 2004, 3.6% in 2005, and 3.4% in 2006. On average, between 1999 and 2006, only 4% of revenue was generated internally. This figure conceals great differences between states. The local governments in Kogi State, which are mainly rural, and in Lagos State, which are basically urban, illustrate the differences. Local governments in Kogi are 99% dependent on statutory transfers, whereas local governments in Lagos State raise about 8% of their revenues from internal sources. Although this is about the highest in the country, it is still inadequate to cover current expenditure, such as overhead and personnel costs, let alone capital and development expenditures that will ultimately have a direct impact on the well-being of the citizens.58 Obviously, there is a wide gap between the assigned duties and functions of local government and internal revenue. Sizable vertical imbalances must thus be met through intergovernmental transfers (i.e., tax sharing and grants). The external sources of local governments’ revenue are the statutory allocation from the Federation Account, a share of the valued-added

Federal Republic of Nigeria

251

tax (vat), 10% of state governments’ internally generated revenues, and block and conditional grants from the federation and the states. Prior to the introduction of the vat in 1994, the state and local governments relied heavily on their share of the Federation Account, which in turn depended on developments in the international petroleum market, as oil revenue contributed most to the national purse. The implication for local government was that this arrangement introduced a dependence syndrome in local government’s revenue-generation effort.59 The Constitution requires that all revenue accruing to the federal government be paid into the Federation Account, which in turn must be distributed among the federal and state governments and the local governments in each state.60 The president, upon receiving advice from the Revenue Mobilization Allocation and Fiscal Commission (rmafc), an advisory body on intergovernmental fiscal relations, must table before the National Assembly proposals for revenue allocation from the Federation Account. The National Assembly finally determines the formula for allocating the funds and must do so taking into account various allocation principles, especially population size, equality of states, internal revenue generation, land mass and terrain, and population density.61 In addition, the formula has been made more concrete with respect to the principle of derivation in favour of those states whose natural resources have been exploited; they may not receive less than 13% of the revenue accruing to the Federation Account directly from any natural resources exploited in those states. The allocation of the Federal Account among the three orders of government is a highly contested area. A 2002 Supreme Court decision eliminated the discretionary practice of deducting revenue before it was paid into the Federal Account, thereby increasing the amount to be distributed to states and local governments.62 In that decision, the court also determined that the seaward boundary of the coastal states, for the purpose of calculating the amount of revenue accruing to the Federation Account directly from any natural resources derived from a state, was the highwater mark. After this decision, President Olusegun Obasanjo amended the revenue-sharing formula using an executive order, increasing the federal government’s share of the Federation Account from 48.5% to 56%, thus leaving the states and local governments to share 44% – that is, 24% for the state governments and 20% for the local governments. There were several dissenting voices, the loudest coming from the Revenue Mobilization and Fiscal Commission, which saw the entire action as unconstitutional and, therefore, illegal. The federal government was thus forced to reduce its allocation. Under the current formula, the federal government still receives the lion’s share (52.68%) of the allocation, whereas the state governments and the local governments receive 26.72% and 20.6%, respectively.63 Since the return to democracy, the

252

Habu Galadima

more rigid application of the formula has meant that the actual distribution of the Federal Account has seen a large actual increase in local government’s share, from 11.7% in 1999 to 18.3% in 2005.64 The vat constitutes an additional source of revenue for local governments in addition to the Federation Account. The vat is a federal tax collected nationwide by the federal Inland Revenue Service and distributed on the basis of a 15:50:35 proportion to the federal government, states, and local governments, respectively.65 The federal government then makes allocations horizontally among the states and local governments on the basis of equality (50%), population (30%), and derivation (20%).66 In 2003 the revenue sources of local government were as follows: 78.7% from the Federation Account, 10.7% from the vat, 3.3% from other grants, and 1.2% from a stabilization fund. The revenue contribution by states was an insignificant 0.6%, and that from own revenue was 5.5%.67 According to figures published by the Nigerian Ministry of Finance, average total monthly allocations to the 774 local governments from the Federation Account rose from just under n8.2 billion (US$84.5 million) to roughly n61.6 billion (US$460 million) between 1999 and 2006, whereas Nigeria’s state governments received more than n4.6 trillion (US$35.6 billion) in federal allocations between May 1999 and August 2006.68 Besides revenue sharing, the main mechanism for intergovernmental transfers takes the form of grants from either higher (i.e., federal or state) or lower (i.e., state or local) levels. There are general-purpose grants – unconditional transfers, generally aimed at addressing horizontal imbalances – and specific-purpose grants that carry conditions regarding the use of the funds and/or the performance to be achieved in the programs financed through them. Block grants fall between these two categories. They are earmarked to finance broad areas of expenditure, such as education, rather than specific programs. As indicated above, the level of grants is rather limited, and in 2003 it was no more than 4.5% of total revenue. The Federal Capital Territory, not being a state, cannot partake in the revenue allocation from the Federation Account. Instead, the National Assembly determines the revenue to be allocated to the territory from the revenue of the federal government. The administration of the Federal Capital Territory also allocates 10% of the internally generated revenue to the area councils in line with the constitutional provisions applicable to states. In this regard, the Federal Capital Territory performs the duties of a state with respect to the area councils within its territory. The states play a very limited role in intergovernmental transfers to local governments, although in terms of the Constitution each state is expected to pay to the local governments in its area of jurisdiction 10% of its own revenue (that is, excluding the sums received from the Federation Account)

Federal Republic of Nigeria

253

on such terms and in such manner as may be prescribed by the National Assembly.69 Many states do not implement this requirement.70 The state governments exercise wide powers over the finances of local government. All amounts transferred from the Federation Account for local government are deposited into a State Joint Local Government Account, which must then be used for joint purposes as may be prescribed by the state or the National Assembly.71 However, the states must ensure that local governments receive their allocations on the basis of various factors, such as minimum responsibility of government (i.e., equality of local governments), population size, social development factors as reflected in primary school enrolment, internal revenue efforts, and the like. Akpan Ekpo points out that although the National Assembly prescribes the manner of payment of the Federation Account into the State Joint Local Government Account, the method of distribution to local governments is determined by each state’s house of assembly.72 Most state governments withhold a portion of the monthly paid allocations from the Federation Account in a nontransparent manner through frivolous deductions, a situation that has put some local councils in dire financial straits and undermined the idea of local self-governance. 73 For example, in Niger State there are about nine categories of deductions at source. These include a 5% deduction for a reserve fund, which is then used to finance state projects; a 0.5% deduction to finance matters of common interest to the local governments in the state, such as official vehicles for the traditional leaders in the North, the Emirs;74 a further deduction of 5% for the Emirate councils in the respective local governments; a 1% deduction going to the Local Government Service Commission for training; a deduction of the total personnel emoluments of teaching and nonteaching staff from the State Joint Account into the State Universal Basic Education Board, as provided by law; a deduction of 15% of personnel emoluments of local government personnel into the State Local Government Pension Board; central deductions of the union dues of the Nigeria Union of Local Government Employees (nulge) and the Medical and Allied Workers Union; and central deductions of federal taxes (paye). A World Bank study in 2005 found that the total amount withheld monthly by one state averaged 87.5% of the receipts to which the local governments were entitled.75 In a measure to address the problem, the National Assembly passed the Monitoring of Revenue Allocation to Local Government Act in 2005, establishing the State Joint Local Government Account Allocation Committee. Its purpose is to oversee the prompt payment of the local governments’ allocations from the Federation Account, as well as those from the states’ own revenue to the state joint accounts and from there to the local governments.76 Ekpo comments that the committee cannot detect divergences

254

Habu Galadima

between allocations to individual local governments from the Federation Account and their receipts from the state joint accounts because different principles are used for making these two sets of payments.77 The states exercise extensive control over local government finances. Local budgets must pass through many levels of state government approval. Even after state approval, postbudget controls still impose further restrictions on what local governments can do. The state government also has direct administrative control over borrowing by local government. The states and local governments still operate under an outdated set of financial regulatory instruments, principally the Finance (Control and Management) Act of 1958 and a set of detailed rules and guidelines.78 According to the Handbook on Local Government in Nigeria,79 the local government chairperson, as chief executive and accounting officer, faces periodic checks in order to ensure full adherence to the various regulations. It is statutorily required that all instructions relating to expenditures of public funds by the chairperson be in writing. In order to check excesses, a chairperson is prevented from signing vouchers and checks, a task performed by the heads of the Personnel Management Department and the Treasury. The chairperson is also responsible to the Public Accounts Committee of the council for all monies voted for each department and is personally liable for any maladministration. The chairperson should render monthly statements of income and expenditure and annual reports to the council for it to consider and debate in order to ensure accountability and enforce the performance ethics. The chairperson must also observe, and comply fully, with the checks and balances spelled out in the guidelines and financial regulations governing receipts and disbursement of public funds and other assets entrusted to his or her care and is liable for any breach thereof. Despite clear arrangements for oversight, state government oversight is poor. There are numerous cases of financial mismanagement, misappropriation, recklessness, bloated contracts, invisible projects, violation of budgetary provisions, claims for nonexistent journeys, and massive fraud. Other forms of the mismanagement of council funds include overinvoicing for contracts, payment for jobs not executed at all, and raising multiple payment vouchers for jobs already paid for, among many others. Procurements have over the years been a major source of financial drain and corruption in local government. Corruption is perpetrated mainly through inflated contract bids and awards or through performance below specification resulting in low value for money. Instances of outright project abandonment are very common. Given the high level of corruption and financial mismanagement, it is not surprising that the finances of local councils are in dire straits and have always run into deficit. In general, local self-government has not contributed to financial accountability and efficiency. The overreliance on federal transfers creates

Federal Republic of Nigeria

255

conditions conducive to a lack of accountability, especially as people hardly pay taxes to the local authorities and are also unaware of the exact amounts that are transferred from the federal and state governments. The local population, therefore, does not hold the local governments accountable, either because it perceives them as having no financial power or because it is not as informed or vigilant about monitoring resources that arrive from sources outside the community. To enhance accountability, the federal Ministry of Finance now publishes all allocations to state and local governments on its website, as well as in major newspapers and news magazines in the country.80 There are some indications that citizens are becoming more aware of local government finances and are starting to query maladministration.

supervision of local government Local government is supervised mainly by the state government. It does this through a number of supervisory mechanisms. By law, the councils’ planning processes, financial transactions, and building and construction projects are supervised by the state ministry or bureau for local government affairs. This ministry or bureau has local government inspectors who should routinely monitor performance, periodically visit local government areas, and submit reports to the state government. Based on the reports submitted by the inspectors to the governor, if a local government official is found to be corrupt or inefficient, he or she is recommended to the Local Government Service Commission for the necessary disciplinary action. If the local government chairperson is corrupt, he or she could be suspended or even be removed from office by the governor. In recent years, a number of local government officials have been disciplined and some chairpersons removed from the office by the state government. The state government supervises, and sets standards for, the appointment, promotion, and discipline of local government employees through the Local Government Service Commission. It also establishes general guidelines for the appointment, promotion, and discipline of junior local government employees and serves as an appellate body for all petitions from local government in respect of appointment, promotion, and discipline. It also maintains up-to-date rolls and seniority lists for the entire Unified Local Government Service. In terms of state law, the state houses of assembly must approve the budgets of the local governments as well as monitor their expenditures through committees of the state legislature and the reports of the state auditor general for local government, who is vested with the power to carry out, on a regular basis, the auditing of local governments’ accounts.81 The state auditor general may sanction and fine any officer who contravenes

256

Habu Galadima

any sections of the guidelines governing offences and sanctions. To ensure effectiveness of audit functions, all local governments entering into contracts must include a clause enabling the state auditor general for local government to have access to sites for purposes of auditing or monitoring contract performance. Local governments must further render monthly returns of receipts and expenditure to the council and the state auditor general, with copies to the State Government Office, not later than the third week of the following month. In some states, these procedures are complied with, but there are a number of cases where the state auditor general for local government conspires or collaborates with local officials to defraud the local governments. A recent study found that, despite clear arrangements for oversight, state government oversight is poor.82 A study in 2005 found that in many states, local governments were “rather casual and irregular about their fiscal reports and accounts.”83 There was also no evidence that states consolidated these fiscal reports. There is a clear need for local government to be supervised and monitored constantly, especially because many local government chairpersons appear to regard the local government budget as their personal fiefdom. The supervision has been weak and has not really reduced the level and incidence of local corruption. Through two anticorruption agencies – the Economic and Financial Crimes Commission and the Independent Corrupt Practices Commission – the federal government has started monitoring state and local government officials who cart away the meagre resources of local government and render grassroots governance ineffective. Also at a political level, regular elections are no longer held when due, and local government caretaker committees are appointed by the governor. Overall, given the intrusive role of state government, local government does not enjoy autonomy to make its own laws, rules, and regulations, to formulate, execute, and evaluate its own plans, and to recruit, promote, develop, and discipline its own staff without interference from the state government.

intergovernmental relations Given the subordinate status of local government, intergovernmental relations between local governments and the other orders of government exhibit traits of the principal-agent model: the relationship is hierarchical with a top-down approach. Although the local governments exercise some degree of local discretion, they do not have any real independent powers. In exercising its powers, the federal government hardly consults with the local governments. When it consults with them at all, it does so usually for briefing and clarification of directives. This tradition was inherited from the long period of military rule, and local governments dare not complain

Federal Republic of Nigeria

257

or oppose the decisions of the federal government. Even under the current democratic practice, the federal government in 2000 unilaterally purchased a fleet of Prado jeeps, estimated to cost N82 billion (US$805 million), for the Nigeria Police Force for the enforcement of security in local government areas. The funds used for the purchase of these vehicles were deducted at source by the federal government from the local government share of the Federation Account, without the consent of the Association of Local Government of Nigeria (algon). This unilateral action of the federal government generated immense condemnation from the press and the general public, whereas few of the states and local governments publicly expressed disquiet over the development, although they regarded it as an interference in the affairs of local government by the centre. Relations between the federal government and local governments thus have the appearance of being very cordial because of the “culture of silence” and compliance of local governments, no doubt inherited from the times of the military regimes. People still see the hierarchical pyramid relationship as normal. The federal government has chosen certain sectors, such as primary health and education, as national priorities, and it intervenes extensively in their delivery, largely through direct investments in infrastructure without any local government consultation. Some examples are the construction of schools by the federal government under the Universal Basic Education (ube) program, the construction of primary healthcare centres by the National Primary Health Care Development Agency (nphcda), and federal management of rural water schemes and borehole construction under the National Water Rehabilitation Project (nwrp). The lack of cooperation is evident in the structure of the ube program. The first phase of this program consists of federal construction of new classrooms in each local government area. But there has been difficulty in getting the program off the ground because states have complained that they are not adequately consulted about the appropriate location of the construction sites. The states would prefer to oversee the contracts themselves. Supervisory committees have thus been established within the federal government and in each state, which will be responsible for ensuring the involvement of states and local government councils in selecting school sites, for the supervision of construction, and for certification of satisfactory completion. However, the problem of adequately maintaining and equipping these new schools and classrooms remains. From the responses of the different agencies involved in primary education, it appears that this could become a particularly thorny problem because no agency clearly accepts responsibility for these activities. The interaction of local governments with the states is hierarchically structured and lopsided in favour of the states since local governments fall under direct state control. The states literally dictate policy to local governments

258

Habu Galadima

and control them. However, there are indications of some measure of cooperation. States have established joint planning boards for local governments, allowing local government participation in the economic planning and development of the local government areas. Overall, however, in the exercise of these powers, the state governments see themselves as prefects or masters of the local governments. The states issue directives and circulars to local governments without much consultation. On a number of occasions, local government chairpersons have been suspended or removed from office without explanation. Indeed, even elected local government councils have been dissolved in some states and administrators or caretaker committees appointed in their place without recourse to due process. State governments do not usually consult with the local governments before enacting laws that directly affect them. Local governments are seen by the states as parastatals that exist to be at their beck and call. The three common problem areas in the relations between state and local governments are finances, functions, and staffing. As regards finances, as pointed out above, state governments routinely highjack varying proportions of the allocations to local governments from the Federation Account. Furthermore, many state governments usurp local government avenues of generating internal revenues and fail to contribute the required 10% proportion of their internally generated revenues to the State Local Government Joint Account for sharing among local governments. With regard to functions, there is a degree of overlap of functions among the orders of government, especially in the implementation of such national policies as primary healthcare, primary education, water, and sanitation. This has in some cases resulted in duplicated efforts, acrimony among government functionaries on authority over certain functions, and attendant waste of public funds. Other areas of unclear demarcation of duties include construction and maintenance of roads, streets, street lighting, drains, and public highways, as well as development of agriculture and natural resources. Control over the employment of senior staff by the states is a further cause of friction. Given this hierarchical structure of intergovernmental relations, organized local government has an important role to play. Local authorities have organized themselves into the Association of Local Government of Nigeria (algon). All local governments in Nigeria are permanent members of the association and are represented in its general assembly by the chairpersons of local governments. The association has state chapters. Each chapter is headed by a serving local government chairperson, who is elected into that position by his or her colleagues. Some of algon’s objectives include promoting and protecting the rights, privileges, and autonomy of local governments to effectively and efficiently execute functions assigned to them by law; expressing the view of local governments on federal and state government

Federal Republic of Nigeria

259

policies and laws affecting local governments and on other issues of national and global importance; and promoting interlocal government networking and joint ventures; among many others. To achieve its objectives, algon has been organizing training programs, courses, seminars, workshops, and conferences at the local, national, and international levels. algon conducts research and disseminates information about local governments and affiliated bodies. It publishes a newsletter, magazines, and journals and produces documentaries on local government. algon plays an advisory role to state and local governments on certain policies as they affect local governance. Finally, algon is an influential member of the African Union of Local Authorities, Commonwealth Association of Local Governments, and International Union of Local Authorities. algon is seeking to bring pressure to bear on the other orders of government to grant some measure of autonomy to local governments. It has been pushing for a constitutional amendment to better reposition local governments in the Constitution and to enable them to meet their objectives. Although intergovernmental relations exist principally between the federal government and the states, conducted through the federal Ministry of Intergovernmental Affairs and Special Duties, when they occasionally discuss matters concerning local government, algon is invited to participate.84 algon consults regularly with state governments and offers advice. Many of its activities involve lobbying federal and state government officials to bring development to the local areas. However, algon officials have often been accused of collaborating with state and federal government officials to divert or extort some of the meagre resources of the local governments.

political culture of local governance As political parties are highly centralized and controlled by the federal government, organized party politics in local arenas operate under the large shadow of the party bosses at the centre. However, local elections see a high degree of popular mobilization, as many people are interested in who becomes the local government chairperson. Prominent people, including professors, now aspire to local government leadership. Women’s representation is still very low, despite the very high turnout of women at elections. The 1999 elections produced nine women chairpersons of local government councils out of the 774 positions (1.1%), and 143 women councillors out of 8,800 positions (1.6%).85 Usually, loyalists of the dominant political party and its political puppets in the state are nominated to contest “kangaroo-like” elections and are thus imposed on the electorates regardless of their preferences. The loyalty of the local politician is not to the people but to the political godfather in the state, who provides the finances

260

Habu Galadima

and influence. Consequently, the political godfathers exert tremendous influence on local decisions and policies. The status of women in political representation has not been enhanced. There is no affirmative action or quota system in favour of women in Nigeria, as is the case in India, where one-third of all seats in the panchayats (rural local governments) are reserved for women. Women’s groups in Nigeria are increasingly agitating for at least 30% representation in all appointed and elected positions. The culture of elections is also slowly emerging within local government, as local elections have not been held regularly since independence. After the 1976 elections of local government councils, the next elections were held in 1987 when the military conducted elections based on a zero-party system. Even during the Second Republic (1979–84), there was no election of local government councils. In March 1996 local government council elections were again held on a zero-party basis; the winners of these zero-party elections held office for one year, after which they were succeeded by the winners of party-based local government elections held in the final quarter of 1996. Nigerians voted in the council elections only in 1998. At the expiry of their three-year tenure, the elected councils were removed from office, and caretaker committees were appointed in their place by the state governments. In 2001 elections for local governments were conducted, with the tenure again being three years. The next council polls were originally scheduled for early 2003 but were postponed several times because of disputes over a date for the ballot, the need for a review of the voters’ register, and allegations of bias on the part of state independent electoral commissions. The local government elections finally took place across Nigeria on 27 March 2004. With the expiry of the tenure of office of the councils in 2006, the councils were dissolved and sole administrators appointed. The Constitution does not recognize the position of sole administrators or caretaker committees, as they are unelected. Nigeria is once more approaching another season of political fretfulness as politicians, along with their political godfathers, strategize for the next local government elections, which may take place throughout the country during 2008. Although local government elections are state matters, military rule and now the dominance of the political space by the Peoples’ Democratic Party (pdp) in almost all the states have brought uniformity even to the conduct of local government elections. The common denominators of the past elections have been the widespread irregularities in the conduct of the elections, including inflated vote returns, ballot-box stuffing, altered results, and disenfranchisement of voters, as well as administrative problems, such as late delivery of voting materials to a large number of polling stations, violence, and intimidation of voters and electoral officers by hired thugs. Serious concerns are being expressed by many Nigerians, as well as

Federal Republic of Nigeria

261

international observers, about the electoral process and about the credibility of the forthcoming local government elections, given the experiences of the past elections.

e m e r g i n g i s s u e s a n d tr e n d s Local government is still evolving and is yet to stabilize. Nigeria has gone through a number of phases, from the precolonial and colonial eras to military rule and now, again, to democracy. Each phase has had a significant impact on local government. The development of the institutional structures of local government was punctuated by military rule, which weakened local government’s participatory structures. Although these structures are being developed to allow a participatory bottom-up approach, the communities do not yet exercise control over the program’s activities. The institutions of local government are not all-inclusive and do not ensure the participation of communities, including the disadvantaged groups, in decision-making processes. With fragile structures and no clear autonomy, local governments are subservient to the state and federal governments, despite their status in the Constitution as a third order of the federal structure. Although local governments are part of intergovernmental relations, they function more like local administrations than governments, performing agency functions for the federal and state governments. Even though a number of measures to strengthen local governance were taken, especially from 1988, they have not yielded the desired result. A number of challenges still confront local government. First, the manner in which local government areas were created and distributed all over the country by past military administrations has been a source of acrimony and disharmony. There are now strong voices for reform of the local government system. The contentious issues include the continued retention by the federal government of authority to block the creation of new local governments. Second, the problems associated with funding local governments loom large, namely the overbearing interference of state governments with local government funds, the basis of fund distribution to local government councils, and the desirability and efficacy of joint accounts allocation committees. Third, further challenges include the problems of local government administration occasioned by separately elected chairpersons and councillors. There is serious opposition to the presidential system of local government – an executive arm of government with the chairperson, vice chairperson, secretary, supervisors, and special advisers separate from the legislative arm consisting of councillors. The parliamentary system seems to be gaining favour among many Nigerians. The responsibility to conduct local government elections should also be transferred from the state

262

Habu Galadima

independent electoral commissions to the Independent National Electoral Commission. The role of traditional rulers, as custodians of values and culture, in the management of the affairs of local government must also be revisited. Fourth, the high level of corruption constitutes the most formidable obstacle to grassroots development. Corruption has rendered the third order of government incapable of delivering services effectively and efficiently. Meanwhile, rural people continue to suffer deep alienation from government, creating a wide gap between the government and the governed. There is a need to provide guarantees and safeguards in order to ensure effective and efficient service delivery, accountability, and transparency. Fifth, the massive influx of people into urban centres, especially in Lagos and other major cities, has made the federal government quite enthusiastic about the idea of mega-cities. At the same time, local governments with geographical proximity to the big cities are beginning to discuss possible functional amalgamation to make service delivery more efficient through a mega-city structure, an arrangement where the chairpersons of affected local governments become members of the board of governors or trustees, with the councillors constituting the legislative assembly. Lagos, Port Harcourt, Ibadan, Enugu, and Kaduna, all major cities in Nigeria, are likely to become mega-cities in the near future. Nigeria could soon be operating a multilayer structure of local government. At the other end of the scale, many Nigerians also demand greater decentralization of local government authority to development areas and village areas, and many states have now instituted development areas. In summary, to promote good governance, accountability, and popular participation at the grassroots level and to strengthen the ability of local governments to meet the basic needs of the rural people, a progressive reform of the local government system is necessary. The long period of military rule may be partly responsible for the present predicament of local governments, but successive civilian governments have not improved the situation. If the pronouncements and policy directions of the new president, Umaru Yar’adua, are anything to go by, local governments will enjoy more autonomy in the next few years. There is no doubt that local government occupies a very important place in Nigeria’s federation. However, given the concerns of various government regimes about its autonomy, only a constitutional review of the role and place of local government can ultimately make it more effective and efficient. The overall challenge confronting local government remains the need to improve governance in order to positively impact the lives of ordinary Nigerians.

Federal Republic of Nigeria

263

notes 1 See J. Isawa Elaigwu, “Devolution of Powers,” keynote address at the “Seminar on Devolution of Powers in a Federal State,” organized by the Friederich-Ebert Foundation, held at the University of Lagos, Lagos, Nigeria, 14 to 15 October 1998. See also J. Isawa Elaigwu, Politics of Federalism (Jos: aha Press, 2005). 2 CIA, “The World Fact Book: Nigeria,” https://www.cia.gov/library/publications/ the-world-factbook/print/ni.html (viewed 20 February 2008). 3 J. Isawa Elaigwu and Habu Galadima, “The Shadow of Sharia over Nigerian Federalism,” Publius: The Journal of Federalism 33 (Summer 2003): 123–44. 4 Central Bank of Nigeria (cbn), Annual Report 2006 (Abuja: cbn, 2007), 17. 5 On the ways that governance capacity is affected by disproportionate fiscal reliance on petrodollars, see Terry Linn Karl, The Paradox of Plenty: Oil Booms and Petro-States (Berkeley: University of California Press, 1997). 6 See World Bank statistical data on Nigeria at http://devdata.worldbank.org/external/ CPProfile.asp?CCODE=NGA&PTYPE= CP (viewed 20 February 2008). 7 Ignatius Akaayar Ayua and Dakas C.J. Dakas, “Federal Republic of Nigeria,” in Constitutional Origins, Structures, and Change in Federal Countries, ed. John Kincaid and G. Alan Tarr, 239–75 (Montreal and Kingston: McGill-Queen’s University Press, 2005), 241–8; J. Isawa Elaigwu, “The Federal Republic of Nigeria,” in Distribution of Powers and Responsibilities in Federal Countries, ed. Akhtar Majeed, Ronald L. Watts, and Douglas M. Brown, 208–37 (Montreal and Kingston: McGill-Queen’s University Press, 2006). 8 See Daniel J. Elazar, Exploring Federalism (Tuscaloosa: University of Alabama Press, 1987). See also J. Isawa Elaigwu, “Federalism, Institutionalization and Political Stability in Nigeria in the Context of Vision 2010,” African Journal of Federal Studies 1 (April 2000): 35–47, at 44. 9 Emezi Cleus, “Local Government in Historical Perspective,” Nigerian Journal of Public Administration and Local Government 2, no. 2 (1984): 43–65, at 50. 10 Alex Gboyega, Political Values and Local Government in Nigeria (Lagos: Malthouse, 1987), 14. 11 S.O. Okafor, Indirect Rule: The Development of Central Legislature in Nigeria (Lagos: Nelson Africa, 1981). 12 A.E. Afigbo, The Warrant Chiefs (London: Longman, 1972). 13 I.B. Bello-Imam, Local Government in Nigeria: Evolving a Third Tier of Government (Ibadan: Heinemann, 1979). See also I.B. Bello–Imam and V. Akomaye Agba, “Fiscal Federalism, the National Question and Resource Control: Practice and Prospect,” in Democratic Government and Development Management in Nigeria’s Fourth Republic (1999–2003), ed. I.B. Bellow-Imam and Mike Obadan, 52–74 (Ibadan: Clgards, 2004). 14 Federal Republic of Nigeria, Guidelines for Local Government Reforms (Kaduna: Government Printer, 1976).

264

Habu Galadima

15 Timothy D. Mead, “Barriers to Local-Government Capacity in Nigeria,” Amercian Review of Public Administration 26, no. 2 (June 1996): 159–74, at 166. 16 1979 Constitution, Section 7. 17 See Victor O. Ayeni, “The Illusion of Three-Tier Federalism: Rethinking the Nigerian Local Government System,” International Journal of Public Sector Management 7, no. 5 (1994): 52–65, at 60. 18 Committee on the Review of Local Government Administration in Nigeria, “Local Government,” report, Lagos, 1984, 143. 19 A.M. Awotokun and D.O. Adeyemo, “Local Government in Nigeria: A Critical Exploration,” Journal of Public Affairs (Ahmadu Bello University, Zaria, 1999): 74–95. See also A.A. Adesopo, A.A. Agboola, and O.O. Akinlo, “Centralization of Intergovernmental Fiscal Power and the Lower Levels of Government in a Federation: The Nigerian Experience,” Journal of Social Sciences 8, no. 3 (Delhi, India, May 2004): 179–95; and S.T. Akindele, O.R. Olaopa, and A. Sat Obiyan, “Fiscal Federalism and Local Government Finance in Nigeria: An Examination of Revenue Rights and Fiscal Jurisdiction,” International Review of Administrative Sciences 8, no. 4 (2002): 557–77. 20 See 1999 Constitution, Sections 8(3), 8(5), 8(6). 21 Ibid., Section 8(3)(a). 22 Ibid., Section 8(3)(b). 23 Ibid., Section 8(6). 24 Ibid. 25 Ibid., Sections 4(6), 4(7), 7(1). 26 Lagos State Government, Law No. 5 of 2002. 27 Attorney General Lagos State v. Attorney General of the Federation (2005) 2 wrni, at 79, paras 15–25. 28 1999 Constitution, Section 8(5). 29 Attorney General Lagos State v. Attorney General of the Federation (2005) 2 wrni, at 28, ratio 13. 30 See 1999 Constitution, Section 313. 31 Mead, “Barriers to Local-Government Capacity,” 166. 32 The local governments in Lagos State are Agege, Alimosho, Amuwo-Odofin, Apapa, Badagry, Eti-Osa, Ibeju-Lekki, Ifako-Ijaye, Ikorodu, Kosofe, Mushin, Ojo, Oshodi-Isolo, Shomolu, Surulere, Lagos-Island, Lagos-Mainland, Ajeromi-Ifelodun, and Ikeja. 33 Patrick Heinecke, Popular Fallacies in the Nigerian Social Sciences (Okpella: S. Asekome, 1986), 6. 34 Mead, “Barriers to Local-Government Capacity,” 167. 35 Ibid., 168. 36 See 1999 Constitution, Section 7(1). 37 See ibid., Section 7(2). 38 Ibid., Section 102(4). 39 See ibid., Fourth Schedule, item j.

Federal Republic of Nigeria

265

40 Ibid., Fourth Schedule, item b. 41 Ibid., Fourth Schedule, Part II. 42 See Ayo A. Adesopo, “Local Government and Fiscal Stress in Contemporary Nigeria: An Examination,” European Journal of Social Sciences 2, no. 1 (2006): 45–66, at 50. 43 1999 Constitution, Fourth Schdule, Part I. 44 Mead, “Barriers to Local-Government Capacity,” 170. 45 World Bank, Nigeria: A Fiscal Agenda for Change, vol. 1, report no. 36496–ng (Washington, DC: World Bank, 2007), tables 1.2 and 1.5, http://www-wds. worldbank.org/external/default/WDSContentServer/WDSP/IB/2007/06/26/ 000020439_ 20070626104202/Rendered/PDF/364960NG.pdf (viewed 15 May 2008). 46 Ibid., 15. 47 “Federal Government, States, Local Government spend N11.185 trillion in six years,” The Vanguard (Lagos), 29 May 2006. See also Soludo Charles, “State, Local Government Spending Wreck Economy,” The Vanguard (Lagos), 7 August 2006. 48 Akpan H. Ekpo and John E.U. Ndebbio, “Local Government Fiscal Operations in Nigeria,” African Economic Research Consortium (aerc), research paper no. 73, Nairobi, March 1998, http://www.aercafrica.org/documents/rp73.pdf (viewed 27 December 2008). See also D.O. Adeyemo, ed., Financial and Administrative Procedure in Nigerian Local Government (Ile-Ife: Local Government Publication Series, 1997). 49 See Goke Adegoroye, “Public Service Reform for Sustainable Development: The Nigerian Experience,” keynote address at the “Commonwealth Advanced Seminar,” Wellington, New Zealand, 20 February to 3 March 2006. 50 See B.O. Nwabueze, The Presidential Constitution of Nigeria (London, uk: Sweet and Maxwell, 1983). See also Nigerian Journal of Public Administration and Local Government 2, no. 2 (1984). 51 Matthew Okotoni, “Innovations in the Local Government Systems in Nigeria: Implementing the Presidential System of Government at the Local Government Level,” Journal of Nigerian Public Administration and Management 2, no. 2 (1992): 1–12. 52 Akpomuvire Mukoro, ed., Institutional Administration: A Contemporary Local Government Perspective from Nigeria (Lagos: Malthouse, 2000). 53 See Fajonyomi S. Banji, Governing the Grassroots: An Analysis of Decision Making in Nigerian Local Government (Ibadan: Olu-Akin, 1997). 54 World Bank, Nigeria: A Fiscal Agenda for Change, 12. 55 See Adesepo, “Local Government and Fiscal Stress,” table 3(c). 56 Ekpo and Ndebbio, “Local Government Fiscal Operations.” 57 World Bank, Nigeria: State and Local Governance in Nigeria, report no. 24477–uni (Washington, dc: World Bank, 2002), 110, http://go.worldbank.org/ OKRZ4AWS70 (viewed 15 May 2008). 58 K.J. Davey, “Local Autonomy and Independent Revenue,” Journal of Public Administration, no. 49 (1991): 35–50, at 45.

266

Habu Galadima

59 Akindele, Olaopa, and Obiyan, “Fiscal Federalism and Local Government Finance.” 60 1999 Constitution, Section 162(2). 61 For more discussion on fiscal federalism in Nigeria, see Akpan H. Ekpo, “Federal Republic of Nigeria,” in The Practice of Fiscal Federalism: Comparative Perspectives, ed. Anwar Shah, 204–34 (Montreal and Kingston: McGill-Queen’s University Press, 2007). 62 See ibid., 216. 63 World Bank, Nigeria: A Fiscal Agenda for Change, 10. This allocation takes place after 13% of total net receipts from mineral resources are shared by the oil-producing states in proportion to their share of total production; see ibid., 182. 64 Ibid., 10–11. 65 Ibid., 181. 66 Adesepo, “Local Government and Fiscal Stress,” 54. 67 Ibid., table 4. 68 69 1999 Constitution, Section 162(7). 70 Ekpo, “Federal Republic of Nigeria,” 222; World Bank, Nigeria: A Fiscal Agenda for Change, 182. 71 1999 Constitution, Section 162(5). 72 Ekpo, “Federal Republic of Nigeria,” 223. 73 World Bank, Nigeria: A Fiscal Agenda for Change, 15, 184. 74 See Report of the Committee on the Appraisal of Local Government Administration in Niger State, vol. 1, July 2007, 28. 75 World Bank, Nigeria: State and Local Governance in Nigeria, 110. 76 Ekpo, “Federal Republic of Nigeria,” 223. 77 Ibid. 78 World Bank, Nigeria: State and Local Governance in Nigeria, 99. 79 Federal Republic of Nigeria, Handbook on Local Government in Nigeria (Abuja: Government of Nigeria, 1991). 80 See http://www.fmf.gov.ng; and http://www.nigeriannewspapers.com. 81 See World Bank, Nigeria: State and Local Governance in Nigeria, 100. 82 Ibid., 110–11. 83 Ibid., 111. 84 Commonwealth Local Government Forum, Country Profiles, Nigeria, http:// www.clgf.org.uk/index.cfm/pageid/112/Nigeria (viewed 20 May 2008). 85 Independent Electoral Commission (inec), Gender and Development Action Report 2000 (Abuja: inec, 2003).

Republic of South Africa jaap de visser

Since 2000 local government has entered South Africa’s system of intergovernmental relations clothed with a new institutional appearance and armed with constitutional protection. Intergovernmental relations among municipalities, provinces, and the national government have thus become more dynamic yet also more complex and demanding. This chapter seeks to analyze the constitutional and policy frameworks for those relations and to provide insight into current debates and dynamics related to them. The legal and constitutional recognition of local government is impressive and propels it to a status that at times equals or surpasses that of provincial government. Yet this constitutional status is no guarantee of strong local government. In reality, many municipalities are incapable of asserting their financial and political autonomy for reasons both within and beyond their control. South Africa, located at the southern tip of Africa, shares borders with Namibia, Botswana, Zimbabwe, Swaziland, and Mozambique, while Lesotho is locked within its borders. Its land mass spans 1,220,813 square kilometres, and the country is inhabited by close to 48 million people.1 South Africa’s miraculous emergence from centuries of racial and colonial domination startled many who believed that the country was heading for disaster during the violence and despondence of the late 1980s and early 1990s. Now, some fifteen years after the advent of democracy in 1994, South Africa boasts a stable constitutional framework, an independent and functioning judiciary, as well as a human-rights-centred approach to basic service delivery. South Africa’s macroeconomic policy balances financial austerity, inflation control, and trade liberalization with expanding social investments and the pursuit of infrastructure-led economic growth. In 2006 South Africa’s gross domestic product (gdp) grew by 4.9%. Growth for 2007 and 2008 is projected at 4.8% and 5.1%, respectively,2 a figure that may need to be adjusted in the face of an impending economic recession. In 2007 inflation remained

Republic of South Africa

269

contained in or around the target band of 3% to 6%.3 However, despite its macroeconomic successes, South Africa faces major socio-economic challenges of persistent high unemployment (29%), poverty (34% live off US$2 per day), large wealth disparities (Gini coefficient of 0.59),4 and an hiv/ aids pandemic.5 South Africa’s racial divisions,6 created and exploited during apartheid, continue to have a significant influence on income, education levels, and life expectancy. South Africa’s Human Development Index is ranked as “medium.” It fell from 0.691 in 2000 to 0.653 in 2004.7 Central to South Africa’s strategy to erase these bleak figures is its insistence that local government is the key to development and delivery of basic public services. This insistence is in part dictated by the inevitability of urbanization. In 2006, 42% of the national population lived in the twentyone biggest cities and towns, which cover only 2% of South Africa’s land surface. Together these cities and towns contribute 70% of the national geographic value added (gva).8 In-migration to the six largest municipalities generally stands at a much higher percentage than in other municipal areas, which sometimes see a net out-migration.9 The pace of urbanization is the highest in the two provinces of Gauteng and Western Cape. Importantly, the twenty-one biggest cities and towns are also home to 25% of persons living below the poverty line. These cities are confronted with the challenges of urbanization, which require innovative and complex responses. For example, cities need to devise approaches to processes that appear “uncontrollable,” such as unregulated and unlawful land use, settlement establishment, and housing. Similarly, a new approach is required to tap into the informal employment found in unregulated small businesses and microenterprises (which stands at 22.5% of total employment).10 Successful urban and local governments are thus recognized as immediately benefiting both economic growth and poverty alleviation. South Africa’s newly established constitutional democracy, overseen by a new Constitutional Court, managed to absorb myriad challenges and tensions that came with the transition to democracy. The Constitution itself is the final product of a series of events and processes that took place in a context of the apartheid government and liberation movements negotiating the country out of misery. They negotiated an Interim Constitution, which paved the way for the first democratic elections in 1994 and for the operation of Parliament as a constitutional assembly, leading to the adoption of the final Constitution of 1996.11 As most of the constitutional features of South Africa have been traversed in earlier editions of this series, 12 the discussion of these features will be limited to the most essential features relevant to this chapter. The Constitution vests national legislative authority in Parliament, which consists of the National Assembly and the National Council of Provinces (ncop).13 The 400 National Assembly members are directly elected. The

270

Jaap de Visser

ncop is modelled on the German Bundesrat and comprises delegations from each province as well as a nonvoting local government delegation.14 National executive authority is vested in the president, elected by the National Assembly, who exercises this authority together with the other members of the Cabinet. Cabinet members, appointed by the president, are collectively and individually accountable to Parliament.15 The Constitution also establishes and demarcates nine provinces, each with a provincial legislature and a provincial executive. Provincial legislative authority is vested in the provincial legislature. Provincial legislatures range from thirty to eighty directly elected members. A province’s executive authority is exercised by a premier, who is elected by the provincial legislature. The premier exercises this authority together with the other members of the Executive Council. They are collectively and individually accountable to their provincial legislature. There is one judiciary, with the Constitutional Court at the apex.16 The Constitutional Court is the highest court on constitutional matters, whereas the Supreme Court of Appeal is the highest authority on all other matters. Disputes between spheres of government are decided by the Constitutional Court. The Constitutional Court also has the final say on the constitutionality of national, provincial, and local legislation and resolves conflicts between validly passed legislation of the three spheres. The political landscape is dominated by the African National Congress (anc), which rose to power in 1994 and has consolidated its supremacy since then. A strong alliance exists between the anc, the Congress of South African Trade Unions, and the South African Communist Party. This alliance, together with the anc’s control of the lion’s share of municipalities and its outright control of all provinces, ensures that the anc maintains a tight grip on almost all aspects of the South African polity.

h i s t o r y, s t r u c t u r e s , and institutions of local government A discussion of the history of local government serves to emphasize both the recent dramatic change in local government’s role and status and the hideous social and economic legacies that were left for local government to deal with. South Africa’s experience with relations between local government and provincial government started in 1910 with the unification of South Africa, which transformed four British colonies into provinces. Local government was introduced as a responsibility of the provinces. Each province enacted legislation that provided for the structures, functions, and powers of local governments in that province. Therefore, no single uniform system of local government existed for the country. However, there were some important

Republic of South Africa

271

general characteristics: local government as an institution of governance was subservient, racist, and consequently illegitimate. The subservience of local government was manifest in that local authorities existed in terms of provincial laws, and their powers and functions were dependent on, and curtailed by, these provincial laws. After the landmark elections of 1948, which formalized and extended apartheid, the National Party (np) government intensified institutional segregation by providing for the development of separate local authorities for each of the four major racial groups. The leading theme was the principle of “own management for own areas.” However, in areas outside the black homelands, black local authorities operated under the authority of white municipalities until 1971.17 Given that black local authorities governed dormitory townships where no commercial activity was permitted, let alone promoted, there was no commercial base on which to raise property rates or other income. Even after the government devolved more powers to the black local authorities, they remained illegitimate. The fiscal inadequacy created by the fallacy of self-sufficiency rendered them empty shells that produced nothing but conflict. They became the target of rent boycotts and large-scale popular mobilization in the mid-1980s.18 Separate local government structures – management committees – were also created for the Coloured and Indian populations. It was envisaged that these structures would, over time, develop from advisory bodies into fully fledged municipalities, equivalent to the white local authorities. However, they essentially suffered the same fate as the black local authorities. Without exception, the well-resourced commercial centres with their viable revenue bases were reserved as white areas. The outlying and poor areas without meaningful formal economies were reserved for black people. Following the format of the colonial state, traditional authorities in the homeland areas were tasked with performing local government functions. Traditional leaders were used as agents to administer local government activities, such as land allocation, agricultural affairs, road infrastructure, and suppression of cattle diseases.19 Transformation of local government into a fully fledged and nonracial institution of governance was thus impelled by this legacy of an “urban economic logic that systematically favoured white urban areas at the cost of black urban and peri-urban areas,” with, in the words of the Constitutional Court, “tragic and absurd” results.20 Negotiations between the apartheid government and the liberation movements on local government commenced in earnest at the beginning of the 1990s. They produced a foundation for local government transformation. One of the critical features was the adoption of the principle of “one city, one tax base,” which had become the slogan with which the grossly inequitable distribution of resources was opposed by the liberation

272

Jaap de Visser

movements.21 Three dimensions to the negotiations produced a fertile ground for agreement on strong local governments equipped with protected powers and a developmental mandate. First, most liberation movements had an aversion to a federal state. The apartheid policies on territories set aside for black inhabitants, termed “Bantustans” and “homelands” (depending on their level of so-called independence), had a “federal” slant to them. Federalism thus became the concept to be resisted by those liberation movements during the negotiations.22 The dispute over a federal or unitary South Africa drove a deep wedge between the anc and the Inkatha Freedom Party, which argued for the recognition of an autonomous Zulu Kingdom. Second, the liberation movements sought to consolidate and find a constitutional space for the grassroots civic movement that had been so instrumental in overturning the np government. Third, from its side, the np insisted on the inclusion of checks on the power of an almighty anc government. Local Government Transformation The 1993 Interim Constitution23 set the scene for the first democratic elections in 1994 and for the formulation of a final Constitution by the newly elected Parliament. It ushered in constitutional recognition for local government by acknowledging its autonomy and guaranteeing it revenue-generating powers as well as a right to a share of nationally generated revenue. The Interim Constitution set the scene for the amalgamation of over 1,000 racially defined and disparate local government structures into 842 transitional local authorities demarcated by provincial demarcation boards.24 The final Constitution of 1996 contains a progressive chapter on local government in which it is envisaged as a mature sphere of government. It introduces metropolitan, district, and local municipalities. By doing so, it establishes two forms of local government, namely metropolitan local government and nonmetropolitan local government. There are six areas with metropolitan local government – single-tiered metropolitan municipalities that have exclusive municipal authority over their area of jurisdiction.25 What made these areas “metropolitan” is defined in legislation with reference to indicators such as population density, movement of people, goods and services, diverse economic activity, and desirability of integrated development planning. The rest of the country is divided into forty-six district municipalities. Each district municipality, in turn, is divided into a number of local municipalities, varying from two to eight in number. The total number of local municipalities in the country is 231. The district and local municipalities share municipal authority over their respective jurisdictions and rely on a statutorily defined division of authority. This division is a point of contestation, partly because there is role confusion. There is little

Republic of South Africa

273

disagreement that local municipalities are the interface with communities and should perform community services, but the role of district municipalities is less clear. They were initially conceptualized as responsible for regional planning, redistribution between rich and poor municipalities, and providing support to weaker local municipalities, but they have struggled to adapt to these roles. Deciding on metropolitan or nonmetropolitan local governance for a specific municipal area is the prerogative of the independent Municipal Demarcation Board (discussed below). Municipalities must be established “for the whole of the territory of the Republic.”26 This principle, which became known as the principle of “wallto-wall” local government, does away with the phenomenon where certain rural areas were governed not by any form of democratically elected municipal government but by either a traditional authority or a government official. The developmental expectations of local government, combined with the explicit break with the institutionalized rural-urban divide, were instrumental in the decision to include all rural areas in the local government system. Municipal boundaries are determined by an independent Municipal Demarcation Board that is obliged to consult with affected stakeholders and residents. In 1999 and 2000 a concerted drive toward demarcating the entire South African land mass into 284 municipalities paved the way for the first municipal elections on 5 December 2000.27 On that day, the first generation of municipal councils took over the reins of these newly demarcated areas in terms of a new local government dispensation. Considering South Africa’s land mass and population size, it becomes apparent that it has some of the biggest municipalities in the world. Legislation instructed the Municipal Demarcation Board to create local authorities that were financially viable (i.e., able to extract sufficient resources from their tax base). In addition, they needed to be able to redistribute resources from rural to urban areas and from rich towns to outlying poor black areas. In the background, the quest for strong local governments that operate on the national, and even international, scene also added impetus to the creation of large municipalities. The principle of “wall-to-wall” local government, combined with the democratization of local government, meant that the institution of traditional leadership underwent a dramatic change. Rural areas previously under traditional authorities’ rule were absorbed into the constitutional system of local government. Traditional authorities were afforded nonvoting seats on the municipal council in their area, but their number was not to exceed 20% of the council members, an offer still rejected by most traditional leaders seven years after its introduction. This relegation to an advisory status continues to anger many traditional leaders, the House of

274

Jaap de Visser

Traditional Leaders (the constitutional guardian of traditional authorities and customary law), as well as Mangosuthu Buthelezi’s Inkatha Freedom Party, which finds its main support in the traditional rural areas of KwaZulu-Natal. The concept of a single, unified metropolitan municipality was an entirely new feature in the local government design. It was born out of the experience with fragmented service delivery and lack of redistribution that resulted from the pre-1994 arrangements, where multiple small local authorities governed a metropolis that, for all intents and purposes, constituted one integrated metropolitan area. For example, the metropolitan area that became the City of Cape Town in 2000 consisted of sixty local authorities in 1994.28 A new form of metropolitan government was needed to facilitate citywide development, integrated infrastructure planning, and redistribution of resources within these large cities.29 The 1996 Constitution represents a conceptual shift away from local governments as mere retailers of service delivery because it outlines a broad development mandate for local government.

constitutional recognition of local government The rationale for the constitutional recognition of local government, regarded as a progressive and bold step, was that South Africa could have a strong agent for development in local government only if it was afforded a measure of autonomy. The strength of the constitutional protection of local government’s status is largely unprecedented and a leading example worldwide. This constitutional recognition is manifested in a number of ways. First, local government is referred to as one of the three “spheres” of government, which are “distinct,” “interdependent,” and “interrelated.”30 Second, local government is afforded “the right to govern, on its own initiative, the local government affairs of its community.”31 To this end, it is given constitutionally recognized and protected powers, and the national and provincial governments are prohibited from exercising undue interference with municipalities. Third, municipalities enjoy constitutionally guaranteed taxing powers as well as a constitutionally guaranteed entitlement to an “equitable share” of nationally generated revenue.32 Fourth, the Constitution establishes a principle of subsidiarity by providing that national and provincial functions that are more effectively exercised by municipalities should be assigned to local government.33 National and provincial functions can be transferred to local government in general or to individual municipalities, thereby creating the possibility for asymmetrical development of municipalities. Fifth, organized local government is afforded nonvoting seats in the National

Republic of South Africa

275

Council of Provinces – which is the second chamber of Parliament, comprised of provincial delegations – and is represented on the national Financial and Fiscal Commission, government’s prime advisor on intergovernmental fiscal relations.34 Sixth, national and provincial parliaments are obliged by the Constitution to consult organized local government on legislation that affects the institutions or functions of local government.35 The legal value of this constitutional recognition is significant. However, it is also argued that the practical value of the constitutional recognition is a function of both the capacity problems of local governments and the omnipotence of the ruling party. As a result, the metropolitan municipalities are the only local governments that are really reaping the benefits of constitutional protection. Nevertheless, the Constitutional Court, in its description of local government’s status, has not shied away from using the terminology of “autonomy,”36 which is usually reserved for provinces or states in a federation. It has, on various occasions, stressed that the new local government order is fundamentally different from the old, in that local government now derives powers from the Constitution to, for example, levy property rates.37 Inasmuch as the judiciary appears ready and willing to protect local government autonomy, the court cases involving questions related to local government’s autonomy have been few and far between. The one-party dominance across the three spheres of government has enabled the anc to iron out, within party structures, many tensions and disagreements between organs of state. However, in a number of cases, local government autonomy was upheld, and the constitutional protection proved to be of real value.38 Furthermore, the constitutional protection of local government is a very pertinent factor in the development of policies that have an impact on local government. Local government’s constitutional right to reticulate electricity, for example, continues to delay government’s plans to rescale the electricity function to a regional level. The other two spheres of government – national and provincial – are, in the face of tremendous development challenges and policy dilemmas, producing law and policy that too often do not take cognizance of local government’s constitutional status. In the absence of municipal challenges to these developments, this law and policy erode local government autonomy. The extent to which the above dimensions limit the practical value of municipal autonomy naturally varies with the “political colour” of the municipality. However, it is clear that the urban constituency is also asserting its autonomy. For example, the nine biggest municipalities (which include the six metropolitan municipalities) are increasingly making the voice of local government heard. They have joined forces in the South African Cities Network, which exists to be the voice of urban local government. Repeated calls have been made by this constituency to the national

276

Jaap de Visser

government to distinguish between the unique challenges that exist in the various spaces governed by local governments. This diversity manifests itself in two arguments. The first argument is for a reduction of provincial government interference in the affairs of big cities. Whereas small towns may indeed need considerable support from provincial government, wellcapacitated municipalities in the bigger cities might best be left to manage their own affairs, so it is argued.39 The second argument is for more powers. The six metropolitan municipalities have undergone tremendous growth in resources, capacity, and institutional profile since 2000. They account for 57.4% of the total local government budget.40 They have outgrown the straitjacket of their constitutional powers (see below), and they stand ready to exercise more powers, which often still reside with national or provincial government. A strong argument is being made to afford metropolitan municipalities authority over housing, transport, and aspects of primary healthcare.41

governance role of local government The Constitution equips local government with original powers by providing that a municipality has authority over the thirty-nine matters listed in Schedules 4 and 5 of the Constitution. These functional areas can be grouped into the following six themes: 1 built environment (e.g., electricity and water reticulation, sewage, refuse removal, building regulations, planning, storm-water management, noise pollution, cleansing, street lighting, and fencing) 2 social and emergency services (e.g., child-care facilities, firefighting, local recreation, sport facilities, and dog licences) 3 health (e.g., municipal healthcare and air pollution) 4 transport (e.g., public transport, traffic, parking, municipal roads, municipal airports, and ferries) 5 economy (e.g., trading regulations, markets, abattoirs, local tourism, billboards, and liquor and food outlets) 6 amenities (e.g., cemeteries, public spaces, and parks) These functional areas are given content by policy statements, statutory law, and occasionally, court judgments. The reality, however, is that there is a great deal of confusion around the cut-off points between municipal competences and those of the national and provincial spheres.42 By providing for original taxing powers for municipalities, the Constitution establishes a considerable degree of fiscal autonomy for local government. The Constitution grants local government the exclusive right to levy property rates and to impose surcharges on fees for services it provides.43

Republic of South Africa

277

These powers, however, are not exclusive to local government, in the sense that they can be regulated by the national and provincial governments through framework legislation.44 Such legislation may set the parameters for local bylaws in the form of minimum-standards monitoring procedures but may not “compromise or impede” the ability of local government to perform its functions.45 If such legislation extends to the detail of local policymaking, it violates municipal autonomy. National and provincial governments may assign or delegate further powers to local government in general or to individual municipalities. The instrument of assignment is a form of devolution. It entails the transfer of discretion over the functions and the financial risk as well as entitlement to intergovernmental funding. Importantly, as noted above, the Constitution establishes a firm subsidiarity principle by making the assignment of matters listed as national and/or provincial competences compulsory if they would be most effectively administered locally and if the municipality has the capacity to administer them. Statutes provide for procedures and criteria aimed at preventing unfunded mandates and ensuring that the assigned function will be performed. However, the instrument of assignment – in the form and procedure envisaged by the Constitution and legislation – is somewhat of an enigma. National and provincial sector departments have used a variety of other instruments to increase local government’s involvement in government. Some of these instruments would qualify as assignments, albeit not following the prescripts of the Constitution. As a result, municipalities are involved in a variety of essential public services without always having sufficient authority or resources. Examples of functions that have been transferred to local government through a variety of, sometimes legally suspect, constructions are primary healthcare, libraries, and economic development. The reality of local government spending shows that the delivery of basic services, such as water, sanitation, electricity, and refuse removal, is the main activity of municipalities. Of total municipal expenditure, 42% is dedicated to housing and trading services, which comprise housing, waste management, road transport, water, electricity and gas, and environmental protection.46 Within this expenditure category, 85% is made up of water, sanitation, electricity, and refuse removal. In sum, municipalities spend approximately 35% of their budgets on these four services.47 An important aspect of the mandate of municipalities is their responsibility to ensure the extension of free basic services. This policy entails the provision, free of charge, of a basic component of water (i.e., 25 litres per person per day, or 6 kilolitres per household per month) and a basic component of electricity (i.e., 5kWh/50kWp per household per month). This mandate was imposed by the national government through an evolving policy. Municipalities are responsible for funding

278

Jaap de Visser

the initiative through cross-subsidization from high-end users and by utilizing existing intergovernmental transfers. A major critique of the Constitution is that local government’s original functions do not correspond with its developmental mandate. A number of competences are “missing” from the schedules, despite the fact that they have an overwhelmingly developmental character. For example, housing is listed as a concurrent provincial and national competency in Schedule 4A of the Constitution. However, housing is perhaps the most salient element of development. Many of local government’s original competences are peripheral to housing. In fact, municipalities are the key implementing agents of the housing function but perform this function at the behest of provinces without having any significant policy or fiscal autonomy to make localized decisions. The real devolution of policy and fiscal autonomy over housing is strongly resisted by provinces, which fear the loss of yet another service-delivery function. This tension also raises the spectre of political manipulation of assignment, particularly where a municipality and its province are controlled by different political parties. The clearest example is the yet unresolved dispute between the anc-controlled Western Cape provincial government and the opposition-led City of Cape Town around the city’s application to be allocated the responsibility for housing. The city has declared an intergovernmental dispute over the province’s failure to make a decision, whereas the provincial government maintains that the city does not meet the criteria for being allocated the housing function. As is clear from the history of local government, one of the key elements of this vision is the reversal of the inequities of apartheid planning. The creation of integrated settlements is at the heart of local government’s developmental mandate. However, there is confusion over local government’s role in managing the built environment. Water and sanitation are firmly placed in municipal hands. The same applies to electricity reticulation, even though government plans to rescale the industry into regional distributors. Even more confusion persists over who is responsible for housing and urban planning. Provincial governments control the housing function. Furthermore, provinces continuously interfere in municipal planning on the basis of outdated legislation that predates the new local government system.48 This compromises seamless urban planning by municipalities. In 2006, for example, the City of Johannesburg was at loggerheads with the Province of Gauteng over the latter’s approval of development projects in the city without the city’s approval. The matter came to a head in 2006 when the developers, after having obtained provincial permission, launched a court application against the city,49 requesting that the court compel the city to recognize that decision. The city asserted its constitutional authority over urban planning. The matter was settled out of court when the developers agreed to obtain approval from the city.

Republic of South Africa

279

As one of its strategic responses to the need to revisit the architecture of the state in order to ensure developmental local government, the national government initiated in July 2007 a review of the constitutional division of powers and functions across spheres of government, a process that was still underway in 2008. Local government is responsible for a significant slice of the expenditure of the three spheres combined. For the 2005–06 financial year, local government was responsible for 23% of all government expenditure.50 This task is executed by a large workforce. Local government employs approximately 12% of the entire public sector. The six metropolitan municipalities employ about half the staff in the local government sphere.51 The national government employs 21% of the public sector, whereas the nine provinces account for 47% and public entities and state-owned enterprises account for 20%. Governance Institutions Both legislative and executive authority is vested in the municipal council. The council may delegate executive authority either to an indirectly elected executive committee or to an indirectly elected executive mayor, depending on the institutional configuration imposed on it by its provincial government.52 An executive committee, headed by a mayor, broadly represents the composition of the council. An executive mayor exercises executive authority, assisted by a mayoral committee, which is a cabinet of councillors handpicked by the executive mayor. Most councillors are part-time. Office bearers such as mayors, speakers, and members of executive structures are often full-time. Both part-time and full-time councillors are remunerated and may receive pension benefits. The remuneration of councillors and their full-time or part-time status are regulated in a national framework. The level of remuneration that a council may adopt for its councillors depends on an intricate grading system based on municipal income and population.53 For example, a metropolitan municipality may award its mayor an annual package of not more than r770,000 (US$108,741) and its ordinary, part-time members not more than r270,000 (US$38,130).54 For the smallest, rural municipality, these amounts would be R230,000 (US$32,481) and R127,000 (US$17,835), respectively. However, the reality for many part-time councillors, especially in poverty-stricken rural areas, is that their councillor remuneration is the key source of income. In addition to the community calling, the prospects of a political career and of receiving a regular income are also important drivers for someone to stand as a candidate. Although the public service in provinces is regulated by a National Public Service Act,55 municipalities have discretion over their municipal

280

Jaap de Visser

administrations. Salaries are thus negotiated between organized local government and labour unions in a Local Government Bargaining Chamber. The discretion over their administration enables municipalities to determine salaries and performance bonuses of the two highest levels of municipal officialdom, as these salaries are not negotiated in the Local Government Bargaining Chamber. They can do this without having to adhere to national public-service scales. The result has been that some city managers earn more than the president. Legislation is in the offing to include local government within the national public service. This will bring local government employees in line with the national public-service scales.56 The argument for a single public service centres on the need to improve the national government’s ability to respond to capacity gaps in local government by moving skilled human resources across spheres. However, it would reduce this aspect of local government autonomy. The transformation of municipalities from nonrepresentative, nonresponsive bureaucracies into representative and responsive administrations is a key challenge for all municipalities. This is compounded by an acute shortage of skills, particularly in engineering and financial management, as well as by a high turnover in managerial positions. For example, the Municipal Demarcation Board’s assessment in 2004 of the capacity of local and district municipalities to perform their functions revealed that approximately 40% of municipal managers had no university qualification. Of all the municipal managers, 40% had five or fewer years experience in local government.57 As of September 2006, 30% of all municipal-manager posts and 27% of all posts immediately below a municipal manager were vacant.58 With limited resources and skills, the constitutional goal of developmental local government is not achieved easily. The White Paper on Local Government defined “developmental local government” as “local government committed to working with citizens and groups within the community to find sustainable ways to meet their social, economic and material needs and improve the quality of their lives.”59 The current reality in many municipalities, however, stands in contrast to the ideals espoused in the white paper. A 2005 survey revealed that levels of trust in local government (48.1%) were substantially lower than those in provincial government (59.5%) and the national government (64.3%).60 Indeed, the incomplete and imperfect nature of local government transformation is evidenced by social protests that emerged most intensively between 2005 and 2008 on a scale reminiscent of the civic action against the apartheid government. Protests revolve around poor records of service delivery and a lack of developmental impact by municipalities.61 Real and perceived instances of corruption in municipalities are also central to the community protests. The national Special Investigative Unit, tasked with investigating fraud and corruption, reports that a significant problem is the defrauding of municipalities through tender and contracting procedures by

Republic of South Africa

281

councillors and municipal staff who receive kickbacks from the successful tendering organization.62 The perception among the public is that corruption is a major problem. A recent survey of a district revealed that almost threequarters (73%) of the members of the public and civil society reported that nepotism is the most common form of corruption in their municipalities. The perception held by people within local government is not necessarily different: almost two-thirds (63%) of the councillors and officials surveyed in the district acknowledged having either heard or read about cases of corruption in their municipalities.63 The focal point of the national government’s response to capacity problems in municipal government is Project Consolidate, a national support program assisting municipalities with the basics of municipal governance and service delivery, such as municipal billing, project management, good governance, and infrastructure planning. At the end of 2004, 136 municipalities were identified as beneficiaries of the program. However, in 2006 it was decided that Project Consolidate should be mainstreamed into all 283 municipalities, which serves to indicate that capacity problems are endemic to the entire local government sphere.

financing local government The aggregate size of the overall local government budget in South Africa nearly doubled from R64 billion (about US$5.8 billion) in 2001–02 to R119 billion (about US$18.8 billion) in 2005–06,64 which is evidence of an upward trend in devolution of expenditure. An assessment of how these budgets are raised is at the heart of any appraisal of the status and function of local government in federal systems. With regard to this theme, local government in South Africa again enjoys an impressive constitutional status that does not represent the entire story. This constitutional status is not matched by financial buoyancy in many municipal areas and is under pressure from centralizing tendencies. Local government revenue comprises own revenue, intergovernmental allocations, and borrowing. A municipality’s right to impose rates on property and surcharges on fees for services rendered is constitutionally entrenched. Property rates and user charges on services, such as water, electricity, and refuse removal, provide local government with a firm base for generating revenue. These revenue-generating powers afford local government a significant discretion over taxing policies. National legislation can authorize local government to impose other taxes, levies, and duties. In addition to their own revenue, municipalities are entitled to an equitable share of nationally collected revenue. Local government’s equitable share is determined in a Division of Revenue Act of Parliament, which annually appropriates a split among national, provincial, and local governments.65 The

282

Jaap de Visser

individual allocations to municipalities are determined through a formula, described in the same Act. The formula is a composite of factors that looks at the cost of providing basic services to poor households, the cost of running a municipal administration, the municipality’s tax capacity, and predictability in intergovernmental revenue streams.66 The equitable share is an unconditional operating grant. The variations in allocations between municipalities are considerable, reflecting the equalizing nature of the formula. Municipalities also receive a number of conditional grants tied to specific purposes and to be spent subject to national norms. An important example is the Municipal Infrastructure Grant (mig), which municipalities must use to fund new municipal infrastructure and to upgrade existing infrastructure, primarily benefiting poor households. The grant is funded by the budgets of various national departments. Most grants flow directly from the national government to municipalities, which hardly receive any grants from provincial governments. Intergovernmental allocations to municipalities are embedded in a national Medium Term Expenditure Framework, which is a three-year rolling budget containing the government’s entire revenue and expenditure plans. This ensures predictability of grant income for municipalities. A final source of revenue is borrowing. Because municipalities raise much of their own revenue, they have more scope to borrow than provinces. The Constitution permits municipalities to borrow funds within a national legislative framework. However, even though it is an attractive option to fund capital expenditure, borrowing remains largely untapped. As shown in table 9.1 (below), in the 2005–06 financial year, external loans made up a modest 17% of local government’s capital budget. Furthermore, borrowing is not widespread; 70% of the borrowing in the 2002–03 financial year was done by only 39 of the 283 municipalities.67 Johannesburg has taken the lead by entering the bond market; to date, it has issued four municipal institutional bonds totalling r3.9 billion (about US$574 million).68 The main reasons why the capital market is not yet warming up to local government are the uncertainties in the legal framework, particularly in relation to local government functions, and a lack of proper financial management in local governments. Importantly, additional revenue raised by municipalities may not be deducted from their share of revenue raised nationally or from other allocations. Equally, there is no obligation on the national government to compensate municipalities that do not raise revenue commensurate with their fiscal capacity and tax base. Various provisions in the legal framework for local government make it clear that a municipality’s financial good health is primarily the responsibility of the municipality itself. There is thus also no obligation on national or provincial government to bail out municipalities that run into financial difficulties. For example, when a municipal

Republic of South Africa

283

workers’ union sued the Province of Mpumalanga for not bailing out a municipality that had failed to pay over pension contributions, the court held that the provincial government does not have to pay the debts of a municipality in its area.69 Financial management by municipalities must be conducted in terms of national legislation. This legislation has been put in place in the form of a Municipal Finance Management Act,70 augmented by a series of regulations. This legislation tightly regulates municipal budgeting, revenue and expenditure management, borrowing, accounting, and reporting. It also establishes an elaborate scheme of provincial and national monitoring of local government finances and instates provincial and national powers to intervene in the financial affairs of municipalities. With respect to the position of municipalities in intergovernmental relations, the revenue-raising capacity of municipalities, compared to that of provincial governments, is a critical factor.71 On average, local government raises about 86% of its total revenue for current expenditure through local taxes and user charges, whereas provinces raise a mere 3.5% of their income through own revenue.72 This adds an important dynamic to the relationship between, on the one hand, those municipalities, particularly the larger and metropolitan municipalities, that raise over 95% of their current expenditure budgets and, on the other hand, their provincial counterparts, entrusted with supervision over them. Smaller, rural municipalities with less robust tax bases are in a totally different position: their dependence on transfers from the national government renders them weak participants on the intergovernmental pitch. Another important trend relates to the relocation of the administration of important infrastructure grants from provincial government to national government. This has significantly reduced provincial leverage over local governments, as provinces no longer have control over the disbursement of infrastructure grants. Broken down into the operating and capital budgets, the revenue sources for local government are outlined in table 9.1. On average, budgeted capital expenditure grew at 12% per year between 2001–02 and 2004–05.73 This growth was fuelled by sharp increases in national grants rather than by increases in own revenue used for capital projects. That is why the National Treasury remarked that “[i]f municipalities are to reinforce their developmental role, the proportion of their capital budgets funded from their own revenue sources needs to increase in the period ahead.”74 The national government’s commitment to strengthening local government is evidenced by a steady increase in local government’s share of revenue raised nationally and by the expected continuation of this at a growth rate of 7% per year over the medium term. However, the fact that a large portion of capital expenditure is funded by

284

Jaap de Visser

Table 9.1 South Africa: Revenue sources for local government, 2005–06 budget Operating

%

Electricity

26

National grants

38

Property rates

18

Internally generated income

23

National transfers

14

Borrowings

17

Water tariffs

12

Other sources

22

Sanitation, levies, etc.

30

Capital

%

Source: National Treasury of South Africa, Local Government Budgets and Expenditure Review, 2001/02-2007/08, 8.

(mostly conditional) grants raises concerns about the effect of the grant system on local government infrastructure planning. It is argued that municipalities are increasingly planning around government grants, which tends to disturb the local setting of priorities.

supervision of government The supervisory role of the national and provincial governments over local government is an essential component of the local government dispensation. The supervisory role manifests itself in various ways. First, the national and provincial governments have a supervisory role to play in establishing local government institutions and in regulating their institutional framework. Chapter 7 of the Constitution confers a series of regulatory powers that deal with local government institutions on the national government. These provisions formed the basis for foundational legislation, such as the Municipal Demarcation Act 27 of 1998, the Municipal Structures Act 117 of 1998, and the Municipal Systems Act 32 of 2000, which deal with the most essential institutional features of local government. Provincial governments play a very modest role in defining local government institutions. This has resulted in a uniform system of local government throughout the country, with few variations between provinces.75 The second manifestation of supervision of local government is the regulatory supervision by the national and provincial governments. The national government has rapidly produced legislation regulating the exercise of local government functions. For example, a Water Services Act76 regulates local government’s exercise of its power regarding potable water supply, and the National Health Act77 deals with local government’s powers over municipal health services. Due to the rapid production of national legislation and the slow production of provincial legislation on concurrent competences,78 there is little

Republic of South Africa

285

variation on this score, too. Greater variations between provinces, however, are starting to emerge slowly, with the Western Cape and KwaZulu-Natal provinces producing legislation that regulates some local government functions.79 The fragmentation of approaches to local government among sector departments is a cause for concern. Sector departments dealing with transport, water, health, and other areas that intersect with local government’s original powers have often sponsored legislation on those original powers that displays a variety of interpretations of the scope for regulatory supervision. Some of these interpretations are tenable and others are not.80 In addition, some sectors still operate on the basis of regulatory schemes that predate the current local government dispensation and, therefore, are premised on the preconstitutional notion of a subservient municipality. The result is thus an inconsistent and contradictory approach to supervisory regulation. For example, municipalities in KwaZulu-Natal have to obtain prior approval for their bylaws on road traffic,81 whereas their bylaws on municipal health do not require such approval.82 Similarly, the national Department of Trade and Industry requires all municipalities to obtain prior approval for their bylaws on building regulations,83 whereas the national Department of Forestry and Water Affairs imposes no such requirement with regard to bylaws on water reticulation.84 The third manifestation of supervision over local government is monitoring. Both the provincial and national governments can monitor local government’s performance. Generic legislation provides for specific national and provincial monitoring powers. The overall scheme is that provincial departments responsible for local government engage in hands-on monitoring, in that they establish a general monitoring system, may request information from municipalities, and may launch investigations into corruption.85 The national government’s monitoring powers are more at arms length, in that it relies on provincial reports and may not launch investigations. In practice, however, municipalities are also monitored by national departments in terms of sector legislation, which tends to disrupt the balance struck in the generic legislation.86 A fourth, and increasingly dominant, manifestation of monitoring local government entered the fray with the adoption of the Municipal Finance Management Act.87 The Constitution mandates national legislation to prescribe measures to ensure transparency and expenditure control in local government by prescribing accounting rules and general treasury norms and standards. The Act imposes a detailed system of financial management dealing with, among other things, the budget process, revenue management, expenditure control, accounting, and supply-chain management. Integral to the financial management system put forward by the Act is a system of regular reporting to provincial treasuries and (to a lesser extent) the National Treasury.

286

Jaap de Visser

This reporting system enables the national and provincial treasuries to regularly check the pulse of every municipality. The need for this type of oversight is apparent, as the majority of municipalities are experiencing major financial difficulties and problems expending their revenue. The continuous interaction between municipalities and national and provincial treasuries on the basis of the various reports also stimulates intergovernmental cooperation, sharing of information, joint planning, and integration. However, it may result in municipalities developing an increasing sense of upward accountability at the cost of local accountability. Such a development would prevent South Africa from reaping the benefits of decentralized development, monitored and stimulated by the local communities. A fifth, and essential, part of supervision over local government is the constitutional power of provincial governments to intervene in municipalities if the outcomes of the above monitoring activities reveal severe and persistent problems in a municipality.88 In principle, intervention is a power reserved for provincial governments. Provincial governments may intervene when there are general failures on the part of a municipality to fulfil executive obligations. For example, the provincial government can intervene when a municipality fails to provide basic water supply or ensure adequate sanitation. The Constitution permits the province to issue a directive, take over certain functions of the municipality if the situation is dire, and in an extreme case, dissolve the council. Municipal failures in financial or budgetary matters can be responded to with more far-reaching intervention powers. Intervening in the finances of a municipality is compulsory for the province in the event of failure to adopt a budget or revenue-raising measures and in the event of an all-out financial crisis. If the province fails to discharge its duty to intervene, the national government must do so. Checks and balances are built into the framework for interventions, in that the national minister responsible for local government must approve interventions. The National Council of Provinces also oversees the intervention through an approval power and a power to regularly review the implementation of the intervention. However, in the case of financial interventions, these intergovernmental checks and balances are reduced to a notification. Provincial interventions in municipalities have become a regular occurrence.89 In 1999 and 2000 a spate of interventions occurred, which were largely unsuccessful in remedying the crises because the municipal entities were not viable prior to the 2000 demarcation. The incidence of interventions declined dramatically after the amalgamations in 2000. When the national government launched Project Consolidate, the project was hailed as the “kind substitute” for interventions.90 However, interventions never quite left the scene. They are usually initiated by provinces in the face of a

Republic of South Africa

287

total collapse of service delivery in a municipality. The usual pattern reveals deep political problems, corruption, and maladministration, which lead to paralysis, financial chaos, inability to meet financial commitments, and ultimately, a total collapse. The general experience with interventions is that they proved not to be successful and clean incisions with immediate results. By the time a provincial government intervenes, it is often too little, too late; the deployment of a crisis manager hardly produces sustainable results in the face of persistent political problems that at times reverberate throughout the community. It would appear that, more often than not, all the provincial government can do is to solve the most pertinent and threatening financial problems, intensify its support, and hope for the best.

intergovernmental relations Intergovernmental relations are guided by a conceptual framework provided in the Constitution, entitled “co-operative government.” These principles give expression to the attributes of “distinctiveness, interrelatedness and interdependence” granted by the Constitution to the three spheres. For example, the three spheres are enjoined to respect each other’s institutional integrity, cooperate with each other, assist and support each other, consult each other on matters of common interest, and avoid legal proceedings against one another.91 A novel feature of the Constitution is the recognition of the importance of organized local government federations or associations. With the introduction of their constitutional recognition, the government envisaged them as negotiating partners for national and provincial governments and as support structures for municipalities. The Constitution requires national legislation to recognize national and provincial organizations representing municipalities. In addition, it requires legislation determining consultation procedures with organized local government and procedures for organized local government to designate representatives to participate in two significant institutions, the ncop and the Financial and Fiscal Commission. In terms of this scheme, the South African Local Government Association (salga) has been recognized as the legitimate voice of municipalities and national and provincial governments’ key negotiating partner on local government matters. salga may designate up to ten representatives to participate in the parliamentary proceedings of the ncop, but they may not vote.92 However, salga’s participation in the ncop has not yet produced the type of intergovernmental engagement envisaged by the Constitution. Representatives are selected from a panel of available councillors and are thus in a “continuous flux,”93 having to juggle their allegiance to their municipality with their duties as representatives in Parliament. Another challenge to the effectiveness of salga is that local

288

Jaap de Visser

government comprises a great variety of municipalities, ranging from severely underresourced rural municipalities to first-class metropolitan giants. South Africa’s commitment to containing the centrifugal dynamics of decentralization has resulted in comprehensive legal and policy frameworks for intergovernmental planning and budgeting. The Integrated Development Plan (idp) stands at the centre of this framework. Legislation instructs municipalities to adopt and annually review idps. Municipalities are instructed to base their budgeting on the idp, rendering it the prime policy document for municipalities. The idp has three features that are critical in an intergovernmental-relations context. First, it must be formulated after extensive public participation and therefore contains the local articulation of service delivery and development needs. These needs may fall within or outside a municipality’s competency, which relates to the second and third features. The second feature is that idps must be aligned with the development plans and strategies of other affected municipalities and the national and provincial governments. Of particular relevance are the provincial strategic plans, termed Provincial Growth and Development Strategies, and the National Spatial Development Framework. Municipal idps are expected to be aligned with these. Third, this alignment is expected to be a two-way process. idps must complement and influence the development plans and strategies of other affected municipalities and the national and provincial governments. The rationale for this scheme is that all service delivery and development efforts by any sphere of government eventually take place within a municipal jurisdiction – hence the idp as the focal point of coordination and alignment of service delivery. The implementation of the grand approach to the idp is hampered by a number of factors. First, participatory processes are too often flawed and artificial, compromising the quality of idp documents. Second, too many municipalities fail to filter and prioritize needs in line with realistic budgetary and competency parameters, compromising the credibility of idp documents. Third, and often arising from the first two issues, the engagement of national and provincial sector departments with the idp, which is essential for the success of intergovernmental coordination through the idp, is too often inadequate. Provincial and national treasuries and departments for local government are hard at work to promote the adoption of credible idps by municipalities. More emphasis is put on the second feature of the idp, which is the notion that it is the articulation of the entire government program for that municipal area. There are concerns in relation to this emphasis, namely that it prevails at the cost of achieving bottom-up developmental planning, the first selling point of the idp. The recently enacted Intergovernmental Relations Framework Act94 is a key piece of legislation for intergovernmental relations. Chapter 3 of the Constitution sketches only principles for intergovernmental relations. This

Republic of South Africa

289

lack of detail reflects an understanding that the development of an efficient framework for relations between governments is best left to the practice of intergovernmental relations. The Act is based on first results of the “organic growth” of intergovernmental relations. A significant best practice that developed after 1994 was the emergence of executive intergovernmental relations and intergovernmental forums (igr forums). The regular meetings of a national minister with his or her nine provincial counterparts – members of the executive councils (mecs) in so-called Minmecs – grew into strong policymaking structures. Except for the Minmecs on education and finance, these were nonstatutory. Even though the practice of executive intergovernmental relations developed most prominently in national-provincial relations against the background of them holding powers concurrently, the practice was noticed and replicated in the provincial-local arena. The Intergovernmental Relations Framework Act now provides an overall framework for igr forums. In the national arena, the president convenes the President’s Co-ordinating Council, comprising key Cabinet members, the nine premiers, as well as a representative of organized local government. The above-mentioned Minmecs continue to convene in terms of the Act, with organized local government represented at Minmecs that relate to local government’s constitutional functions. Provincially, the premier convenes a Premier’s Intergovernmental Forum, comprising key provincial mecs and mayors of district and metropolitan municipalities. At the district level, the district mayor convenes a District Intergovernmental Forum, comprising all the local mayors in the district. Apart from capturing best practice, the Act gave new impetus to intergovernmental relations by formalizing igr forums for local government and by securing local government representation on key national igr forums. The success of local government’s representation on the national igr forums depends, however, on the quality of organized local government’s input in these structures, which is an uncertain variable at best. Too often, salga has insufficient resources, capacity, or time to provide adequate input at such igr forums. Early indications are that the newly established igr forums are slowly gaining traction in terms of attendance and ownership.95 In addition, if the igr forums continue their progress from being largely symbolic engagements to becoming real programmatic exchanges on planning and service delivery, they will make a significant contribution to the quality of good governance across the three spheres.

political culture of local governance Local government is dominated by the same political parties that operate nationally and provincially. This pattern is informed by a strong party political

290

Jaap de Visser

culture in local government, as well as by the electoral system, which is a mixture of constituency and party-list elections. Except for councils with fewer than seven members – where a proportional representation (pr) system is followed – 50% of councillors are elected in wards in terms of a first-past-thepost system, with the remaining 50% elected in terms of a closed party-list pr system, which ensures overall a high degree of proportionality between votes cast and seats obtained. Voter participation in South Africa shows a clear discrepancy between national and provincial elections (held on the same day) and local elections, which fall in the middle of national and provincial terms. The past three local government elections (1995–96, 2000, and 2006) showed a consistent voter turnout of around 48%, compared to a turnout at national and provincial elections of 86% in 1994, 88% in 1999, and 76% in 2004.96 The local government political arena is characterized by the omnipotence of the ruling party, the African National Congress. The anc secured 67% of the vote in the 2006 nationwide municipal elections and obtained outright majorities in the majority of municipal councils. It controls five of the six metropolitan municipalities. Cape Town, led by a coalition government, excluding the anc, is the exception. The highly centralized party hierarchy that obtains in both the anc and opposition parties stands in sharp contrast to the decentralized nature of the state. The fielding of candidates in local government elections is determined at regional levels and, in the case of mayoral positions in metropolitan municipalities, at the highest political level. Furthermore, it is common for all political parties, where they are able, to exercise considerable influence and oversight over the appointment of senior municipal administrative officers in councils.97 It is a statutory goal that all political parties should seek 50/50 representation of men and women. Although this is not an enforceable obligation, the anc has adopted this policy, and 48% of all its candidates were women in the 2006 local government election. Of the elected councillors, 46% of the anc members were women, with the overall percentage for all councillors standing at 40%. Unlike India, where the one-third quota also applies to leadership positions, only 15% of the mayors in South Africa are women. The career patterns of metropolitan mayors reveal the growing importance of the metropolitan politician. Since the first democratic election in 2000, most metropolitan mayors’ positions have been held by former members of national and provincial parliaments, former provincial executives, and even a former national executive.98

e m e r g i n g i s s u e s a n d tr e n d s There are a number of significant trends that relate to the autonomy of local government. First, for many of South Africa’s 283 municipalities, their

Republic of South Africa

291

constitutional status is one of “paper autonomy.” This reality is due to the absence of political and administrative capacity to assert and exploit this autonomy and also to the dominance of centrally directed party politics. A second trend is the intensification of financial oversight and financial intervention exercised by provincial governments. The imminent absorption of municipal administrations into a single public service will be another step away from administrative autonomy. The national government’s increasing concern for local government appears to centre more on financial oversight and increasing intergovernmental financing and less on improving the financial viability of municipalities. Municipalities are often largely dependent on intergovernmental grants for infrastructure development. This trend, if unreversed, may frustrate achievement of the ideals of localized priority setting. A critical trend in the evolution of local government’s role in South Africa’s governance system relates to the role of district municipalities. As district municipalities are the governance level immediately below provinces, their future will affect the future of provinces and vice versa. If district municipalities indeed establish themselves as strong regional planning and support agencies for local government, much of the provincial role vis-à-vis local government may be eclipsed. The provincial government of Gauteng has already entered the fray. Gauteng is the smallest province but is undoubtedly the nation’s economic powerhouse. Three of the six metropolitan municipalities, namely Johannesburg, Tshwane, and Ekurhuleni, reside in this province, together with two district municipalities. The geographical and functional interlinkages between all these municipalities have prompted the province to suggest moves toward a Global City Region in Gauteng, comprising only metropolitan municipalities. This would mean subsuming the three districts into the three metropolitan municipalities. The rationale lies in the need for common strategies and in the need to avoid wasteful competition for resources and investment. The institutional reshuffle would be complemented by the further devolution of power to these metropolitan municipalities. These moves may mean the reduction of the Province of Gauteng’s role to a nucleus of coordination, policy development, planning, industrial promotion, and transport. These developments and discussions take place against the backdrop of a rethinking of the role of provincial governments.99 The national government initiated a policy review process, which will culminate in a first white paper on provinces and a review of the white paper on local government. Provincial government is the sphere of government with which the African National Congress is the least comfortable.100 It is often said to be a product of the negotiations for peaceful transition to democracy, carried over into the final Constitution on the back of the Constitutional Principles, rather than the genuine and considered wish of the ruling party, the anc.

292

Jaap de Visser

Any debate on the future role of provincial governments will be informed by the rise of a strong sphere of local government since 2000. The role and function of district municipalities and metropolitan municipalities will feature prominently in this discussion. The financial, political, and economic clout of metropolitan municipalities almost equals that of provinces. District municipalities are in dire need of a new sense of purpose and function, which some may find mistakenly placed in the provincial sphere of government. Furthermore, district municipalities are in dire need of capacity injections, a problem for which a single unified public service offers opportunities – albeit, perhaps, at the expense of provincial governments, whose capacity may be redeployed to the districts. At this stage, the direction of the debate is undetermined, and much depends on the outcome of the debate within the ruling party. What seems clear, however, is that provincial governments will continue to exist in one form or another. The precise form and function of provincial governments, however, may be subject to change. Local government’s relationship with provincial governments is rife with contradictions. On the one hand, provincial governments’ leverage over local government has been hollowed out by the relocation to the national government of the disbursement of operating infrastructure grants to municipalities. On the other hand, provincial treasuries are emerging as important monitoring entities under the Municipal Finance Management Act. Indications are that provincial governments and municipalities are establishing workable relations and are sometimes at the forefront of innovation. For example, the debate on the Gauteng Global City Region is driven mainly by the provincial government, with the national government entering the field only reluctantly. A reasonable prediction may be that, in the debate about the future role of provincial governments, the national government will be faced with a fait accompli in that provincial governments are making themselves increasingly indispensable in the effort to integrate 283 municipalities into one national development agenda. The intergovernmental context within which municipalities operate remains unsettled. At the same time, there is little doubt that local government’s role in South Africa’s decentralized system of government is increasing in importance, perhaps at the expense of the role of provincial governments.

notes 1 Statistics South Africa, Stats in Brief, 2007 (Pretoria: Statistics South Africa, 2007), tables 1.1 and 2.1. 2 National Treasury, 2007 Budget Review (Pretoria: National Treasury, 2007), 21. 3 Ibid.

Republic of South Africa

293

4 United Nations Development Program (undp), undp South Africa Report 2007, http://www.undp.org.za/docs/an_rep_2007.doc (viewed 20 February 2008). 5 The Department of Health’s 2005 survey of pregnant women attending a public sector antenatal clinic showed a national hiv prevalence of 30.2% in that study population. See Department of Health, National hiv and Syphilis Antenatal Seroprevalence Survey in South Africa 2005 (Pretoria: Department of Health, 2006), 10. 6 For a breakdown of the South Africa population in racial and religious terms, see Nico Steytler, “Republic of South Africa,” in Constitutional Origins, Structure, and Change in Federal Countries, ed. John Kincaid and G. Alan Tarr, 312–46 (Montreal and Kingston: McGill-Queen’s University Press, 2005), 313. 7 United Nations Development Program (undp), 2006 Human Development Report: Beyond Scarcity: Power, Poverty and the Global Water Crisis (New York: undp, 2006), 290. 8 South African Cities Network, State of the Cities Report 2006 (Pretoria: South African Cities Network, 2006), 2–12. 9 Ibid., 2–18. 10 Ibid., 2–26. 11 See, for example, Janis Van der Westhuizen, “South Africa (Republic of South Africa),” in Handbook of Federal Countries, ed. Ann L. Griffiths and Karl Nerenberg, 282–95 (Montreal and Kingston: McGill-Queen’s University Press, 2002), 284–5. 12 See Steytler, “Republic of South Africa”; and Christina Murray, “Legislative and Executive Government in South Africa,” in Legislative, Executive and Judicial Governance in Federal Countries, ed. Katy le Roy and Cheryl Saunders, 258–88 (Montreal and Kingston: McGill-Queen’s University Press, 2006), 258. 13 Sections 42 to 46. 14 Sections 42(4), 60, and 67. 15 Sections 83 to 92. 16 Sections 167 and 168. 17 Nazeem Ismail and Chisepo J.J. Mphaisha, The Final Constitution of South Africa: Local Government Provisions and Their Implications (Johannesburg: Konrad Adenauer Stiftung, 1997), 7. 18 Department of Constitutional Development, White Paper on Local Government (Pretoria: Government Printers, 1998), 2. 19 Sam Rugege, “Traditional Leadership and Its Future Role in Local Governance,” Law Democracy and Development 7, no. 2 (2003): 171–200, at 173. 20 Fedsure Life Assurance Ltd and Others v Greater Johannesburg Transitional Metropolitan Council and Others 1998 (2) blcr 1458 (cc) para. 122. 21 Gideon Pimstone, “Local Government,” in Constitutional Law of South Africa, ed. Matthew Chaskalson et al., 5A1–5A42 (Cape Town: Juta, 1999), 5A3. 22 Nicolas Haysom, “The Origins of Co-operative Governance: The ‘Federal’ Debates in the Constitution-Making Process,” in Intergovernmental Relations in South Africa: The Challenges of Co-operative Government, ed. Norman Levy and Christopher Tapscott, 43–65 (Cape Town: idasa and School of Government, University of the Western Cape, 2001), 45. See also Nico Steytler and Johann Mettler, “Federal

294

23 24

25 26 27 28 29 30 31 32 33 34 35 36 37

38

39 40 41 42

43 44

45 46

Jaap de Visser

Arrangements as a Peacemaking Device during South Africa’s Transition to Democracy,” Publius: The Journal of Federalism 31 (Fall 2001): 93–106. Constitution of the Republic of South Africa 1993. Nico Steytler, “Local Government in South Africa: Entrenching Decentralised Government,” in The Place and Role of Local Government in Federal Systems, ed. Nico Steytler, 183–212 (Johannesburg: Konrad Adenauer Stifting, 2006), 187. The six areas are Johannesburg, Cape Town, eThekwini (Durban), Tshwane (Pretoria), Nelson Mandela Bay (Port Elizabeth), and Ekurhuleni (East Rand). Constitution, Section 151(1). This was later reduced to 283 municipalities. See City of Cape Town and Another v Robertson and Another 2005 (3) bclr 199 (cc) para. 9. Department of Constitutional Development, White Paper on Local Government, 59. Constitution, Section 40(1). Ibid., Section 151(3). Ibid., Section 229. Ibid., Section 156(4). Ibid., Sections 67 and 221(1). Ibid., Section 154(2). See, for example, In re: Certification of the Constitution of the Republic of South Africa, 1996 1996 (10) bclr 1253 (cc) paras 364, 373, 374, 462, and 478. Fedsure Life Assurance Ltd and Others v Greater Johannesburg Transitional Metropolitan Council and Others 1998 (12) blcr 1458 (cc); and City of Cape Town and Another v Robertson and Another 2005 (3) bclr 199 (cc) para. 9. See, for example, cda Boerdery (Edms) Bpk and Others v The Nelson Mandela Metropolitan Municipality and Others 2007 (4) sa 276 (sca) para. 41. See also Fedsure Life Assurance Ltd and Others v Greater Johannesburg Transitional Metropolitan Council and Others 1998 (12) blcr 1458 (cc); and City of Cape Town and Another v Robertson and Another 2005 (3) bclr 199 (cc). South African Cities Network, State of the Cities Report 2006, 5–22. National Treasury, Local Government Budgets and Expenditure Review 2001/02-2007/ 08 (Pretoria: National Treasury, 2006), 9. South African Cities Network, State of the Cities Report 2006, 5–25. For a discussion of the challenges of concurrent and overlapping powers, see Nico Steytler and Yonatan Fessha, “Defining Provincial and Local Government Powers and Functions,” South African Law Journal 124 (2007): 320–38. Constitution, Section 229. Certain matters, namely those mentioned in Schedule 5B of the Constitution, can be regulated only by provincial governments. The national government can legislate on those matters only in specific circumstances, as per Section 44(2) of the Constitution. Constitution, Section 151(4). Statistics South Africa, Financial Census of Municipalities for the Year ended 30 June 2006 (Pretoria: Statistics South Africa, 2007), 8.

Republic of South Africa 47 48 49 50 51 52 53

54 55 56 57 58

59 60 61

62 63 64 65

66 67

295

Ibid., 12. One such example is the Development Facilitation Act 67 of 1995. High Court, Transvaal Provincial Division, Case number 11723/06. National Treasury, Local Government Budgets, 8; Division of Revenue Act of 2005. National Treasury, Local Government Budgets, 51. In a number of small municipalities, the council as a whole exercises executive authority without electing a dedicated political structure. See Determination of Upper Limits of Salaries, Allowance and Benefits of Different Members of Municipal Councils, 2007, gn r1227, Government Gazette 30600, 18 December 2007. Exchange rate on 1 June 2007, US$1 = R7.081. Public Service Act 104 of 1994. State of the Nation Address, 9 February 2007, 23 February 2007, http://www.gov.za (viewed 20 February 2008). Municipal Demarcation Board, National Report on Local Government Capacity, Period 2004/2005 (Pretoria: Municipal Demarcation Board, 2005), 13–14. Department of Provincial and Local Government, Consolidating the Local Sphere of Government, Towards a Mid Term Review and an Overview of Progress in Implementing the 5 Year Local Government Strategic Agenda and Project Consolidate (Pretoria: Department of Provincial and Local Government, 2007), 32. Department of Constitutional Development, White Paper on Local Government, 17. Good Governance Learning Network (ggln), Local Democracy in Action: A Civil Society Perspective on Local Governance in South Africa (Cape Town: ggln, 2008), 15. Doreen Atkinson, “Taking to the Streets: Has Developmental Local Government Failed in South Africa?” in State of the Nation South Africa 2007, ed. Sakhela Buhlungu, John Daniel, Roger Southall, and Jessica Lutchmann, 53–77 (Cape Town: hsrc Press), 58. For example, the Local Government Briefing’s Community Protest Monitor recorded thirteen service delivery protests in August, seven in October, five in November, and three in December; see “Community Protest Monitor,” The sa Local Government Briefing, nos 8, 10, 11, and 12 (2007). Special Investigating Unit, Annual Report 2004/2005 (Pretoria: Special Investigating Unit, 2005). Good Governance Learning Network, Local Democracy in Action, 47. National Treasury, Local Government Budgets, 8. For the 2006–07 financial year, the vertical division of revenue (after deduction of debt servicing and contingency costs) was determined as follows: national departments receive 50.4% of available resources, with 42.4% allocated to the nine provinces and 7.2% to the 283 municipalities; see National Treasury, 2007 Budget Review, 19. For a detailed explanation of the equitable share formula for local government, see National Treasury, 2007 Budget Review, Annexure E. National Treasury, 2003 Intergovernmental Fiscal Review (Pretoria: National Treasury, 2007), 42.

296

Jaap de Visser

68 sa Local Government Research Centre, “Johannesburg Issues New Retail Bond,” sa Local Government Briefing, July 2007, 55. 69 mec for Local Government, Mpumalanga v imatu 2002 (1) sa 76 (sca). 70 Act 56 of 2003. 71 On intergovernmental fiscal relations, see Bongani Khumalo and Renosi Mokate, “Republic of South Africa,” in The Practice of Fiscal Federalism: Comparative Perspectives, ed. Anwar Shah, 263–86 (Montreal and Kingston: McGill-Queen’s University Press, 2007). 72 National Treasury, 2007 Budget Review, 136. 73 National Treasury, Local Government Budgets, 8. 74 Ibid., 7. 75 One exception is perhaps that the Province of KwaZulu-Natal has opted to exclude the executive mayor system and to operate with executive committee systems only. 76 Act 108 of 1997. 77 Act 61 of 2003. 78 See Steytler, “Republic of South Africa,” 327. 79 For example, the Western Cape provincial government intends to adopt regulations on noise pollution in terms of the Environment Conservation Act 73 of 1989. The KwaZulu-Natal government has adopted KwaZulu-Natal Road Traffic Act 7 of 1997, KwaZulu-Natal Health Act 4 of 2000, and KwaZulu-Natal Cemeteries and Crematoria Act 12 of 1996, all of which regulate local government functions. 80 For examples of the variety of approaches, see Jaap de Visser, Developmental Local Government, a Case Study of South Africa (Antwerp: Intersentia, 2005), 174. 81 See KwaZulu-Natal Road Traffic Act 7 of 1997, Section 26. 82 See KwaZulu-Natal Health Act 4 of 2000, Section 4. 83 See National Building Regulations and Building Standards Act 103 of 1977, Section 29(8)(a). 84 See Water Services Act 108 of 1997, Section 21. 85 Municipal Systems Act 32 of 2000, Sections 106 to 108. 86 For examples of various monitoring schemes that are at odds with the Municipal Systems Act and the Constitution, see de Visser, Developmental Local Government, 183. 87 Act 56 of 2003. 88 Constitution, Section 139. 89 The first intervention occurred in 1998, followed by six interventions in 1999, two in 2003, seven in 2004, two in 2005, three in 2006, and seven in 2007. For parliamentary reports on these interventions, see http://www.ncop.parliament.gov (viewed 20 February 2008). 90 For a discussion of the relation between interventions and the national government’s support program, see Christina Murray, “The ncop and Intervention,” Stellenbosch Law Review 18, no. 1 (2007): 26–30. 91 Constitution, Section 41(1). 92 Constitution, Section 67.

Republic of South Africa

297

93 Norman Levy, Chris Tapscott, Nico Steytler, et al., The Intergovernmental Relations Audit – Towards a Culture of Co-operative Government (Pretoria: Department of Provincial and Local Government, 1999), 134. 94 Act 13 of 2005. 95 Reuben Baatjies and Nico Steytler, District Intergovernmental Forums: A Preliminary Assessment of Institutional Compliance with the Intergovernmental Relations Framework Act (Cape Town: Community Law Centre, 2007), 26, http://www.communitylawcentre. org.za (viewed 20 February 2008); Yonatan Fessha and Nico Steytler, Provincial Intergovernmental Forums: A Post–Intergovernmental Relations Framework Act Compliance Assessment (Cape Town: Community Law Centre, 2007), 28, http://www. communitylawcentre.org.za (viewed 20 February 2008). 96 Human Sciences Research Council, Survey on South African Voter Participation in Elections (Pretoria: Independent Electoral Commission, 23 February 2007), 3, http:// www.elections.org.za (viewed on 20 February 2008); Independent Electoral Commission, Local Government Election 2006 Voter Turnout Summary (Pretoria: Independent Electoral Commission, 23 February 2007), http://www.elections.org.za (viewed 20 February 2008). 97 Robert Cameron, “The Upliftment of South African Local Government,” Local Government Studies 27 (2001): 97–118. 98 Jaap de Visser, “Career Patterns of National, Provincial and Local Parliamentarians in South Africa,” in Legislatures in Federal Systems and Multi-Level Governance – Schriftenreihe des Europäischen Zentrums für Föderalismus-Forschung Tübingen, ed. Rudolf Hrbek (Baden-Baden: Nomos, forthcoming). 99 This rethinking was an item at the anc’s Policy Conference of June 2007; see African National Congress, anc 52nd National Conference 2007: Policy Discussion Documents (Johannesburg: Amrabula, 2007), section 2, 6. 100 See Steytler, “Republic of South Africa,” 316, 323.

Kingdom of Spain f r a n c i s c o ve l a s c o c a b a l l e r o

Local governments play a very important role in Spain’s contemporary success. They contributed significantly to the establishment of democracy. The restoration of democracy, after four decades of military dictatorship (1939–75), was not only a question of freely electing the central government; it also required expansion of a new culture of participation and freedom. The municipal councils played a fundamental role in this process as far back as 1977, before the Constitution was proclaimed in 1978. Local governments, next to the new autonomous communities created in 1979, have been decisive in Spain’s economic development. The municipal and provincial councils have collaborated very actively to establish the economic bases (i.e., services and infrastructure) for private entrepreneurial activity. Thus the municipal and provincial councils have been successful in securing, like never before, more efficient delivery of public services, such as water supply, waste disposal, and highway maintenance. In addition, through the use of new municipal companies and administrative agencies, councils have attained unprecedented levels of success in promoting economic development locally. Recently, local governments have also been influential in achieving the objectives of the welfare state. It is the city councils that, precisely because of their proximity to the citizens, were the first to design and implement public policies focused on underprivileged citizens. The constitutional and legal frameworks of local governments, firmly grounded in the principles of democracy and autonomy, play an integral role in the social, economic, and political success of Spain. Democracy has made local governments fully accountable to their citizens and has thus fostered their autonomy. In turn, local autonomy has stimulated the leading role of the councils. It has also prompted innovative public choices suited to the specific needs of individual towns. To accommodate this local autonomy, sufficient resources are made available to finance specific local choices.

300

Francisco Velasco Caballero

Despite the progressive nature of local government, politicians and scholars have asked for a review of the local government system. Some proposals concern the possibility of introducing new powers of legal control by the autonomous communities over all local governments, or at least over the smaller ones. By contrast, the associations of local governments advocate for the expansion of local jurisdiction and the financial resources available to local government. All these proposals, however, rest on a firm acceptance of the current local government system and are mainly directed at remedying certain problems and developing local autonomy.1 The Kingdom of Spain ranks among the largest countries in the European Union (eu) in terms of its population, gross domestic product (gdp), and size of its territory.2 Spain has 44.7 million inhabitants, constituting 8.9% of the entire population of the eu. Currently, at least 4.1 million of these inhabitants are immigrants (9.3% of the total population).3 These figures would be even higher if the approximately 700,000 additional illegal immigrants were included in the total. Moreover, the fact that Spanish nationality is easily attainable by certain foreigners from Latin American countries and Morocco (mainly) means that in a few years a significant portion of the population will come from other countries. Although the Spanish population is certainly growing (at a rate of 1.2% in 2006), almost the entire increase is attributable to immigration and is concentrated in only a few regions and towns, namely Catalonia, the Mediterranean coast, and Madrid. The changes in the demographic structure have resulted in new political and constitutional debates, such as the electoral rights of immigrants (which at the moment are tied to nationality) and the institutional position of other religions, such as Islam and many Protestant churches, which have grown as a result of numerous Latin American immigrants, thus countering the traditional pre-eminence of the Roman Catholic Church. The economic position of Spain has changed since 1986, when it first entered the European Community. Estimated gdp for 2006 rose to €976.189 billion (US$1.3 trillion), which represents a good 3.9% of annual economic growth (the highest figure in the eu). Nevertheless, these positive figures hide several economic weaknesses. Per capita income in Spain ranks only twelfth in the eu. In addition, the striking Spanish economic growth shows important imbalances: 60% of the national economy is derived from the service sector, with 10% originating from the building sector. In addition, economic growth is highly concentrated in only a few regions: Madrid, Catalonia, Murcia, the Basque Country, and Navarre. The constitutional structure of Spain has remained stable since 1978. In almost thirty years, only one reform has been instituted: the recognition of eu citizens’ electoral rights in municipal elections. Within the context of this constitutional stability, however, salient reforms have been made to the

Kingdom of Spain

301

statutes of autonomy of the different regions of Spain. These reforms have been geared toward increasing regional self-government. With the last reforms of these statutes (Catalonia in 2006 and Andalusia, Aragón, and the Balearic Islands in 2007), the level of regional autonomy easily equals or surpasses that which prevails in many federal countries. Nevertheless, the term “federal” is normally avoided in Spanish territorial and political debates as a consequence of the separatist connotations associated with its use since the beginning of the nineteenth century. The “quasi-federal” character of the Spanish state can be easily demonstrated by considering some salient features of the autonomous communities. First, the statutes of autonomy are necessarily drafted and initially passed by the regional parliaments – logically within the boundaries of the Constitution – and finally approved by the Spanish Parliament. Every autonomous community has a parliament exercising a broad jurisdiction, even exclusively, on a wide range of important matters – for example, education, public security, local government, urban planning, and environmental protection. Even more extensive are the administrative functions of the autonomous communities because they apply not only regional laws but also most of the state ones. Three autonomous communities – the Basque Country, Catalonia, and Navarre – also have their own police forces, although Navarre has a mixed system. Finally, even though the administration of justice is an exclusive competence of the state, the autonomous communities also possess important powers relating to the judicial bureaucracy. There are currently proposals by the national government for constitutional reforms. These would address matters such as the equality of male and female heirs in respect of succession to the throne, definitive identification of the autonomous communities that comprise Spain, and reform of the Senate to reinforce its function as the chamber for territorial representation. Furthermore, the structure and position of the political parties have become crystallized since the 1980s. The political scene is dominated by two principal parties: the conservative Partido Popular (pp) and the socialdemocratic Partido Socialista Obrero Español (psoe). These two parties have been trading places as the ruling party since 1982. Following the two leading parties, the left-wing Izquierda Unida, which incorporates the historical Partido Comunista (Communist Party), has been progressively losing electoral support, nowadays failing to obtain anything higher than 5.5% of the vote. Additionally, in three of the autonomous communities – Catalonia, Galicia, and the Basque Country – there are sizable nationalist parties. In the case of the Basque Country, the Partido Nacionalista Vasco has been governing the community without interruption since 1979. Catalonia had also been governed continuously by the Convergencia i Unió, a nationalist party, until four years ago. The Bloque Nacionalista Gallego is less popular, being the third political force in Galicia, after the pp and the psoe.

302

Francisco Velasco Caballero

h i s t o r y, s t r u c t u r e , and institutions of local government Municipalities have been a permanent fixture in the political history of Spain. Yet the first historical predecessors of the present municipalities are found during the Christian Conquest and repopulation of the Iberian Peninsula, from the Arab kingdoms, in the eighth century. The conquest was based on “cartas pueblos” (privileges for repopulation), which secured for the new settlers possession of land and a high level of autonomy against the feudal or royal power. Although later centuries saw limits progressively imposed on this self-government of cities and villages, it remained a historical reference to a time of freedom and autonomy of the cities. This memory repeatedly reappeared as a political “myth” in later centuries. From the mid-twelfth century, the municipalities were subject to significant restrictions of power, to the benefit of the royal crown or the lords. At that time, there was an irregular distribution (along the Iberian Peninsula) of cities and towns subject to different authorities. Towns of realengo were placed under the authority of the king, whereas cities of señorio were subject to the power of feudal lords. Although the municipalities of realengo lost part of their power (which was exerted to a great extent by authorities directly named by the king – corregidores), at the same time, they took part in the new monarchical institutions (including representation of these cities in the Cortes, or Royal Parliament). The diminution of the power of the municipalities was even more conspicuous in the territories of señorío. In addition, the city councils lost their “democratic” character, no longer being popular assemblies but autocratic bodies composed of councillors appointed by the king (or the feudal lord) for life and in exchange for a fixed payment. This historical phenomenon, known as the “sale of public posts,” was a determinant cause of the continual deterioration of municipal life until the end of the eighteenth century. Similarly, from the sixteenth century, a process of municipal fragmentation began, consisting of the dismemberment of ancient larger municipalities. It resulted in the formation of some 20,000 local bodies by the end of the ancient régime. Again, the need for funding by the monarchy appears to have been the motivation for the fragmentation. The creation of a new municipality, appointed by the king by means of “privilegio de viallazgo,” gathered important revenue for the royal treasury. Also to the further benefit of the king, the fragmentation of municipalities limited the political power of some of the great cities of the time, such as Toledo. The Royal House of the Bourbons, having settled in Spain as a result of the War of the Succession (1701–14), transferred to Spain the centralized organization of power found in France. As a result, the municipalities lost autonomy (mainly economic) to the benefit of the new royal authorities (intendentes). This situation lasted until the dawn of constitutionalism and Spanish liberalism in 1812.

Kingdom of Spain

303

The Spanish Constitution of 1812 was directly connected to the French revolutionary movement, initiated in 1789. While the Spanish cities fought against Napoleon, the deputies of those same cities approved a constitution clearly influenced by French revolutionary thought. The 1812 Constitution paid special attention to municipalities, prompting a significant reduction in the number of municipalities (leaving around 9,000 in existence, a figure similar to that of today). It also set up a second level of local government: the province. It forbade the sale of municipal posts and established the election of mayors and councillors by the townspeople (only the heads of households). The new constitutional municipalities were subject to the control of the provincial councils. The political instability of the nineteenth century was duly reflected in local government. Frequent military uprisings and erratic alternation between two parties in the central government – the “moderate” and the “progressive” parties – resulted in continuous changes being made to the political organization of local bodies. An example of the parallel processes this evoked is that mayors were either elected by the townspeople or appointed by the royal government. Councils, depending on who was in power, were assigned either merely deliberative roles or actual decisionmaking ones. Broad government powers could be manipulated to suspend or dissolve the councils or to restrict them. Last but not least, those in power at the time determined the extent of the powers of the provincial president (jefe político) over the mayors and municipal councils. Several dictatorships during the twentieth century culminated in the political and economic regression of municipalities. The dictatorship of General Francisco Franco (1939–75), in particular, firmly placed the local bodies (i.e., municipalities and provinces) under the control of the central government. This was effected not only through the direct appointment and removal of mayors and provincial presidents but also by means of requiring central government approval of all major local decisions. This situation radically changed after the proclamation of the Constitution of 1978. The municipalities and provinces were democratized and assumed a central position in the new decentralized state. At present, public authority is exercised at four basic levels in Spain: the central state, autonomous communities, provinces, and municipalities. These four orders of government are directly established and guaranteed by the Constitution. The entire state is comprised of seventeen autonomous communities (plus two autonomous cities – Ceuta and Melilla) and two types of local bodies: forty-three provinces and 8,108 municipalities.4 Unlike municipalities, provinces do not always exist as local bodies in all the autonomous communities. In some autonomous communities – Asturias, Madrid, La Rioja, Cantabria, Murcia, the Balearic Islands, and Navarre – provinces are only subdivisions of the state and not

304

Francisco Velasco Caballero

local governments. In the Basque Country, provinces are substituted for by the “Historical Territories” of Álava, Guipúzcoa, and Vizcaya. In the case of the archipelagos, the distribution of local entities is complex. The Autonomous Community of the Canary Islands is composed of two provinces; each province has several islands, and each island is a local entity. The Autonomous Community of the Balearic Islands does not have provinces, but the islands that constitute the archipelago function as local entities too. This territorial power structure can only be explained using historical-political criteria. In respect of efficiency criteria, it is difficult for a population of 44 million to justify the existence of seventeen autonomous communities,5 and even less so the existence of over 8,000 municipalities (of which, incidentally, over 80% have a population of under 5,000 inhabitants and only 2% have over 50,000 inhabitants). However, despite the inefficiency inherent in the high number of primary territorial entities, the reduction or fusion of these entities is not currently on the agenda of the political parties.6 The sentiment of territorial identity is deeply rooted in Spain, so any attempt to amalgamate municipalities faces strong social resistance. From the perspective of expenditure, the progressive importance of the autonomous communities, the withdrawal of the central state, and the apparent stability of the local entities are clearly observed. Thus, in global figures in 2006, after intergovernmental transfers, 49% of public expenditure was accounted for by the state, 37% by autonomous communities, and 13% by local entities (i.e., municipalities, islands, and provinces). These figures can easily be explained through an analysis of the main economic costs of two public services – education and health – both of which are functions of the autonomous communities. In comparative terms, in countries where local expenditure rises above 19% of total public expenditure, education and health services are generally allocated to local bodies.7 The territorial distribution of power is asymmetrical. The national state centres its activity on legislative functions, the administration of justice, and the administrative management of very select sectors (such as defence and the construction and management of general infrastructure). The autonomous communities perform legislative tasks and manage the greater part of the administrative functions, mainly those that are typical of the social state, such as education, health, and social security. The municipalities implement state and regional laws and provide most local public services, such as traffic, waste management, and the municipal police force, among others. Finally, the provinces assist and cooperate with municipalities, their main function being to ensure the provision of local services by the smallest municipalities. In the case of the archipelagos (i.e., the Canary and the Balearic Islands), the functions of the continental provinces and a good part of the regional powers are performed by the islands. Some particularities are presented by the “Historical Territories” of the Basque Country.

Kingdom of Spain

305

They operate in similar ways to autonomous communities in so much as they have ample jurisdiction, for instance, regarding taxation. In sum, the primary structure of local government in Spain is based on two institutions – municipalities and provinces – but their composition varies significantly. On the one hand, municipalities can be large, with over 500,000 inhabitants (e.g., Madrid, Barcelona, Valencia, Sevilla, Zaragoza, and Malaga); on the other hand, as is the case with the majority, they are medium-sized or small cities. Of the 8,108 Spanish municipalities, 6,817 (84.1%) have fewer than 5,000 inhabitants. Provinces show similar divergence. In contrast with the most populated, such as Barcelona, Zaragoza, or Malaga, each with over 1 million inhabitants, others, like Soria, hardly reach 90,000. The great differences in size are a source of the various dysfunctional elements in the structure of local government because the interests of the larger municipalities are difficult to reconcile with those of the more numerous smaller ones. Whereas the large cities openly question the functions, and even the existence, of provinces, small municipalities are clearly dependent on them. Another example is the difficulty of combining the interests of the different sized municipalities in the context of (1) exclusive associations of municipalities and provinces, (2) the Federation of Municipalities and Provinces, for the whole of Spain, and (3) the federations of municipalities within the autonomous communities. The constitutional system does make allowances for (although it does not impose) the existence of other local bodies: those established by the autonomous communities – this is the case with the comarcas (counties) in Catalonia and Aragon – and single-purpose public partnerships established by two or more municipalities for the efficient management of local public services (manucomunidades). The creation of these other entities is frequently the cause of political conflict. In the case of the comarcas, established for multimunicipal servicing and planning, dissension is created because they try to occupy the functional space that would typically belong to the provinces. The Constitution establishes the existence of provinces and does not permit their extinction, causing parallel rivalry between them and the counties. A special case is that of the metropolitan areas of the large cities. Their normal structure is that of a large city that, in its expansion, encroaches upon small towns and cities, which in turn experience notable rates of demographic growth. In the case of Barcelona, for example, the metropolitan area is comprised of thirty-two municipalities, including the city of Barcelona. The metropolitan areas do not have their own specific local government. Since 1979 the autonomous communities have impeded the development of any new special territorial government for the metropolitan areas, which could limit their functions. In fact, some pre-existing metropolitan governments, created before 1978 – like that of Barcelona – were eliminated by a law of the relevant

306

Francisco Velasco Caballero

autonomous community. Instead of general metropolitan governments, the metropolitan areas of some large cities (such as Barcelona and Valencia) provide different organizational structures for certain public services. In Barcelona there are specific intermunicipal cooperation entities for the provision of urban and interurban transport and for environmental protection. These cooperative entities, however, do not exist in Madrid. That the metropolitan area of Madrid is, in itself, an autonomous community means that the metropolitan area is governed directly by the Autonomous Community of Madrid. Finally, both Madrid (3,128,600 inhabitants) and Barcelona (1,605,602 inhabitants) each have their own specific legal order in the form of a special state law.8 Both laws either regulate the participation of the respective local councils in the management of state infrastructure (e.g., airports and rail stations) or create specific measures for improving municipal organization or exercising specified municipal competences, such as traffic regulation. Furthermore, despite the demands of Madrid and Barcelona, neither of the two special laws contains specific measures that improve their financing. In general terms, the special laws of Madrid and Barcelona do not differentiate in any essential manner between these two cities and other urban municipalities. The current structure of local government is not novel in terms of comparative constitutionalism. Frequently, federal states – as is the case in Germany – include two or more types of local government: municipalities and counties. The place and role of these territorial bodies in the federation is of course another matter. Spain, and the structures established by the Constitution of 1978, can be fully understood only if one takes into account the organization of the dictatorial regime between 1939 and 1975. The military dictatorship of General Francisco Franco clearly centralized public authority. The authoritarian regime eliminated all forms of regional autonomy. Only two local organizations survived – the provinces and the municipalities – which were, in both cases, under strict, even hierarchical, control by the central state. The democratic transition, embodied in the Constitution of 1978, did not radically change the territorial organization. Rather, it supplemented and readjusted it with two primary decisions: the creation of the autonomous communities and the reconversion of the local bodies (i.e., provinces and municipalities) into democratic local self-governments. The new constitutional system, however, did not precisely define the functions and role of the provinces within the framework of the new autonomous communities. In practice, this has meant that the very existence of the provinces gives rise to continuous conflicts being brought before the Constitutional Court.9

constitutional recognition of local governments Article 137 of the Constitution (Constitución Española, ce) guarantees municipalities, provinces, and the islands (along with the autonomous

Kingdom of Spain

307

communities) the “right to self-government” in the following terms: “The State is organized territorially into municipalities, provinces and autonomous communities that may be constituted. All these bodies shall enjoy self-government for the management of their respective interests.” Since 1999 local governments have been permitted to plead this political autonomy before the Constitutional Court. The constitutional recognition of local autonomy, however, does not imply the direct conferral of power to local authorities. Unlike the detailed constitutional regulation of the autonomous communities,10 local bodies are granted only the right to local autonomy. The Constitution does not specify what powers such autonomy entails. From a historical point of view, priority was then given to the recognition of the autonomous communities and their effective powers. The local governments (and therefore local powers) are basically defined by statutory law. This definition is limited not only to state law but to autonomous community legislation as well.11 In fact, according to the constitutional distribution of powers, the autonomous communities assume (in their statutes of autonomy) legislative powers that extend over local government. Therefore, the establishment of local autonomy was, to a great extent, the responsibility of the regional parliaments. The legal configuration of local autonomy must necessarily take place within the framework of the constitutional guarantee of local self-government, and the rulings of the Constitutional Court have been decisive in identifying these constitutional limits. For example, the court held that the regional laws must grant municipal councils the power to initiate new urban plans.12 The legal system of local government falls under the concurrent jurisdiction of the national state and the autonomous communities. According to Article 149.1.18 CE, the state has the power to establish (initially by an Act of Parliament) the “foundations of public administration law.” Therefore, by describing the provinces and municipalities as “public administrations,” the Constitution acknowledges the regulatory powers of the central state over local government. Nonetheless, the statutes of autonomy confer upon the autonomous communities (with different texts and nuances of meaning) exclusive powers over local government, “notwithstanding” the fundamental regulation by the state under Article 149.1.18 ce. The Constitutional Court has concluded that Spain’s local government system has a “two-fold nature.”13 It is defined by the laws of the state as well as by the laws of the different autonomous communities. The state is responsible for “fundamental” regulation; the autonomous communities are responsible for “nonfundamental” regulation, or so-called “developmental” regulation. Moreover, the state has interpreted its own “fundamental” powers broadly.14 This “fundamental” regulation of local government by the national state is found primarily in two laws: Act 7/1985 of 2 April, relating to the regulation of the Basis of the Local System (lbrl);15 and Royal Legislative Decree 2/2004 of 5 March, which approves the Restated Text of

308

Francisco Velasco Caballero

the Local Tax Authorities Act (LHL ).16 The extent of “fundamental” regulation by the state has thus far imposed clear limitations on the legislative power of the autonomous communities. In terms of functions and organization, the municipalities in the different autonomous communities are fairly uniform, but the provinces are quite diverse. In 1979, with the creation of autonomous communities, the provincial structure underwent important modifications; in some communities the province disappeared as a local entity. In the Basque Country the provinces were transformed into “Historical Territories.” In the archipelagos the provinces were partially or totally substituted for by specific local governments called “islands.” But apart from these exceptions, the organization and functioning of the provinces are very similar throughout Spain. The same can be said of the municipal governments. The composition of the assemblies, the electoral system, and financing and management of public services do not differ noticeably across the autonomous communities. In 2006 the reform of various statutes of autonomy was initiated, something that has had important consequences for local government overall. From the new statutes of Catalonia (2006) and Andalusia (2007), the following points can be highlighted. First, both statutes contain direct regulation with regard to some essential aspects of local governance (i.e., various guarantees of local autonomy and some organizational matters). In addition, the new statutes increase the legislative powers of the autonomous communities in matters of local government (some of the matters that are currently regulated in national Acts will become regional matters). Lastly, the new statutes contain a provision that guarantees local funding. Points of contention, upon which scholars disagree, however, are the role and position of the new statutory rulings with relation to the laws of the central state. What is unclear is whether the new statutes are able to trump the “fundamental” laws of the state.17

governance role of local governments The Constitution does not attribute specific powers to the local entities, nor does it distribute local power between provinces, municipalities, and islands. As mentioned earlier, Article 137 ce guarantees the local autonomy of municipalities, provinces, and islands, but without any great precision. The local government system, therefore, lacks a constitutional “universal clause” that irrefutably establishes the powers of local government, as exists, for example, in the German Basic Law.18 In recent years, certain scholars have made the argument that Article 137 ce (right to local autonomy) includes a “universal clause” of powers, finding expression in the so-called “principle of subsidiarity.”19 Moreover, these scholars argue that such universal powers can be limited only by law and in terms of the principle of

Kingdom of Spain

309

proportionality. These opinions have clearly been influenced by German public law and, especially in recent years, by the principle of subsidiarity in terms of Article 4.3 of the European Charter on Local Autonomy of 1985 (ratified by Spain in 1988). Thus far, such opinions have not been accepted by the Constitutional Court,20 even though since 1999 some dictums have appeared to indicate a new doctrine tending in this direction.21 Municipalities State Act 7/1985 (lbrl) does not directly give powers to municipalities; it enumerates matters or functional areas in respect of which the national and regional Acts have to allocate a “minimum” of jurisdiction to the municipalities. In the majority of cases, it is the laws of the autonomous communities that transfer these powers. This is due in part to the fact that matters best regulated locally in accordance with Articles 25 and 26 lbrl coincide with the powers of the autonomous communities in terms of their respective statutes. According to Article 25.2 lbrl, municipal councils must be empowered to perform in the following domains: safety in public places, planning for vehicle traffic and pedestrians on urban roads, civil defence, firefighting, urban regulations, historic-artistic heritage, environmental protection, abattoirs, markets and consumer and user protection, public health, cemeteries and funeral services, social services, water, public lighting, street cleaning, waste, sewage, public transport, cultural and sports activities, and maintenance of school buildings. In all these areas, legislation (of the national state or the autonomous communities) must confer the necessary powers to municipalities, although not necessarily exclusively. In addition, in terms of Article 26.1 lbrl, municipalities are directly responsible for a certain minimum of public services. These required services increase according to the number of inhabitants of a municipality and must be managed according to national law or, in most cases, regional laws.22 These laws do not usually contain specific financial provisions. The funding for each public service, therefore, comes from the common financial resources of each municipal council, which, as shall be explained later, are regulated by state legislation. Thus there is a clear separation between the territorial entity that regulates local services (normally the autonomous community) and the territorial entity that regulates local income (normally the central state). Finally, Article 28 lbrl completes the outline of powers and public services of the municipalities by authorizing the municipalities to perform “complementary activities” to those of other administrations in the following areas: education, culture, promotion of women, housing, health, and environmental protection. These local activities have clearly surpassed

310

Francisco Velasco Caballero

their “complementary” nature and are essential tasks of municipalities, highly demanded and valued by citizens. This is the case in respect of policies on equality, children’s education, treatment of drug addicts, and urgent healthcare. In addition to “complementary activities” formally included under Article 28 lbrl, municipalities perform new tasks (especially social services) without express empowerment to do so. Two especially noteworthy examples are the social integration of immigrants (both legal and illegal) and activities revolving around international cooperation – very well developed in the municipalities of Catalonia. The provision of public services consumes the major part of the municipal budget. However, this portion of the expenditure is proportionally higher in the small municipalities than in the large cities. According to the budget figures for 2004, the highest average amount of expenditure was dedicated to the production of social goods in the following order: urban development, public municipal works, culture, collection and treatment of waste, supply of water, education, and sanitation. The next most relevant areas of expenditure are those referred to as “social protection and promotion” (i.e., essentially aid given to the most disadvantaged sections of the population) and “public security.”19 An important figure, although difficult to estimate, is the level of municipal expenditure on services that are not obligatory. As explained above, the extent of mandatory local services depends on the size of the municipal population. But this does not prevent small and medium-sized municipalities, under the pressure of popular demands, from providing public services to certain sectors of the population without a real right to them. It is estimated that in 2003, 26.7% of municipal expenditure was destined for these services, mainly focusing on civil security and protection, culture, education, and social aid.20 Finally, it is necessary to emphasize that all municipal expenditure comprises only 8.3% of total public expenditure, which, when added to the 4.3% of expenditure by the provinces and islands, represents a total of 13% of total public expenditure. Of the remaining expenditure, 49% is accounted for by the state and 37% by the autonomous communities. As explained above, the low relative contribution of the municipalities is attributed to the fact that the two expensive services – education and health – are provided by the autonomous communities. The legal regulation of the management of local powers and services is contained, to a large extent, in the same regional laws that give powers to the municipalities. For example, the regional laws that regulate the water supply also regulate the system of tariffs and the possible sanctions for failure to pay. Beyond these material regulations, the form of organization of each power or service is a matter for each municipality to decide. This forms part of the “power of self-organization” that is guaranteed both by Article 4.1(a) lbrl and by Article 6.2 of the European Charter on Local

Kingdom of Spain

311

Autonomy. In this way, and with few limits, each municipality can choose between managing a power or service directly (by means of municipal agencies, public municipal companies, and foundations) or indirectly (through a public service contract or administrative concession). In general terms, each council can employ additional persons who do not become part of the civil service. Adding together the two categories (civil servants and additional employees), the municipalities employ collectively 602,001 persons – 20.8% of the total employment of the public sector, compared with 50.2% employed by the autonomous communities, 22% by the central state, 3.8% by universities, and 3.2% by the provinces and islands.21 From an overall perspective, and under the paradigm of the greater efficiency in private management, a clear tendency can be observed today toward public power management built on trends found in the private sector, namely substitution of civil servants by non-civil-service employees, creation of municipal limited companies for the management of services, and the management of services by means of administrative contracts with the private sector. Special mention should be made of the management of public services in metropolitan areas, delivered jointly by the autonomous community and one or several local councils. The principal examples are Madrid and Barcelona, although there are great differences between them for reasons that include their political context and their territorial and demographic structures. In the metropolitan area of Madrid, the role of the Autonomous Community of Madrid is predominant, and public services are highly integrated. In the case of Barcelona, the role of the Autonomous Community of Catalonia is very limited; therefore, the coordination or integration of public services is assigned to agencies or public companies governed by the municipalities of the metropolitan area. Since 1980 both Catalonia and the Autonomous Community of Madrid have avoided the creation of any kind of general government for the metropolitan areas of Madrid and Barcelona in order to prevent strong metropolitan councils from accumulating a level of power that could rival that of the autonomous communities. In practice, this has led to each metropolitan area having a very specific management structure linked to the public services it provides. Urban and intercity transport in metropolitan Madrid is perhaps one of the most successful examples of the combined delivery of public services. By Act 5/1985 of 16 May, the regional Parliament established the Consortium of Transport of the Community of Madrid, creating a sort of autonomous agency for the Autonomous Community of Madrid, which exercises a wide range of powers over public transport, including all administrative issues relating to transport within the autonomous community, as well as all local powers over transport in the municipalities that voluntarily join this consortium (for a minimum period of seven years). Each type or mode

312

Francisco Velasco Caballero

of public transportation is managed in a different way. The underground is managed by a private company shared jointly by the region and the municipality of Madrid; the intercity buses by means of contracts (concessions) with private companies; and the intracity buses by means of public municipal companies. However, all these public-service agents are managed and coordinated by the regional Consortium of Transport. The consortium decides the following issues: the itineraries of public transport and the interconnections between them, the infrastructures of each type of transport, the tariffs (i.e., fares) for services and the unification of tickets, the award of contracts to private companies, the distribution of revenue and expenses among the various public and private transport agencies, and finally, providing information and assistance to customers. The management of the consortium is assigned to a council composed of representatives from the autonomous community, the city council of Madrid, other municipalities, the unions, the managerial associations, and a member designated by the consumer associations. Two fundamental legal elements have prompted the unquestionable success of the consortium. First of all, its broad powers allow for wide coordination between the very different means of transport and the responsible agent. Second, the balance of power between the autonomous community and the municipality of Madrid in its management has ensured that neither one dominates the consortium. In accordance with the Constitution of 1978, every municipal government is based on the democratic principle. More than this, Article 140 ce establishes that this democratic legitimacy consists of the direct election of councillors. However, the Constitution says nothing with regard to the mayor, who can be elected directly by the citizens or indirectly by councillors. The system of election for mayors and councillors is established in the State Organic Act 5/1985, regulating the general electoral system. In 1985 the central state determined that its powers over the “general electoral system” authorized it to regulate fundamental matters of the municipal electoral system. These include electoral procedure, the election of the mayor, and the rights of the municipal parties. In accordance with this regulation, Spaniards and citizens of the European Union over eighteen years old (excluding other foreigners) are eligible to vote in each municipality. The residents choose a fixed number of councillors, grouped together in closed lists of political parties or electoral coalitions, according to the municipal population. For the determination of the councillors-elect, a modified proportional system is followed (the socalled d´Hont rule). The elected councillors then designate the mayor by majority vote. In recent years, most of the political parties have considered the possibility of direct election of mayors, although it has not been manifested in legislative initiatives. This possibility has been highly criticized by several scholars who have pointed out that the direct election of mayors could provoke severe malfunction in an electoral system built on political parties.

Kingdom of Spain

313

With regard to organizational regulation, the lbrl draws a clear line between political organs and the municipal administration. The lbrl regulates the former (i.e., decision-making organs) in detail and leaves the administrative organization of municipalities practically without regulation – and, therefore, open to regional regulation or municipal self-regulation. There are three main political organs among which the decision-making power in a council is divided: the assembly of councillors, the mayor, and the local government cabinet. The assembly is made up of a variable number of elected councillors, depending on the population of the municipality (which ranges from five councillors in the smallest villages to fifty-seven in Madrid). The municipal cabinet (Junta de Gobierno), an executive committee present in municipalities with more than 5,000 inhabitants, consists of a maximum of one-third of the councillors in the assembly, who are appointed by the mayor at his or her discretion. However, the distribution of tasks among these municipal organs is not applied uniformly throughout Spain. One can speak of three different systems: “a general system” applicable to the majority of municipalities and regulated entirely in the lbrl; a specific system for “municipalities of great population,” which was introduced into the lbrl in 2003;23 and the special systems of Madrid and Barcelona.24 In the “general system,” the assembly of councillors, directly elected by the citizens, exercises a great deal of power. For example, the activities of the assembly range from providing political or strategic direction, such as in planning and budgeting, to administrative execution, such as awarding contracts or selling goods. This functional description is adapted substantially in the large municipalities (including Madrid and Barcelona), where the assembly concentrates on decisions that are more politically relevant, such as setting norms and budgets, and on political control over the executive organs like the mayor and the executive committee. This singularity of function of the assembly in the large cities is commonly described as the “parliamentarilization” of local government. In the municipalities of the “general system,” the mayor of a municipality directs local politics and exercises numerous administrative functions, such as managing personnel, overseeing the municipal police force, sanctioning powers, and conferring licences. These functions of the mayor are not present in the large municipalities. Lastly, most municipalities also have an executive committee, whose functions are diverse. In ordinary municipalities, the committee simply supports the mayor; in the large municipalities, it is vested with executive power. Provinces Although the new constitutional order of 1978 did not substantially change the powers of municipalities, the provinces experienced a signifiant

314

Francisco Velasco Caballero

reduction of their functions to the benefit of the emerging autonomous communities. The Constitutional Court accepted the reduction of provincial powers – in favour of the autonomous communities – provided it did not alter the “essential core” of provincial powers. As the court stated in the case on Catalan provincial councils, “the adaptation of the provinces to the new scheme of functional distribution of power cannot continue, except through an amendment of the Constitution, [including] the elimination of the Province as an entity with autonomy for the management of its own interests.”25 Constitutional case law has identified the minimum core of provincial autonomy with the traditional function of “cooperation and assistance” to municipalities. This cooperative function is often expressed as a “spending power,” so the core of provincial autonomy is, in essence, financial autonomy. The provincial councils are elected not directly by citizens but indirectly by the constituent municipalities.26 According to the results of the municipal elections, political parties then designate representatives to the provincial council. The responsibilities of these councils are specified via Article 36 lbrl in a reduced list of provincial powers based on the idea of cooperation and assistance to municipalities. The autonomous communities have not extended this narrow framework of powers. For the autonomous communities – especially for Catalonia and the Canary Islands – there is competition with the provinces for territorial public authority. From their perspective, provinces are frequently considered to be vestiges of the centralized state of the dictatorship period. The 2006 statute of autonomy of Catalonia and the 2007 statutes of Andalusia, Aragon, and Balearic Islands do not promote provincial powers. In the case of Catalonia, the province is substituted for by a new regional territorial entity (veguerías). In Andalusia, powers of coordination (by the autonomous community) over the provinces are being considered. These regulations are in contrast with the central-state’s 2006 proposal for a new Local Government Act that would protect the autonomy of small municipalities by specifically fostering the supportive and cooperative powers of the provinces.

financing local government Article 142 ce guarantees financial autonomy,27 although it does not elaborate on this guarantee.28 According to case law, the constitutional guarantee operates basically in respect of spending power and to a lesser extent in the area of income.29 The local bodies that are given this guarantee by the Constitution (i.e., provinces, municipalities, and islands) lack the constitutional power to determine their own revenue sources.30 The concise constitutional guarantee has recently been supplemented by various statutes of

Kingdom of Spain

315

autonomy. In the 2006 statute of Catalonia, the following items are directly guaranteed: a certain amount of local power over own taxes, the unconditional collection of subsidies, and the necessary provision of funding each time the law assigns a new task or power to local bodies.31 The effectiveness of all these financial guarantees is still not clear. The local funding system is defined by state law in Royal Legislative Decree 2/2004 of 5 March (lhl). This state law establishes a “mixed system” of local financing. A basic distinction is made between “local revenue” and “revenue granted” by the central state or autonomous communities. Sources of “local revenue” include local property rates, local taxes, fines, and profit from credit transactions. Of all the sources of local revenue, taxes are the most important. In respect of local taxes, a distinction is made between public tariffs and fees (for individualized delivery of local public services), special contributions (presently hardly in use, imposing taxes on those who derive any special benefit from public action), and five “general municipal taxes.” These taxes include the Buildings Tax, Facilities and Construction Tax (icio), Increased Value of Urban Land Tax (iivtnu), Real Estate Tax (ibi), Power Haulage Vehicle Tax (ivtm), and Business Tax (iae), the last being residual at present. Although we refer to “municipal taxes,” it must be pointed out that local institutions lack their own taxing powers; in other words, they lack the authority to establish taxes. This function is reserved for central-state or autonomous-community legislation. However, the lhl recognizes the power of local governments to shape nonessential elements of local taxes determined by state legislation (such as tax rebates or tariffs). On average, tax revenues make up 50% of all municipal revenues (including intergovernmental transfers), the most important part of which is derived from the real estate tax (approximately 50% of tax revenues). Compared with other European countries, the Business Tax is not a substantial source of revenue. Regarding tax revenue, the most significant difference between large and small towns lies in the importance of the fees or charges imposed for public services and the extent to which they affect the budget. In 2005 the small municipalities gathered around 28% of their operating costs by means of charges for the delivery of public services, whereas in the larger cities (over 500,000 inhabitants), these charges accounted for only 14% of their total revenue.32 It can be concluded that in small cities as opposed to large ones, funding is more effectively linked to the provision of public services. Local revenue also includes borrowing from public or private organizations. Articles 48 to 55 lhl envisage municipal borrowing but subject it to different kinds of controls, distinguishing between short-term (one year) and long-term loans. Short-term loans can be arranged directly by the local body, although within limits set by legislation. Long-term loans require prior authorization by the autonomous community and, in specific cases,

316

Francisco Velasco Caballero

the central state. In the 1980s local bodies obtained loans from banks even for financing their current expenditures. In subsequent years, there has been a lesser tendency to resort to this, but at the same time, there is greater use of loans for new infrastructure or extraordinary expenditures. In 2005 the income from borrowing did not exceed, on average, 7% of local governments’ total income.25 The system of local revenue is not always sufficient for financing local tasks. This is demonstrated very clearly in small municipalities where tax revenue is scanty. In the larger cities, in recent years, due to the remarkable increases in tax revenue (around 12%), the financial shortcomings have not been as strongly felt as in the medium-sized and small towns. Some big cities (e.g., Madrid) have increased their debt in the past few years, but this is clearly attributable to the significant increase in expenditure on new public policies and infrastructure rather than to any inherent shortage of income. According to the Local Tax Authorities Act (lhl), municipal councils can improve their local revenue by increasing the tax burden, mainly through the Real Estate Tax and charges for public services. Municipal councils, however, very seldom take advantage of this option. The real and direct relationship between the municipal tax burden and opinion polls discourages local councils from any explicit increase of local taxes.33 In the context of insufficient local revenue, the lhl considers, as a supplementary element, financing local governments either through a share of central-state or regional tax revenue or through grants. Formerly, only the central state – and not the autonomous communities – transferred earnings from state taxes to local tax bodies. Now, both the state and the autonomous communities participate in financing local governments. The share of local governments in the tax revenue of the central state (and of the autonomous communities) constitutes up to 32% of their revenue and is mainly linked to population size. Only for medium-sized and big cities (over 75,000 inhabitants) does a complementary criterion exist, based on the tax revenue (principally through income tax) directly generated in that municipality. In addition to the share in central-state revenue, municipalities receive grants from the central state and the autonomous communities. The main financial transfers to local councils have come from the central state, and these transfers remain far higher than transfers received from the autonomous communities. In the 2005 financial year, the unconditional transfers from the central state to the local governments (i.e., shares of state tax revenue) rose to €11,328 billion (US$13,741 billion). In addition to this sum, in 2005 the state granted subsidies to municipalities in three different ways.34 First, the general Program of Economic Cooperation (€157 million, or US$190 million) was used to finance specific local infrastructure (mainly urban development, new highways, and public

Kingdom of Spain

317

water supply) and was managed by the provincial councils through the socalled Provincial Plans of Cooperation. Second, transfers were made by the different ministries (€246 million, or US$298 million) for specific local projects, more than half of which were destined to promote access to employment. Finally, there were injections for investment (€159 million, or US$193 million), of which a great part was destined for the development of highways and the promotion of tourism. The state funds granted by the Program of Economic Cooperation play an equalizing function by concentrating investment in smaller municipalities where tax income is clearly insufficient. In the state budget for 2005, 67% of state aid was devoted to municipalities of fewer than 20,000 inhabitants. In terms of public expenditure per capita, in towns with a population below 5,000, the state invested €96 (US$116) per inhabitant, whereas in the larger cities (over 1 million), the state dedicated just about €0.70 (US$0.85) per inhabitant. All these state grants – as well as those of the autonomous communities – normally reflect the political choices of the supra-municipal authority as opposed to those of the municipality.35 Because of this, these types of grants are strongly challenged by scholars because they contradict the constitutional guarantee of local autonomy.36 In recent years, different political parties, as well as many scholars, have insisted on the need to undertake basic reforms of local financing. It was proposed that local institutions should manage up to 25% of the general revenue of the central state (a figure much higher than the 13% at present). However, to obtain this level of income, the proposal should relate to a greater share of state tax revenue, which is generally regarded as preferable to an overall increase in the taxing powers of local bodies. Local income is managed, in general, at an autonomous level because, as has already been stated, Article 142 ce guarantees local financial sufficiency in the area of expenditure. As a result, municipalities and provinces enjoy, with the exception of granted revenue, complete budgeting power over their income. Only some statutes of autonomy, such as that of Valencia and the 2007 statute of Andalusia, include certain generic controls by the autonomous community over local budgeting of the provinces. This power, however, has yet to be implemented in practice. Although spending power is formally very extensive, reality demonstrates that the level of spending, which is conditioned by the other levels of government, is considerably high. First, legislation (of both the central state and the autonomous communities) determines the tasks and services of local governments, which, therefore, have to be reflected in the budget. Second, the budget power is narrowly framed by Act 18/2001 on Budgetary Stability, prohibiting local governments from incurring a budget deficit. Lastly, the control over budget execution is exercised, cumulatively, by the local

318

Francisco Velasco Caballero

bodies themselves and by the “courts on accounts” of both the state and each autonomous community.37 In the municipal budgets for 2005, the general categories of expenditure do not differ greatly between different city councils.38 Approximately 24% of expenditure is directed to capital investment, whereas the remaining 76% of the budget is usually allotted to operational expenditure. Nevertheless, it must be pointed out that over the past few years, the total expenditure directed to capital investment appears to have increased at a much faster rate than growth in operational costs.39 As regards the latter category, staff costs consume approximately 38% of total operating expenditure, constituting only a slightly lower percentage in the big cities than in small towns. Goods and public utilities account for 37% of total operational expenditure, the difference between the larger cities (approximately 20%) and the small towns (41%) being much more significant in this case.40 These figures can be explained by the advantages of employing economies of scale and by the fact that the larger cities direct an important part of their budgets to social policies that proportionally increase other categories of expenditure. Finally – and reflecting on the progressive improvement of the local financial situation – in recent years the operational income needed to service loans has accounted for only 6% of operating expenditure. In general terms, the system of financing presents high levels of local autonomy, even though it does not avoid the existence of a certain structural deficit of income. It is difficult for the actual local contributions to cover this deficit. This gives rise to proposals for greater participation of local governments in the revenues of state taxes. In any case, the financial problem is not extremely serious; yet it must be solved, mainly by differentiating the financing of the smaller municipalities from that of the larger ones.

supervision of local governments The state and autonomous communities exercise very limited supervision or control over the activities of the municipalities and provinces. Moreover, the Constitutional Court considers that the local autonomy guaranteed by Article 137 ce to a great extent excludes rigid governmental controls.41 All political or efficiency controls are excluded. Furthermore, the small constitutional margin for government control over local institutions has been reduced by state law (lbrl). Although the Constitution does not prevent the central state and autonomous communities from selectively reviewing the legality of local performance (that is, ensuring that local actions do not infringe upon the law), Article 63 and others of the lbrl have ruled out this possibility. Because it is a fundamental state regulation, the lbrl prevents the regional laws from adding specific reviewing controls.

Kingdom of Spain

319

Consequently, in reality, only the judges have the competence to review legal compliance by local entities. In extreme cases, such as actions by the local administration that seriously affect general interests or violate constitutional obligations, Article 61 lbrl provides for the dissolution of local councils by the central state. Such dissolution must be followed by a call for partial elections to replace the dissolved council. This is clearly an instrument of control that may be exercised over local authorities, but it has been used only once. Royal Decree 421/2006 of 7 April dissolved the Council of Marbella (Malaga) because over half of its councillors were being tried on charges of corruption. The exceptional nature of dissolution reaffirms the general premise that no ordinary controls over local councils may be exerted by the state or autonomous communities. In the lbrl, government control of local institutions was replaced by a complex system of voluntary “intergovernmental relations,” based on the idea of full respect for the powers of local institutions and the principle of cooperation. Only when voluntary cooperation is not technically possible do Articles 10.2 and 59.1 lbrl provide for a final decision by the state or the autonomous community. This occurs, for example, in decisions about geographical distribution of large infrastructure projects (e.g., airports, ports, or waste-treatment plants), where the central-state or regional decision is imposed on the local body.

i nt er g ove rn m en ta l r el at i on s In the context of the constitutional guarantee of local autonomy, the administrative relations between local governments and other, superior orders of government are frequently explained by using the concept of “constitutional equality.” This means that municipalities, provinces, and the islands are neither a part of the central state nor institutions of the autonomous communities. They are certainly ruled by state and regional laws, but at the same time, they can defend their autonomy before the central state and the autonomous communities by appealing to the courts, including the Constitutional Court. In recent years, the possible participation of local bodies (especially the large cities) at supra-local levels of government has featured prominently in debate in Europe. Two tendencies exist: institutional participation, through representatives of the local governments in state organs or regional or federal bodies; and functional participation, by including local bodies in decisionmaking procedures (especially in respect of those processes that set norms). These tendencies are exemplified in Italy and Germany.42 The Spanish local government system traditionally contains some form of institutional participation within a cooperative structure. This is apparent at

320

Francisco Velasco Caballero

the state level in the National Commission of Local Administration and, at present, also in the General Conference on Local Matters. The National Commission of Local Administration is an organ of the Ministry of Public Administration, presided over by the minister and with equal representation: thirteen representatives designated by the state and thirteen representatives from the local bodies. Its function is the obligatory preliminary assessment – although not binding – of draft laws of the state that affect local governments. Because of its composition, this body is not an instrument for expressing local interests but rather serves to secure political cooperation with the state. The General Conference on Local Matters is a vehicle for cooperation between the state and the autonomous communities on local issues, but unlike the other commissions for cooperation between the state and autonomous communities, this one includes nine representatives of the local governments. Its functions are consultative and are meant to secure political agreements. Local participation in the exercise of power by other bodies – the state or the autonomous communities – is less clear. It does not refer to the cooperative exercise of concurrent powers as seen, for example, through the Interadministrative Commission on the Capital Status of Madrid. In general terms, it can be said that the participation of local bodies at supra-local levels of government is still very limited. However, there are new possibilities on the horizon. One proposal, modelled on the Italian example, calls for municipal participation in the Senate. Moreover, there is much anticipation about the so-called Council of Local Governments envisioned in the new statutes of autonomy (2006–07). Nevertheless, thus far, there is no clear pattern for setting up these councils, as several options are still open. First, there is the issue of whether those councils should incorporate only representatives of local governments or also include elected deputies of the regional assembly. Second, there is the matter of whether the Council of Local Governments should have any kind of veto rights in respect of regional laws or have only advisory functions. In any case, all these possibilities and proposals for participation certainly permit the promotion of local perspectives at higher levels of government. There is concern, however, regarding the proliferation of local government participation in state and regional decision-making processes, which may in turn confuse citizens with respect to where final decision-making power lies and, in consequence, who is politically accountable to the voters.43 Spanish local bodies engage directly with both the central state and the autonomous communities. This has been described in constitutional case law as the “double-faced character” of local government. However, viewed from a more realistic perspective, direct relations with the state are really relevant only within the financial sphere, and they take the form of current transfers or direct transfers from the state to the municipalities and provinces. Outside

Kingdom of Spain

321

of the financial sphere, administrative relations are few or sporadic. The state administration basically acts as an instigator of legislative reform and as a management agency for information that comes from the municipalities and provinces. Truly relevant executive powers are scarce. The state administration, however, using these limited powers, can enter into direct relations with each of the municipalities and provinces. Despite this, communication tends to be collective or representative. This representation of local interests is concentrated in the Spanish Federation of Municipalities and Provinces (femp), an association of local bodies that, although not linked to the state, receives funding from it. Through the mediation of the femp, municipalities and provinces can participate in state organs such as the National Commission of Local Administration and the General Conference on Local Matters. On the whole, this refers to participation that is barely regulated and very dependent on the political interests of each national minister of public administration. Apart from this institutional participation, political cooperation between the state and local bodies is also promoted – for example, the agreements between the minister for environment and the femp concerning local implementation of the Kyoto Protocol on climate change (by means of which the local governments, represented by the femp, assume some political commitments, such as to reduce pollution derived from urban traffic). But in general, the real political scope of the femp is somewhat limited. Often the large national political parties, whether in government or in opposition, use the femp to articulate their political projects. The autonomous communities also have direct relations with local bodies. In this case, the administrative relations go beyond the financial sphere. As has already been stated, municipal powers normally correspond to those matters that the statutes of autonomy allocate to the different autonomous communities. As a result, the administrative connection between local bodies and autonomous communities is very close in respect of three matters: land use, urban development, and protection of the environment. In these sectors of activity, the autonomous communities direct and control local activities by approving plans and programs or by reserving the approval or authorization of specific activities to themselves. Communication of municipalities and provinces with the authorities of their autonomous communities is also conducted by relevant federations or territorial associations – such as the Catalonian Federation of Municipalities, the Andalusian Federation of Municipalities and Provinces, and the Federation of Municipalities of Madrid – which, in this manner, fulfil a similar function to that of the femp. The Spanish local governments, with representatives in the Committee of Regions and Cities of the European Union, participate in eu decision making only on a small scale because the role of the committee is secondary and because just four of the seventeen representatives allotted to Spain come from local governments.

322

Francisco Velasco Caballero

political culture of local governance On a general basis, polls reflect more favourable public approval of municipal management than of other state or regional institutions, even including courts of law. Only the police, the army, and the monarchy rate above municipal councils.44 Consistent with these results, corruption is not considered to be a relevant issue for citizens.45 The proximity of local councils to citizens, and the social relevance of the public services they deliver, could explain the positive approval ratings of local governments. There are numerous political parties that run in the municipal elections. In addition to the larger state or regional parties, there are small independent, left-wing radical, green, and alternative parties with a concentrated local focus. Normally, the large state or regional parties present candidates in all the municipalities, and it will be one or several of those parties that govern each municipality. The lists of the large parties include many local candidates (widely experienced in local government), as well as popular state or regional politicians (ministers or deputies). For example, the previous president of the Autonomous Community of Madrid is now the mayor. The truly local parties govern only small towns and cities, and this is normally with the support of one of the large parties. The political parties that obtain representation in the elections form the “municipal political groups” financed by the council itself. The councillors who separate themselves from these groups do not lose their position in the assembly, but they cannot form a new political group. Participation in local elections is relatively high (67.6% of voters in 2003; 63.9% in 2007), and local governments are generally stable. Several recent proposals for the direct election of the mayor have been rejected. This is due in part to the widespread perception that the present system functions well. The profile of the elected councillors progressively tends toward a malefemale equilibrium and a higher standard of qualifications.46 In 1979 only 1.22% of mayors were female, as opposed to 12.6% in 2003 and 14% in 2007. As regards the number of female councillors, in 1979 women constituted 3.23% of the total, as opposed to 25% in 2003 and 37% in 2007. With regard to qualifications, in the last municipal elections (2007), 38.7% of councillors held high school degrees, and many of them were working as professionals in the private (27%) or public (15.2%) sectors. These changes are due to the relatively high turnover of those in office. According to the results of the last municipal elections, 46% of the councillors were new. The economic and administrative status of councillors and mayors has been, and continuous to be, improving. The municipal assemblies decide the functions of each councillor. The mayor is not necessarily compelled to

Kingdom of Spain

323

dedicate him or herself exclusively to that office. Only a restricted number of councillors dedicate themselves full time to local tasks, whereas other councillors dedicate themselves part time or take part only in local assembly meetings. Full-time mayors and councillors of large and medium-sized municipalities are frequently well paid, earning (before tax) around €50,000 (US$67,210) on average. Some mayors earn considerably more than the president of the country. Both full- and part-time councillors receive social security benefits. In addition, since 2007 full-time councillors have had a right to unemployment benefits when leaving office. The practical reality of local democracy is that, in general, the state (or regional) parties play a direct role in exercising local power. This can be attributed to the fact that either the local political elites are also represented in the central structures of the political parties or the parties direct the governance of local matters with a supra-local perspective. In both cases, a certain lack of connection exists between the constitutional guarantee of local autonomy, which is based on the existence and advancement of local interests, and the actual exercise of this autonomy, which is often linked to the demands of regional and state party politics. The situation described is related, above all, to the electoral system, which favours the selection of candidates by national parties. Participation of residents outside the electoral process is increasing in importance. Political parties promote, without exception, increases in civic participation. In this regard, there is the new “popular municipal initiative,” introduced by Act 57/2003 on Measures for the Modernization of Local Government.47 In addition to the numerous municipal regulations and plans for civic participation, and the new municipal organs and committees established for this participation, numerous programs have been created to provide subsidies that promote such participation. The concrete results for the new instruments of participation are frequently minimal.48 There are a number of factors behind this outcome: defects in the mode or manner in which participation takes place, such as too much procedural formality; irrelevance of participation in the adoption of government decisions; and limitations on matters open to civic participation. These factors all diminish the positive outcomes of engaged public participation.

e m e r g i n g i s s u e s a n d tr e n d s Local governments have contributed in a very positive manner to the effective political, economic, and social development of Spain. In the first place, this is due to the adoption of democratic rule as opposed to dictatorship. In the second place, local governments provide essential public services, uphold private enterprise, and invest in local economic development projects. Finally, they initiate social policies (e.g., employment, social work, and immigrant

324

Francisco Velasco Caballero

integration) that are later assumed by the autonomous communities or the state. The shortcomings in the system, however, lie in the large number of municipalities, which creates various economic and political inefficiencies.49 From an economic perspective, a significant part of public services is too costly for smaller municipalities. These services account for the greatest proportion of the budgets of small municipalities. From a political perspective, the multiplicity of municipalities makes it difficult to produce a rigorous representation of local interests before the regional and central governments. As any in-depth reform of the municipal system has been ruled out, the remaining political and economic challenge is to make the system more efficient. There have been several development initiatives in this area, including increasing the differences between the legal status of large and small municipalities, reinforcing the provinces and counties as replacements for small municipalities, and privatizing the provision of local services. For some twenty years, the large municipalities have been calling for greater distinctiveness in their organization, competences, and financial structure. These demands have been satisfied to a limited extent by the legislative changes effected between 2003 and 2007, but the issue is no closer to being resolved. Calls for better financing (principally from Madrid and Barcelona) have been satisfied only temporarily. Greater independence for the large cities, based on a higher level of political and economic autonomy, faces objections from the autonomous communities and small municipalities. This is motivated by the fact that the autonomous communities would lose substantial powers to the cities. Small municipalities, in turn, fear new territorial and economic imbalances that would favour these principal cities. Nonetheless, improving the economic efficiency of the municipal network in Spain requires a redefinition of the intermediate local entities (i.e., the provinces, counties, and metropolitan areas). The reinforcement and strengthening of local governments, backed by almost all political voices today, are not always possible at the level of municipalities. Small municipalities lack the technical, political, and economic size to control a very significant part of public affairs. The reinforcement of governance in this context requires a better determination of the purpose and functions of the intermediate local entities. The question of who should lead this reform and how it should be conducted remains open. The obvious choice is between the autonomous communities (which have been the principal competitors with the provinces until now) and the central state. Finally, the search for efficiency in the functioning of small municipalities is taking shape. This is manifested in the tendency to favour private management of public services. The excessive cost of public-sector employment is creating incentives for municipal services to be subcontracted on a large scale to private companies, normally in a monopolistic system. This

Kingdom of Spain

325

often relates to companies with broad reaches within a determined territory, permitting them to exploit the benefits of economies of scale. By means of this new trend of privatization, a significant improvement can be achieved in the efficiency of municipalities. An open-ended question evident in all of this relates to the level of actual control that small municipalities can maintain over the private companies that are progressively taking over the provision of local services. All these challenges fit into the idea of a stable institutional system. In accordance with the constitutional order, local government is one of the three territorial organizations that exercise power in the Kingdom of Spain, together with the central state and the various autonomous communities. Thus the local governments are instruments neither of the central state nor of the autonomous communities. They are autonomous governments, even though they are regulated and controlled to a limited extent by the state and the autonomous communities. Given this point of departure, there are two concurrent political positions today. One proposes an increase in the regional “interiorization” of the local governments, following the example of many federal states. The other proposes greater local autonomy, to the disadvantage of the autonomous communities.

notes 1 For a recent analysis and overview, see Robert Agranoff, “Local Governments in Spain’s Multilevel Arrangements,” in Spheres of Governance: Comparative Studies of Cities in Multilevel Governance Systems, ed. Harvey Lazar and Christian Leuprecht, 23–69 (Montreal and Kingston: McGill-Queen’s University Press, 2007). 2 See Enric Argullol Murgadas and Xavier Bernadí Gil, “The Kingdom of Spain,” in Distribution of Powers and Responsibilities in Federal Countries, ed. Akhtar Majeed, Ronald L. Watts, and Douglas M. Brown, 238–65 (Montreal and Kingston: McGillQueen’s University Press, 2006). 3 Official figures from the Instituto Nacional de Estadística, updated 1 January 2006, http://www.ine.es (viewed 30 January 2008). 4 A critical description of the public authorities can be found in Santiago Muñoz Machado, El Problema de la Vertebración del Estado en España: Del siglo XVIII al siglo XXI (Madrid: Iustel, 2006). 5 For a comparative view, see Johann Christian Pielow, “Las Estructuras del Gobierno Local en un Marco Federal: La Asimetría y las Singularidades,” in Anuario del Gobierno Local 1999–2000, ed. Tomás Font i Llovet, 95–120 (Madrid and Barcelona: Marcial Pons, 2000). 6 See Catalina Escuin Palop, “Los Retos del Mundo Rural: La Fusión de Municipios como Fórmula de Viabilidad y su Problemática,” Revista de Estudios Locales, no. 90 (2006): 25–51.

326

Francisco Velasco Caballero

7 Albert Solé Ollé, “Economía Política de los Gobiernos Locales: Una Valoración del Funcionamiento de los Municipios,” Actual 15 (Centro de Estudios Andaluces, Junta de Andalucía, March 2007): 1–20, at 17. 8 Act 1/2006 of 13 March, on the Special Regime of the Municipality of Barcelona; and Act 22/2006 of 4 July, on the Capital Status and Special Regime of Madrid. 9 stc 32/1981; 27/1987; 109/1998; and 48/2004. Constitutional Court judgments are referred to as stc (Sentencia del Tribunal Constitucional). 10 Articles 148 and 149 ce contain a distribution of powers between the autonomous communities and the central state, which is complemented by the statute of autonomy of each community, approved by the Spanish Parliament. 11 Josep Mir i Bagó, El Sistema Español de Competencias Locales (Madrid: Marcial Pons, 1991). 12 stc 58/2004. 13 stc 214/1989, fj 11. 14 Francisco Velasco Caballero, “Organización Territorial y Régimen Local en la Reforma del Estatuto de Cataluña: Límites Constitucionales,” in Estudios Sobre la Reforma del Estatuto, 283–350 (Barcelona: Institut d´Estudis Autonòmics, 2004), 308ff. 15 Ley reguladora de las Bases de Régimen Local (lbrl). In 2006 the present national government presented the draft of a new Local Government Act that would basically deregulate some organizational issues and strengthen the autonomy of provinces and municipalities. 16 Ley reguladora de las Haciendas Locales (lhl). 17 See Francisco Velasco Caballero, “El Gobierno Local en la Reforma de los Estatutos: Estatutos de Autonomía, Leyes Básicas y Leyes Autonómicas en el Sistema de Fuentes del Derecho local,” in Anuario del Gobierno Local 2005, ed. Tomás Font i Llovet, 121–52 (Madrid and Barcelona: Marcial Pons, 2006). 18 Article 28 II of the German Federal Constitution according to German case law: Decision 89, 127 (Rastede). 19 José Luis Carro y Fernández-Valmayor, “El Debate sobre la Autonomía Municipal,” Revista de Administración Pública, no. 147 (1998): 59–96, at 89ff. 20 On this debate, see Francisco Velasco Caballero, “Autonomía Local y Subsidiariedad en la Reforma de los Estatutos de Autonomía,” in Anuario del Gobierno Local 2004, ed. Tomás Font i Llovet, 117–60 (Madrid and Barcelona: Marcial Pons, 2005). 21 For example, in stc 159/2001 on urban planning. 22 Article 26.1 lbrl: “The municipalities shall individually or in association provide, in all cases, the following services:” a. In all municipalities: public lighting, cemeteries, refuse removal, street cleaning, residential supply of drinking water, sewer system, access to population centres, paving of public highways, and control of food and drink. b. In municipalities with a population of over 5,000 inhabitants (or equivalents), also: public park, public library, market, and waste treatment.

Kingdom of Spain

23 24 25 26 27

28

29 30 31 32 33 34 35

36 37 38 39

40 41 42

327

c. In municipalities with a population of over 20,000 inhabitants (or equivalents), also: civil defence, social services, firefighting and fire prevention, and public sports facilities. d. In municipalities with a population of over 50,000 inhabitants (or equivalents), also: urban public transport, and environmental protection. Act 57/2003, on Measures for the Modernization of Local Government. By State Act 22/2006 and State Act 1/2006, respectively. stc 32/1981. State Organic Act 5/1985, on the General Electoral System. Article 142 ce reads: “The local treasuries must have the means necessary to carry out the functions that the law attributes to the respective corporations, and they shall be supported basically by their own taxes and by sharing those of the State and the Autonomous Communities.” A complete description of the Spanish finance system can be found in Julio López Laborda, Jorge Martínez Vázquez, and Carlos Monasterio, “Kingdom of Spain,” in The Practice of Fiscal Federalism: Comparative Perspectives, ed. Anwar Shah, 288–316 (Montreal and Kingston: McGill-Queen’s University Press, 2007). stc 48/2004, fj 10. Since stc 4/1981, fj 15. Articles 218.3, 219.1, and 219.3 of Statute of Autonomy of 2006, respectively. Ministerio de Administraciones Públicas, Informe Económico-financiero de las Administraciones Territoriales 2005 (Madrid: Ministerio de Administraciones Públicas, 2007), 303. Solé Ollé, “Economía Política de los Gobiernos Locales,” 10. Ministerio de Administraciones Públicas, Informe Económico-financiero, 245. Maite Vilalta, “La Financiación Local ante la Reforma del Estatuto de Autonomía de Cataluña,” in Anuario del Gobierno Local 2005, ed. Tomàs Font i Llovet, 151–78 (Madrid and Barcelona: Institut de Dret Public and Fundación Democracia y Gobierno Local, 2006). See Manuel Medina Guerrero, “La Garantía Constitucional de la Suficiencia Financiera de los Entes Locales,” Cuadernos de Derecho Local 1 (2003): 38–57. The courts of accounts are quasi-judicial courts, with permanent and independent members. Ministerio de Administraciones Públicas, Informe Económico-financiero, 308. Alfonso Utrilla de la Hoz, “La Hacienda Municipal en el Marco de la Financiación de las Grandes Ciudades,” in Estudios sobre la Ley de Capitalidad y de Régimen especial de Madrid, ed. Luciano Parejo, Juan Bravo, and Cayetano Prieto, 437–69 (Barcelona: bosch, 2006), 442. Ministerio de Administraciones Públicas, Informe Económico-financiero, 309. stc 4/1981, fj 2. See Silvia Díez Sastre and Luis Medina Alcoz, “La Participación de la Villa de Madrid en los Procedimientos Normativos Estatales, Autonómicos y Europeos,” in Estudios sobre la Ley de Capitalidad y de Régimen especial de Madrid, ed. Luciano Parejo, Juan Bravo, and Cayetano Prieto, 353–456 (Barcelona: bosch, 2006).

328

Francisco Velasco Caballero

43 See José María Rodríguez de Santiago, Los Convenios entre Administraciones Públicas (Barcelona: bosch, 1997), 311. 44 Centre for Sociologic Studies (cis), report no. 2657 of 18 October 2006, http:// www.cis.es (viewed 30 January 2008). 45 Manuel Villoria Mendieta, “Informe Global 2007 sobre la Corrupción en España,” Transparency Internacional España, Madrid, 2007, http://www.transparencia. org.es (viewed 30 January 2008). 46 Department of Local Cooperation, Ministry of Public Administrations, internal reports, Madrid, 2007; Spanish Federation of Municipalities and Provinces (femp), “Morfología Social de los Nuevos Represenantes Sociales,” report, Madrid, 2007. 47 Article 70.2 bis lbrl. 48 For example, in 2006 the elections for the Committee for Dialogue and Coexistence of Madrid did not interest even 0.3% of the possible voters. 49 See Carlos Alba and Carmen Navarro, “Twenty-Five Years of Democratic Local Government in Spain,” in Reforming Local Government in Europe, ed. N. Kersting and A. Vetter, 197–220 (Opladen: Leske+Budrich, 2003).

Swiss Confederation andreas ladner

Most municipalities in Switzerland are very small. Nevertheless, reflecting the bottom-up process of Swiss nation building, local governments play an important role in the Swiss federal system. Like the cantons, municipalities enjoy considerable autonomy. This leads to important differences between the municipalities of different cantons and sometimes even between municipalities within a canton. Municipalities differ not only in their political organization but also in their services, facilities, and financial capacities. Recent reforms of local government – very much like the reform of Swiss federalism with regard to the role of the cantons – have tried to strengthen the municipalities in line with the principle of subsidiarity. At the same time, however, there are claims for more efficiency, economies of scale, and fiscal equivalence. The ongoing reforms point toward a disentanglement of tasks, increased intermunicipal cooperation, and even amalgamations of municipalities. Special challenges have to be met by the cities. Although they are the motors of economic development, they lack an effective political structure. Vertically, they find it difficult to place their concerns directly on the agenda of national politics. There is no direct link between the national and municipal governments. Horizontally, their facilities and services are used by a significant number of citizens living in municipalities surrounding a city, and many problems, such as regional traffic, planning, and environmental issues, cannot be solved independently. Quite a few adjacent municipalities have considerably lower tax burdens. Because Swiss citizens are used to directly deciding many political issues, smaller municipalities are also reluctant to join a city where they face an overwhelming majority. With regional and tripartite conferences, new forms of horizontal and vertical cooperation should allow for more flexible solutions among the municipalities and across all three orders of government.

Swiss Confederation

331

country overview1 Switzerland is a small, heterogeneous country. It has about 7.6 million inhabitants (in 2007) in a territory of 41,000 square kilometres. The country has a very high population density,2 and its culture is characterized by the diversity of its geography,3 four different languages, and two major religious denominations. The culture in the mountainous areas is not the same as that of the lowlands, and there are significant differences between the language areas, as well as between the Roman Catholic and the Protestant regions. Agglomerations4 and metropolitan regions in Switzerland are small, too. The federal office of statistics counts fifty agglomerations. The largest is Zurich with 1.1 million inhabitants, followed by Basle (493,000 inhabitants on Swiss territory), and Geneva (486,000 inhabitants on Swiss territory). Among the smallest agglomerations are St Moritz and Interlaken with 14,000 and 22,000 inhabitants respectively. About 73% of the Swiss population live in agglomerations. The federal office of statistics additionally names five metropolitan regions: Zurich (1.7 million inhabitants), GenevaLausanne (1.2 million), Basle (731,000), Berne (660,000), and Ticino (510,000). Almost 50% of the inhabitants belonging to the metropolitan region of Ticino do not live on Swiss territory. For Geneva-Lausanne and Basle, it is 28% and 35% respectively, whereas the regions of Zurich and Berne are entirely on Swiss territory. The most widespread language is Swiss German, spoken by 63.7% of the population. French is spoken in the western part of the country, the Suisse Romande, by 20.4% of the population. Some 6.5% speak Italian, mainly in Ticino and in the southern valleys of Graubünden. In the canton of Graubünden, some 0.5% of the total Swiss population also speak RhaetoRumantsch.5 Language rights are enshrined in the Swiss Constitution. German, French, Italian, and Rhaeto-Rumantsch all have the status of national languages, but only the first three are official languages.6 Even though the churches are no longer relevant to many people’s lives, both Roman Catholicism and Protestantism have played a key role in shaping modern Switzerland and the way the Swiss see themselves.7 The 2000 national census showed that Roman Catholics and mainstream Protestants had decreased in both absolute numbers and relative terms (i.e., their share of the total population). In 2000, 41.8% of the population were Roman Catholics, 35.3% Protestants, and 4.3% Muslims. Switzerland can doubtlessly be considered a prosperous country offering its citizens a high standard of living. Although the growth of per capita income has been weak in past years and considerably below the average of the countries in the Organization for Economic Cooperation and Development (oecd), Switzerland still has one of the highest per capita rates of gross

332

Andreas Ladner

domestic product (gdp) in the world. The International Monetary Fund estimated the gdp per capita for 2008 at US$58,412. The tax burden is comparatively low despite the above-average increase of the country’s ratio of government expenditures to the gross national product in recent years, and the rate of unemployment is usually lower than in the neighbouring countries. In the past few years, the rate varied between 3% and 4%. Switzerland’s economy is based on a well-qualified labour force performing highly skilled work. The main areas include microtechnology, hi-tech, biotechnology, and pharmaceuticals, as well as banking and insurance. Most businesses, however, are small or medium-sized. In 2001 more than 99% of enterprises had fewer than 250 full-time workers, employing about twothirds of the total workforce. About 88% were microenterprises, with fewer than ten employees. They provided more than one-quarter of all jobs.8 Because taxation is relatively low, it is not astonishing that the Swiss spend a lot on insurance. More than 4% of their expenditure is on compulsory health insurance, which citizens must purchase from private companies to cover basic treatment. Another 5% is spent on voluntary (private) insurance for additional medical services. Housing is expensive, and most people live in rented accommodations. In 2000 only 34.6% of homes were owner occupied, which is by far the lowest rate in Europe. Food and clothing account for an ever smaller proportion of the household budget, dropping from 16% in 1992 to just less than 11% in 2004. Switzerland’s existence as a modern federal state dates back to 1848. The federal Constitution protects the rights of individuals as well as citizen participation in public affairs, divides powers between the confederation and the cantons, and defines federal jurisdictions. Under the federal Constitution, there are three main governing bodies: the Federal Assembly (or Parliament), the Federal Council (or government), and the Federal Court. The power to legislate is delegated to the two chambers of Parliament. The Council of States (chamber of cantons) has forty-six canton representatives (two from each of the twenty cantons and one from each of the six halfcantons). The strongest parties in the Council of States after the 2007 elections were the Christian Democrats (cvp) with fifteen seats and the Radical Democrats (fdp) with twelve seats. The National Council (the People’s Chamber) consists of 200 members who are elected under a system of proportional representation. The number of seats of the cantons varies according to their population: the canton of Zurich, for example, has thirty-four seats, whereas the cantons of Glarus and Uri as well as the half-cantons Appenzell Innerrhoden, Appenzell Ausserrhoden, Obwalden, and Nidwalden have only one. The strongest party in the National Council after the 2007 elections was the Swiss People’s Party (svp) with sixty-two seats (28.9%), followed by the Social Democrats (sp) with forty-three seats (19.5%). Both houses – the Council of States and the National Council – have equal powers

Swiss Confederation

333

in all respects, including the right to introduce legislation. Members of both houses serve for four years. The top executive body and collective head of state is the Federal Council, a body of seven members, each of whom is also responsible for a special ministry. Although the Constitution expects the Federal Assembly to elect and supervise the members of the Federal Council for a four-year mandate, the latter (and its administration) has gradually assumed a pre-eminent role both in directing the legislative process and in executing federal laws. The president of the confederation is elected from among the seven federal councillors and assumes special representative functions for a one-year term. From 1959 to December 2003, the four major parties were represented in the Federal Council according to a “magic formula” proportional to their representation in the federal Parliament: two Radical Democrats, two Christian Democrats, two Social Democrats, and one member of the Swiss People’s Party. This distribution of seats, however, is not backed up by law but is the result of an almost voluntary commitment to consociationalism and power sharing. In the 2003 elections for the Federal Council, the cvp lost its second seat to the svp, which became the strongest party in the elections for the National Council in the same year. This new composition, however, did not prove to be a stable solution. In 2008 the svp broke with its members in government and was no longer represented in the executive.9 It remains to be seen whether this marks the end of the Swiss formula of power sharing or whether it is only a matter of time until the new balance of power between the parties will be represented in government again. At least in principle, the idea of power sharing is basically not questioned. In addition to the right to vote in elections, Swiss citizens have far-reaching direct-democracy rights that allow them to control governments and parliaments. Direct democracy, as it is viewed by most citizens, is more than merely an instrument that enables their participation in policymaking. It is a fundamental concept of the state, which is based on the sovereignty of its citizens, and a statement against extending more competences to the authorities. By means of referendums, citizens entitled to vote may challenge parliamentary decisions after they have been made. Federal laws, generally binding decisions of the confederation, and international treaties of indefinite duration are subject to an optional referendum. If 50,000 signatures are collected within 100 days, a ballot has to be organized. A majority of citizens can then turn down the proposal of the authorities. No minimal rate of participation is needed. If the proposal consists of an amendment to the Constitution, a referendum (and hence a ballot) is compulsory, and together with the majority of citizens, a majority of cantons also must accept the proposal. Additionally, citizens, parties, or interest groups can put forward an initiative to amend the Constitution. To do so, they have to collect 100,000 signatures

334

Andreas Ladner

within eighteen months. For an initiative to be accepted, the double majority of the people and the cantons is again needed. Cantons and municipalities form important pillars of the Swiss political system.10 Under the 1999 Constitution, cantons hold all powers not specifically delegated to the federation. There are similar rules concerning the relation between municipalities and cantons. Today, the country is divided into twentysix cantons11 and 2,715 municipalities.12 Seventeen of the twenty-six cantons are monolingual German-speaking. Four cantons are French-speaking: Geneva, Jura, Neuchâtel, and Vaud. Three cantons are bilingual: in Berne, Fribourg, and Valais both French and German are spoken. The canton of Graubünden is trilingual, with German, Italian, and Rhaeto-Rumantsch speakers. There are also a few bilingual municipalities, mainly bigger cities in bilingual cantons like Berne and Fribourg. The size of the cantons and the number of municipalities within a canton, as well as the size of the municipalities within and between cantons, vary considerably. The smallest canton, Appenzell-Innerrhoden, has only about 15,000 inhabitants; the largest canton, Zurich, has 1.3 million inhabitants. The canton of Basle-Stadt consists of only three municipalities, whereas the canton of Berne has 398 municipalities. Cantons and municipalities have their own political institutions, and there are considerable differences between them. Each canton and each municipality has its executive, which is in general directly elected by the citizens. Like the federal government, almost all executive bodies combine members from different parties. Cantons and the bigger municipalities (see next section) have an elected legislature, and cantons as well as municipalities employ various forms of direct democracy. Finally, the cantons are almost totally free with regard to the organization of their municipalities. There are two city cantons (i.e., Basle-City and Geneva) with almost no autonomy of municipalities, and there are mountain cantons (e.g., Graubünden) with strong autonomy of municipalities. Taking all the different elements of the Swiss political system together, the most important features are the bottom-up construction of the federal polity and the concept of power sharing, which is implied not only in the concepts of federalism and local autonomy but also in the existence of multiparty governments and direct democracy.

h i s t o r y, s t r u c t u r e s , and institutions of local government The term “local government”13 in Switzerland usually refers to the municipalities, the order of government closest to the people.14 The entire territory consists of municipalities. There is no area falling directly under federal rule, and there is no special constituent status attributed to cities. In addition to the so-called “political municipalities” (Einwohnergemeinden), which are –

Swiss Confederation

335

despite significant differences as far as their tasks and competences are concerned – considered equal within a canton, the constitutional laws of some cantons also allow for single-purpose municipalities. Six cantons still have “school municipalities”15 that do not have to coincide with the political municipalities. There are still a few “municipalities for social security and care for the poor,” even though they lost their importance long ago, and the Catholic and Protestant churches are also organized as municipalities (Kirchgemeinden) in most parts of the country.16 Single-purpose municipalities usually have their own elected authorities, levy taxes according to their needs, and offer their “citizens” the possibility to influence their decisions. However, for quite a few years, the remaining single-purpose municipalities have been increasingly integrated into the political municipalities.17 An equal loss of influence has also happened to the traditional forms of municipalities (usually named Burger- or Bürgergemeinden), which unite citizens and families having ancestral roots in a locality (landed gentry or burghers) and/or people born in the municipality who are accepted into the Bürgergemeinde.18 Primarily, these citizens jointly govern common or public goods of the municipality (e.g., land, forests, and pastures).19 However, in some cantons (e.g., Zoug), it is still the members of these traditional forms of municipalities who decide whether Swiss citizenship is to be given to an immigrant from another country. The granting of citizenship involves all three orders of government. First, a naturalization permit must be obtained from the confederation; then it is necessary to apply for citizenship of a canton and a municipality, both of which have their own naturalization requirements. In some municipalities, it is the citizens who decide on the citizenship; in other municipalities, it is an elected body; but in some municipalities, it is still the members of the Bürgergemeinde. For a better understanding of the importance of local government, a quick glance at the history of the country is instructive. Symmetric federalism and relatively autonomous municipalities offering far-reaching political rights to citizens did not characterize the country from the very beginning. These features had to be struggled for and were brought about with foreign help, but they helped to build a united nation-state in a heterogeneous and culturally divided society. By the end of the eighteenth century, the thirteen “old” cantons, which emerged from the original pact of three mountain cantons under Habsburgian rule fighting for freedom and independence, had formed a feudalist regime of privileges, exploiting the resources and people of the newly acquired regions. In the new cantons and in the municipalities, political rights were reserved for a small elite of well-established long-time residents.20 Hence, when troops of the French Revolution invaded Switzerland in 1798 with the promise of equality and democracy, they were at least partly welcome.

336

Andreas Ladner

Although France failed to unite the cantons in a centralized Helvetic republic, which would have left very little autonomy to the cantons and the municipalities, the French eventually broke the privileges of the old cantons and instituted equal rights in local matters for all Swiss citizens living in a municipality. With the so-called “Mediation Act” of 1803, Napoleon restored the autonomy of the cantons, and in 1815 the Swiss returned to the old system, to a confederation of now twenty-five independent cantons that considered themselves to be sovereign states and were held together by a treaty guaranteeing collective security and mutual assistance.21 The municipalities regained their autonomy and were no longer considered to be only administrative units. In the decades following 1815, however, there was not only an increasing demand for more democracy in some of the cantons but also an internal polarization between the Radicals from the Protestant and more industrialized areas, who advocated a more centralized nation-state, and the Conservatives, mainly from the Catholic and rural areas, who insisted that decisions of the Conference of Delegates (Tagsatzung) should be taken unanimously.22 After a short civil war (Sonderbundskrieg) in 1847, which was lost by the Conservatives, the loose confederation of cantons became a federation of cantons, a federal nation-state.23 In the following year, the cantons and their citizens accepted the new federal Constitution and agreed to a national executive authority and a parliament. The cantons hereby agreed to give up some of their rights. However, to ensure acceptance by the Conservatives as well as by the cultural minorities in the French- and Italian-speaking areas, federalism seemed to be the only solution, and the competences of the federal authorities remained rather limited. The privileges of the well-established long-time residents in the municipalities remained untouched until 1874, when the revised Constitution finally granted the right to vote on local affairs to every Swiss citizen (nationwide, women were not granted the right to vote until 1971), regardless of whether he had always lived in the municipality or moved into it from another part of Switzerland. In the 1874 revision of the Constitution, all male Swiss citizens with domicile in a municipality were granted the right to vote in all political matters after at least three months of residence. Only issues concerning the matters of the Bürgergemeinde were excluded from this constitutional right. An outstanding structural characteristic of local government is the small size of many municipalities. More than half of the 2,775 municipalities in 1998 had fewer than 1,000 inhabitants. However, very few people live in such small municipalities. About 90% of the population live in municipalities with more than 1,000 inhabitants.24 Put differently, 56.6% of Swiss live in municipalities of 2,000 to 20,000 inhabitants, and only 12.5% live in cities of more than 100,000 inhabitants. The size of municipalities varies considerably; the largest municipality, the

Swiss Confederation

337

City of Zurich, has about 360,000 inhabitants, whereas there are some very small municipalities with fewer than 100 inhabitants. Formally, all municipalities are regarded as equal. In reality, their resources, the range of their services, and the problems they face vary considerably. The number of people working for the City of Zurich outnumbers the population of some of the smallest cantons. Due to the finely meshed political structure of the country, the agglomerations and metropolitan regions also have rather complex territorial and political subdivisions. The fifty agglomerations consist of almost 1,000 municipalities. Parts of an agglomeration or metropolitan region may be in different cantons or even in other countries. The agglomeration of Zurich extends into the cantons of Aargau and Schwyz, and the metropolitan area of Basle reaches into France and Germany. This, of course, does not make cooperation easy. Not only do the different countries insist on their sovereignty, but the cantons and the municipalities also claim self-determination. Given the small size of so many municipalities, it is not surprising that demands for amalgamations of municipalities have entered the reform agenda. Creating large-scale amalgamations, however, is not as simple as that because it is not in the power of the federal government to force municipalities to amalgamate. Not even the cantons have the power to carry out territorial reforms without the consent of the citizens because cantons usually require the approval of the majority of citizens in each municipality to be amalgamated.25 Initiatives for amalgamations have to come from the bottom, from the municipalities themselves. After a long period during which hardly any amalgamations took place – apart from the incorporation of municipalities around big cities (e.g., Zurich in 1893 and 1934) – mergers of municipalities have become more frequent in recent times. Between 1848 and 1960 the number of municipalities declined from 3,202 to 3,095. Since 1990 more than 300 municipalities have disappeared, and the total number declined from 3,021 to 2,715 in 2008. It is not only the very smallest municipalities that try to grow by amalgamating with other small municipalities next door. Bigger municipalities and cities (like Luzern, Lugano, and Rapperswil), and whole valleys or regions, also try to raise their performance levels and become more competitive through amalgamations. Most uniquely, in Glaris the citizens decided in 2006 to reduce the number of municipalities from twenty-seven to three. One of the big obstacles to amalgamations is the different tax levels in the municipalities. Citizens rarely accept amalgamation with another municipality if this means paying more tax. Here, the cantons often step in and help to keep the lower tax level by providing subsidies out of their own budget. Another quite rational argument against amalgamation is the loss of voting power. Because Swiss citizens decide on quite a lot of matters directly, it makes a difference whether you are asked to vote in a small municipality or

338

Andreas Ladner

whether you are hugely outnumbered by the citizens living in another part of the newly created municipality. For agglomerations, different tax rates for the different municipalities, and the unequal distribution of voting power between a city and the surrounding municipalities, are especially important. This renders amalgamations more difficult. Also, given the three orders of government and the large number of units for the small size of Switzerland, there has been great reluctance to add another political order by creating regional or metropolitan areas with elected representatives. At the same time, coordination and cooperation in such areas as urban public transport and planning become more and more of a necessity. In 2001 federal authorities, therefore, launched a strategy to focus federal politics on the problems of the agglomerations, to improve cooperation in both the vertical and horizontal dimensions, and to promote the integration of Swiss cities into the network of European cities.26 The creation of the Tripartite Conference of Swiss Agglomerations (Tripartite Agglomerationskonferenz, or tak) in the same year pointed in the same direction. First steps to address the new challenges have been put forward with the introduction of regional or agglomeration conferences – for example, in the canton of Berne. The municipalities are represented by their mayors, and there are ballots across all the municipalities belonging to the area. Depending on the size of the municipalities, different weightings are given to the mayors and their municipalities. Instead of amalgamations, many municipalities have chosen various forms of intermunicipal cooperation. The classic form of cooperation is an administrative union (Zweckverband), an association under public law. In recent years, however, municipalities have increasingly cooperated on the basis of private law, which offers them more flexibility. In 1998 at least half of all municipalities worked together with at least one other municipality in areas such as schools, medical care, care for the elderly, refuse disposal, water supply, sewage treatment, and civil service. In areas such as support for the unemployed, civil service, fire brigades, and medical care, cooperation has intensified within recent years.27 A nationwide survey in 2005 revealed a further increase in cooperation.28 Civil service has become the area where four out of five municipalities cooperate, followed by medical care, schools, fire brigades, and sewage treatment. Sometimes cooperation even crosses borders, as in the region of the Lake of Constance, where cooperation includes municipalities from Austria and Germany.

constitutional recognition of local government Only recently were Swiss municipalities explicitly mentioned in the federal Constitution. Before that, municipalities were merely creatures of statute

Swiss Confederation

339

at the discretion of the cantons, which all have a constitution of their own. Some of the cantonal constitutions enumerate all the municipalities, whereas others guarantee their right of existence. Not all municipalities are treated equally with respect to their competences. This, however, is not due to unequal treatment by the confederation but rather to differences between cantons. The capital, the City of Berne, has no prominent position, and representatives of the municipalities are not guaranteed institutionalized access to federal authorities. On 1 January 2000 the new Article 50 of the federal Constitution was introduced, stating as follows: 1 The autonomy of the Municipalities is guaranteed within the limits fixed by cantonal law. 2 In its activity, the Confederation shall take into account the possible consequences for the Municipalities. 3 In particular, it shall take into account the special situation of cities, agglomerations, and mountainous regions. The effects of this article are still open to debate. The lobby organizations of the municipalities and cities, which are the driving forces behind the article, consider it a good basis for getting in touch with federal authorities directly, whereas the cantons fear they might be bypassed on important issues. Given the traditionally strong position of the municipalities within the cantons, it cannot be said that the new article changed much. Rather, it merely recorded the entrenched status of the municipalities, as the municipalities already had the possibility to express their position, especially through the association of Swiss municipalities, in the consultation process prior to the enactment of new federal laws. Nevertheless, in some policy fields, such as the integration of foreigners and asylum seekers, where regulation is within the competence of the confederation and execution within that of the cities, the article may shorten the communication distances. The leading principles of constitutional recognition are subsidiarity and municipal autonomy. Both emphasize the importance of local government. Under the notion of subsidiarity (see, for example, the new Article 5a of the Constitution), all activities not explicitly assigned to higher political levels remain within the scope of cantonal or municipal authorities. Higher levels should thus take over powers of the lower level only when the lower level is not able to assume its responsibilities. Basic pillars of local autonomy are substantial freedom in determining the organization of political systems within terms set by cantonal legislation,29 far-reaching competences to fulfil tasks and provide goods and services, and – especially salient – fiscal autonomy. Municipalities are largely autonomous in the administration and the control of their finances, and they have the competence to fix the rate of the local

340

Andreas Ladner

tax on income and property, which amounts to more than one-third of the total tax paid by citizens. In fiscal terms, municipalities are thus equal players alongside the cantons and the confederation. Fiscal autonomy, together with direct democracy, is also a strong argument for making local government accountable to the citizens. Not only can citizens decide on proposals and projects of their local authorities, but they also have to provide the necessary resources, knowing full well that expensive projects will lead to increased taxes. The other side of the coin is that it can be difficult to finance projects that serve minorities only. On the one hand, the two guiding principles – subsidiarity and local autonomy – have become strengthened in recent years by their more explicitly statement in the course of constitutional revisions; on the other hand, the cantonal constitutions now also anticipate possible interventions by the cantons to increase cooperation between the municipalities and to coordinate, and ensure, comparable services. The solution to the problem of how to combine these two opposing intentions seems to be a conceptual differentiation between strategy and operation. The strategic responsibility for joint services is accorded to the canton, whereas an operative autonomy is granted to the municipalities. There are also attempts by the cantons to define minimal service standards that must be attained by the municipalities and that serve as a basis for allocating financial transfers.

governance role of local government To describe the functions and the power of local government, a distinction has to be made between tasks that are allocated to the municipalities by legislation from the federal and cantonal governments and those that fall within the competences of the municipalities themselves. As regards the latter, at least they have a general residual competence, and the range of their activities depends largely on their resources and the demands of the citizens. All activities that are not explicitly federal or cantonal belong to the municipalities. For the former – the tasks allocated by the higher level, which have constantly increased in recent years – there are no distinctions drawn between the municipalities, but given their size differences, it is obvious that not all municipalities can fulfil the same mandate. Characteristic of Swiss cooperative federalism is a relatively weak national state. The share of the federal government’s contribution to expenditures amounts to a little more than 30% (31.7% in 2004), leaving about 68% to be met by the cantons and the municipalities. The bigger part, a little more than 40%, is spent by the cantons, and just over 25% is spent by the municipalities. These percentages have remained stable over the past twenty years, especially for the cantons. The federal government has increased its share by about 5% at the expense of the municipalities’ spending power.30

Swiss Confederation

341

The public expenditures of each order of government (after intergovernmental transfers) reflect the responsibilities of the different orders quite well. Not surprisingly, the federal government is responsible for foreign relations, national defence, and the national economy. In 2006 these three functional areas together covered about 22% of the total spending of the federal government, with national defence amounting to 8.5%. More important in terms of expenditure for the federal government are social security (27%), interest payable and tax income belonging to third parties such as the cantons (22%), and traffic (15%), areas where the federal government is also responsible for the biggest part of the expenditures. Social security and finances covering that portion of federal tax income that goes to cantons, insurance, and interest on debt repayment are the areas with the largest increases in the past fifteen years, whereas the biggest decrease occurred in the area of national defence. Unlike in unitary states, where quite important local expenditures fall within the competence of local government, in the Swiss Confederation these expenditures fall into the jurisdiction of the cantons. The cantons are responsible for more than half of the expenditures in the two important areas of health and education. The municipalities are the most important actors in environment and planning, culture and leisure, and together with the cantons, education, where they are responsible for primary schools. Regarding the expenditures of only the cantons, the most important services are education, social security, and public health, consuming 25%, 19%, and 18% respectively of cantonal expenditures (table 11.1). The most important municipal expenditures are very similar to those of the cantons: education, public health, and social security, which account for 22%, 21%, and 16% respectively of the municipal expenditures. In these areas, there is very often a clear division of competences; for example, the cantons are responsible for the universities and additional payments to health insurance, whereas the municipalities are responsible for the homes for the elderly. Sometimes there are overlapping services (e.g., hospitals run by the cantons and by the municipalities). Sometimes planning or instruction is the function of the cantons, and the municipalities have executive functions. For example, the organization of primary-school teaching and the setting of curricula are in the hands of the canton, but the schools are run by the municipalities. The cantons have independent control over their education systems and social services, leading to different curricula and different services between cantons. Each canton has its own police force, and some laws differ from one canton to another. In some cantons, the police power is shared between the canton and the municipalities. The specific activities of the municipalities include administration and control of municipal finances, tax-rate assessment, administration of social security and public health (hospitals), care of the

342

Andreas Ladner

Table 11.1 Swiss Confederation: Percentage public expenditures of cantons and municipalities, 1990 and 2004* Cantons

Administration

Municipalities

2004

1990

2004

4.9

5.4

8.5

1990 9.5

8.3

9.5

5.2

6.3

25.1

26.8

21.6

22.1

2.1

2.3

5.6

6.6

Public health

18.2

17.6

20.7

16.0

Social security

Security Education Culture and leisure

19.0

11.7

15.8

11.1

Traffic

9.1

11.2

7.1

8.7

Environment

2.0

2.9

8.0

9.2

5.9

6.2

1.5

3.4

Economy (regulation, support) Finances and tax (interest, transfers, duties) Total Total (chf/US$ billions)

5.4

6.2

5.9

7.1

100.0

100.0

100.0

100.0

chf68.9 (us$55.0)

chf41.1 (us$28.6)

chf44.3 (us$35.4)

chf30.2 (us$21.0)

* Without transfers between cantons or between municipalities. Source: Eidgenössische Finanzverwaltung, Öffentliche Finanzen der Schweiz 2004 (Berne: Eidgenössische Finanzverwaltung, 2006), 48–9, 82–3, own calculations.

elderly (including construction of homes for the elderly), and provision of education, waste treatment, electricity, water, gas, and local roads. Municipalities are also in charge of local cultural affairs and of the appointment of municipal executive and administrative authorities. They also determine the requirements for citizenship in the municipality. Here again, there are differences between the cantons. Joint involvement across different orders of government leads to interwoven policy structures that become difficult to manage due to the resulting political entanglement (Politikverflechtung).31 In areas like roads, energy, and social assistance, no order takes a strong lead; in areas like education, police, public health, and social assistance, cantons and municipalities are involved equally in financing. It is increasingly argued that, when regulation, financing, and implementation of a policy do not coincide, the system becomes suboptimal. Problems of spillovers and lack of fiscal equivalence are especially salient in city areas.

Swiss Confederation

343

Given that the federal government is rather weak, the federal administration is small, too. No federal civil servants are active in cantonal or local governments; the same is true for cantonal civil servants in the local arena. The number of persons employed by the municipalities amounts to about 34% of the total public workforce, with 47% employed by the cantons. In the past few decades, the cantons have increased their share of public employment to the detriment of the federal government’s role, whereas the share of the municipalities has remained relatively stable. In absolute terms, the number of public employees has decreased in terms of the total figure as well as federal and municipal employment, which is due not only to cuts but also to outsourcing (e.g., telecommunications, infrastructure, and supply services). The growing importance of the health and education sectors, which are cantonal competences, has led to an increase both in the share of the cantons and in their absolute numbers. In accordance with the federalist division of power, municipalities enjoy remarkable freedom with regard to their political organization. The political organization of a municipality is governed by cantonal legislation. There are twenty-six different cantonal laws telling municipalities how to set up and organize their political institutions. This has led to a number of distinct political systems throughout the country,32 and quite a few cantonal laws impose very limited institutional requirements on their municipalities. Basically, there are two different types of local political systems. Some municipalities reflect a division of power similar to that suggested by Montesquieu, at least in regard to executive and legislative bodies. They have a local parliament, which is also called a municipal or city council (Grosser Gemeinderat, Einwohnerrat, Gemeindeparlament). The local parliament is a body of between 10 and 120 representatives elected by the citizens entitled to vote in the municipality in a proportional representation (pr) system. Other municipalities have a municipal assembly, a gathering or meeting of all citizens entitled to vote, representing a form of direct democracy in the tradition of Rousseau and the ancient Greeks. The competences of the parliament and assembly are very similar. They have both a control and an input function with respect to the activities of the executive, and they decide on all important projects and proposals that are not within the competence of the executive or the citizens at the polls. Typical concerns of a parliament or assembly are municipal projects of particular importance, projects with financial consequences above a certain amount, minor changes of municipal decrees and regulations, and acceptance of the municipal account, the budget, and the tax rate. Which form a municipality chooses depends on its size and cultural background. Bigger municipalities and almost all cities have a local parliament. But local parliaments are also more widespread in the French-speaking cantons, where – close to France – the tradition of representative democracy is much stronger.33 Given the smallness of Switzerland’s municipalities and the

344

Andreas Ladner

larger number of municipalities in the German-speaking part, fewer than 20% of municipalities have a local parliament.34 Nevertheless, some municipalities with well above 10,000 inhabitants still have a local assembly.35 The division of power prohibits the mayor and the other members of the executive from being at the same time members of the local parliament. The municipal assembly is a genuine form of direct democracy. It is a gathering of all citizens entitled to vote in the municipality, taking place two to four times per year. In these gatherings, binding decisions are made on changes to municipal rules and on public policies and spending. Everyone is entitled to have a say, and the decisions are made – unless a secret vote is requested – by a show of hands. Despite the decisional power of the municipal assembly, the rate of participation is low. In municipalities with fewer than 250 inhabitants, the rate is about 30% of citizens entitled to vote. This figure steadily falls as the size of the municipality increases. In municipalities of between 10,000 and 20,000 inhabitants, the average participation rate is below 5%.36 The main reason for such a low turnout is the demanding character of this form of deliberation and decision making. The local executive usually has between three and seven members from different parties. They are directly elected by the citizens in a majority system.37 Most of the executive members do their job on a voluntary basis (Milizsystem). Only the biggest cities and a very few cantons have full-time executives. The mayor, too, is directly elected by the citizens. Reimbursements and expenses, as well as salaries for the full-time executives in the bigger municipalities, are paid by the municipality. Full-time executives tend to stay longer in office, whereas many of the volunteer members leave office after one or two electoral periods. For the executive, it makes quite a difference whether it faces a local parliament or a municipal assembly because the local executive enjoys more freedom when it has to deal with a municipal assembly. But sometimes the decisions of the citizens may be unpredictable, depending, for example, on who turns up at the assembly. In municipalities with a parliament, the executive has to deal with parties and party politics. This means that there is a more open political debate, and the positions of the different actors are known in advance. Nevertheless, it would be wrong to believe that the parliament is effectively able to control and steer local politics. The gaps in political knowledge and understanding between the members of parliament and the members of the executive make such a task very difficult for parliamentarians. Regardless of whether they have a parliament or an assembly, municipalities also have other forms of direct democracy, like referendums and initiatives, which affect the functioning of the executive and parliament.38 In municipalities with a parliament, direct democracy addresses the decisions of the executive and the parliament; in municipalities with an assembly, direct democracy addresses the executive as well as decisions of the assembly.

Swiss Confederation

345

Comparative studies show that Swiss citizens are quite satisfied not only with their local administrations and the services and facilities provided by local government but also with the possibilities to influence local politics.39 Corruption is hardly an issue. Complaints, if there are any, are due much more to the small size of a municipality and the proximity between its citizens; everybody knows everybody, and personal interests and local politics are difficult to separate.

financing local government Swiss municipalities enjoy far-reaching fiscal sovereignty. In line with the bottom-up construction of the Swiss nation-state, and backed by the principle of fiscal equivalence, they finance their activities themselves through taxes, fees, and charges. They are allowed to accumulate surpluses or debt, and they prepare a budget, which they have to submit to the local parliament, assembly, or sometimes directly to the citizens in a referendum. Financial control is exercised first by municipal committees and second by the cantonal administration, which supervises the financial administration. The cantonal supervision, however, is rather weak; only if the municipalities abuse their liberties does the canton step in, but this rarely happens. The most important source to cover municipal expenses is taxes. Within quite a broad range usually fixed by the canton, municipalities set the tax rate on personal income and property. Swiss citizens pay taxes to all three orders of government. In 2004 local taxes amounted to a little more than 33% of total individual taxation, and they are paid directly to the municipality; a little more than 33% is paid directly to the canton, and a little less than 30% goes to the federal government. The exact amounts an individual has to pay to the three orders depend on his or her income because the progression of the federal tax rate differs from the progression of the rates in the municipalities and cantons. Municipal and cantonal tax rates are usually flatter. Fiscal autonomy produces huge differences in individual tax burdens, depending on the municipality and the canton of residence. A father of three children earning chf200,000 (US$164,939) a year and living in the City of Zurich has to pay chf12,000 (US$9,896) to the municipality, whereas in the neighbouring municipality of Zollikon, he would have to pay only chf7,200 (US$5,938). Living in the canton of Zurich, he additionally has to pay chf10,000 (US$8,247) in income tax to the canton. If he were to move to Jura, he would have to pay chf20,000 (US$16,494), whereas in Schwyz it would be only chf6,500 (US$5,361).40 These tax differences, of course, motivate high-income individuals to move to low-tax jurisdictions, and they also enhance intermunicipal competition.41 Occasionally, municipalities try to reduce their tax rate to make themselves

346

Andreas Ladner

more attractive, and sometimes people move to such municipalities. In low-tax municipalities, however, higher land prices and rents and higher costs of living counterbalance an individual’s tax gains. In 2004 direct taxes on income and property provided the biggest part of the revenue not only of the municipalities but also of the cantons, at 38.4% and 35.1% respectively (table 11.2). On all levels taxation of income yielded about ten times as much as taxation of property. The second most important source of revenue for municipalities was fees and charges (28.6%), followed by transfers from the canton (12.2%) or from other municipalities (3.9%). Transfers from cantons without any specific purposes were relatively low (4.1%), with other sources making up 2.1%. The municipalities can also issue bonds or borrow money from banks. The Emission Centre of the Swiss Municipalities is a cooperative of more than one-third of Swiss municipalities, which offers loans at advantageous rates. Municipalities taking up a loan agree on a joint guarantee. If one municipality cannot pay back the loan, the others are supposed to pay it. The structural differences between the municipalities – and more specifically, the inability of some municipalities to generate sufficient tax income – make sophisticated systems to balance inequalities necessary. On the one hand, there are transfers from richer to poorer municipalities; on the other hand, the cantons allot more money to the less affluent municipalities. The functioning of these systems, which were often based on the financial situation of the municipalities and directly linked to special activities, has been heavily criticized in recent years, and most of the cantons are – as we shall see – about to reform them. In general, however, the financial health of the municipalities is, apart from some exceptions, much better than that of the confederation or the majority of the cantons. In 2007 the estimated total debt of the public sector amounted to about chf234 billion (US$190 billion), which is about 48% of gdp. The municipalities’ share is about 16% of the total public debt. The share of the cantons (28%) is higher, whereas the largest portion (56%) is that of the federal government.42 In light of these data, it is not surprising that the higher political levels tend to make the lower ones pay more for public services.

supervision of local government Local government is supervised by the canton. This supervision includes the decisions of the citizens at the assembly or in the course of referendums and initiatives as well as the activities of the local authorities. In areas that fall within the competence of the municipalities, supervision is restricted to the lawfulness of the municipalities’ activities; in areas that do not fall within the autonomy of the municipalities, supervision also relates to the appropriateness of activities.

Swiss Confederation

347

Table 11.2 Swiss Confederation: Percentage revenue structure of the confederation, the cantons, and the municipalities, 2004 Revenue

Confederation

Cantons

Municipalities

A. Taxes

92.1

49.4

48.2

Income and property tax, including: • direct federal tax • income tax • property tax

35.4 24.3

35.1

38.4

Excise duties, including : • value-added tax

51.6 36.4

34.4 4.0

Other taxes

5.1

B. Fees and charges

3.8

15.7

28.6

C. Transfers without special purposes (untied)

0.0

7.2

4.1

D. Transfers and reimbursements, including: • confederation • cantons • municipalities

0.1

22.3

17.0

13.6 1.8 5.8

0.0 12.2 3.9

E. Others

4.1

5.4

2.1

100.1

100.0

100.0

Total (A + B + C + D + E) Total (chf/us$ billions)

chf48.6

chf64.8

chf43.4

(us$38.8)

(us$51.8)

(us$34.7)

Source: Eidgenössische Finanzverwaltung, Öffentliche Finanzen der Schweiz 2004 (Berne: Eidgenössische Finanzverwaltung, 2006), 24–5, 46–7, 80–1, own calculations.

A canton usually has an office within its department of justice or internal affairs that is responsible for the municipalities. This office organizes the control of the municipalities’ public finances and determines whether the decrees of the municipalities conform to cantonal laws. The canton also provides municipalities with further information necessary for their activities and supports them in their reform endeavours, such as amalgamation with another municipality or the implementation of New Public Management. This support is welcomed by smaller municipalities, whereas the cities either do not need or do not want support from the canton. The extent of supervision by the canton depends on the legal framework that is given to the municipalities, the size of the municipalities, and the strength of the canton itself. The bigger the municipalities, the less detailed

348

Andreas Ladner

the cantonal law; and the weaker a canton, the greater the autonomy of its municipalities. In general, the municipalities are less autonomous in the French-speaking part of Switzerland, whereas they are more autonomous in the Northeast and in the central mountainous regions – the Germanspeaking part of Switzerland. It is within the principles of municipal autonomy and subsidiarity that the cantons keep a tight rein on the municipalities. There are no ways to dismiss an elected council (except for disciplinary matters) or to override local laws and decisions on political grounds without legal or constitutional backing. But cantonal authorities have to step in if a municipality goes bankrupt or is no longer able to elect municipal authorities. Such cases, however, happen very rarely. In the case of bankruptcy, all financially relevant decisions have to be accepted by the cantonal authorities; in the case of an inability to elect municipal authorities, a cantonal commission agent assumes the administration of the municipality until a new council is elected.

i nt e rg ove rn m e nta l r el at i o ns Given that the confederation has no direct implementing capacity in its areas of competence, implementation of federal policies is left to cantons and municipalities, with the cantons acting as intermediaries between the confederation and the municipalities. There is no federal ministry responsible for local government or local affairs. Such ministries exist only in the cantons. Top-down planning and policymaking are thus cumbersome and time-consuming exercises, which sometimes cannot prevent diverging results, as in the case of land-use practices. Financial transfers between the orders of government are quite common as a means of political steering and equalization. The confederation uses only one-third of its total expenditures for its own purposes, whereas twothirds are transfer payments, most of them in favour of the cantons and some of them in favour of the municipalities. About two-thirds of the transfers to the cantons have been transfers for special purposes. Since 2000 there has, for the first time, been a shift toward untied transfers. Transfers from the cantons to the municipalities are less than transfers from the confederation to the cantons; nevertheless, one-fourth of the expenditures of the cantons are transfers to the municipalities.43 As a direct consequence of the delegation of implementation to the cantons and localities, the higher levels often depend on the know-how of the lower levels, which are closer to the problems to be solved. Representatives of the cantons and the municipalities, for example, are frequently members of the different groups of experts consulted by the federal administration. Similarly, they are also represented in many of the extraparliamentary commissions.44

Swiss Confederation

349

Policymaking is thus highly dependent on cooperation between the three orders of government. Swiss federalism is often described as a typical form of cooperative federalism. Over time, this has led to a high degree of Politikverflechtung, which is felt as an increasing loss of autonomy by the municipalities. Not only have more and more government activities been delegated to the municipalities, but legal restrictions stemming from the federal and cantonal governments have also intensified and become more complex. Although this has led to an increased dependence on higher orders of government and infringed upon local autonomy,45 some observers claim that in certain areas local executive authorities still retain far-reaching competences.46 Not surprisingly for a federal polity, the cantons have a strong influence on national politics. They play an important role in policy formulation, decision making, and implementation.47 The cantons – together with parties and interest groups – take part in the pre-parliamentary consultation procedure (Vernehmlassungsverfahren).48 However, their role here is less important than is implied by their strong position in the implementation process.49 During the parliamentary decision-making process, it is the Council of States, where the smaller cantons are overrepresented, that can be seen as the core element of cantonal influence. For constitutional amendments, a majority of the cantons is needed, and their responsibility for implementation allows them to put forward their own program priorities.50 An increasingly important means of influencing federal decisions is the intercantonal conferences of directors (Interkantonale Direktorenkonferenzen), which bring together the task-specific members of the cantonal governments – for example, the Conference of the Cantonal Ministers of Finance and the Conference of the Cantonal Ministers of Education.51 In 1993, in the aftermath of the rejected European Economic Area Agreement, the Conference of the Cantonal Governments was established to coordinate the formulation of the political demands of the cantons and to increase their influence in foreign and European policy. Finally, there are intercantonal conferences of experts, which are organized at various levels of the administration and bring together a considerable amount of knowledge missing in the federal government. The direct access of the municipalities and the cities to federal decisions is less formalized, and direct intervention of the confederation in local affairs, and even simple contacts between municipalities and the confederation, are rather exceptional. The Association of Swiss Municipalities and the Association of Swiss Cities take part in the pre-parliamentary consultation procedure and generally operate as lobby organizations. Especially the cities – with the backing of the new constitutional Article 50 – have tried to get more influence in recent times by claiming that their problems (e.g., traffic in the metropolitan areas, drug abuse, integration of foreigners, and asylum seekers) are not duly taken up in federal politics. In

350

Andreas Ladner

general, however, it is still accepted that the municipalities are supposed to address the canton, whereas the cantons address the federal government. In light of the growing importance of the agglomerations and the lack of policy coordination between the federal, cantonal, and municipal governments, the need for improvement has been widely recognized.52 As a first step, in 2001 the three orders of government created the Tripartite Conference of Swiss Agglomerations (Tripartite Agglomerationskonferenz, or tak) to promote cooperation in policy fields relevant to metropolitan areas. This conference involves the confederation, the Conference of the Cantonal Governments, the Association of Swiss Cities, and the Association of Swiss Municipalities. Given the many shared responsibilities – such as transport, spatial planning, environment, social welfare, and healthcare – and the strong impact federal policies have on metropolitan areas, such a permanent forum appears to be very promising. For the first time, the division of competences has given way to a partnership among all three orders of government. Some observers describe this rather informal manner of cooperation, in the case of the agglomerations, as being a first step away from the traditional cooperative federalism between the confederation and the cantons and toward multilevel governance. Nevertheless, this new development has not affected the traditional strong position of the cantons. The situation is better described as coexistence between strong cantons and relatively strong cities, whose relations are mediated by the federal government.53 Access of the municipalities to cantonal decisions may vary from one canton to another. In some cantons, there are direct democratic means available to the municipalities (initiatives or referendums in a certain number of municipalities), but the most important way to influence cantonal politics in favour of the municipalities is through elected members in the cantonal parliaments and through interest associations like the cantonal associations of municipalities (although they do not exist in all cantons) or the cantonal associations of mayors or higher municipal administrators. In a very like manner, the national Association of Swiss Municipalities and the national Association of Swiss Cities try to strengthen the impact of the municipalities on federal politics. An important linkage function between the different orders of government is also played by politicians. The typical career of a Swiss politician involves moving up the ladder from the municipal to the federal government. A considerable number of politicians represent not only their political party in that arena but also their municipality or their canton. Having a member of a municipal executive who is at the same time a member of a cantonal parliament, or having a member of a cantonal government who is also a member in the federal Parliament (cumul des mandats), is one way to ensure the influence of the canton or municipality. This, however, is not accepted

Swiss Confederation

351

equally in all cantons. Whereas some cities and cantons gladly accept a member of their executive having a mandate at a higher level, as this member can keep them informed or even increase their influence, others do not allow it, claiming that the workload becomes too heavy or the single politician too powerful. Another way is offered by the constituencies and the electorate. Constituencies for the federal Parliament are the cantons, and for cantonal elections most politicians depend on the support of the voters from their municipalities. If politicians want to be sure to get re-elected, they have to be careful not to upset the citizens in their municipality or canton.

political culture of local governance Swiss political parties are rather weak, at least in organizational terms. Federalism splits the party system into twenty-six different cantonal party systems, and the smallness of many of the municipalities prevents the parties from being organized in all localities. The strength of the different parties varies among the orders of government. In the national arena, the two most important parties are the Swiss People’s Party (svp) and the Social Democrats (sp). In the cantonal parliaments (and more especially in the cantonal governments), the Christian Democrats (cvp) and the Radical Party (fdp) are still considerably stronger. This is due largely to the smaller cantons in the mountainous areas, where especially the Christian Democrats and, to a minor extent, the Radical Party play a more important role. Although local politics is often considered to be more pragmatic – that is, more oriented toward problem solving and less concerned about ideologies – a large number of political parties can be found locally, especially when we consider the small size of most municipalities. More than 60% of the municipalities have political parties that are subsections of the national parties. In general, these local parties do not depend strongly on their cantonal or national parties. The party at a higher level, for example, is not supposed to interfere in the local party’s recruitment process. The percentage of municipalities with political parties was even higher twenty years ago. Since then, due to the weakening party ties of the citizens, political parties have been losing their influence, at least in the smaller municipalities.54 In these municipalities, there has also been an increase of no-party members elected to the local executive. Increasingly, citizens also elect candidates from local citizens’ organizations. Today, about 30% of the members of the local executives have no party affiliation. Apart from the biggest cities, a majority of the municipalities are dominated by the political right. At the beginning of 2005, the Radical Party, the Christian Democrats, the Liberal Party, and the Swiss People’s Party together held just above 60% of the seats in the executives.55 Nevertheless, this share has decreased by about 5% over the past twenty years,56 which goes hand in

352

Andreas Ladner

hand with the turn to the left of the biggest cities. Nowadays, they diverge politically not only from most of the cantons but also from many of their surrounding municipalities. At the beginning of 2008, the five biggest cities (Zurich, Berne, Basle, Geneva, and Lausanne) had a left-wing mayor as well as executive and a legislative body with left-green majorities, whereas the more affluent municipalities around the cities were dominated by right-wing parties. Not surprisingly, local politics in cities differs quite considerably from local politics in smaller municipalities due to higher media coverage and different prerequisites for citizens to take part.57 Because the representation of women is higher in left-wing parties, there is also a higher representation of women in the biggest cities, compared to smaller towns and municipalities. In 2006 women occupied 34% of the seats in the executives of the eight cities with more than 50,000 inhabitants and 37% of the seats in the parliaments.58 Across all municipalities, a little more than 20% of the seats in the executives were held by women. The principle of power sharing59 applies not only to the federal government, in which the four biggest parties are represented, but also to the cantonal and local executives. There are hardly any single-party executives, and the most important parties are usually represented in the local executive. This might at first be surprising given that the majority system for electing the executive is the rule in most cantons and municipalities. In accordance with the principles of consociational democracy (Konkordanzdemokratie), however, a “voluntary proportionality” (freiwilliger Proporz) is practised. The leading party abstains from presenting a full slate of candidates to make room for opposition-party candidates. In smaller communities, of course, abstaining from running for all seats is not always voluntary, as it can be difficult to find suitable candidates for each available seat. Running for all seats also carries the danger that candidates of the same party may take votes away from each other and fall behind the candidates of the other parties. Sometimes the parties present fewer candidates to avoid the risk of possible defeat, especially when running against current officeholders. One common strategy for the leading party is to abstain from running for all seats under certain conditions. The smaller parties are offered a number of seats in accordance with their strength. In return, they have to nominate candidates who suit the stronger parties. Local politics in Switzerland is based on voluntary engagement and high citizen involvement. The Milizsystem (the firmly established tradition that Swiss citizens hold a public office alongside their normal jobs) and the smallness of the political units lead to a high degree of citizens’ involvement in holding public office. With the seats in the local executive and parliament as well as the various commissions in the different policy fields, an average of about fifty different political posts per municipality have to be filled by citizens. In small municipalities, one out of eight or ten citizens holds public

Swiss Confederation

353

office. This can be seen as a form of social capital. In recent years, however, this high demand to fill public offices has encountered problems on the supply side. The municipalities, and more particularly the local political parties, which are the most important recruitment agents for public officeholders, find it increasingly difficult to recruit enough qualified candidates. That a municipality has a parliament can, on the one hand, make it easier for the parties to recruit candidates from among the members of the parliament to run for election to the local executive. On the other hand, the parties have to find enough candidates for their seats in the parliament in the first place. According to survey results, it is most difficult to find enough candidates in the medium-sized municipalities.60 In the big cities, public office is sufficiently prestigious and, in the case of a seat in the executive, well remunerated. In the very small municipalities, these offices are less time-consuming, and it is probably more difficult to refuse an invitation if it becomes obvious that there is nobody else to do the job. Local elections are by no means second-order elections. Voter turnout in 2004 for local elections was even higher than the turnout for cantonal and national elections, at least in smaller municipalities with up to 5,000 inhabitants. The decline in the turnout for local affairs in bigger municipalities becomes particularly important when we look at the percentage of people attending a local assembly. In 2004, in the smallest municipalities (with fewer than 250 citizens), about one-quarter of the citizens appeared at these meetings, whereas in the biggest municipalities, it was only a small percentage (2.7% or less in municipalities with 5,000 or more citizens). There has also been a decline in participation in all municipalities over the past two decades; however, the larger the municipality, the more pronounced the decline. Cultural differences between the language areas with respect to local government are rather small, apart from the institutional differences that bring the French-speaking municipalities closer to representative democracy but afford them a somewhat lesser degree of autonomy than the Germanspeaking municipalities.

e m e r g i n g i s s u e s a n d tr e n d s Since the 1990s there have been serious attempts to reform local government.61 The entanglement of tasks and the flow of financial resources between the municipalities and the cantons have been considered to be nontransparent, ineffective, and inefficient and thus to violate the principle of fiscal equivalence. In almost all cantons, therefore, there have been more or less serious attempts to allocate tasks and resources between the cantons and the municipalities more appropriately.62 Most of these reforms have also pursued the idea that transfers to the localities should be

354

Andreas Ladner

made on the basis of the municipalities’ capacity for raising their own resources and should be given in the form of block grants rather than being tied to the provision of specific tasks. In some instances (e.g., in the canton of Berne), the reallocation of tasks led – quite unexpectedly – to a shift of tax money to the cantons, which certainly was not desired by the municipalities. However, this shift cannot be seen as a general loss of municipal autonomy because the decisional power of the municipalities in the fields that have been transferred to the canton (i.e., primary schools, social security, and public health) was already very weak. In comparative terms, the fiscal autonomy of the Bernese municipalities still remains high. In general, the principles of subsidiarity and local autonomy have not been questioned in the course of these reforms and have been upheld in most of the recent revisions of cantonal constitutions. In some task areas, however, local autonomy is restricted to an “operative autonomy,” whereas strategic responsibilities increasingly move to the cantons and the federal government. Cantonal authorities will tell the municipalities what to do, and the municipalities will decide how they want to do it. The cantons have also enforced their legal competences to make municipalities cooperate more intensively. However, the new possibilities to force municipalities to cooperate have hardly been applied yet. The idea that municipalities should work together to provide certain services more efficiently is by no means new, and such cooperation sometimes even crosses cantonal and, as in the case of Basle and the Bodensee region, national borders. In the history of Swiss municipalities, there have always been some forms of cooperation, which is not surprising given the smallness of many municipalities. For intermunicipal cooperation in general, it seems obvious that in larger territorial units, many services (e.g., waste removal and the fire brigade) profit from economies of scale. But cooperation also raises questions of democratic decision making and control. How can decisions be made within a union of municipalities of different sizes if the principle of “one person, one vote” puts smaller municipalities at a disadvantage? How can delegates on the board of a union of municipalities be controlled democratically, and how, in the case of cooperation on the basis of private law, are contracts to be formulated and property rights to be regulated? Given the problems of intermunicipal cooperation in terms of democratic decision making and the increasingly complex structure of cooperation sometimes encompassing varying perimeters, it is not surprising that amalgamations and the creation of simpler structures have become part of the reform agenda. Contributing further to this trend are not only the smallness of so many Swiss municipalities but also their difficulties in finding enough candidates for the various public offices and their

Swiss Confederation

355

problems in fulfilling the increasingly demanding tasks of local government. The amalgamations achieved up to now have shown that the municipalities have improved the quality of their services. Considerable savings, however, occur rather seldom. In any case, amalgamations are seen as a means to strengthen local governments, not as a fundamental change of the territorial organization. Hardly any canton can force municipalities to amalgamate. The only thing cantons can do is to set up incentives and stop financial equalization efforts that support costly and inefficient structures. An amalgamation of two municipalities needs the support of the majority of the citizens in each municipality in a ballot. More recently, however, amalgamation projects no longer concern only the small municipalities. There have been several projects (e.g., in Lugano, Luzern-Littau, and Rapperswil-Jona) where cities have tried to become stronger and more competitive through amalgamation with surrounding municipalities. Regional traffic, environmental and spatial planning, and economic development are easier to coordinate within only one municipality than across a huge number of municipalities. Institutionally, no special legal status for cities is in sight. But there are, as we have seen, first steps in this direction: the rather informal cooperation within the Tripartite Conference of Swiss Agglomerations and a commitment of the national authorities to improve the situation. In 2001 federal authorities launched a strategy to focus federal politics on the problems of the agglomerations, improve vertical and horizontal cooperation, and promote the integration of Swiss cities into the network of European cities. The incentives provided by the federal agglomeration policy have proved to be quite successful up to now. A large number of agglomerations have submitted concrete projects for funding. Additional complexity arises from the geographic situation. Cities like Geneva and Basle, but also Lugano, Schaffhausen, and Kreuzlingen, form metropolitan areas, or at least agglomerations, that reach into other countries.63 Up to now, various forms of cooperation and coordination have been discussed, and quite a few projects have been launched,64 but solutions that would produce joint policies that can be controlled democratically are not easy to find. Furthermore, because international developments do not leave cities untouched, there are also attempts to be more involved internationally by having a say in foreign and European policies and by promoting the city as an attractive location for investors. The small size of municipalities is an important challenge to metropolitan governance in Switzerland. If it is true – as is frequently stated by the cities themselves – that a country needs cities that are global players and that global players have to achieve a size comparable to other metropolitan regions, it seems difficult to see how Switzerland will play an important part in the future. This at least is the fear, backed by corresponding predictions, of

356

Andreas Ladner

the authorities. The most important cities, like Zurich (banks, insurance), Geneva (international organizations, banks), and Basle (chemical industry), undoubtedly have their strong domains, but they remain very small. If each had to become an internationally comparable agglomeration or metropolitan region, its territory would cover most of the country and considerably disturb the internal equilibrium. The “Greater Zurich Area” is a first, and till now not unsuccessful, attempt to promote an area across cantonal and national borders – based on a network-like structure, a public-private partnership, and a common strategy – but without any idea of amalgamating. Zurich regularly manages to appear among the world’s highest-ranked cities for living standards. It successfully attracts international companies (e.g., the Google European Engineering Center and Microsoft) and offers a comparatively low tax burden. The area around the City of Zurich also benefits from this development. A second challenge to Swiss metropolitan governance is how to bring together municipalities with different standards of living and with different tax burdens without infringing on their autonomy and the democratic rights of their citizens. If an amalgamation also means a higher tax burden, no majority will approve it. Because Swiss citizens are used to deciding directly on many political issues and believe to an important extent in the effectiveness of small government, smaller municipalities are always reluctant to join a bigger one in which they face an overwhelming majority. Cooperation within an agglomeration cannot take place without the citizens retaining their direct democratic rights, but “one person, one vote” hardly seems attractive to smaller units. The first steps to address these challenges have been taken with the idea of regional conventions (Regionalkonferenzen) – for example, in the canton of Berne. The municipalities are represented in these conventions by their mayors, and for important issues there are ballots of the citizens in all the municipalities belonging to the region. Depending on the size of the municipalities, different weightings are given to the mayors and the municipalities. The model that will be successful in addressing the challenges to cities and their surrounding municipalities is difficult to foresee. However, because federal countries are less likely to have dominant cities and are generally more inclined to find solutions when it comes to integrating culturally, economically, and socially different areas on democratic grounds and for mutual benefit, who other than federal countries will be able to show the way not only to good local governance but also to good metropolitan governance?

notes 1 For easily accessible and/or more detailed information about Switzerland, see http://www.ch.ch/index.html?lang=enhttp://www.ch.ch/schweiz/index.

Swiss Confederation

2

3 4

5

6

7

8

9

357

html?lang=en (9 January 2009). For more about Swiss municipalities and local government, see Wolf Linder, “Local Government: The Case of Switzerland,” in Local Government and Urban Affairs in International Perspective, ed. Jens Joachim Hesse, 409–28 (Baden-Baden: Nomos Verlagsgesellschaft, 1990); Hans Geser, “The Communes in Switzerland,” in Handbook of Swiss Politics, 1st ed., ed. Ulrich Klöti et al., 349–92 (Zürich: Neue Zürcher Zeitung, 2004); Katia Horber-Papazian, “The Municipalities,” in Handbook of Swiss Politics, 2nd ed., ed. Ulrich Klöti et al., 227–52 (Zürich: Neue Zürcher Zeitung, 2007); and Daniel Kübler, “Agglomerations,” in Handbook of Swiss Politics, 2nd ed., ed. Ulrich Klöti et al., 253–78 (Zürich: Neue Zürcher Zeitung, 2007). Population density amounts to about 240 people per square kilometre of the productive area (in 2000). In the agglomerations, which cover about 20% of the total surface area, the density is 590 per square kilometre. The most important parts are the large mountainous areas called the Alps, the Jura, and the Plateau, where most of the population live. In Switzerland the term “agglomeration” is more frequently used than “metropolitan area.” An agglomeration is a town or a city with surrounding municipalities having an urban character. A metropolitan region is an extended agglomeration or conurbation that also includes peripheral areas, not themselves necessarily urban in character but closely bound to the urban area by flows linked to employment or commerce. Agglomerations are much smaller than metropolitan areas. The foreigners resident in Switzerland (about 20% of the population) have brought with them their own languages, which taken as a whole now outnumber both Rhaeto-Rumantsch and Italian. The 2000 census showed that speakers of Serbian/Croatian were the largest foreign language group, with 1.4% of the population. English was the main language for 1% of the population. Nevertheless, Rhaeto-Rumantsch is used in official communications with RhaetoRumantsch speakers, who in turn have the right to use their native language in addressing federal authorities. Membership of Christian churches has shrunk in recent years. In 2000 only 16% of Swiss said religion was “very important” to them, ranking far below their families, their jobs, sports, or culture. Another survey published the same year showed that the number of regular churchgoers had dropped by 10% in ten years. The largest company is Nestlé, the biggest food company in the world. It has around 250,000 employees, more than 97% of them outside Switzerland. Banks like Union Bank of Switzerland (ubs) and Credit Suisse are among the world’s biggest banks. In 2007 the Parliament did not re-elect one of the two members in government of the Swiss People’s Party – the very prominent informal party leader Mr Blocher – and elected another, more moderate representative of the Swiss People’s Party instead. The two elected members of the Swiss People’s Party were asked by their own party to withdraw from government. They decided to remain in government and

358

10

11 12 13

14

15

16 17

18 19

Andreas Ladner

lost confidence and support of their party and eventually became members of a newly founded splinter group. For a description of the Swiss federal system, see also Nicolas Schmitt, “Swiss Confederation,” in Constitutional Origins, Structure, and Change in Federal Countries, ed. John Kincaid and G. Alan Tarr, 347–81 (Montreal and Kingston: McGill-Queen’s University Press, 2005); Thomas Fleiner, “Swiss Confederation,” in Distribution of Powers and Responsibilities in Federal Countries, ed. Akhtar Majeed, Ronald L. Watts, and Douglas M. Brown, 265–94 (Montreal and Kingston: McGill-Queen’s University Press, 2006); and Wolf Linder and Isabelle Steffen, “Swiss Confederation,” in Legislative, Executive, and Judicial Governance in Federal Countries, ed. Katy le Roy and Cheryl Saunders, 289– 315 (Montreal and Kingston: McGill-Queen’s University Press, 2006). In 1978 Jura, which formerly belonged to the canton of Berne, became the twentysixth canton. The municipalities are called Gemeinden in German, communes in French, and comuni in Italian. The term “government” is sometimes misleading for observers of Switzerland. Government (Regierung) is – following the principle of separation of power – used for the executive. In an attempt to define local government more broadly, one could also refer to all territorially linked structures beyond the cantons. Some of the bigger cantons (like Zurich or Berne) are divided into counties (Kreise), and some cities (like Zurich) into districts (Bezirke). These subdivisions, however, are of lesser importance compared to the municipalities and are not considered here. Namely, the cantons of Zürich, Nidwalden, Glarus, Appenzell-Innerrhoden, St Gallen, and Thurgau. See Andreas Ladner, Politische Gemeinden, kommunale Parteien und lokale Politik: Eine empirische Untersuchung in den Gemeinden der Schweiz (Zürich: Seismo, 1991), 29. In the French-speaking cantons of Vaud, Neuchâtel, Genève, and Jura, as well as in the German-speaking Basle-Land, there are no “church municipalities.” See ibid. This trend away from single-purpose authorities occurs despite the contradictory claims of some economists. See, for example, Reiner Eichenberger, “Zweckgemeinden statt Zweckverbände! – Effiziente und demokratische kommunale Leistungserbringung dank focj,” in Der politische Raum – Beiträge zu Politik, Wirtschaft, Kultur und Gesellschaft, ed. Bruno Meier, 39–51 (Baden: Baden-Verlag, 1998); and Reiner Eichenberger, “Starker Föderalismus – Drei Reformvorschläge für fruchtbaren politischen Wettbewerb,” in Der Preis des Föderalismus, ed. Uwe Wagschal and Hans Rentsch, 177–99 (Zürich: Orell Füssli, 2002). The members of the Bürgergemeinde do not necessarily have to live in the municipality. With the revision of the Constitution in 1874, all Swiss citizens entitled to vote received their political rights locally in their municipality of residence (Einwohnergemeinde). These municipalities, however, no longer included the common goods of the old established families who had lived there for a long time. These goods became part of the Burger- or Bürgergemeinde.

Swiss Confederation

359

20 Wolf Linder, Swiss Democracy: Possible Solutions to Conflict in Multicultural Societies (New York: St Martin’s Press, 1994), 5. 21 Common decisions were reached in the conference of canton delegates (Tagsatzung), a periodic gathering of representatives of each canton, bound by the instructions of the cantonal governments. 22 Linder, Swiss Democracy, 6. 23 The official name “Swiss Confederation” is misleading because in 1848 Switzerland became a federal nation-state and can no longer be considered a confederation (of cantons). 24 Swiss Federal Statistical Office (sfso), Permanent Resident Population by Municipality in 1998 (Neuchâtel: sfso, 2000). 25 Note, however, that there have been occasions when the federal authorities eventually backed cantonal attempts to merge municipalities – for example, Ausserbinn in the canton of Valais; and Bignasco, Aquila, Sala Capriasca, and Dongio in the canton of Ticino. 26 See http://www.are.admin.ch/themen/agglomeration/00561/index.html? lang=de (viewed 2 February 2008). 27 Andreas Ladner, Daniel Arn, Ueli Friederich, Reto Steiner, and Jürg Wichtermann, Gemeindereformen zwischen Handlungsfähigkeit und Legitimation (Berne: Institut für Politikwissenschaft und Institut für Organisation und Personal, 2000). 28 Reto Steiner and Andreas Ladner, “Die Schweizer Gemeinden im Fokus – Ergebnisse der Gemeindebefragung 2005,” in Perspektiven für Gemeindefinanzen, ed. Glatthard Alexander and Ulrich Isch, 8–34 (Berne: Emissionszentrale der Schweizer Gemeinden, 2006). 29 Ladner, Politische Gemeinden. 30 See Daniel Bochsler, Christophe Koller, Pascal Sciarini, Sylvie Traimond, and Ivar Trippolini, Les Cantons Suisses sous la Loupe (Berne: Haupt, 2004), 140. 31 For more about Politikverflechtung, see Fritz Scharpf, “Die Theorie der Politikverflechtung: Ein kurzgefasster Leitfaden,” in Politikverflechtung im föderativen Staat: Studien zum Planungs- und Finanzierungsverbund zwischen Bund, Ländern und Gemeinden, ed. Joachim Jens Hesse, 21–31 (Baden-Baden: Nomos, 1978). 32 Ladner, Politische Gemeinden; Andreas Ladner, “Laymen and Executives in Swiss Local Government,” in Transforming Political Leadership in Local Government, ed. Rikke Berg and Nirmala Rao, 101–15 (London, uk: Palgrave Macmillan, 2005). 33 In the German-speaking part of Switzerland, municipalities with 8,000 to 10,000 inhabitants or more have a parliament, whereas in the French- and Italian-speaking municipalities, this might also be the case in much smaller municipalities. In the cantons of Geneva and Neuchâtel, all municipalities have a parliament, even those with fewer than 1,000 inhabitants. 34 Ladner, Politische Gemeinden, 81ff. 35 This is especially true for Zurich, where about half the municipalities with between 10,000 and 20,000 inhabitants have a municipal assembly.

360

Andreas Ladner

36 Andreas Ladner, “Size and Direct Democracy at the Local Level: The Case of Switzerland,” Environment and Planning C: Government and Policy 20, no. 6 (2002): 813–28, at 823. 37 Only about 28% of the municipalities use pr to elect the executive, and a few municipalities have bigger executives. See Ladner, Politische Gemeinden. 38 Andreas Ladner, “Local Parties in Switzerland: An Active Pillar of the Swiss Political System,” in Local Parties in Political and Organizational Perspective, ed. Martin Saiz and Hans Geser, 213–41 (Boulder, co: Westview Press, 1999); Ladner, “Size and Direct Democracy.” 39 Andreas Ladner and Marc Bühlmann, Demokratie in den Gemeinden: Der Einfluss der Gemeindegrösse und anderer Faktoren auf die Qualität der Demokratie in den Gemeinden (Zürich and Chur: Rüegger, 2007). 40 For calculations, see http://www.estv.admin.ch/data/sd/d/index.htm?berechnungen/ inhalt.htm (viewed 2 February 2008). 41 Gebhard Kirchgässner, “Swiss Confederation,” in The Practice of Fiscal Federalism: Comparative Perspectives, ed. Anwar Shah, 318–43 (Montreal and Kingston: McGillQueen’s University Press, 2007). 42 See http://www.efv.admin.ch/d/dokumentation/downloads/themen/oeff_ haushalte/oeHH_Verschuldungsquote.pdf (viewed 2 February 2008). 43 For more information on transfers, see Ernst Buschor, Hans Mäder, and Kuno Schedler, “Entwicklungen im Finanzausgleich – eine Einleitung,” in Perspektiven des Finanzausgieischs in der Schweiz, ed. Hans Mäder and Kuno Schedler, 3–22 (Berne: Haupt, 1996); and Uwe Serdült and Walter Schenkel, “Bundesstaatliche Beziehungen und Governance im Mehrebenensystem,” in Handbuch der Schweizer Politik, 4th ed., ed. Ulrich Klöti et al., 553–74 (Zürich: Neue Zürcher Zeitung, 2006). 44 Raimund E. Germann, Ausserparlamentarische Kommissionen: Die Milizverwaltung des Bundes (Berne and Stuttgart: Verlag Paul Haupt, 1981), 62ff. 45 Hans Geser, “Die Gemeinden in der Schweiz,” in Handbuch der Schweizer Politik, 1st ed., ed. Ulrich Klöti et al., 421–68 (Zürich: Neue Zürcher Zeitung, 1999), 429ff. 46 Ulrich Klöti, Theo Haldemann, and Walter Schenkel, Die Stadt im Bundesstaat – Alleingang oder Zusammenarbeit? (Zürich and Chur: Rüegger, 1993). 47 Adrian Vatter, “Federalism,” in Handbook of Swiss Politics, 2nd ed., ed. Ulrich Klöti et al., 78–99 (Zürich: Neue Zürcher Zeitung, 2007), 78. 48 Consultation takes place prior to the formulation of a project for a new law (legislative Act and related message). The aim of this process is not only to ensure at an early stage of policy formulation that federal bills are sensibly drafted and easy to implement but also to prevent a possible “optional referendum” (freiwilliges Referendum). 49 Fritz Sager and Isabelle Steffen, “Die Kantone im Vernehmlassungsverfahren des Bundes,” in Föderalismusreform: Wirkungsweise und Reformmodelle föderativer Institutionen in der Schweiz, ed. Adrian Vatter, 152–73 (Zürich: Neue Zürcher Zeitung, 2006). 50 Control and supervision of the implementation are in the hands of the federal authorities but are limited in scope and difficult to execute. The federal order therefore prefers cooperation to conflicts and rarely makes use of its powers. See Ingrid

Swiss Confederation

51 52

53

54 55 56 57 58 59

60

61

361

Kissling and Peter Knoepfel, “Politikflexibilität dank zentralstaatlichem Immobilismus? Handlungsspielräume kantonaler Vollzugspolitiken im schweizeri-schen politisch-administrativen System,” in Staatstätigkeit in der Schweiz, ed. Heidrun Abromeit and Werner W. Pommerehne, 43–61 (Berne: Haupt, 1992). Vatter, “Federalism,” 94. Fritz Sager, “Metropolitan Institutions and Policy Coordination: The Integration of Land Use and Transport Policies in Swiss Urban Areas,” Governance: An International Journal of Policy, Administration, and Institutions 18, no. 2 (2005): 227–56; Daniel Kübler, Fritz Sager, and Brigitte Schwab, “Governing without Government: Metropolitan Governance in Switzerland,” in Metropolitan Governance in the 21st Century: Capacity, Democracy and the Dynamics of Place, ed. Hubert Heinelt and Daniel Kübler, 169–87 (London, uk: Routledge, 2005). Compared to tendencies elsewhere in Europe, the structure of the state, whether federalist or not, seems to be a crucial explanatory factor. The assertion of cities against regional, or even national, institutions seems to be confined to unitary states (e.g., France and the United Kingdom), whereas in federal systems (e.g., Germany and Belgium) a balance between regions and cities can be found. See Daniel Kübler, Walter Schenkel, and Jean-Philippe Leresche, “Bright Lights, Big Cities? Metropolisation, Intergovernmental Relations, and the New Federal Urban Policy in Switzerland,” Swiss Political Science Review 9, no. 1 (2003): 261–82, at 276; Daniel Kübler, “Agglomerationen,” in Handbuch der Schweizer Politik, 4th ed., ed. Ulrich Klöti et al., 259–86 (Zürich: Neue Zürcher Zeitung, 2006); and Daniel Kübler, “The Lost Dimension of Swiss Federalism: Democracy Problems of New Regionalism in Meteropolitan Areas,” in Contemporary Switzerland: Revisiting the Special Case, ed. Hanspeter Kriesi, Peter Farago, Martin Kohli, and Milad Zarin-Nejadan, 256–80 (Houndmills, uk: Palgrave Macmillan, 2005). Ladner, “Local Parties in Switzerland.” Andreas Ladner, Die Schweizer Gemeinden im Wandel: Politische Institutionen und lokale Politik (Chavannes-près-Renens: Cahier de l’idheap, no. 237, 2008). Bundesamt für Statistik (bfs), Die Exekutiven und Legislativen der Schweizer Städte (Neuchâchtel: bfs, 2006). Ladner and Bühlmann, Demokratie in den Gemeinden. Statistik der Schweizer Städte 2007, http://www.stadt-zuerich.ch/internet/stat/home/ publikationen/staedtestatistik/STST_2007.html (viewed 2 February 2008). See Linder, Swiss Democracy; and Arend Lijphart, Patterns of Democracy: Government Forms and Performance in Thirty-Six Countries (New Haven, CT, and London, uk: Yale University Press, 1999). Ladner, Politische Gemeinden; Hans Geser, François Höpflinger, Andreas Ladner, Urs Meuli, und Roland Schaller, Die Schweizer Gemeinden im Kräftefeld des gesellschaftlichen und politisch-administrativen Wandel, Schlussbericht nf-Project No. 12-32586-92 (Zürich: Soziologisches Institut der Universität Zürich, 1996); Ladner et al., Gemeindereformen zwischen. For a comprehensive coverage of the problems and the reform activities of the Swiss municipalities, see Geser et al., Die Schweizer Gemeinden im Kräftefeld; Ladner et

362

Andreas Ladner

al., Gemeindereformen zwischen; Daniel Kübler and Andreas Ladner, “Local Government Reform in Switzerland: More ‘for’ than ‘by’ – but what about ‘of’?” in Reforming Local Government in Europe, ed. Norbert Kersting and Angelika Vetter, 137–56 (Opladen: Leske and Budrich, 2003); Andreas Ladner and Reto Steiner, “Reforming the Swiss Municipalities – Efficiency or Democracy?” in Contemporary Switzerland: Revisiting the Special Case, ed. Hanspeter Kriesi, Peter Farago, Martin Kohli, and Milad Zarin-Nejadan, 239–55 (Houndmills, uk: Palgrave Macmillan, 2005); and Andreas Ladner, “Switzerland: Reforming Small Autonomous Municipalities,” in Comparing Local Governance: Trends and Developments, ed. Lawrence E. Rose and Bas Denters, 139–54 (Houndsmills, uk: Palgrave Macmillan, 2005). 62 Andreas Ladner and Reto Steiner, Gemeindereformen in den Schweizer Kantonen: Konzeptuelle Grundlagen und empirische Ergebnisse einer Kantonsbefragung, Arbeitsbericht No. 28 (Berne: Institut für Organisation und Personal, Universität Berne, 1998), 24ff. 63 Alain Thierstein, Christian Kruse, Lars Glanzmann, Simone Gabi, and Nathalie Grillon, Raumentwicklung im Verborgenen: Die Entwicklung der Metropolregion Nordschweiz (Zürich: Neue Zürcher Zeitung, 2006). 64 Jean-Philippe Leresche, “Enclavement et Désenclavement: La Suisse et la Coopération Régionale Transfrontalière,” Revue Internationale de Politique Comparée 2, no. 3 (1995): 485–504.

United States of America m i c h a e l a . pa g a n o

Local governments in the United States number 89,476, and citizens view these governments as more effective service providers than their states and the federal government.1 In many states, the jurisdictional responsibility of some local governments, such as municipalities, overlaps with the jurisdictional responsibility of other local governments, such as public school districts. That is, the service-delivery areas and the tax-base sources (e.g., the property tax) of two or more local governments are spatially contiguous. All US residents live within and are subject to the taxing powers of a local government, whether an incorporated municipality, a special district that provides public education, and/or substate jurisdictions such as counties (known as parishes in Louisiana and boroughs in Alaska).2 All local governments have been created by their state constitution or a state statute. Local governments are “creatures of their states,” and they have many legal, regulatory, and financial relationships with their states. The interactive effect of these relationships might be considered a patchwork quilt of local and regional governments and governing structures.3 Although the patchwork quilt conjures images of great diversity across the fifty states and within each state, there are also similar issues and challenges that bind and link local governments in the federal system, such as immigration, the decline of manufacturing and rise of the service sector, and the internationalization of finance and supply chains. Yet the effects of such forces are heterogeneous: they benefit certain state and local governments (especially those of the southern and western United States) and metropolitan regions (e.g., New York, Los Angeles, Chicago, and Charlotte) where population and employment have grown, but they harm others (e.g., the metropolitan areas of Buffalo, Cleveland, and St Louis). Among the common challenges are the increasing pressures felt by local governments to simultaneously deliver quality services and hold down general tax burdens on citizens, to experiment with alternative service-delivery

United States of America

365

arrangements in cooperation with neighbouring governments as well as with private-sector entities, and to shift the cost of services from undifferentiated taxpayers to users. The nation’s metropolitan regions and cities are powerful engines of the national economy, which explains their growing demand for financial and governing autonomy in meeting the needs of the globalized economy.4 These are some of the issues and challenges addressed by this chapter.

introductory overview US federalism was founded on divided, shared, and limited powers. In Federalist 51, James Madison, the father of the US federal system and Constitution, argued that the powers of governments should be divided by two sorts of “auxiliary precautions”: not only a separation of powers within the institutions of the federal and state governments but also a division of authority between the general government and the states. Local governments are not mentioned in the US Constitution because they are deemed legal creatures of their states. Their importance to the federal polity, however, should not be underestimated. As of 2007 the Census Bureau counted 367 metropolitan regions and 89,476 local governments in the fifty states. The population of the United States surpassed 304 million in June 2008, with approximately 83% living in metropolitan areas, defined as an urbanized area with a central city having a population of 50,000 or more plus contiguous counties socio-economically integrated with the centre. More than 24.5 million people live in the nation’s largest cities, those with populations exceeding 1 million. Nearly one-fourth (23.3%) of the population reside in metro areas of more than 5 million people, whereas 30.4% live in metro areas of 1 to 5 million people.5 In July 2006, 44.3 million people (or 14.8% of the total US population) were Hispanics, whereas 40.2 million were blacks, 4.5 million were Native Americans, and 1 million were Native Hawaiians and Other Pacific Islanders. Non-Hispanic whites accounted for 198.7 million persons. Hawaii had the largest percentage of “minority”group residents (75%), followed by New Mexico and California (both with 57%) and Texas (52%). The minority population of the District of Columbia was 68%. About 51.3% of Americans are Protestants, and 23.9% are Roman Catholics. Per capita gross domestic product (gdp) in 2007 was $45,800. About 12.5% of the US population were foreign-born in 2006, and English is the principal language for 82.1% of Americans. The US Constitution of 1788 established three branches of government, with the president being elected by electors chosen by voters within each state.6 The number of electors per state is determined by population. A bicameral legislature was established to represent states (two senators per

366

Michael A. Pagano

state were appointed by the state legislatures to serve six-year terms in the Senate) and the people (one representative per 30,000 people to serve two-year terms in the House of Representatives). The Seventeenth Amendment to the Constitution (ratified in 1913) required the popular election of senators, and since 1910 the House of Representatives has been fixed at 435 members. The general government is given enumerated powers, as articulated in Article 1, Section 8, of the US Constitution, whereas the unspecified powers retained by the states are reaffirmed in the Tenth Amendment to the US Constitution, referred to as the “reserve clause”: “The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the states respectively, or to the people.” Over time, the powers of the federal government have expanded to include powers that are “necessary and proper” to carry out its enumerated powers, as well as powers to “promote the general welfare,” allowing it to encroach upon areas of traditional state responsibility, such as education, health, and welfare.7 The US Supreme Court plays a major role in defining the powers of the federal government vis-à-vis the states. A two-party political system has been the dominant party arrangement. The Democratic and Republican parties have been the primary parties since the mid-nineteenth century. Except for the existence of other parties in a few states and cities, the Democratic and Republican parties are the principal parties in the state and local arenas as well.

h i s t o r y, s t r u c t u r e s , and institutions of local government Local governments have a long history in the United States as political entities that deliver certain services to the public and as polities that in theory reflect the will of the citizens. Under British, French, and Spanish colonial rule, a system of administration was created to ensure implementation of the Crowns’ laws. Local self-governance with elected officials was widespread throughout British North America. Over time, a variety of local governments evolved and became part of the permanent fabric of the American political system. Today, local governments are organized entities that possess substantial autonomy over their administrative and fiscal affairs and that are accountable to the public.8 However, the assignment of functional responsibilities is not uniform across the fifty states. Counties, a government form derived from the English system of shires, are administrative units of states, and their boundaries were often drawn based on the distance a person could travel on horseback in one day. County governments are general-purpose local governments that were created initially as administrative arms of the states. Over time, many evolved into fairly autonomous governments with directly elected officials or commissioners

United States of America

367

who adopt budgets, raise revenues, and enact local ordinances.9 Counties’ functions tend to include social welfare (as an assignment from the state), healthcare, prisons, courts, parks, refuse collection, and roads, among others. Although county governments exist in forty-eight states, there are exceptions: they do not exist in Connecticut and Rhode Island. In Virginia and Massachusetts, cities exist independently of counties. Most other cities and municipalities in the United States operate within overlapping county governments. Several states have merged some county and city governments, such as in Philadelphia, San Francisco, Honolulu, New York, and Boston, the latter merging with parts of Suffolk County. Townships are local governments in only twenty states. In a few of these states (e.g., New Jersey and Pennsylvania), townships can assume generalgovernment powers, much like municipalities. In others (e.g., Ohio, Illinois, Michigan, and Wisconsin), townships have limited powers, typically for the provision of roads, bridges, and police services, for which they can levy a tax or fee. In these latter states, townships were prescribed in the Northwest Ordinance, which was approved under the Articles of Confederation in 1787 and then adopted wholesale by the Congress of the United States assembled under the Constitution of 1788. Sections of land were also set aside within townships for “common schools.” Municipal corporations, usually referred to as cities, towns, boroughs, or villages, are general-purpose governments with directly elected legislative bodies, usually called councils. They have budgeting, revenue-raising, and ordinance-making powers. Although the precise assignment of functions to municipal (as well as county) governments varies by state, municipal corporations are granted police powers and are charged with protecting residents’ safety, health, and welfare, typically through the provision of public safety (e.g., fire protection, police, and emergency medical services), zoning and land-use powers, and local public works (including streets, bridges, and water and sewer systems). Typically, municipalities are governed either by an elected mayor and city council, in which the mayor is the executive officer, or by a manager system, in which the council hires a professional municipal manager as the executive. Other forms of municipal government include: the commission form, in which each city-council member (or in the case of counties, each county commissioner) is assigned administrative responsibility for a particular function, such as highways or health; and the town-meeting form, common only in the New England states, which is a form of direct democracy in which all voters participate in adopting budgets and ordinances. Special districts are limited governments that provide a specific service, such as potable water, wastewater treatment, transit, housing, and port services, among others. Approximately 91% of all special districts perform a single function (typically water and sewer, fire protection, housing and

368

Michael A. Pagano

community development, or natural-resource management), whereas the remainder perform multiple functions. Special districts are granted taxing authority over a clearly designated region (e.g., most transit agencies are permitted to collect a regional tax) and are authorized to “sell” their services either by setting a fee or charge for a unit of service (e.g., water districts collect a fee from users based on their consumption of water) or by setting tax levies for debt-retirement purposes. Special districts are usually given the authority to issue debt for capital projects, namely the construction and renovation of infrastructure. Special districts may be either legally dependent on other local governments or independent, and the governing boards of special districts may be appointed by mayors, governors, and other elected officials. However, special districts that have any tax powers are almost always governed by a board elected by area voters. Local governments can also create legal entities known as public authorities for the purpose of issuing debt and charging fees for the construction and use of infrastructure. The first public authority in the United States was the Port Authority of New York, established in 1921 as a bi-state compact between New York and New Jersey to administer the common harbour interests between the two states (the name was formally changed in 1972 to the Port Authority of New York and New Jersey). The public authority, as usually defined, is governed by a city-appointed board and lacks taxing authority, yet it often possesses the power of eminent domain, which allows local governments to take private property for public purposes with fair compensation to the owner. The major purposes of public authorities and special districts are “to provide a vehicle for using nonguaranteed debt and to finance activities out of fees and charges or special benefits taxes.”10 Creation of special districts and public authorities, as well as tax-increment finance districts,11 business improvement districts, special taxing districts, and the like, is also pursued for the purpose of enhancing political and administrative flexibility in service delivery, debt issuance, and revenue raising.12 The past fifty-five years have witnessed growth in the number of special districts for a variety of reasons. Restrictions on municipalities at times encouraged the formation of special districts by the states so that a specific service (usually one with a measurable product that can be priced on a unit-of-consumption basis, such as water) could be provided without competing with other “general” services.13 Enhancing access to the bond market was also a reason for special-district growth. At times, the creation of municipal corporations and special districts in the twentieth century was motivated by individuals seeking to exclude certain groups (i.e., segregation by race and class).14 In other words, special districts and municipalities were sometimes created (1) to address concerns other than inefficiencies in service delivery due to scale diseconomies or (2) to achieve higher service standards.

United States of America

369

A particular type of special district is a school district, which is separated from special districts in this presentation because all states require the public provision of elementary and secondary education (including grades 1 to 12, with some states requiring kindergarten as well). Public education is not a federal government responsibility, although many public acts providing financial support (e.g., Elementary and Secondary Education Acts) and requiring accountability for performance (e.g., No Child Left Behind Act of 2001) have been enacted by the US Congress during the past fifty years. Some states assign the education function to counties and cities (these are known as dependent school systems, of which there are 1,508),15 whereas forty-five states have created single-purpose independent school districts (these are known as independent school systems, of which there are 13,051). In only one state, Hawaii, is public education administered directly by the state. School districts are governed by directly elected boards that set tax rates, approve curricula, and hire the superintendent who manages the schools. A Landscape of Thousands of Local Governments Local governments employed 13.7 million people in 2004, amounting to 64.5% of combined federal-state-local government employment. This marks a substantial increase from 2.8 million (or 47% of total federal-state-local government employees) in 1946. At the same time, the number of local governments changed dramatically, reaching 89,476 as of the last government census in 2007. These numbers mask the wide variation in composition among local governments. School district consolidations, for example, reduced the number of independent school districts from 67,355 in 1952 to 13,051 in 2007, whereas special districts experienced an opposite trend, surging to 35,301 by 2007, an increase of 202.9% since 1952. Changes in the number of other local governments were remarkable as well. Municipal governments amounted to 19,492 in 2007, compared to 16,807 in 1952; counties consolidated somewhat as a result of rural depopulation, decreasing by 19 to 3,033; and 683 townships were consolidated or absorbed by incorporated municipalities, declining to 16,519 from 17,202. The consolidation of school districts can be explained primarily by states’ assuming greater control over, and providing more resources to, local schools since 1942, when the Census Bureau counted 108,579 independent school districts. States at one time required compulsory attendance through grade 8; now it is through grade 12 or to age sixteen or seventeen. Curricula requirements set by the states became more comprehensive, and minimum standards for graduation were imposed by the states, leading to more course offerings. Over time, states provided increasingly more revenue to support local schools, which tended to be funded almost entirely from the local

370

Michael A. Pagano

property tax, in large part to comply with state-court rulings and to modernize and upgrade curricula. States also devised equalization formulae to distribute additional state aid to poorer school districts (i.e., school districts with low property values) or to “high need” schools (e.g., low-performing schools and those having large numbers of students with disabilities), although each state defines an “adequate” per-pupil amount of spending differently. By 2005 nearly half of all revenue (46.9%) for public schools was provided by the states. School consolidation as a mechanism for combining resources, meeting higher minimum standards, and achieving scale economies, especially in light of population shifts from rural to urban areas, was in many cases the outcome. Consolidating or merging local governments and services among a host of regional providers has been promoted for over a century. Yet fewer than one in five proposals has been approved by voters. Where implemented, no proposal has ever consolidated all local governments in the region, except for the creation of New York City in 1898 through a consolidation of all local governments in a five-county area. More typically, cities merge with neighbouring cities, or a city and county consolidate their governments. But school districts are almost always excluded from consolidation proposals, as are other special districts such as mass transit. Consolidating local governments is a laborious process of fact-finding, public discussions, and state petitioning. In many states, it also requires voter approval. Advocates for consolidation often point to the benefits of economies of scale, reduction in duplicate services and red tape, enhanced coordination among the various stakeholders of infrastructure investment, better transportation planning, and more economic growth opportunities for a broader region. As metropolitan regions became increasingly urbanized and as more unincorporated areas were incorporated as new municipalities, the possibilities diminished for cooperation among governments and for a unified strategy and approach to economic growth. Reformers called for abolishing outdated local government structures, such as townships whose limited responsibilities (e.g., roads and public safety) could be absorbed by city or county governments, and illogical municipal boundaries that had little relevance to natural groupings of citizens and businesses. Others argued that all citizens and local governments within “economic regions” depend on the region’s components working together toward a common purpose. Public policies designed to enhance the economic and social well-being of a region, then, should be coordinated and thought about in terms of a metropolitan economic region rather than regarded as an uncoordinated set of potentially contrary policies that balkanize the region.16 As powerful as these calls for consolidated or unified government might appear, loyalty and attachment to one’s city, and fear of (racial and class) integration and substandard schools, have resulted in the failure of the

United States of America

371

overwhelming majority of consolidation proposals. In the past century, only 18% of all city-county consolidation proposals brought before voters were approved by them.17 In the past thirty years, the approval rate has increased compared to the historical levels, in part, according to some analysts, due to focusing on mid-sized counties with more homogeneous populations rather than on the larger ones.18 Not all reformers place their faith in the curative effects of local government or city-county consolidation. Over a decade ago, Allen Wallis argued that calls for consolidation were being replaced by calls for metropolitan governance or regionalism based on the use of voluntary cooperative mechanisms.19 The work of many scholars over the past forty years has concluded that decentralization can encourage cooperation and coordination of proximate governments for the purpose of enhancing the well-being of the broader region in an efficient manner.20 A cooperative arrangement among local governments to take advantage of scale economies, such as contracting out a service to a local government (e.g., fire suppression) or creating a regional procurement collective, is a voluntary act based on a formal assessment by the participating governments. Because these are voluntary arrangements, these governments are continually searching for better, lower-cost arrangements with other governments, the nonprofit sector, or the private sector. In the early 1990s government reform was being pushed by the “reinventing government” movement, which called for governments to steer not row, meaning that governments need not “produce” (or organize and deliver) a service but could, or should, “provide” (or contract with a private or nonprofit agency) the service or ensure its delivery.21 Competitive forces, according to this perspective, would increase the quality of recruits and lower the cost of service provision. All governments, then, should be encouraged to search for the best service producers. Continuously searching for more costeffective arrangements allows local governments to maintain their legal integrity, allows citizens and taxpayers to maintain their connection to the government and identify with it, and engenders a flexible web of interactions among a host of players. Local governments have adapted to challenges in their environment by, at times, cooperating with other local governments in the region to provide services through voluntary contractual arrangements called interlocal agreements. The fragmented local governments in Allegheny County (in which Pittsburgh is the major city) and St Louis County, for example, have been examined to understand the extent to which interlocal agreements and contracts have improved efficiency and reduced tax burdens.22 Studies conclude that local governments’ flexibility in contracting with other local governments has been beneficial.23 Interlocal agreements and other forms of cooperation between, and among, governments are often touted as approaches for local governments

372

Michael A. Pagano

to both maintain their identity and at the same time take advantage of scale economies.24 Nevertheless, local governments are also in competition with each other. Interjurisdictional competition can constrain tax burdens on individuals, promote competitive service-delivery systems, and require continuous assessments of government performance.25 In the absence of competition, local governments can behave as monopolists, ignore or distort consumer demands for services, and create budgets that do not reflect the true cost of service provision. If taxpayers (i.e., individuals and firms) become disenchanted by the bundles of services provided by the local government at the tax-price (or fee-price) of the services, the option to “exit,” or leave, the jurisdiction might be taken.26 Local governments, as a consequence of the continuous threat to exit, behave in a competitive manner, mixing the quantity and quality of services to match the perceived preference of the taxpayers and adjusting the tax prices for services and the tax burden on citizens to ensure alignment with other local governments. Interlocal agreements, or shared service-delivery arrangements with other local governments, will continue to grow in importance. Recognizing the importance of estimating transaction costs in service delivery, local governments are investigating voluntary transactions for negotiated periods of time. These transactions are often linked to performance outcomes. These outcomebased measures, then, provide feedback to the local governments that informs the deliberative process of the next round of interlocal agreements.27 Local governments in the large metropolitan regions have also adapted to their shifting environments but not by following one particular model of centralizing or decentralizing service-delivery responsibilities. If anything characterizes the regional governance models of metropolitan areas in the United States, it is the heterogeneous adaptation to the legal, economic, and social foundations of those regions. The New York metropolitan area, for example, is home to more than 18 million people, of which over 8 million live in the municipality called the City of New York. The geographic scope of city government was established in 1898 with the consolidation of five counties and all local governments into one city, making it one of the more centralized regions in the nation in population and land mass. Yet the larger metro region is governed by more than 200 municipalities, counties, and special districts. Chicago’s metropolitan region, on the other hand, with only 9.2 million people, of which 2.9 million are in the incorporated municipality of Chicago, is more fragmented and decentralized. The six-county metropolitan region is home to 1,246 local governments, including 270 incorporated municipalities. Los Angeles, a city of 3.7 million people within a metropolitan region of over 16 million, is the second largest city in the nation. But it is only one of nearly 380 local governments in its metropolitan region. As these three cases illustrate, no one model of regional governance predominates in the United States.

United States of America

373

constitutional recognition of local governments Creating, terminating, and consolidating local governments can be realized only with the express approval of the state. The federal Constitution does not mention local governments, whereas all state constitutions do. States create local governments through powers of incorporation, and states can abolish local governments, regulate their behaviour, limit their taxing authority, and in all ways make them comply with their demands within state constitutional limits. The constitutional and legal lives of local governments have been shaped by the ruling of a state judge in Iowa, John Dillon, who declared in 1868: “Municipal corporations owe their origin to, and derive their powers and rights wholly from, the legislature. It breathes into them the breath of life, without which they cannot exist. As it creates, so it may destroy.” Dillon’s construction of local governments was not shared by all observers or judges at the time. Judge Thomas Cooley of the Michigan Supreme Court held that local governments had an inherent right of selfgovernance.28 Yet Dillon’s Rule has enjoyed the most legal and popular support. In the 150 years since then, reformers have encouraged state legislatures to enact, or placed on the ballot through the initiative and referendum process, constitutional or statutory provisions that give local governments, or certain local governments (e.g., municipalities), expansive or restrictive powers to tax, legislate, provide services, and otherwise meet the needs of local citizens. Legal provisions for local government home rule have been granted by constitutional provision in thirty-six states and by statute in eight states. One interpretation of home rule, based on the common-law maxim imperium in imperio, essentially grants local governments broad autonomy in service delivery, taxation, and other areas of traditional local concern within the constitutional strictures of the state.29 Another version, which fairly weakens any liberal grant of home-rule authority, is the common-law ultra vires rule, which allows states to restrict the powers of local governments to only those things that are granted to them. A delegation-ofpowers arrangement, or Fordham model, grants local governments broad discretion to do what they want, except for the fields of felony law and civil relations. Nevertheless, the powers of local government under any grant of authority by states, whether restricted or expansive, can be affected and altered by statutory or constitutional adjustment, although constitutional changes are more difficult to enact than statutory changes.

governance role of local governments Local governments provide goods and services to people and firms that consume those services in one place, whether in the home, the school, on the

374

Michael A. Pagano

street, or in a park. These places of consumption, however, are the target areas of, in many cases, more than one local government. School districts, for example, deliver education to children who live in a household; the same household receives public safety from the city fire and police departments; the family consumes water and sewer services from the water district; and, if poor, the family receives welfare assistance from the county. Moreover, many states regulate the fiscal policies of local governments by, for example, capping the property-tax levy. States also regulate the fiscal and operational policies of public school districts. Local governments and states, then, have overlapping responsibilities: several governments provide a distinct bundle of services to households or citizens,30 such as public education; and several governments provide similar services to households or citizens, such as the public-safety responsibilities of the city (police), county (sheriff), and state (state police). The functional responsibilities of local governments today are not uniquely assigned to one local government or another. Although there is no prescribed set of required functions for each type of local government, there are commonalities.31 Municipalities and counties (and townships with general-government responsibilities) provide the following services, among many others: utilities (water, electricity, gas), public safety (police, fire protection), highways and transportation, general governmental administration, social services and income maintenance, education and libraries, parks and recreation, community development and housing, sewerage, and solid-waste management. Special districts have been created for the following services in at least a few states: air transportation, cemeteries, electric power, fire protection, gas supply, health, highways, hospitals, industrial development, libraries, mortgage credit, natural resources, parking facilities, parks and recreation, sea and inland port facilities, sewerage, solid-waste management, transit, and water supply. Local government budgets amounted to $1.1 trillion, or 25.7% of total federal-state-local government spending in 2002. State spending was $1.3 trillion, and the federal government, which does not operate under a balanced-budget requirement (as do all local governments and all but one state) and which can thus deficit spend, had a budget of $2.1 trillion. Local government spending increased in constant-dollar terms between 1992 and 2005. The largest expenditure item was education, which increased from $319 billion to $439 billion during the period 1992 to 2005, an increase of 37%. Spending on public safety increased the most in relative terms, by some 42%, and local government expenditure on social services and utilities increased to $122 billion and $116 billion, respectively, in 2005.

financing local governments Although nearly all general-purpose local governments and school districts have the legal authority to place a tax on real estate and structures (i.e.,

United States of America

375

property tax), their reliance on the property tax has waned over the past several decades. As states have granted access to other forms of general tax revenue, or as they have not legally proscribed access to other revenue, there has been a gradual adoption of other forms of general taxing, especially local option taxes on retail sales and on income. Local governments in those states that are authorized to tax sales or income have opted to diversify their revenue structures. School districts and townships, nevertheless, remain highly dependent on the property tax, whereas counties and municipalities have diversified considerably. Local governments are also permitted to charge a fee for certain services. Fees, or user charges, have become the fastest growing and most important type of own-source revenue for counties and municipalities. Fees and charges continue to be the dominant revenue source for special-district governments because these governments were created in many cases to provide a service whose characteristics are similar to those of private, quasi-monopoly goods, such as water, transit, electricity, and sewerage. Between 1972 and 2002 counties reduced their reliance on the property tax from 63% of own-source revenues to 39%, while increasing user-fee reliance from 26% to 43%; municipalities, in a similar vein, increased userfee reliance from 28% to 40%, while reducing property-tax reliance from 47% to 29% and increasing their reliance on other general tax revenues (i.e., sales, income, and other) from 26% to 31%. Even school districts and townships, although still highly reliant on the property tax for own-source revenues, have diversified their revenues. In 2002, 79.3% of school districts’ own-source revenues was derived from the property tax, down from 86% in 1972, while fees and charges jumped from 12.3% to 17.5%. Townships’ reliance on the property tax declined from 89.1% to 72.7% during the same period, and their user-fee reliance increased from 10.9% to 20.6% (table 12.1). Local governments now rely more on user charges and fees to support their budgets than they have at any other time in their history. Yet the relative decline in general tax support for budgetary outlays has not been replaced by an increase in intergovernmental aid, except for state aid to schools. Federal aid has remained relatively constant over the past twenty years, amounting to approximately 4% of local governments’ total revenues, and state aid has increased only slightly from 30% in the 1982 financial year to 32% in the 2002 financial year, and most of that increase supported the education function of local governments. Since the late 1970s, when homeowners experienced rapidly inflating property values and attendant property-tax liabilities, local officials have been encouraged to hold down tax increases and individual tax burdens. Citizens and elected officials can impose Tax and Expenditure Limitations (tels) on state and local budgets. The antitax sentiment is best illustrated by a 1978 citizens’ initiative in California (i.e., Proposition 13) that rolled

376

Michael A. Pagano

Table 12.1 United States: Percentage own-source revenue composition of local governments, 1972 and 2002 Own-source revenues

Counties

Municipalities

Townships

School districts

Special districts

Property

39.3

29.1

72.7

79.3

16.6

Sales and gross receipts

12.5

17.7

0.5

1.8

5.9

2.1

7.6

2.2

0.8

0.0

2002

Income taxes

3.4

5.7

4.1

0.6

1.3

Charges and misc. revenue

43.2

40.1

20.6

17.5

76.2

Property

63.0

46.6

83.3

86.0

24.5

Sales and gross receipts

6.6

13.6

2.0

0.3

1.3

Income taxes

1.4

8.0

0.8

0.6

0.0

Other

1972

Other Charges and misc. revenue

2.6

4.3

3.0

0.8

0.0

26.4

27.5

10.9

12.3

74.1

Source: US Census Bureau, 2002 Census of Governments, Government Finances, 2002, http://www.census.gov/prod/2005pubs/gc024x5.pdf (viewed 10 February 2008).

back the property-tax rate and limited annual growth in property-tax liabilities to 1%. Between 1978 and 1980, “43 states had implemented some kind of property tax limitations or relief.”32 The balanced-budget requirements that govern local governments’ fiscal policies are universal. The balanced-budget policy requires that current-year revenues (including any carryover balances from the previous year) equal or exceed expenditures. Deficit spending for operating purposes is not an option. Most local governments certainly are permitted to borrow funds for the construction and purchase of capital facilities (i.e., infrastructure) or fixed assets, such as streets, school buildings, water and wastewater treatment facilities, mass transit, jails, and courthouses. Long-term debt for local government capital facilities

United States of America

377

is restricted by states, usually by capping the amount of debt a local government can issue or the total amount of outstanding debt it can hold. When local governments pledge their taxing powers to retire the debt by guaranteeing their full faith and credit, it is referred to as general-obligation debt. Local governments can also issue revenue debt if the facility funded by the loan generates an income stream (e.g., payment for water and sewer services). Revenue bonds, which pledge a portion of the income stream toward debt retirement, do not pledge the local government’s full faith and credit. Consequently, the risk of owning revenue debt rests with the investors in the facility rather than with the government. This results in revenue bonds being priced higher than general-obligation bonds, which pledges the government’s taxing powers to retire debt. In recognition of the differential capacity to generate adequate revenues for service delivery, states can, and often do, create equalization formulae or revenue-sharing grants that redistribute wealth to low-resource jurisdictions. Most states’ formulae for aiding public schools contain a factor that includes an indicator of property wealth, or per capita income, or some other resource-related measure of the school district. State revenue sharing is typically a program that provides unrestricted aid to local governments related to some measure of need, such as poverty, property values, or income. State aid to local governments has fluctuated slightly as a percentage of local government revenues over the past thirty years. In 1972 state aid to municipalities amounted to 20% of total municipal government revenues and 36.8% of total local government revenues (excluding municipalities); by 2002 state aid had declined slightly to 18.5% of total municipal revenues and increased slightly to 39.9% of local government revenue (excluding municipalities). Even though the proportion of city revenues and of other local government revenues derived from the states remained relatively smooth throughout the period, the actual dollar contribution from states to local governments paints a different picture. State aid to nonmunicipal local governments from 1972 to 2002 increased from $26.7 billion to $293.1 billion, or a ten-fold increase, whereas state aid to municipal governments during the same period grew from $8.4 billion to $62.4 billion. The growth in state aid to local governments can be explained in large part by states’ assistance to just one of those governments, namely public school districts. In 1972, 44.3% of expenditures by public school districts were derived from state aid; by 2002, state aid had increased to 56.4%.33 State aid to all local governments in 2002 was $355.7 billion, of which 58.3% was directed to school districts.

378

Michael A. Pagano

Local Governments and the Federal Government Although local governments were partners with the federal government during the nineteenth century, in part as a consequence of the federal government’s control over waterways and harbours, which placed them in contact with municipalities, local governments operated with little direct and sustained contact with the federal government. The Great Depression of the 1930s changed the relationship significantly. Federal aid to local governments as direct beneficiaries rose dramatically, especially in the area of public works, through the Works Progress Administration, the Public Works Administration, and the Civilian Conservation Corps; then aid was extended to hospitals and welfare and later to education. The federal government now provides support for highways, elementary and secondary education, libraries, hospitals, police and fire services, mass transit, and wastewater-treatment construction, among others. Local governments, in return, developed a strong political presence in Washington, dc, as federal aid and regulations increasingly affected local government operations. Although the lines demarcating the responsibilities between local governments and the federal government were fairly clear prior to this time, they had become quite blurred by the mid-twentieth century, causing some analysts to speak about “cooperative” federalism or “marble-cake” federalism. Federal aid to local governments reached its apogee in the late 1970s. In 1982 a drastic reduction in federal aid accompanied a sweeping transformation of federal-local relations initiated by President Ronald Reagan. Direct federal aid to local governments declined, and the most visible program, General Revenue Sharing (State and Local Fiscal Assistance Act of 1972), came to an end in 1987, severing direct unrestricted aid to local governments (the state portion ended in 1981).34 Nevertheless, the decline in federal support coincided with a surge in federal regulatory actions. If the policy movement toward devolution told local governments to live within their means, the federal government’s presence did not by any means evaporate. Federal aid as a means of directing policy was replaced by federal partial pre-emption, in which the federal government pre-empts the fiscal or service-delivery powers of state and local governments, resulting in a fundamental shift in intergovernmental relations from an arrangement that at one time had been characterized as “cooperative federalism” to one that reflects the new relationship of “coercive federalism.”35 Either way, local governments (and states) were forced, or guided, by the heavy hand of Washington.

supervising local governments Local governments must abide by the regulations imposed by their states and by the federal government. Since the 1980s local governments have

United States of America

379

complained about federally imposed mandates, but state mandates are also the object of their frustration.36 Two methods have been adopted as mechanisms to limit the fiscal effects of state mandates. One is called “fiscal noting,” in which states are required to identify the fiscal impact of their legislation on local governments, a practice that has been approved by more than half the states.37 The other is called “mandate reimbursement,” in which the states are expected to cover the full costs incurred by local governments for mandated activity. This has been approved in fourteen states.38 Because local governments are creatures of their states, states monitor their fiscal health and perform a fiduciary oversight responsibility. Although the federal government can become involved in local government bankruptcy cases through Chapter IX of the federal tax code, it is highly unusual for local governments to file for bankruptcy.39 The process of filing in federal bankruptcy courts involves demonstrating that the local government has no liquid assets and has failed to meet state-emergency or fiscal-exigency standards. More likely, states monitor the fiscal position of local governments, and when the local government reaches some predetermined point that the state considers to be at or near “insolvency” or “fiscal exigency,” the state will take over the operations and/or financing of the local government. This action is seldom employed by states, in large part due to the broad-based taxing powers of local governments, although some poor or underperforming school districts have been subjected to state takeover.40 Yet states can, and do, take over the budgeting and operating powers of other local governments, such as occurred with New York City in 1976, Cleveland in 1978, Miami in 1996, Orange County (California) in 1994, and Buffalo in 2003. States do not, however, assume the debt of their local governments, nor do states (or the federal government) back the debt issues of local governments. Instead, local governments pledge (1) their own full faith and credit (not that of their states) when issuing general-obligation bonds or (2) a portion of the revenue stream from an income-producing facility when issuing revenue (or nonguaranteed) bonds.

intergovernmental relations Local governments interact with the federal government less frequently than with their states. Local and state governments’ responsibilities during the first century and a half of the federal republic’s existence overlapped little with the federal government’s responsibilities of regulating commerce, providing a common defence, coining money, and exercising other powers listed in the US Constitution. For the past century the federal government has expanded its activities into a variety of areas that had been the primary purview of the states and local governments, including funding and regulating health,

380

Michael A. Pagano

education, welfare, and transportation as well as ensuring pure food and drugs, among other activities. Consequently, all three orders of government now share overlapping responsibilities for many of these activities.41 Local governments today, then, are linked to the federal government, as well as to their states. These connections vary by activity and function but can include funding, regulation, and coproduction of services. The importance of the regulatory environment in shaping the intergovernmental system was documented by the US Advisory Commission on Intergovernmental Relations (acir) before its untimely demise in 1996. The acir provided a historical count of federal pre-emption statutes, reaching over 557 in the late 1980s, which according to the latest estimates by the congressional agency, the General Accounting Office (renamed the Government Accountability Office in 2004), may be approaching some 700.42 In 1995, however, Congress passed the Unfunded Mandates Reform Act (umra), which was intended to reduce the number of federal unfunded mandates and also to require Congress to estimate the fiscal impact of proposed laws.43 Yet umra’s effectiveness in restraining federal intervention in the affairs of local governments is suspect because umra requires an estimation of costs associated only with “statutory direct orders” (these do not deal with constitutional rights, prohibition of discrimination, national security, and social security) and not an estimation of costs associated with other forms of regulation, such as conditions (i.e., rules) of federal aid.44 In addition to congressional intrusion into the affairs of local governments, the regulatory environment created by the federal government also includes the federal courts, which intervene in a variety of arenas, from environmental policy to living conditions in jails; one federal court has even required a local school district to raise taxes to meet race desegregation orders.45 Local governments have organized themselves to protect their interests and relative autonomy and to obtain financial aid. Their lobbying organizations, known as public-interest groups, include the National League of Cities, US Conference of Mayors, National Association of Counties, National Association of Towns and Townships, and smaller groups. These organizations are nonpartisan and employ professional staffs that undertake research, technical assistance, and training. The interests of municipalities and counties within states are also represented by state-specific lobbying organizations, such as the state municipal leagues (representing the interests of cities) and county associations. These public-interest groups are active in state capitals and in Washington, dc, in promoting their individual constituencies’ needs and, at times, their collective needs. In the absence of either a federal government department that represents the interests of local governments or a local government department in a state government,46 the voices of local governments, as reflected in the public-interest groups, are sometimes influential in guiding legislation and regulations in both the national and state arenas.

United States of America

381

political culture of local governance Two dominant national political parties, the Democratic Party and the Republican Party, compete for power and control of many local governments (although in some areas of the country, other parties predominate, such as in Minnesota with the Democratic-Farmer-Labor Party and in New York City with the Liberal Party and Conservative Party). However, a majority of local governments require nonpartisan elections, and some local governments’ governing boards are appointed by city mayors and state governors. The mayor of the nation’s federal district, the District of Columbia, is elected, as is the city council, and prior to 2005 the city’s budget was controlled by the US Congress. Local government elections are governed by state law. Consequently, there is no one date for local elections nationwide, although states do coordinate state and local elections with federal elections (the second Tuesday in November of even-numbered years). Turnout for elections in November tends to be much higher than at other times. In 2004 approximately 61% of eligible voters cast ballots in the presidential election, the highest turnout since 1968.47 The turnout in nonpresidential, even-numbered years since 1974 has ranged from 42% to 47%. In 2006 the nation’s highest turnout was in Minnesota (60%), South Dakota (59%), Montana (56%), and Vermont (55%), with the lowest turnout in Mississippi (30%), Texas (31%), North Carolina (33%), and West Virginia (33%).48 When elections are held in odd-numbered years, and at times other than November, voter turnout tends to be lower. There were nearly a half-million local elected officials in 2005, including officials in all types of local government. Prior to 1970 few local government offices were held by minorities. For example, 715 city and county offices were held by blacks in 1970, a number that had increased to 4,485 by 1990 and to 5,753 by 2002.49 The number of Hispanic elected officials in city and county governments was 1,316 in 1985, 1,819 in 1990, and 2,151 in 2002. Moreover, in 2006 in the 1,137 cities with populations greater than 30,000, nearly one in five mayors (17.3%) were women.50

i s s u e s a n d tr e n d s The challenges confronting America’s local governments and regions are manifold and varied, but they are not the same for each type of government. General-purpose governments face different issues than do special districts, due in part to the broad array of services and broad-based taxes of the former, compared with the latter’s narrow revenue sources and reliance on user fees. The nation’s school districts, which are highly dependent on the property tax and subject to tight scrutiny and regulation by their states, and

382

Michael A. Pagano

increasingly by the federal government, are subject to an even different set of issues. Yet even though different local governments face varying challenges, and even though the challenges vary across the states, a few observations about general trends can be made, namely the tugging and pulling between forces arguing for consolidation of local governments and those extolling the virtues of decentralization, the increasing prevalence of market-like pricing of government services, and the calls to both enhance local government autonomy and meet future problems regionally. Complexity in governing arrangements among local governments has been recognized over the past few decades by scholars and practitioners alike, who speak about regionalism or metropolitan governance. Regional or metropolitan governance allows for, and recognizes, the fact that the authority to govern over a spatially contiguous area is no longer within the purview of the standard players in American federalism, namely the horizontal (overlapping) local governments, state government, and federal government. Metropolitan governance must now recognize, and include, the diversity of nonprofit service providers (especially the growing influence of religious organizations); the intrusion and involvement of universities, colleges, real estate developers, banks, chambers of commerce, and the broader corporate community (especially with regard to their engagement in economic development, transportation, land use, and housing); and the public-private partnerships and the sharing of service-delivery responsibilities with private-sector providers. The rapid rise in nongovernmental, nonprofit service providers, which rely on local government contracts as crucial revenue sources, has led some observers to refer to the “hollow state.”51 Research suggests that the contracting-out of services is becoming commonplace. The International City/County Management Association (icma) has published a book that outlines the intricate legal and financial procedures that local governments can follow to perform their service-contracting activities efficiently, effectively, and adequately.52 As a consequence of the engagement of local governments with the private sector in searching for solutions to providing efficient services, the concept of third-party government has become an important part of the lexicon of governance. This is a formal recognition of the importance of nongovernmental stakeholders in both shaping and implementing public policy. The resulting complexity in coordinating service delivery from several government providers challenges the managerial capabilities of local governments. The scale of complexity in managing program delivery, which requires input from or communications with a variety of organizations and other intergovernmental players, has spawned increasing interest in how the intergovernmental system can be better managed.53 More precisely, how can service delivery by one order of government (or a contractor of one government) be effectively

United States of America

383

coordinated with other governments and stakeholders? The intertwining of the relevant government actors requires collaboration at some basic level to ensure that the intergovernmental system meets citizen demands.54 The challenges of intergovernmental management have also taken on a new urgency in the past decade, as the inner-ring suburbs have begun to experience problems that have been thought to exist primarily in regions’ central cities. Unemployment, crime, abandoned properties, and other ills that observers once thought to be confined to central cities are beginning to be noticed in the inner-ring suburbs.55 Coalitions of central-city and inner-ring suburban local governments based on these common problems have been growing, as they perceive the need to work together to resolve the problems and also the need to petition their states and the federal government for support. Forces favouring consolidation contend that both negative externalities and destructive competition among local governments for economicdevelopment opportunities can be addressed under a more centralized and integrated governing system. Economies of scale can enhance productivity and performance, and positive externalities can be encouraged. Yet consolidation can create conditions of noncompetitive pricing policies, monopoly control over wages and prices, and a lack of transparency, especially in the area of transaction costs. These serious challenges and concerns about both centralizing and decentralizing local governments will continue to be debated. The push toward both competition and cooperation has enormous implications for the future of metropolitan governance.56 Under the fragmentation scenario, local governments will be locked into competing for resources by bundling just the right type and quality of services at just the right tax price, an activity that characterizes much of the local government landscape today.57 What makes twenty-first-century competition distinct from the twentieth-century variety can be traced in part to what has happened to local governments during the past three decades. Local governments are less dependent on general tax revenue today than ever; they are becoming even more reliant on user charges and fees. This trend forces local governments to continue to search for ways of unbundling services and goods that possess private-good characteristics from the bundle of services that have public-good characteristics (being nondivisible and nonexcludable) and that are supported by general tax revenue.58 This approach to providing services by local governments, based on the particularistic demands of individuals and firms, resembles a vending machine; that is, one chooses what one wants to consume.59 The switch toward user fees – by which individuals can measure their consumption of government services and match it to the fee they pay – has made the connection between supply and demand much clearer. Individuals, then, can opt out of consuming certain services or reduce demand, thereby lowering revenues for local governments.

384

Michael A. Pagano

User fees are the best market-like pricing mechanisms available to local governments. The concern, then, is that some government services that are subject to user-fee pricing cannot be unbundled from local government services without consequences for those who can least afford the user fee yet still need public services. Although local governments have adapted to challenges by unbundling services and charging users a fee, more individuals are choosing to reside in dwellings that are part of residential community associations (rcas), which often provide services that duplicate their local governments’ services, such as street cleaning, safety, refuse removal, and parks. At what point, one may ask, will residents of rcas mobilize to reduce their tax burden or to withdraw from their local governments’ jurisdiction completely?60 The challenge for local governments in the future is one of managing cooperation among local governments, rcas, and private-sector providers of government services. History demonstrates that local governments in the United States are resilient in the face of adversity and entrepreneurial in their will to survive; they adapt to their environment, and as part of their will to survive, they innovate.61 Local governments, then, have adapted to their fiscal environments (e.g., taxpayer revolts and reduced federal aid) by providing more user-fee supported services (and decreasing the tax support of those services), raising tax rates when possible, and choosing to cooperate or compete with other local governments. Local governments have also adapted to a declining federal presence in the form of financial assistance, and the prospects of increased federal aid in the near future seem remote. Moreover, local governments continue to pressure states and the federal government for regulatory relief by reducing unfunded mandates, providing greater access to revenue, and allowing public-private partnerships in financing projects and delivering services. In short, local governments continue to seek greater flexibility and more operational and financial autonomy. As globalization quickens the movement of capital and labour, local governments’ capacity to meet the changing needs of residents, immigrants (especially for housing and education), and firms is challenged. Another critical area for local governments is transportation. Ports, roads, transit systems, and other transportation facilities are often owned and operated by local governments (although the private sector is taking an increasing role in operating facilities and even in owning turnpikes), which demand autonomy and flexibility in designing an appropriate financial package, constructing the facilities, and putting the plans together very quickly. Yet these demands for more modernized transportation facilities, such as deep harbours for supercargoes, longer runways for aircraft, rapid-rail systems, and “smart” highways, come at a time when infrastructure repair and maintenance have been underfunded. The American Society of Civil

United States of America

385

Engineers estimates the backlog in maintenance nationwide, including federal- and state-owned facilities, at over $1.6 trillion.62 Addressing that backlog and meeting the new demands of the global economy will require additional local government resources, such as allowing public-private partnerships, removing debt restrictions, accelerating planning, enhancing management capacity, modernizing budget practices, and the like.63 But just as local governments are demanding greater autonomy to shape their own affairs and to craft policies that address problems they consider unique, local governments in the nation’s regions also understand the need to cooperate, work together, and move forward. Although many of the nation’s central cities are growing in population, most of the population growth since the 1950s has been in suburbia. Suburbs that are primarily residential in nature have increasingly come to understand that their growth and survival depend on the region’s economic well-being, which includes the region’s central city and other employment centres. Formal interlocal agreements, enforced as a contract, as well as informal agreements of cooperation among these local governments in the region have been increasing. In Chicago, for example, the suburban municipalities and the City of Chicago collaborated in creating a Metropolitan Mayors Caucus as a venue to air common concerns facing the region.64 How local governments adapt to these major forces will result in a configuration of local government institutions that will be different from earlier structures. Just how different is not yet known. What is known is that metropolitan regions cannot be understood today by focusing only on the major central city or even on the governments of the region. Instead, the multiplicity of stakeholders from the private and nonprofit sectors, in addition to the hundreds of government institutions, constitute the governance structure of metropolitan regions. More actors, more governments, and more entanglements will characterize the new institutional features of local governments and metropolitan governance in the foreseeable future. The patchwork quilt of local governments will most likely become more complex and more variegated.

notes 1 Data on local governments from US Census Bureau, 2002 Census of Governments, Government Operations, http://www.census.gov/prod/2003pubs/gc021x1.pdf (viewed 10 February 2008). In a biennial survey, respondents rated local governments ahead of state or federal governments in eight of ten surveys as the order of government from which “you get the most for your money.” See Richard L. Cole and John Kincaid, “Public Opinion on US Federal and Intergovernmental Issues in 2006: Continuity and Change,” Publius: The Journal of Federalism 36 (Summer 2006): 443–59.

386

Michael A. Pagano

2 The special status of Washington, dc, places its governing structure under the jurisdiction of Congress, which enacts statutes for implementation by the Washington, dc, government. It is governed by an elected mayor and council, and it has taxing authority to fund services, including public education. 3 This notion of a “patchwork quilt” is inspired by Daniel J. Elazar’s description of a “mosaic” of space, time, and culture in American politics. See Daniel J. Elazar, The American Mosaic: The Impact of Space, Time and Culture on American Politics (Boulder, co: Westview, 1994). Quilts are patches of fabric sewn together, or quilted, in shapes, some of which are overlays of patches that provide both a vertical and horizontal connection to adjacent patches. 4 See, for example, Saskia Sassen, The Global City (Princeton: Princeton University Press, 1991); and Susan Clarke and Gary Gaile, The Work of Cities (Minneapolis: University of Minnesota Press, 1997). 5 US Census Bureau, “Population Change in Metropolitan and Micropolitan Statistical Areas: 1990–2003,” Current Population Report issued September 2005, http:// www.census.gov/prod/2005pubs/p25-1134.pdf (viewed 30 August 2008). 6 See, for example, G. Alan Tarr, “United States of America,” in Constitutional Origins, Structure, and Change in Federal Countries, ed. John Kincaid and G. Alan Tarr, 381–408 (Montreal and Kingston: McGill-Queen’s University Press, 2005); and John Dinan, “United States of America,” in Legislative, Executive, and Judicial Governance in Federal Countries, ed. Katy Le Roy and Cheryl Saunders, 316–43 (Montreal and Kingston: McGill-Queen’s University Press, 2006). 7 See, for example, Ellis Katz, “United States of America,” in Distribution of Powers and Responsibilities in Federal Countries: A Global Dialogue on Federalism, ed. Akhtar Majeed, Ronald L. Watts, and Douglas M. Brown, 295–321 (Montreal and Kingston: McGillQueen’s University Press, 2006); and William Fox, “United States of America,” in The Practice of Fiscal Federalism: Comparative Perspectives, ed. Anwar Shah, 344–69 (Montreal and Kingston: McGill-Queen’s University Press, 2007). 8 The US Census Bureau defines local government as “an organized entity subject to public accountability, whose officials are popularly elected or are appointed by public officials, and which has sufficient discretion in the management of its affairs to distinguish it as separate from the administrative structure of any other government unit.” See US Census Bureau, 2002 Census of Governments, Government Units in 2002, Preliminary Report, July 2002, i, http://ftp2.census.gov/govs/cog/ 2002COGprelim_report.pdf (viewed 15 February 2008). 9 J. Edwin Benton, Counties as Service Delivery Agents: Changing Expectations and Roles (Westport, ct: Praeger, 2002); J. Edwin Benton, “County Government Structure and County Revenue Policy: What Is the Connection?” State and Local Government Review 35, no. 2 (Spring 2003): 78–89. 10 J. Richard Aronson and Eli Schwartz, eds, Management Policies in Local Government Finance (Washington, DC: International City Management Association, 1975), 166. 11 Tax increment finance (tif) districts have become fairly common economicdevelopment tools for cities. According to legal criteria (most often “blight”),

United States of America

12

13

14 15

16 17

18

19

387

cities create tif districts as subareas within the city’s limits and then assess the value of the property. At the time the tif is created, this value is referred to as the base. As the property escalates in value, the incremental growth in property-tax collections over the base is set aside in a tif fund to be used on projects (typically infrastructure) within the tif district. The tif fund can be used to support bond issuances for major infrastructure projects. See, for example, Rachel Weber, “Equity and Entrepreneurialism: The Impact of Tax Increment Financing on School District Finances,” Urban Affairs Review 38 (May 2003): 619–44; and Craig Johnson and Joyce Man, Tax Increment Financing and Economic Development (Albany: State University of New York Press, 2001). See, for example, Alberta Sbragia, Debt Wish: Entrepreneurial Cities, US Federalism, and Economic Development (Pittsburgh, pa: University of Pittsburgh Press, 1996); Eric Monkonnen, The Local State: Public Money and the American Cities (Stanford, ca: Stanford University Press, 1995); and David Perry, ed., Building the Public City (Thousand Oaks, CA: Sage, 1995). See, for example, Sbragia, Debt Wish; Kathryn A. Foster, Political Economy of SpecialPurpose Government (Washington, dc: Georgetown University Press, 1997); and Barbara McCabe, “Special-District Formation among the States,” State and Local Government Review 32 (2000): 121–31. For a contrary perspective, see Jered Carr, “Local Government Autonomy and State Reliance on Special District Governments: A Reassessment,” Political Research Quarterly 59 (September 2006): 481–92. Nancy Burns, The Formation of American Local Governments: Private Values in Public Institutions (Oxford, uk: Oxford University Press, 1994). School systems dependent on counties can be found in North Carolina, Tennessee, and Virginia; school systems dependent on town or township governments can be found in Connecticut, Maine, Massachusetts, New Jersey, and Rhode Island, although cities are responsible for schools in eight other states. There are no independent school districts in the District of Columbia, Alaska, Hawaii, North Carolina, and Maryland. See US Census Bureau, 2002 Census of Government, Government Organization, 2002, viii, http://www.census.gov/prod/2003pubs/ gc021x1.pdf (viewed 10 February 2008). William R. Barnes and Larry Ledebur, The New Regional Economies: The US Common Market and the Global Economy (Thousand Oaks, ca: Sage, 1998). “City/County Consolidation: A Brief Overview Presented to the Mississippi Legislature,” prepared by the John C. Stennis Institute of Government, Mississippi State University, January 2002. Richard W. Campbell and Dan Durning, “Is City-County Consolidation Good Policy? A Symposium,” Public Administration Quarterly 24 (Summer 2000): 133–9; Ronald Vogel and H.V. Savitch, “Metropolitan Consolidation versus Metropolitan Governance in Louisville,” State and Local Government Review 32 (2000): 198–212. Allen Wallis, “The Third Wave: Current Trends in Regional Governance,” National Civic Review 83 (1994): 290–310. See also, William Dodge, Regional Excellence (Washington, dc: National League of Cities, 1996); G. Ross Stephens and Nelson

388

20

21 22

23

24

25

Michael A. Pagano

Wikstrom, Metropolitan Government and Governance: Theoretical Perspectives, Empirical Analysis, and the Future (New York: Oxford University Press, 2000); Myron Orfield, Metropolitics: A Regional Agenda for Community and Stability (Washington, dc: Brookings Institution Press, 1997); Donald Norris, “Whither Metropolitan Governance,” Urban Affairs Review 36 (March 2001): 532–50; David Young Miller, The Regional Governing of Metropolitan America (Boulder, co: Westview, 2002); and Ronald K. Vogel and H.V. Savitch, eds, Regional Politics: America in a Post-City Age (Thousand Oaks, ca: Sage, 1996). Vincent Ostrom, Charles M. Tiebout, and Robert Warren, “The Organization of Government in Metropolitan Areas: A Theoretical Inquiry,” American Political Science Review 55 (December 1961): 831–42. See, for example, Daphne A. Kenyon and John Kincaid, Interjurisdictional Tax and Policy Competition: Good or Bad for the Federal System? (Washington, dc: US Advisory Commission on Intergovernmental Relations, 1991); US Advisory Commission on Intergovernmental Relations, Metropolitan Organization: The Allegheny County Case (Washington, dc: US Advisory Commission on Intergovernmental Relations, 1992); Mark Schneider, The Competitive City: The Political Economy of Suburbia (Pittsburgh, pa: University of Pittsburgh Press, 1989); and Ronald Oakerson, Governing Local Public Economies (Oakland, ca: ics Press, 1999). David Osborne and Ted Gaebler, Reinventing Government: How the Entrepreneurial Spirit Is Transforming the Public Sector (Reading, ma: Addison-Wesley, 1992). US Advisory Commission on Intergovernmental Relations, The Organization of Local Public Economies (Washington, dc: US Advisory Commission on Intergovernmental Relations, 1987). In some states, interlocal agreements were proscribed by constitution or statute, which had to be changed to allow for such cooperation. The State of Washington, for example, disallowed agreements between local governments until the end of the its first century of existence in 1967. See State of Washington, Interlocal Cooperation Act, Chapter 39.34 (1967). See, for example, Richard Feiock, “Metropolitan Governance and Institutional Collective Action,” Urban Affairs Review 44, no. 3 (January 2009): 356–77; David Morgan and Michael Hirlinger, “Intergovernmental Service Contracts,” Urban Affairs Quarterly 27 (1991): 128–44; Kurt Thurmaier and Curtis Wood, “Interlocal Agreements as Social Networks: Picket Fence Regionalism in Metropolitan Kansas City,” Public Administration Review 62 (2002): 585–98; William C. Seyler, “Interlocal Relations: Cooperation,” Annals of the American Academy of Political and Social Science 416 (1974): 158–69; and Ann O’M. Bowman, “Horizontal Federalism: Exploring Interstate Interactions,” Journal of Public Administration and Research 14 (2004): 535–46. See, for example, Daphne A. Kenyon and John Kincaid, eds, Competition among State and Local Governments: Efficiency and Equity in American Federalism (Washington, dc: Urban Institute Press, 1991); and Roger Parks and Ronald Oakerson, “Comparative Metropolitan Organization: Service Production and Governance Structures in St. Louis (mo) and Allegheny County (pa),” Publius: The Journal of Federalism 23

United States of America

26 27 28

29

30

31

32 33 34

35

389

(Winter 1993): 19–39. For a dissenting view, see David Miller, Rowan Miranda, Robert Roque, and Charles Wilf, “The Fiscal Organization of Metropolitan Areas: The Allegheny County Case Reconsidered,” Publius: The Journal of Federalism 25 (Fall 1995): 19–35. Charles Tiebout, “A Pure Theory of Local Expenditures,” Journal of Political Economy 64 (1956): 416–24. See, for example, Feiock, “Metropolitan Governance.” See, for example, Jesse J. Richardson Jr, Meghan Zimmerman Gough, and Robert Puentes, “Is Home Rule the Answer? Clarifying the Influence of Dillon’s Rule on Growth Management,” a discussion paper prepared for the Brookings Institution Center on Urban and Metropolitan Policy, January 2003, http://www.brookings. edu/es/urban/publications/dillonsrule.pdf (viewed 28 May 2007). See, for example, ibid.; US Advisory Commission on Intergovernmental Relations, Measuring Local Discretionary Authority (Washington, dc: US Advisory Commission on Intergovernmental Relations, 1981); Dale Krane, Platon N. Rigos, and Melvin G. Hill Jr, Home Rule in America: A Fifty-State Handbook (Washington, dc: cq Press, 2000); Joseph F. Zimmerman, “Governance Capacity and Mobilization of Resources,” paper presented at the conference “Challenge of New Governance in the 21st Century: Achieving Effective CentralLocal Relations,” sponsored by the National Academy of Public Administration and the National Institute for Research Advancement, Tokyo, 7 July 1998, http://napawash.org/aa_federal_system/98_national_governance.html (viewed 28 May 2007). In his classic essay “A Pure Theory of Local Expenditures,” Charles Tiebout theorized that local governments bundle services together and offer them at a tax-price to consumer-citizens who then locate on the basis of which government provides the best bundle of services at the optimal tax-price. See US Census Bureau, Finances of County Governments, 2002 (Washington, dc: US Government Printing Office, 2002); US Census Bureau, Finances of Municipal and Township Governments, 2002 (Washington, dc: US Government Printing Office, 2002); and US Census Bureau, Government Organization (Washington, dc: US Government Printing Office, 2002). Daniel Mullins and Bruce Wallin, “Tax and Expenditure Limitations: An Overview,” Public Budgeting and Finance 24 (Winter 2004): 2–15, at 2–3. Sonya Hoo, Sheila Murray, and Kim Rueben, “Education Spending and Changing Revenue Sources,” State Tax Notes, 10 April 2006, 223. For a history of revenue sharing, see Bruce Wallin, From Revenue Sharing to Deficit Sharing (Washington, dc: Georgetown University Press, 1998); Timothy J. Conlan, From New Federalism to Devolution (Washington, dc: Brookings Institution Press, 1998); and Ben Canada, Federal Grants to State and Local Governments: A Brief History (Washington, dc: Congressional Research Service, 2003). John Kincaid, “From Cooperation to Coercion in American Federalism: Housing, Fragmentation, and Preemption, 1780–1992,” Journal of Law and Politics 9 (Winter 1993): 333–433.

390

Michael A. Pagano

36 Joseph F. Zimmerman, State-Local Relations: A Partnership Approach, 2nd ed. (Westport, ct: Greenwood, 1995). 37 Janet Kelly identifies twenty-eight states that have adopted fiscal noting, whereas the US General Accounting Office (gao) puts the number at forty-two. See Janet Kelly, State Mandates: Fiscal Notes, Reimbursement, and Anti-Mandate Strategies (Washington, dc: National League of Cities, 1992); and US General Accounting Office, Legislative Mandates: State Experiences Offer Insights into Federal Action (Washington, dc: gao, 1988). 38 Kelly, State Mandates, and the US gao, Legislative Mandates, each identify fourteen states. 39 The noteworthy bankruptcy case of the Washington Public Power Supply System in the early 1980s is an exception to this broad statement. 40 See, for example, David Berman, “Takeovers of Local Governments,” Publius: The Journal of Federalism 25 (Summer 1995): 55–70. 41 See, for example, Deil Wright, Understanding Intergovernmental Relations, 3rd ed. (Pacific Grove, ca: Brooks and Cole, 1988); and Katz, “United States of America.” 42 US General Accounting Office, Highlights of a gao Symposium: Addressing Key Challenges in an Intergovernmental Setting (Washington, dc: US Government Printing Office, March 2003). 43 See, for example, Paul Posner, The Politics of Unfunded Mandates (New York: New York University Press, 1998). The Congressional Budget Office is the federal agency charged with monitoring compliance with umra. 44 Paul Posner, “The Politics of Coercive Federalism,” Publius: The Journal of Federalism 37 (Summer 2007): 390–412. 45 Missouri v. Jenkins, 110 S. Ct. 1651 (1990). 46 Most states have created a Department of Community Affairs, but these departments are not designed to advocate for the interests of local governments. Rather, they assume a variety of responsibilities, including promoting community economic development, acting as conduits for federal grants (primarily for housing and community development), assisting in local planning, and providing administrative support and guidance. 47 See website managed by Michael McDonald of George Mason University: http:// elections.gmu.edu/voter_turnout.htm (viewed 21 January 2009). 48 Nonprofit Voter Engagement Network, “America Goes to the Polls: A Report on Voter Turnout in the 2006 Election,” http://www.nonprofitvote.org/wp-content/ uploads/AGttP.pdf (viewed 26 May 2007). 49 US Census Bureau, Statistical Abstract of the United States: 2006–2007 (Washington, dc: US Government Printing Office, 2007). 50 Center for American Women and Politics, Eagleton Institute of Politics, http:// www.cawp.rutgers.edu/Facts/Officeholders/mayors-curr.html (viewed 28 May 2007). 51 H. Brinton Milward and Keith G. Provan, “Governing the Hollow State,” Journal of Public Administration Research and Theory 10 (April 2000): 359–79. 52 Donald F. Harney and Kelly LeRoux, Service Contracting: A Local Government Guide (Washington, dc: icma Press, 2007).

United States of America

391

53 One approach to managing these overlapping governments is intergovernmental management (igm), which involves solving problems through networks of actors in a process that often requires bargaining and negotiations. See, for example, Robert Agranoff, Intergovernmental Management: Human Services Problem-Solving in Six Metropolitan Areas (Albany: State University of New York Press, 1986); Robert Agranoff and Michael McGuire, Collaborative Public Management: New Strategies for Local Governments (Washington, dc: Georgetown University Press, 2003); Jeffrey Pressman, Federal Programs and City Politics (Berkeley: University of California Press, 1975); and Robert Agranoff, “Intergovernmental Policy Management: Cooperative Practices in Federal Systems,” in The Dynamics of Federalism in National and Supranational Political Systems, ed. Michael A. Pagano and Robert Leonardi, 248–84 (Basingstoke, uk, and New York: Palgrave, 2007). 54 See, for example, Agranoff and McGuire, Collaborative Public Management; and Richard C. Feiock, ed., Metropolitan Governance: Conflict, Competition, and Cooperation (Washington, dc: Georgetown University Press, 2004). 55 See, for example, Robert Puentes and David Warren, One-Fifth of America: A Comprehensive Guide to America’s First Suburbs, Brookings Institution Survey Series, February 2006, http://media.brookings.edu/mediaarchive/pubs/metro/pubs/ 20060215_FirstSuburbs.pdf (viewed 25 July 2007); Margaret Weir, Harold Wolman, and Todd Swanstrom, “The Calculus of Coalitions: Cities, Suburbs, and the Metropolitan Agenda,” Urban Affairs Review 40 (July 2005): 730–60; Rebecca Hendrick, “Assessing and Measuring the Fiscal Health of Local Government: Focus on Chicago Suburban Municipalities,” Urban Affairs Review 40 (September 2004): 78–114; and Juliet Gainesborough, “Slow Growth and Urban Sprawl: Support for a New Regional Agenda?” Urban Affairs Review 37 (May 2002): 728–44. 56 Michael A. Pagano, “In the Eye of the Beholder: The Dynamics of Federalism,” in The Dynamics of Federalism in National and Supranational Political Systems, ed. Michael A. Pagano and Robert Leonardi, 1–18 (Basingstoke, uk, and New York: Palgrave, 2007). 57 Liesbet Hooghe and Gary Marks refer to consolidated, general-purpose jurisdictions as Type I governance and to specialized, task-specific jurisdictions as Type II governance. See their “Unraveling the Central State, but How? Types of Multi-Level Governance,” American Political Science Review 97 (May 2003): 233–43. 58 I am grateful to Kathryn Foster, who articulated the notion of “unbundling” at the Forum of Federations roundtable, Chicago, 18 January 2007. 59 Michael A. Pagano, “Good Governance in Federal Polities: Issues for the 21st Century,” in Federalism and Good Governance: Issues across Cultures, ed. Kousar J. Azam, 11–22 (New Delhi: South Asian Publishers, 1998). 60 A similar set of questions about rcas and local governments is raised in Michael A. Pagano, “Metropolitan Limits: Intrametropolitan Disparities and Governance in US Laboratories of Democracy,” in Governance and Opportunity in Metropolitan America, ed. Alan Altshuler, William Morrill, Harold Wolman, and Faith Mitchell, 253–92 (Washington, dc: National Academy Press, 1999). See also Evan McKenzie, Privatopia: Homeowner Associations and the Rise of Residential Private Government (New

392

61

62

63

64

Michael A. Pagano

Haven, ct: Yale University Press, 1994); and George Glasze, Chris Webster, and Klaus Frantz, eds, Private Cities (London, uk, and New York: Routledge, 2006). See, for example, Dora L. Costa and Matthew E. Kahn, “Civic Engagement and Community Heterogeneity: An Economist’s Perspective,” Perspectives on Politics 1 (2003): 103–12; and Christine Kelleher and David Lowery, “Political Participation and Metropolitan Institutional Context,” Urban Affairs Review 39 (July 2004): 720–57. American Society of Civil Engineers (asce), “Report Card for American Infrastructure: 2005 Grades,” http://www.asce.org/reportcard/2005/page.cfm?id=103 (viewed 30 January 2008). See, for example, William F. Marcuson III, “Fixing America’s Crumbling Infrastructure: A Call to Action for All,” Public Works Management and Policy 12 (January 2008): 473–5; The Urban Land Institute and Ernst & Young, Infrastructure 2007: A Global Perspective (Washington, dc: Urban Land Institute, 2007); Marcia Clemmitt, “Aging Infrastructure: Is Neglected Maintenance Putting Americans in Danger?” cq Researcher 17, no. 4 (28 September 2007): 793–816; Bruce Katz, Christopher Geissler, and Robert Puentes, “America’s Infrastructure: Ramping Up or Crashing Down?” October 2007, http://www.brookings.edu/papers/ 2008/01_infrastructure_katz_puentes.aspx (viewed 30 January 2008); and Michael A. Pagano and David Perry, “Financing Infrastructure in the 21st Century City,” Public Works Management and Policy 13, no. 1 (July 2008): 22–38. See, for example, David K. Hamilton, “Regimes and Regional Governance: The Case of Chicago,” Journal of Urban Affairs 24 (2002): 403–23. For a journalistic exploration of the dynamic importance of regional cooperation, see Richard C. Longworth, Caught in the Middle: America’s Heartland in the Age of Globalism (New York: Bloomsbury, 2008).

Comparative Conclusions nico steytler

The classical model of federalism is premised on two orders of government: the federal government and the states (or provinces, Länder, or cantons). Local government was not recognized as an order of government but seen as a competence of the constituent states. Within the dual federalism model, where there is a clear division of powers and functions, local government was typically placed within the sole jurisdiction of the states, excluding any direct federal interference. Local governments were mere creatures of states, existing at their will and having no independent relations with the federal government. Even in systems described as “administrative federalism,” where the legislative and executive competences do not coincide, local government was nevertheless seen as part of the state formation. The general conclusion drawn from both models of federalism is that with no final decision-making powers in a clearly demarcated area, local government had no independent autonomous status that made it an order of government, although this did not necessarily preclude constituent states from granting degrees of autonomy or home rule to various local governments. The status of local government, the case studies show, is evolving. In some countries, local government is seen as an integral part of the federated state and recognized as such in the federal constitution. Discrete areas of autonomous decision making in policy and finances are also emerging. In other countries, where the traditional subservient position of local governments to state governments is maintained, financial self-reliance is leading to greater policy autonomy. The emerging autonomy, often a result of federal intervention, leads to direct interaction with the federal government. The recognition of local government as an order of government – often with direct engagement with the federal government – is the most pronounced in metropolitan regions. Large municipal governments that have been formed in metropolitan regions are no longer content to have the same status as village governments and are claiming more resources,

394

Nico Steytler

power, and status. As the wealth and health of nations are in most countries linked to the productivity and well-being of the highly concentrated metropolitan populations, federal governments have a direct interest in their governance and hence in city governments. Although local governments (and the organizations representing their interests) often claim their right to sit at the table of government, the evolution of federal systems has been slow, generally going no further than the description of the Austrian system as having “two and a half partners,” with local government representing the half. In some countries, there has been constitutional recognition of local government as an order in its own right. In others, two-order federalism (also referred to as dyadic federalism) continues to be asserted, confining local government to the jurisdiction of the states; the growth of local government, particularly in large cities, is viewed as a zero-sum game, with the states’ own power and resources being at stake. Despite the generally slow pace of evolution, it is evident that the emergence of local government as a partner in federative governance is becoming a significant element of most federal systems.

country characteristics The twelve federal countries in this volume have very different origins, structures, and dynamics. Material factors that not only influence the federal systems as a whole1 but also have a bearing on local government’s functioning are the geographical, demographic, economic, and political contexts in which they function. Canada, the United States, Brazil, Australia, and India have among the largest geographical areas in the world, with sizes ranging from Canada’s 9.9 million square kilometres to India’s 3.2 million square kilometres. Even the remaining countries, ranging from Mexico (1.9 million km2) to Germany (357,000 km2), dwarf the two smallest countries in the sample, Austria (83,000 km2) and Switzerland (41,000 km2). Due to the geographic vastness of thinly populated areas of Canada and Australia, large tracts of land have no local authorities. There is, however, no direct correlation between the size of a country and the number of local authorities. Population size is somewhat more significant. Where large geographical areas coincide with large populations, such as in India (1.1 billion) and the United States (303 million), large numbers of local governments have been established. The population sizes of the next group of countries – Brazil (184 million), Nigeria (144 million), Mexico (103 million), and Germany (82 million) – do not necessarily correspond to a high number of local governments. Nigeria, for example, has about one-seventh of the local governments of Brazil. The same is true of the midrange countries – South Africa (48 million), Spain (44 million), Canada (33 million), and Australia

Comparative Conclusions

395

(21 million) – where South Africa and Australia have a fraction of the local governments of the others, even fewer than the two smallest countries: Austria (8.3 million) and Switzerland (7.6 million). The distribution of the population within each country may have a more important bearing on local governance than sheer size. The majority of countries have a high level of urbanization.2 Between the United States (83% urbanized) and Australia (75%) fall Canada, Brazil, Spain, Germany, Switzerland, and Austria. In developing countries, a low to medium level of urbanization is found – India (25%), Nigeria (50%), and South Africa (58%) – although this is changing rapidly. Setting the trend is Brazil. In 1970 it was only 56% urbanized, a figure that had jumped dramatically to 81.2% by 2000. Mexico also moved quickly to its current level of 65%. The urban-rural split has implications not only for the number and size of local governments but also for the distribution of economic resources. The countries considered in this book exhibit vast disparities in wealth. Taking gross domestic product (gdp) per capita as a measure, three groups of countries are discernable. The first includes some of the richest countries in the world – Switzerland, Canada, Austria, Australia, the United States, and Germany – with between US$58,000 and US$36,000 per person (with Spain making considerable ground since its entry into the European Union). The middle-income group includes Brazil, Mexico, and South Africa, with between US$9,000 and US$12,000 per person.3 India and Nigeria make up the low-income group, with US$2,200 and US$917 per person respectively. Both the middle- and low-income countries display enormous disparities in wealth, with Brazil and South Africa having the world’s highest Gini coefficients of inequality. With the rapid growth in the economy of India, existing inequality will be further exacerbated. The combination of urbanization and poverty places local government at the coal face of intense demands for local services. Although diversity in respect of language, ethnicity, and culture may be a key ingredient in the architecture of states and provinces, its relevance to local government is less direct. Where local government is the charge of states, culture may affect the institutions and practices of municipalities in multilingual countries, such as Canada, India, and Switzerland. In other multilingual countries, such as South Africa and Nigeria, central regulation of local government minimizes the significance of cultural or linguistic diversity. The countries are more or less evenly divided between presidential and parliamentary systems. The governance model of the national and state governments is most often replicated for local government.4 But this is not always the case. In Austria and Germany, for example, the direct election of mayors is not consistent with the parliamentary systems in the federal and Land arenas.

396

Nico Steytler

The governance systems of the twelve countries function within significantly different political milieus. A stable party system is found in the United States, Switzerland, Canada, and Australia, as well as in Germany and Austria (following the Second World War) and in India (after Independence in 1947). The remaining five countries achieved democratic governance in the last quarter of the twentieth century, moving from authoritarian, military, minority, and one-party dominance to democracy. However, a stable party system is yet to develop in Brazil, and one-party dominance features strongly in South Africa and Nigeria. As local politics in most countries is inextricably linked to the national political system, it reflects, too, the dynamics of national party politics.

h i s t o r y, s t r u c t u r e s , a n d i n s t i t u t i o n s History Local government, defined as a government structure directly interacting with its constituent population without any other order of government in between, has its roots in antiquity. As the basic unit of government, local government in India stems from ancient village governance structures, called panchayats, referred to by the colonial British as “the little republics” because of their democratic nature. In Europe local government institutions have equally ancient origins, predating the nation-state in Spain and Germany. Along with colonial rule, the colonies of the British Empire received the English local council structures. In the United States, Canada, Australia, South Africa, India, and Nigeria, these local institutions preceded the formation of the countries themselves – and their federal structure – by decades, if not centuries. A similar process occurred in Latin America, where the Spanish and Portuguese exported their basic local political institutions to Mexico and Brazil respectively. Although, at first, local government was simply an arm of colonial government, representative government developed over time. Local government institutions with various degrees of self-governance predated the federal system, but the act of federation formation invariably resulted in the local institutions becoming the domain of the states within a two-order federal structure and often operating as an arm of the state governments. The “disappearance” of local government in the shadow of state governments prevailed at least until after the Second World War, when the return to democracy in many nondemocratic countries was often linked to decentralization. Given the proximity of local governments to the people, democratic governance was in practice (if not more in theory) their strength. In India village self-governance was central to the ideology of India’s independence

Comparative Conclusions

397

movement, organized around Mahatma Gandhi’s vision of local selfgovernment via panchayats; democracy at the top would not be successful unless it was built up from below. This idea also underpinned the constitutional entrenchment of local self-government in West Germany after the end of Nazi rule. The link between democratization and decentralization also featured in Nigeria, Brazil, and South Africa. In the first steps toward civilian rule in Nigeria in 1976, local government was reorganized to enhance local self-government as part of the transition from centrist military rule. Again, in the 1980s and 1990s, the precursor to returns to civilian rule was local elections. In Brazil local elections in 1982 preceded the restoration of democracy, and in the 1988 Constitution local government was recognized as a constituent member of the federation. In South Africa the consolidation and deepening of democracy were in part the reason for local government’s elevated position in the 1996 Constitution. The argument that the emergence of strong local governments in Brazil and South Africa was influenced by the desire of the federal governments to cut back on the powers of the state governments5 has some merit and may also have some explanatory value in Nigeria and India. The Nigerian reforms of 1976 were in part a response to the mismanagement of local government by the state governments. The 1993 constitutional amendments in India were aimed at limiting the stranglehold of states over local governments, including the states’ disallowance of local democracy. Undercutting the role of state governments was certainly part of the picture, but this objective does not discount the overall impact that the coupling of decentralization with democracy has had on the evolution of local governments in these countries.6 Local Government Institutions In comparison to the 271 state government institutions (excluding federal territories) in the twelve countries, there are nearly 370,000 local government institutions. Like the states, local governments cover the entire land surface in most countries. The exceptions are the two largest countries – Canada and Australia – where large tracts of uninhabited land remain unincorporated. In contrast to the state legislative and executive institutions, which exhibit a measure of uniformity in purpose and size, the substate institutions come in various shapes and sizes, with different purposes and governance functions. This makes it difficult to conceive of local government as a single institution with an identifiable character. Not only are there differences between countries, but because local governments most often fall under the exclusive jurisdiction of state governments, variations between states also are common. Moreover, in terms of the principle of local autonomy, accepted and practised in a number of countries and states,

398

Nico Steytler

further variation in local governance is also prevalent. Even in the country chapters, it has been difficult to capture the full richness of the variety. Four main institutional forms of local government can be identified: (1) the basic multipurpose unit (referred to as a municipality); (2) county or district governments, often forming part of a two-tiered local governance structure; (3) single-purpose institutions; and (4) indigenous forms of local government. Basic multipurpose unit The most common institution is the multipurpose municipality, which is directly elected by the inhabitants of a demarcated area and provides a range of services such as the household necessities of water, sewage, refuse removal, sometimes electricity, and basic communal services, including roads and public order. These basic units vary enormously in size, from mega-metropolitan municipalities of several million people in India, the United States, Canada, and South Africa, to small rural municipalities with no more than a few hundred people in Germany, Spain, Switzerland, Austria, India, and Brazil. Although the demographic size of the municipalities is closely linked to their rural or urban locations, they are most often, from a regulatory point of view, treated as uniform institutions. Although the Toronto municipality, with a population of over 2 million, has its own founding statute in provincial law, its powers and functions do not differ substantially from those of small municipalities in rural Ontario. Although the rural-urban divide is present in all the countries, only in India is a formal distinction drawn in the Constitution between rural and urban local governments, with the main difference being the scope and nature of powers and functions.7 In contrast to this formal urban-rural divide, the demarcation of South Africa, with a population of 48 million, into 283 very large municipalities has explicitly sought to link rural hinterlands with urban centres. Two-tier structures Often following the urban-rural divide are umbrella municipalities that function in the same geographical rural areas as a number of the basic-unit municipalities, thus splitting local government competences and functions between two spheres of government. This is not, however, the norm, and half the countries in the sample (i.e., Australia, Austria, Brazil, Mexico, Nigeria, and Switzerland) have a singletier system. Canada has a mixed system, with the county system still found in the large provinces. The functions of the umbrella local governments are typically limited to providing area-wide services, such as water, sewage, and transport (where economies of scale make it more efficient), rendering assistance to small municipalities, facilitating cooperation between constituent municipalities, and often serving as administrative arms of the states.

Comparative Conclusions

399

The value of providing economies of scale and coordination in many functional areas finds its best application in the countries with a large number of municipalities but very low population sizes and limited capacity. Spain’s fifty provinces (as local government entities) coordinate and provide services for over 8,000 municipalities, of which more than 80% have fewer than 5,000 inhabitants. This pattern is also reflected in Germany and India, where the two-tier system finds specific application in the context of the urban-rural divide. Germany’s 323 counties (kreise) exclude the 116 urban municipalities (with more than 100,000 inhabitants) and serve the remaining 12,125 municipalities, 40% of which have populations of fewer than 1,000 persons. Running counter to this pattern is the grouping of South Africa’s 231 nonmetropolitan municipalities into fortysix district municipalities. It is therefore not surprising that the value of district municipalities is contested by large urban local municipalities, which experience the districts as a source of duplication and strife. Similar sentiments are found among the large Spanish urban municipalities with respect to provinces. Single-purpose municipal governments Found in the United States, and to a lesser extent in Canada and Switzerland, are single-purpose local governments. They perform important functions in the United States, providing services such as potable water, wastewater treatment, transit, housing, and port services. The most important of these are the school districts. In Canada elected school boards are still the norm, whereas in Switzerland only six cantons still have “school municipalities,” the general trend being for the single-purpose municipalities to be incorporated into the multipurpose political municipalities. Single-purpose, democratically elected local government institutions must be distinguished from the myriad public bodies that municipalities create singly or jointly with other municipalities to provide services more effectively and efficiently. Indigenous local government institutions In the American, African, and Asian countries that were subject to European colonization, indigenous populations or indigenous forms of governance often continued to exist alongside or to intersect with local governance. The approach in the United States, Canada, Australia, and Brazil has been to regard matters of indigenous communities and their welfare as either a federal or state issue, removing them from the domain of local government.8 This neat division of competences, however, does not reflect the demographic distribution of indigenous populations. In Canada, for example, more than half of aboriginals live outside recognized indigenous territories, but the federal government does not take responsibility for them, and the costs of services are generally borne by the provincial and local governments.

400

Nico Steytler

The second approach has been to recognize indigenous governance structures as legitimate and on par with the formal, democratic local government institutions. Mexico has fully embraced traditional forms of government by permitting significant indigenous populations to elect their authorities based on traditional and customary practices (usos y costumbres). This form of local government is recognized in Oaxaca State, where, in 2006, 421 of 570 municipalities were so governed. In India the 73rd Amendment of 1993 did not apply at first to scheduled tribal areas, exempting traditional tribal village and district councils from holding elections and having reserved seats for women (a dispensation that is progressively being phased out). In Australia, historically, Aborigines and Torres Strait Islanders operated in distinct community councils, but these councils are increasingly being brought into the mainstream to function as regular local councils. In Africa, where traditional leadership is the most pervasive, the least accommodation is given to indigenous governance within the newly entrenched democratic ethos. Both Nigeria and South Africa have eschewed any traditional forms of government that would oust democratically elected local institutions. South Africa has only gone as far as giving traditional leaders ex officio representation in local councils (limited to 20% of council membership and without the right to vote). Multiplicity and Consolidation of Local Government Institutions In comparison to the twelve countries’ limited numbers of states, most countries have a large number of local governments. In India 243,095 local governments serve the interests of 1.1 billion people. In 2007 the United States had 89,476 local institutions. The European countries have uniformly high numbers of local governments (Germany, 12,241; Spain, 8,151; Austria, 2,358; and Switzerland, 2,775). Brazil and Mexico, with 5,563 and 2,445 municipalities respectively, also reflect this pattern. Only Nigeria (770), Australia (around 700), and South Africa (283) have fewer than 1,000 local governments. The numbers of local governments come into perspective when compared to population size and demographic distribution. In terms of population size, three groups are evident. The majority of countries (the United States, Canada, Germany, India, Spain, Austria, and Switzerland) have ratios of between 3,000 and 8,000 citizens per local government. For the second group, the average number of persons per institution ranges from 33,000 in Brazil to 36,000 in Australia and 42,000 in Mexico. In the last group, South Africa and Nigeria have an average of 169,000 and 186,000 residents per municipality respectively. Due to the high level of urbanization in most of the twelve countries, the averages are misleading; the vast majority of municipalities have very small

Comparative Conclusions

401

populations. For example, more than half of Switzerland’s municipalities have fewer than 1,000 inhabitants. The same holds true in Germany, Spain, the United States, Canada, India, Brazil, and Mexico. The large numbers of municipalities with very small populations reflect the processes of industrialization and urbanization that took place during the nineteenth century in Europe (and the twentieth century elsewhere); although rural areas depopulated dramatically, the numbers of municipalities still reflect the institutions that preceded the industrial revolution. In Spain, for example, the number of municipalities has not significantly been reduced from the 9,000 that existed in 1812. To some degree, the concept of local government has also not shifted from the village concept of governance, where consensual decision making flowed from nonpartisan communal interest in the basic necessities of life such as water, sanitation, and public order. What is evident in most countries is a strong attachment to this traditional form of government and to the value and protection of the localized interests it represents. Austria, where the small village-type municipality is set to become entrenched constitutionally, perhaps best illustrates these sentiments. In contrast to the village notion of local government, there are movements in Australia and South Africa to create much larger local government units through consolidation as well as a movement in Nigeria to prevent an increase in the number of local governments. Apart from the United States, where there has been an increase in the number of special districts over the past fifty years, Brazil is the only country where there has been a strong increase in the number of local governments during the past twenty years, a movement driven by perverse fiscal incentives that were eventually stopped by federal intervention. The motives behind consolidating municipalities in South Africa and Australia (and limiting local governments in Nigeria) have been the creation of financially viable and efficient municipalities that allow for economies of scale, efficiency of service delivery, better strategic planning, and management of spillover effects. These goals are valued in most countries, but consolidation efforts have mostly not met with success, mainly because of voter resistance. In Australia and South Africa, consolidation was possible because it was effected without voter approval – in Australia by the states and in South Africa by an independent body, the Municipal Demarcation Board. What is the relevance of size in the context of local government’s place in a federal system? It would appear that size is closely associated with autonomy. Very small municipalities reflect and reinforce the commanding position of the states. They lack the necessary resources to address increasing demands for services. Due to their small economic base, they are by and large dependent for survival on transfers from the state or federal governments, a situation

402

Nico Steytler

that undercuts local autonomy. In sharp contrast, the relatively few large urban municipalities show a much greater degree of autonomy in making and implementing policy choices, spurring them to claim more powers and access to revenue. In Canada, for example, a few urban municipalities are a force provincial governments have to reckon with: Winnepeg has 55% of the population of Manitoba, Halifax 31% of Nova Scotia, Calgary 30% of Alberta, Montreal 21% of Quebec, and Toronto 20% of Ontario. As Robert Young observes: “This weight confers political strength, despite municipalities’ constitutional weaknesses.” Likewise, in South Africa the large metropolitan municipalities are not only financially autonomous but are also asserting that autonomy. Given the vast difference in power and resources, the interests of large and small municipalities inevitably do not coincide. With reference to Spain, Francisco Velasco Caballero reports that “the great differences in size are a source of the various dysfunctional elements in the structure of local government because the interests of the larger municipalities are difficult to reconcile with those of the more numerous smaller ones.” For example, the large Spanish cities question the need for provinces, whereas the smaller ones depend on them for survival. The divergence of interests also manifests itself in organized local government. Although the high number of municipalities makes a unified voice of local government essential, the divergence of interests makes organized local government speak in muted tones. Finally, given the importance of the large urban municipalities, states engage directly with them – as, increasingly, do federal governments. The Governance of Metropolitan Regions The size of municipalities, their consolidation, and local government structures come together most acutely in the massive urban conglomerations that are found in most countries in this study. Some of the largest cities in the world are found in our sample of federations: Sao Paolo, Mexico City, Mumbai, New York, and Lagos. The New York metropolitan area includes 22 million people. The Mexico City metropolitan area houses over 18 million (almost 20% of the country’s entire population) located in the Federal District and three states. Greater Mumbai has 16.4 million people, and Sao Paulo has 19 million. The urban complex of Lagos is regarded as the fastest growing mega-city in the world,9 with an estimated 2006 population ranging from 9.1 million to 17.5 million. These metropolitan regions are not only economically most productive but, in the developing world, also home to a significant portion of the country’s poor. The role of local governments in meeting the demands for the effective and efficient provision of municipal services, transportation, planning, and protecting the environment, to mention a few, has an important bearing on their place in the federal system.

Comparative Conclusions

403

Three broad approaches to metropolitan governance can be discerned.10 Least prevalent is the amalgamation of local authorities into large metropolitan governments. Within this approach, two variants are found: the first is an incomplete amalgamation with an umbrella metropolitan council established over a number of local councils; the second is the complete amalgamation of municipalities into a unified structure. The second broad approach keeps the constituent local governments intact but seeks consolidation through other means such as consolidating government services in a sector through single-purpose special districts or achieving the same end through various cooperative agreements between local governments. The third broad approach bypasses local governments altogether, locating metropolitan-wide governance in the hands of the states. Where states dominate local government, no single approach is usually followed. Michael Pagano shows that the major characterization of the regional governance models of metropolitan areas in the United States has been their heterogenous adaptation to their environments. Similar variations are also found in Australia and Canada. The weak form of consolidation entails placing a number of local authorities in a metropolitan area under an overarching coordinating structure and tasking the latter with metropolitan-wide services, planning, and coordination. The two-tier model was first used in Toronto, Ontario, between 1954 and 1999 and in South Africa between 1995 and 2000. The organization of the Montreal metropolitan area in Quebec still reflects this model. Least popular has been the consolidation of metropolitan areas into unified multipurpose political structures. Consolidation of metropolitan regions is seldom complete, particularly when the conurbations are vast. The consolidated Toronto municipality of over 2 million people comprises only a portion of the larger Toronto metropolitan area and thus remains too small to manage regional transport and land-use planning, matters in which the Province of Ontario has taken the lead. That there are three contiguous metropolitan municipalities in Gauteng Province in South Africa shows the difficulty of consolidating an entire metropolitan region. A less ambitious attempt at metropolitan-wide governance is the singlepurpose government structure – a prominent feature on the American landscape. Called special districts, these structures have become an important part of metropolitan governance, their growth being more rapid in metropolitan areas than elsewhere. Most metropolitan regions are a jumble of multiple municipalities, and the challenges of regions are tackled with varying degrees of success through voluntary ad hoc agreements. In many US cities, interlocal agreements and contracts have proved to be efficient and beneficial. In Germany new administrative entities – higher level associations of municipalities (e.g., Region Hanover and Region Stuttgart) – have been established to fulfil local public tasks.

404

Nico Steytler

In a number of countries (e.g., Mexico, India, Brazil, and Nigeria), effective cooperation is not always achieved. The Mexico City metropolitan area incorporates nearly eighty municipalities in three states, plus the sixteen divisions of the Federal District. There have been few efforts at consolidation, and intermunicipal cooperation is based on and maintained by ad hoc voluntary efforts. Intermunicipal agreements (even across state borders) are used, but success is at best sporadic. A worst case is probably the metropolitan region of Lagos, Nigeria. Habu Galadima observes that the twenty municipalities comprising the state of Lagos divide, rather than unify, the urban region. Where metropolitan areas have been balkanized into a large number of small local authorities, state governments have assumed responsibility for metropolitan governance. Australia is the best example of this model, which results in weak urban local government.11 Apart from Brisbane (which contains 40% of the metropolitan region’s population), the major state capital cities of Sydney, Melbourne, Adelaide, and Perth are fractured into a number of small municipalities. Through special-purpose agencies, the state governments provide key metropolitan-wide services, such as urban transport, main roads, water and sewage, and pollution control. A similar pattern is found in Spain. When the competition between the metropolitan government of Barcelona and the Autonomous Community of Catalonia surfaced, the latter disaggregated the metropolitan government of Barcelona into thirty-two municipalities and assumed dominance over the governance of the region. The establishment of the Lagos MegaCity Development Authority, funded and controlled by the federal and two state governments, had a similar effect in that metropolitan region. Consolidated large-city governments, in contrast to the myriad small local government structures, command considerable resources and political clout. They clamour for more power and resources, which brings them into competition with state governments. Mayors of large cities become better known internationally than their state premiers.12 The national leader of the opposition in South Africa dons the mayoral chain of the City of Cape Town rather than take a seat in the national Parliament. The consolidation of resources in large urban municipalities produces autonomy, which brings competition with state governments. It is thus not surprising that state governments in Australia and Spain eschew the growth of metropolitan local governments. The relationship is not always one of competition but often materializes in cooperation and coordination over a range of areas because even the most consolidated local governments do not include the entire metropolitan area. The cooperation may also extend to the federal government. As metropolitan regions are important to the health and wealth of the nation, federal governments also engage directly with metropolitan governments.

Comparative Conclusions

405

Federal Capital Cities Only some capital cities (e.g., Delhi, Mexico City, Vienna, Berlin, and Madrid) face the challenges of being part of a metropolitan region, but all of them raise the questions of local governments’ governance role and their relations with their state and federal governments. Three broad governance models can be identified from our sample of countries: (1) local government governs the city but under the control of the federal government; (2) the capital has the status of a state, and local government is subsumed in that structure; and (3) the capital has no special status and is governed by local governments as any other city. In a number of countries, to avoid favouring any constituent state, a capital territory is designated, with its governance in the hands of local government(s) under the supervision or financial tutelage of the federal government. The first example was Washington, dc, where the federal government still approves the budget of the capital but leaves the governance of the city to an elected local authority. Nigeria followed this example. Although the newly created Federal Capital Territory at Abuja has the same status as a state, it has no state government. Constitutionally, the territory is divided into six local council areas, but the federal National Assembly assumes the role of the state authority, including funding and approving the budgets of the six local area councils. This model, then, is an uneasy amalgam of federal and local government. In the second approach, the capital territory has the status of a state, dominating or absorbing local authorities in that area. The Australian Capital Territory, located at Canberra, has semistate status, its government doubling up as the local authority. Brazilia, as the Federal District of Brazil, has state status, with the governor performing both state and municipal tasks. In Berlin and Vienna the Land and municipal government is one; the elected representatives function both as a Land parliament and as a local council, depending on the matter at hand. Madrid is comparable to the extent that the Autonomous Community of Madrid is also a city-state, comprising the entire metropolitan area. There are municipalities in Madrid, but the provincial structure has been consumed by the autonomous community. The Federal District in Mexico City was subject to federal control before being given the status of a state in 1997. In the third group, no special status is attached to the seat of government, and the capital city is governed, like any other city, by local government. Examples are Berne in Switzerland, Ottawa in Canada, and the two seats of government in South Africa: Cape Town, where the national Parliament has its seat; and Pretoria, where the national executive is located. Delhi is a special case, being a mixture of all three models. There is an elected local authority (Municipal Corporation of Delhi), two bodies

406

Nico Steytler

nominated by the Union ministries, and a state government for the capital territory. The Union government has direct control over the planning and development of land and the maintenance of law and order.

constitutional recognition The experience across the twelve selected countries suggests that constitutional recognition in federal constitutions plays an important role in defining the place of local government in the federal system but is not dispositive of its status or role. There is also great variation in the forms of recognition, which further define the nature of local government’s relations with the other orders of government. However, the dyadic federal system remains dominant, subjecting local government in most cases to the jurisdiction of the states. In the classic dual federal systems, with a clear division of powers and functions between the federal and state governments, local government falls within the latter’s jurisdiction. In the constitutions of the United States and Australia, which do not mention the existence of local government, local government falls within the residual powers of states. In contrast, the explicit mention of local government in the Canadian Constitution of 1867 allocates it as a competence of the provinces. The Anglo-American model of dual federalism was also followed when the federations of India and Nigeria were founded in 1949 and 1954 respectively. The Continental models of federalism are no different: the Swiss Constitution of 1848 makes no mention of local government, and the Brazilian Constitution of 1891 makes local government a matter for state legislation. The only exception is Austria, where local government is defined by the notion that the “free municipality [is] the basis of the state,” as echoed in its 1920 republican Constitution. Although this Constitution establishes the principle of local autonomy, municipalities are still subject to Land legislation. As noted above, it was only after the Second World War that local government gradually received constitutional recognition, resulting from linking democracy to decentralization. Local democratic institutions were seen as the building blocks of democracy for countries emerging from authoritarian, military, or minority rule. The principle of local self-government was enshrined in the German Basic Law of 1949 as well as in the Spanish Constitution of 1978 after the fall of General Francisco Franco. The link between democratization and decentralization was drawn much more forcefully when Brazil emerged from military dictatorship in the late 1980s. The Brazilian Constitution of 1988 not only defines the federation as comprising states and local governments, but the latter’s powers and autonomy are spelled out in detail. South Africa in its emergence from minority rule and

Comparative Conclusions

407

internal conflict, also sought to ground its newfound democracy on local government. The recognition of local government as an order of government by the 1999 amendment to the Mexican Constitution can also be ascribed to the process of redemocratizing after decades of one-party authoritarian rule. The recognition of local governments in the 1999 Nigerian Constitution not only secures local democracy but also protects local councils from arbitrary state action. The dominant reason for the constitutional recognition of local government in the 73rd and 74th Amendments to the Indian Constitution in 1993 was to bind states to democratize localities, based on the premise that local democracy is an essential prerequisite for development. Given the opposition by the states to the previous attempts at constitutional recognition, the 1993 amendments retained the dominant position of the states vis-à-vis local governments. The recognition of local self-government in the Swiss Constitution of 1999 had little to do with democracy or development. Given the strong position of local governments in the country’s governance prior to 1999, recognition is seen as merely recording that status. The municipalities argued, however, that the recognition now provides a basis to deal directly with the federal government. Forms of Constitutional Recognition In the nine countries with constitutional recognition of local government, the form of such recognition varies considerably. However, in most cases, local government is not explicitly elevated to an order of government on par with the states, thus keeping the dyadic nature of the federal systems more or less intact. In all nine constitutions, there is some reference to the principle of local self-government. In the Mexican Constitution it is evoked by reference to “free municipalities.”13 The Swiss Constitution guarantees the “autonomy” of municipalities.14 South Africa’s Constitution confers on a municipality “the right to govern on its own initiative.”15 In Switzerland and Spain the right to self-government is the principal provision relating to local government and can be raised by municipalities before the federal constitutional courts. In none of these constitutions is the meaning of local self-government defined with any precision. In a number of constitutions, recognition goes further than proclaiming merely the general right of local self-government. It deals with substantive issues, including a definition of the democratic institutions of local governments (Mexico and South Africa), the powers of local government (India, Nigeria, Brazil, and South Africa), access to revenue and taxing powers (Germany, Brazil, and South Africa), conditions for state interventions (Mexico and South Africa), and the entitlement to

408

Nico Steytler

be consulted by the federal government on matters affecting local government (Switzerland and South Africa). However detailed the provisions of the constitutions, the general trend is that local autonomy must be exercised within the limits set by state and federal law. In most cases, the constitutions do not provide operative provisions for local governments; the provisions must be operationalized through state and federal law. This, of course, goes to the heart of the dual federalism issue: who is responsible for local government? Two patterns are apparent. In the first group, the dual nature of federalism is firmly maintained; explicating and implementing the constitutional provisions falls within the domain of the states. Mexico, India, and Nigeria follow this path. The detailed provisions of their constitutions, such as the listing of powers and functions (including tax powers), remain merely a promise because the contours of local government powers, functions, and funds are the prerogative of the states. In India the two amendments of 1993 provide a broad framework in which the states must operate but leave to the discretion of the states which of the long list of functions may be exercised by panchayats or municipalities. Likewise, the Nigerian constitutional provisions are not operative but must be mediated by state law. Although there is a list of “exclusive” local government functions, these must still be operationalized by state law. It is thus argued by Galadima that Nigeria’s Constitution does not guarantee the autonomy of local government, only the democratic election of local councils. In the second group of countries, characterized by more centralized federal systems, the regulation of local government is a concurrent function exercised by both the federation and the state. In Germany, Austria, Spain, and South Africa, the federal government provides the legal framework and the states fill in the details. The Spanish Constitutional Court has held that the Spanish system has a “two-fold nature” – defined by the laws of both the central state and the autonomous communities – the state being responsible for fundamental regulation and the autonomous communities for the nonfundamental aspects.16 The result is that there is a fair measure of uniformity in the local government system. The constitutions of Brazil and South Africa set local government in these two countries apart from the rest. First, the federation is explicitly defined in terms of three orders of government. Article 1 of Brazil’s 1988 Constitution proclaims that the Federal Republic of Brazil is “formed by the indissoluble union of States, municipalities [municipios], as well as the federal district.” The South African Constitution follows a similar pattern when it states in Section 40(1) that “government is constituted as national, provincial and local spheres of government which are distinctive, interdependent and interrelated.” The logic of recognizing local governments as

Comparative Conclusions

409

constituent parts of the federal structure has led, inter alia, to the inclusion of organized local government in national institutions, such as South Africa’s National Council of Provinces. In both constitutions, the scope of local autonomy is described with a measure of detail. In the Brazilian Constitution local autonomy is secure even from constitutional amendment and is protected from both the federal and the state governments as far as internal affairs are concerned. The nature of autonomy is not absolute, and conditions for intervention are set in the Constitution. Although both the federal and (to a lesser extent) state governments may regulate the exercise of autonomy, municipalities may also rely directly on constitutional provisions. A similar position prevails in South Africa. Municipalities can rely (and have done so) directly on the Constitution in the exercise of their functions as well as assert their power to levy property taxes. As in Brazil, the national government plays the dominant regulatory function, prescribing the form, functioning, and financial management of local government in detail. However, the hierarchy of a dyadic system is still evident. Provinces are still constitutionally mandated to supervise municipalities and may in prescribed circumstances intervene, including by dismissing elected councils.

subnational constitutional recognition Given the general view that local governments fall within the competence of state governments, most of them (including in the US and Australian states) are accorded some form of recognition in their state constitutions. In Germany, Switzerland, Austria, Brazil, and Spain, the principle of local self-government is repeated in the subnational constitutions. Further details vary widely. Some US states have entrenched local “home rule” and, to avoid the strictures of Dillon’s ultra vires rule, have given expansive powers to local governments to tax, legislate, and provide services. As Pagano notes, home-rule provisions have been granted by states that believe in increasing the authority of local governments, whereas others have kept the scope and authority restricted. The Australian state constitutions are at the other end of the scale: they provide little more than recognition of local government’s existence, placing few if any limitations on state sovereignty. No powers are directly conferred, and the recognition that is available can, in most states, be changed by ordinary legislation. Given that in a number of countries local government falls uncomfortably between federal and state regulation, subnational constitutional regulation itself can become a site of controversy, as seen in Spain and Brazil. The recent reforms of the statutes of autonomy in Catelonia (2006) and Andalusia (2007) have increased the scope of regional powers and afforded more local autonomy. The ability of these statutes to trump the

410

Nico Steytler

“fundamental” central government laws over local government, however, is contested. In contrast, many state constitutions in Brazil do not yet recognize the increased autonomy of local government achieved under the 1988 Constitution, minimizing municipal competences via provisions that are regarded as unconstitutional. The Significance of Recognition Given wide differences in the scope and extent of constitutional recognition, the impact of such recognition on the federal system is inevitably varied. Foremost, recognition is some brake on state power. In India it was only after the 1993 amendments that states’ exclusive jurisdiction over local government was breached. However, where the implementation of the constitutional recognition still lies in the hands of state governments, reluctance or resistance on their part may scupper the realization of local self-government. Nigeria presents an example of state governments fundamentally undermining such a constitutional mandate. Where constitutional recognition is confined to the principle of local self-government, the elusiveness of the concept limits the usefulness of the recognition. The recognition nevertheless remains legally significant. The experience of Germany shows that it protects local governments from excessive restrictions and preserves a “core sphere” of responsibilities (i.e., finances, local planning, and personnel matters) for local government. It also protects local governments from revocation of responsibilities to higher orders of government; this is allowed only if justified by an overriding public interest. However, as Martin Burgi reports, constitutionally entrenched local self-government may often be a fiction in Germany; the complaint is that very detailed federal and state legislation – and even European Union (eu) regulations – often leaves little to the general competence of local government. Where constitutional provisions are directly operative, the shield against federal and state intervention is that much more effective. In South Africa not only can the Constitutional Court be asked to protect local autonomy, but the Constitution also defines the practice of intergovernmental relations. Local government’s constitutionally listed power to reticulate electricity continues to prevent the national government from restructuring the electricity industry by conferring that power on parastatals. However, the reality of autonomy lies not only in the Constitution but also in the ability of local government to exercise that autonomy effectively. In South Africa it has mainly been the large metropolitan municipalities that have been able to reap the benefits of their constitutional status. Constitutional recognition is not a prerequisite for local autonomy. In Australia a measure of financial autonomy has been achieved despite the

Comparative Conclusions

411

absence of constitutional recognition. Yet constitutional recognition remains on the political agenda. Although two attempts to amend the federal Constitution failed in 1974 and 1988, the matter is again on the agenda of the new Labour government. Without local government’s inclusion in some manner in a constitution, the fundamental dyadic structure of the federal system remains intact despite increased statutory powers, as the Canadian experience suggests. Some provinces (i.e., Alberta, British Columbia, Ontario, and Manitoba) have sought to imbue local governments, particularly the cities, with greater autonomy through ordinary legislation, conferring on them so-called “natural person” powers to do any thing to achieve local government purposes, provided it is consistent with federal and provincial law. Young’s assessment of these developments is that they have not fundamentally transformed the constitutional nature of local governments or their finances.

governance role of local government The role that local government plays in the governance of a country varies from country to country and from state to state. In some countries, local government is responsible for around one-quarter of all government expenditure, providing a host of services. In others, its contribution to overall government expenditure and provision of services is much more modest. Its governance role is further defined by a double mandate – one derived from its constituency, the other from states and the federal government. Both the scope of functions and the lines of accountability shape local government’s status as an autonomous order of government. Source of Powers and Functions Most local governments perform functions in terms of their autonomous powers as well as execute delegated tasks on behalf of states (and sometimes the federal government). Local governments have thus been described in Germany as having a hybrid character. In addition to their autonomous functions, they are extensively used to implement federal and Land legislation, acting as the most subsidiary unit of Land administrations. The dual nature of local governments often stems from their origins as parts of state governments. The US counties were originally administrative units of the states, and they still provide social welfare as an assignment from the states. A more functional reason for the dual nature of local governments is that, being closest to the people, they perform tasks more efficiently and effectively. The dual role of local governments raises two concerns about local autonomy. The first is that if a substantial part of local administrations is concerned

412

Nico Steytler

with delegated powers, little remains of their primary function of responding to needs identified by their constituencies. Most countries report the increasing burden of delegated functions. In Nigeria the complaint is that in many cases local governments function as mere administrative extensions of state governments. The second concern is that delegated functions from state governments are not always followed by matching funds, resulting in unfunded mandates (a matter covered in the next section). Although states prescribe the functions to be performed, local governments must look to their constituencies for funding. In Canada the list of prescribed activities has grown steadily, but this has occurred increasingly without new financing. This is a predicament shared also by local governments in Australia, South Africa, Mexico, and Switzerland. The functions assigned exclusively to local governments are infrequently captured in constitutions but more usually prescribed in state (and sometimes federal) legislation. Only in Brazil and South Africa do local governments draw directly from the Constitution for the delineation of their powers. Although such powers are thus protected from incursion by the state governments, the generality of their expression often provides little certainty. Moreover, if the neat distribution of powers between the federal and state governments produces overlaps, a three-way cut is likely to result in more uncertainty. Concurrency between all three spheres of government is prescribed in the Brazilian Constitution with respect to education, health, and social assistance. Although the federal government may set framework legislation for these constitutional powers, more often than not it goes into detail, leaving little room for local legislation. Although local government functions are listed in the Indian, Nigerian, and Mexican constitutions, these provisions must be actualized by state law. The complaint in India is thus that because the assignment of powers to panchayats falls within the states’ discretion, no state has yet transferred all the listed powers to local governments in its jurisdiction, leaving most local governments without adequate assigned functions. In Germany, Switzerland, and Austria, where the principle of local selfgovernment is constitutionally protected, local governments may act within this restricted autonomous sphere. In Austria this entails competence for the election of local organs, limited taxation, and internal administration. In Switzerland, in terms of the principle of subsidiarity, all activities not explicitly allocated to higher political orders fall into the jurisdiction of municipalities. In Germany local authorities have the competence to attend to local matters and do not need specifically empowered federal or Land legislation to take action locally. In contrast to these three countries, the constitutional guarantee of local self-government in Spain’s Constitution depends on state or regional laws for its realization.

Comparative Conclusions

413

Where local governments are mere creatures of statute, the rule in the common-law countries, at first, was that municipal powers had to be found within an enabling statute. The ultra vires doctrine, expressed in the United States as Dillon’s Rule, holds that any conduct not explicitly within the empowering legislation is invalid. Increasingly, the shackles of this restrictive rule have given way to a more enabling approach. Most Australian states give local councils the power of “general competence.” In Canada this is done, as noted above, by conferring “natural person” powers on local governments. Such powers are still subject to the requirement that they be consistent with state and federal law, but the courts have adopted a benevolent interpretation of local competences, requiring a high level of conflict to strike down a municipal bylaw for want of compliance with a provincial or federal law. This has brought the common law much closer to the civil law. In Germany local governments have a “general competence,” meaning that a local authority does not act illegally if it takes measures in an area that is not explicitly given to it by legislation, the only exception being the need for a legal basis for measures regulating or restricting rights and freedoms of individuals. In Spain, too, local governments engage in new tasks without express authorization – for example, in providing social services, such as the integration of immigrants. In some countries and states, there is an asymmetrical allocation of functions to local governments relating to (1) the size of the municipality, (2) the urban-rural divide, (3) shared jurisdictions, (4) dedicated singlepurpose structures, and/or (5) the capacity of a municipality. In others, a uniform approach to the distribution of powers and functions within a state is usually prevalent. For example, in Australia all councils operate under the same state legislation, regardless of location, size, or capacity. Focus of Powers and Functions Although there are numerous differences in the scope and extent of the functions typically performed by local governments, there is also a large measure of coincidence. Generally speaking, the coincidental functions concern basic household utilities (such as water, sewage, and electricity), the built environment (including building regulations, zoning, and planning), roads and traffic, social welfare, health services, culture and leisure, environmental protection, economic development, education (usually only kindergarten, primary, and secondary schooling), and policing. A clear trend in at least some countries is the provision of services beyond the provision of utilities (e.g., water, sewage, and energy), with increased activities in land-use planning, environmental management, economic development, and community services. This trend is the most pronounced in those larger urban municipalities that are seeking to develop a new role in urban governance.

414

Nico Steytler

The major differences between countries are seen in a few cost-intensive functional areas. First, local governments in Australia, India, Mexico, Spain, South Africa, and Nigeria are not directly involved in the provision of either primary or secondary education. Second, social welfare (including social security) is not a local function in Mexico, South Africa, Nigeria, Spain, and India. Third, although the types of public-security provision vary enormously, it appears that policing (excluding traffic policing) is not a local function in Australia, India, South Africa, and Spain. Local police can be found in Austria (but only in a few municipalities), Brazil (in a few cities but with limited authority), Canada, India (in a few large cities but with limited authority), South Africa (only in metropolitan municipalities), Spain, Switzerland, and the United States (where local police are numerous and exercise substantial authority). The functional area of policing illustrates the general point about the imprecise nature of comparisons across jurisdictions; the types of public security provided by local authorities vary enormously, and the practice within a country is often hugely divergent. Fourth, health services are not provided by Spanish or, except for limited environmental healthcare, South African municipalities. These exceptions have a considerable impact on the budgets of local governments and their portion of overall government expenditure. Many of the functions are not performed exclusively but are undertaken jointly with other orders of government, some on an assigned, delegated, or agency basis. In Spain, for example, national law provides for municipalities to supply complementary services to other orders of government in education, culture, housing, health, and environmental protection. In the constitutions of Nigeria, Brazil, and India, concurrency is mandated in the key social policy areas. Where there are overlaps in functions between state and local governments, or where the latter perform a complementary role in providing services, the states frequently dominate the area. However, in most instances of concurrency, coordination is inevitable and pursued purposively. The high level of cooperation in Switzerland, however, has led, in a number of areas of overlapping jurisdiction, to political entanglement (Politikverflechtung). There are tightly interwoven policy structures, with no sphere taking a strong lead in areas such as roads, energy, public health, and social assistance. Without clear allocations of responsibilities and decision making, accountability to constituencies inevitably suffers. Following the practice of other orders of government (and at times at their behest, as in the State of Victoria in Australia), local governments increasingly apply the business model of New Public Management to deliver services. They corporatize municipal administrations, create public entities under their control, or privatize services altogether. In Canada quasiindependent institutions, agencies, boards, and commissions have been

Comparative Conclusions

415

created in order to insulate administration from political pressures and allow expertise to dominate. In the United States the catch phrase that government should steer and not row is reflected in the private sector’s engagement in service provision. In Germany the focus is also on the enabling rather than the providing state, and in the areas of water and energy supply as well as waste and sewage disposal, the trend has been toward privatization. This is also the case in Australia, Spain, Switzerland, and Austria. In Canada there also is a clear but contested trend toward outsourcing services through public-private partnerships. The contestation has been the most pronounced in Brazil and South Africa. Although the Brazilian Constitution allows municipalities to outsource municipal functions such as public transportation and waste management, private-sector provision of services faces political opposition because it is seen as hurting the poor. There has thus been little movement toward the privatization of essential services. A distinguishing feature of local service delivery is the use of consortia formed by a number of local governments. Due to the large numbers of small local governments, the benefits of economies of scale, and the consolidation of skills and resources, particularly in urban areas, intermunicipal agreements are often encouraged and facilitated by federal and state legislation and incentives. Consortia are also formed between municipalities and state governments, and in Brazil 20% of municipalities are in consortia with states on health, education, and social assistance. When measured against total government expenditure, local governments perform a limited yet significant portion of government services. In a comparison of local expenditures, funded by both their own revenue and intergovernmental grants and transfers, three groups are apparent. At the top end of the scale are countries where local governments are responsible for approximately one-quarter of total government expenditure, namely the United States, Switzerland, and South Africa. There is a middle group of countries where local government’s contribution is around 15%, namely Brazil, Austria, Germany, Spain, and Nigeria. At the low end of the scale, with a limited contribution of between 5% and 8%, are Australia, India, Mexico, and Canada. These variations depend largely on whether local governments in a particular country are responsible for the cost-intensive social services of education, health, and social welfare. A second variable is the provision of basic utilities. With no responsibility for education or basic utilities, the contribution of local governments in Australia is a mere 6.4% of the total expenditure. In most countries, local governments are not in the same league as state governments; the latter’s expenditures are double to quadruple those of their local governments. Only in the United States and Switzerland is there a measure of equivalence.

416

Nico Steytler

The size of local government’s contribution to the national expenditure is not necessarily linked to the size of its personnel complement. Given that much of local government’s services are labour-intensive rather than cost-intensive, local government employees’ portion of the total of all civil servants is considerably higher than their portion of local government’s expenditure contribution. In Switzerland, Germany, Canada, and Austria, local administrators constitute approximately one-third of the entire civil service. In the United States the figure jumps to nearly two-thirds. In Spain, Nigeria, and Brazil, the figure is around one-quarter, whereas in the rest of the countries the figure is below 15%. Again, the significant variable is the provision of education. Institutions Exercising Power One of the principal strengths of local government is the democratic ethos of exercising public power. It is indeed the only order of government where, due to the smallness of its constituent parts, direct democracy in the form of assemblies can be practised. The norm, however, is the election of representative councils and executives, often complemented by participatory governance. The predominant ethos is also that elected representatives perform voluntary public service on a part-time basis. In contrast to the other orders of government, there is often no separation between the executive and legislative branches in the Montesquieuan sense, as these functions are fused in a single council. Whether this distinction is drawn depends largely on the preference for either presidential or parliamentary systems of executive government, a choice that most often reflects the state and federal models. Underpinning all the systems is the election of a local representative council, varying in size according to the population of the municipality. In South Africa it ranges from 7 councillors in the smallest local municipality to 210 in the largest metropolitan municipality. Voting rights are similar to those in federal and state elections but for two unique exceptions. First, in the European Union a broader notion of citizenship applies because a citizen of any EU country may vote in a local election in any EU country where he or she is resident. Second, Canadian and Australian landowners, as rate payers, have the right to vote in municipalities where they own property. Direct elections have become the dominant mode of electing a mayor or chairperson of a local government. Following the national and state models, direct elections are found in the United States, Nigeria, Mexico, and Brazil. However, in a number of countries with an imbedded parliamentary tradition, the trend is toward direct elections. Both systems are present in Switzerland, India, Canada, Australia, Germany, and Austria. Only South Africa and Spain are the exceptions. The trend has been prompted, Burgi

Comparative Conclusions

417

observes with reference to Germany, by the effort to boost electoral turnout and increase democratic legitimacy. He also reports that this has made mayors more independent of councils and has increased their political influence. In Austria, where direct elections take place in six of the nine Länder, the experience is that the combination of the parliamentary and presidential systems does not always work well in practice where there is no political alignment between the mayor and the council. In the presidential system the separation of powers between the executive and the legislature follows automatically. In the parliamentary system (i.e., Canada, Australia, India, Spain, and South Africa), both legislative and executive functions are fused in the council. In South Africa even an executive mayor exercises only delegated power from the council. In Spain the role of councils changes with their size. In large councils, such as those of Madrid and Barcelona, there is a process of parlementarization of local government; councils focus on setting norms and on political oversight of mayors and executive committees. This has become increasingly necessary because mayors in large urban municipalities are most often full-time executives. One of the claimed strengths of local governments is their proximity to the people. The traditional village concept of local government is that of the gathering of the village to collectively make decisions affecting local matters. This tradition still survives in the least and most populated countries in this study. In a number of Swiss cantons, there are still municipal assemblies where the citizens are entitled to cast binding votes on all major issues, such as budgets and tax rates. The choice of this form of government depends on the size of the municipality and on political culture. Fewer than 20% of municipalities have a local assembly, and as Andreas Ladner reports, the rate of participation in municipal assemblies is rather low, decreasing drastically as the size of the municipality increases. In India the inclusion of all eligible voters in a panchayat (village assembly) is aimed at ensuring direct democracy. Although these assemblies are statutory bodies, their role is not yet significant because state governments have not devolved specific functions to them. Whereas direct democracy through assemblies is an exception, other forms of public participation in local government are gaining ground. Referendums and popular initiatives have been essential features of the Swiss political system but are also found in the United States, Austria, and Germany. A much more common method has been popular consultation. Perhaps more so than in the other orders of government, a participatory approach to governance has been pronounced in local government, as reflected in expanded community consultation on matters such as budgets, the publication of annual reports, and the privatization of municipal services. Some cities in Brazil have been at the forefront of participatory budget processes. Only in Nigeria is little progress reported with regard to popular participation in local governance.

418

Nico Steytler

The relationship between local political structures and municipal administrators is a further reflection of the contested nature of local self-government. In some countries, autonomy over the hiring and firing of personnel is seen as an essential component of local self-government, whereas in others a high level of state control is exercised over all aspects of the administration. In Germany the employment and dismissal of administrators is seen as part of the right to self-government. The same could be said of the United States, Canada, Australia, and South Africa. At the other end of the scale is India, where the system of urban administration is centrally controlled. As members of the Indian Administrative Service, senior officials are appointed by the state, which directly impacts the relationship between the elected council and the officials. Dominant is the so-called “Bombay model,” in which the state appoints a commissioner as the chief executive officer of a municipal corporation, granting this individual enormous executive power. This leaves the mayor devoid of powers and authority and reduces elected councillors principally to an advisory capacity. In the rural areas, most of the panchayat staff are delegated state employees. In Nigeria the states also control the appointment of senior levels of local administrations, leaving only lower-level appointments to local councils. Given state jurisdiction over local government, both approaches can be found in one country. In Austria, for example, some states require the approval of every appointment and promotion, whereas others leave these decisions mostly in the hands of the elected council. Even where the elected officials control appointments, the part-time nature of councillors and executives often translates into strong administrations acting with broad discretion. Elected officials play a limited executive role, acting more as “a board of directors,” whereas day-to-day matters are in the hands of appointed officials. However, as reported from Australia, the line between policy and administrative decisions is often blurred, giving rise to tensions between politicians and administrators. In the developing countries in this study, local administrative capacities and resources are spread very unevenly, with the more numerous rural municipalities being poorly skilled and ill-equipped to govern effectively. In Mexico fewer than 40% of municipalities have budget planning and evaluation units, and one-sixth of municipalities do not yet use computers for bookkeeping purposes. In South Africa many rural municipalities are functioning poorly, with frequent protests against poor service delivery. As in Nigeria, corruption is becoming endemic, prompting greater provincial and national intervention. Without skills and resources, local self-government is a mirage.

financing local government The financing of local governments is crucial to understanding their place in a federal system. It reflects on the exercise of local autonomy, determining

Comparative Conclusions

419

whether local governments can make and implement policy choices in response to their constituencies’ preferences. In short, financial autonomy defines whether local government can be seen as an order of government and a true partner of the federal system of government. Where local governments raise the bulk of their revenue independently, a high level of autonomy follows. Conversely, overreliance on transfers from state and federal governments, especially if the transfers are tied to particular policy outcomes, usually results in local governments’ financial dependency and policy subservience. Whatever the formal powers of local governments, financial self-reliance often determines their ability to make meaningful choices with regard to policy directions and implementation of services. As Luiz Cesar de Queiroz Ribeiro and Sol Garson note with respect to Brazil, the reality is that “the budget composition of municipalities shows a deep contrast between their financial status and their political autonomy.” That there should be transfers of funds to local governments is inevitable where local governments also perform delegated functions, but it is a question of degree. To what extent are local governments able to make decisions reflecting the policy choices of their constituencies? The source of transfers also reflects on the constituent parts of the federal system. Direct transfers from the federal government to local governments breach the usual dual nature of the federal system, often establishing direct intergovernmental relations between the two orders of government without states mediating that relationship. There are marked differences in the levels of financial self-reliance enjoyed by local governments in this study. In half the countries, local governments show a high to medium level of financial self-reliance in collecting the bulk, or more than half, of their revenue: Australia (90%), South Africa (86%), Canada (84.1%), and Switzerland (76.8%), followed by Spain (68%), Germany (68%), and the United States (64%). Collecting less than half but more than one-third of their income are local governments in Austria (48%), Mexico (41.9%), and Brazil (32.3%). With very modest independent income are local governments in India (6.7%) and Nigeria (3.4%). There are a number of contributing factors. The high level of selfreliance in South Africa, Australia, and Canada can be attributed to the absence of any major involvement in the provision of the cost-intensive services of schooling, health, or social welfare. These local governments rely mainly on property taxes and service charges. Although Swiss municipalities are responsible for cost-intensive social policy services, they achieve a high level of self-reliance because they, uniquely, impose and collect an income tax. Without access to this revenue source, local governments in the mid-range countries that provide social services – Germany, Austria, Mexico, and Brazil – are reliant on sharing in certain revenue streams with either states or the federal government. The dependency of Indian and Nigerian local governments is largely due to their limited taxing powers.

420

Nico Steytler

In the countries with a high level of local self-reliance, the national average masks huge disparities in revenue generation. Where property taxes are the mainstay of local income, rural municipalities most often struggle to raise income from this source and invariably depend on transfers. The observation of Queiroz Ribeiro and Garson with reference to Brazil, that the smaller the municipality, the larger the gap between political and financial autonomy, is also applicable to many other countries. Independent of the level of self-reliance of municipalities, a high level of regulation of revenue generation and control over expenditure is effected by states (and even in some countries by the federal government). This includes control of borrowing powers and budget adoption. Given the dominance of dual federalism, financial regulation is effected mostly by the states. For example, under Mexico’s Constitution, the states are pre-eminent; federal law may not limit the power of states to establish taxes or regulate collections of service fees. In contrast, in the more centralized federal systems, such as Spain and South Africa, national laws govern municipal finances. Although local financial management is tightly regulated by states, the latter’s point of departure is that local governments are responsible for their own financial health. The federal or state governments do not automatically stand as guarantors for local debt. In Germany, for example, there are no bail-out provisions for bankrupt municipalities. In Brazil the Fiscal Responsibility Law of 2000 prohibits the federal government from assisting subnational governments experiencing financial problems related to debt. Own Revenue Sources In general, local governments in this study have limited access to exclusive revenue sources. Only in South Africa and Brazil can municipalities rely directly on constitutionally entrenched taxing powers. In Mexico, India, and Nigeria, constitutional promises of income streams must be mediated by state laws. The main sources of own revenue are, first, a range of taxes, the most important of which are property rates and commercial taxes. The second stream is income generated by the trading (or selling) services. The third general source is borrowing. Property taxes (also referred to as property rates) have traditionally been the principal source of revenue for local government, usually allocated exclusively to this order of government and even enshrined in the constitutions of Germany, Mexico, and South Africa. In a number of countries (i.e., Canada, Australia, Spain, and India), property rates are the mainstay of income. In the United States, for example, they are the main source for school districts and townships, whereas counties and municipalities have diversified, relying much more on their trading services. As a

Comparative Conclusions

421

type of wealth tax, property rates generate little income outside the urban areas and, in Mexico, are not even levied in rural areas. The power of municipalities to set their own rates shows much variation between countries and within countries. In Australia, for example, local councils enjoy a substantial measure of autonomy in setting rates, but in New South Wales they must secure state permission to increase rates beyond a certain percentage. Although local governments complain that they are underfunded, that property rates do not grow with the economy, and that there is a growing dependence on transfers, a number of contributors to this volume point out that many local governments do not fully exploit the property-tax base. The principal reason appears to be the perceived unpopularity of a higher tax burden, as witnessed in Spain, Australia, India, and the United States. Other reasons are more technical, such as outdated valuation rolls in Brazil and simply the absence of enabling state legislation in India and Nigeria. Property rates are illustrative of a more general trend of local governments not always using their tax powers to the full and preferring the politically safer option of calling for more intergovernmental transfers. In a number of countries, property rates are not the dominant tax. In Germany and Austria it is commercial or payroll taxes. In the United States taxes on retail sales and on income are levied by a few municipalities. As noted above, Swiss municipalities play a significant role in imposing an income tax; one-third of total individual taxation is levied and collected by them. Then there are a host of taxes, duties, levies, and fines that bring in modest amounts of income, the most proverbial local government tax probably being dog licences. In South Africa and Brazil taxes on municipal service charges are also a significant source of revenue. Local governments providing water, electricity, and other trading services usually generate income from this source, which is used to cross-subsidize other nonpaying services. In Mexico service charges are even a constitutionally protected source of revenue for local governments. In the United States user charges are the fastest growing and most important type of own-source revenue for counties and municipalities. A related source in Germany is the profit generated by public enterprises from commercial activities. Reflecting the general fear that the higher orders of government will have to pay the debt owed when local governments default on loans, their borrowing of money is uniformly and tightly controlled by state and/or federal law. Not only is their borrowing keenly regulated, but in a number of countries authorization of superior orders of government must be sought. In Austria loans may be used only for capital expenditure and then only within an overall framework agreed upon by the three orders of government. Although both short-term (less than a year) and long-term loans

422

Nico Steytler

are possible in Spain, the latter require the authorization of the autonomous community concerned. In Canada provinces set caps on amounts to be borrowed. The Mexican Constitution proscribes foreign bank loans, and states must approve all bank loans. Given the tight regulatory framework, coupled with intense supervision, it is not surprising that a low rate of borrowing by local governments is reported in most countries (i.e., Australia, Brazil, Canada, India, Mexico, Nigeria, and South Africa), with Germany being among the exceptions. The pattern of borrowing is very similar: it is done mostly by a few large urban municipalities, often by floating bonds. Transfers The manner and extent of transfers have an important bearing on local governments’ autonomy and their relations with the other orders of government. The chapters reveal that, first, as noted above, there are a significant number of countries where local governments are dependent on transfers. Second, federal governments are increasingly the main source of transfers to local government. Third, the increased use of tied transfers (conditional grants) in a number of countries adversely impacts local autonomy. Following the strictures of dual federalism, in a limited number of countries the state governments are still the primary source of transfers to local government. This is the case in the United States and Canada and in Switzerland, where the cantons are the only source of transfers. In others, states play a small or insignificant role in transferring own funds to local governments. The transfer of state funds to local governments has been entrenched as a constitutional obligation in Brazil, Nigeria, and Mexico. Broadly, it can be seen as their entitlement to share in the revenue streams of states. For example, in Nigeria local governments are constitutionally entitled to 10% of the revenue generated by states, although the situation in practice may be different. A particular source of revenue can also be earmarked for sharing, such as the gasoline tax in the Canadian province of Manitoba, the sales tax of Brazilian states, and state entertainment taxes in India. As these transfers flow from “entitlements,” they are usually untied. However, they are also complemented by a range of conditional grants pursuing various state policies. The trends run in contrary directions. In Canada the percentage of state transfers for specific purposes has decreased sharply, allowing greater discretion for local governments. In Brazil the earmarking of transferred funds by states is undercutting the autonomy of even the more self-reliant cities. In a significant number of countries, the transfers by states are merely federal funds being relayed to local government, although the state role

Comparative Conclusions

423

sometimes includes deciding on the horizontal distribution of the funds. Overall, however, state reliance on federal funding to execute stewardship of local governments reveals the threadbare nature of dual federalism. In most of our survey countries (i.e., Australia, Spain, South Africa, Nigeria, India, Brazil, Mexico, Germany, and Austria), transfers to local government emanate from the federal government. In some, such as South Africa, Brazil, and Austria, the transfers are direct from the federal government to local governments, whereas in the others the dual model of federalism is asserted, with the allocation to each municipality being mediated by the states. Either the transfers are unconditional (such as in the case of a constitutional entitlement to the sharing of the federal taxes) or grants are tied to specific purposes. In Brazil, South Africa, Mexico, and Nigeria, there is a constitutional claim on the nationally raised revenue, which in Nigeria and Brazil is complemented by a specific claim on a share of the federally collected sales tax. The distribution is done in a variety of ways. In South Africa the national executive determines the amounts for each local government after considering the recommendations of an independent advisory body, the Financial and Fiscal Commission. More frequently, the individual allocative decisions are made by the states. In Mexico the states must transfer at least 20% of their share of the federal revenue to municipalities. In Australia federal (untied) financial assistance grants are mediated through state grants commissions. In Nigeria local governments are allocated a set percentage of the federal revenue, which is then distributed by the states, a process that allows for considerable abuse by states in deducting various amounts from the allocated funds. In India the states must distribute the funds in accordance with the recommendations of the state finance commissions, but most often these are ignored. A recurring theme in most countries is the equalization of resources as a distributive principle of both the federal and the state governments. The exception is Brazil, with the result that horizontal imbalances have increased. Direct specific-purpose federal grants are found in all countries (except Switzerland), even in those countries where dual federalism is dominant, such as the United States, Canada, and Australia. In Australia municipalities receive specific-purpose grants for roads directly from the federal government, contrary to the Constitution. In the United States the federal government provides support for highways, primary and secondary schools, libraries, hospitals, police services, mass transit, wastewater treatment, and some other local functions. In Canada there has been a substantial growth in direct federal subsidies, although they come from a very small base. No general trend, pointing either to an increased or decreased use of tied transfers, is apparent across the sample.

424

Nico Steytler

The general complaint in most countries is the mismatch between funds transferred and the number of functions assigned to local governments, illustrating the double weakness of local governments. They often have little control over the assignment of additional functions by the state or federal governments and even less access to the necessary funds for their execution. To prevent the financial distress caused by unfunded mandates, an array of structural devices has been attempted in some countries. In Germany the federal Constitution was recently amended to prevent the federal government from delegating, without the consent of the Länder, cost-intensive functions to local governments. The US Congress in 1995 passed the Unfunded Mandates Reform Act, and the Autonomous Community of Catalonia has linked the assignment of functions to the transfer of the necessary funding. The financing of local government shows both its limitations and its potential as an order of government. The continued reliance of some local governments on transfers points to their dependence and lack of autonomy. Queiroz Ribeiro and Garson comment that even in Brazil, where local government enjoys the most elevated status as an order of government, the major cities (where own revenue is significant) cannot be considered financially autonomous due to the extensive earmarking of funds by the federal government and the states. Even so, there are also indicators pointing to greater local autonomy and a multisphere system of government. First, there are local governments with a large degree of financial autonomy, notably the large urban municipalities, which can improve their position should they show the political will to exploit their available tax sources more effectively. Second, with increasing flows of federal funding to local governments, their intergovernmental relations are no longer exclusively with states but also with the federal government. Given the centrality of finances to local autonomy, it is not surprising that a key area for reform is financial relations. In Spain local governments are demanding a greater share in centrally raised taxes. Canadian municipalities want access to taxes that grow with the economy, such as sales taxes and income taxes. On the agenda in Germany are changes to the Basic Law aimed at providing steady and adequate funding for all orders of government in accordance with their respective duties. Political emancipation is an empty shell without the concomitant financial powers and resources. This is not, however, a static situation. In the United States federal relations with local governments have waxed and waned according to whether the federal government’s relationship with state governments has been accorded primacy over its relationship with local governments.

Comparative Conclusions

425

Expenditure The general norm is strict control by state governments (and even national governments in the case of Spain and South Africa) over expenditure decisions. Although the Mexican Constitution provides that municipalities “shall freely administer their finances,”17 they operate in a tightly controlled environment. Only in Switzerland is cantonal supervision weak. Control is exercised, first, by prescribing a regulatory framework for financial decisions, including the proscription of deficit budgeting. The regulatory framework is followed by close supervision through various reporting mechanisms. In this context, the auditor general in the common-law jurisdictions and the more powerful courts of auditors in the civil-law jurisdictions play an important monitoring role. The most severe form of supervision is where certain financial decisions require prior state approval. For example, some Indian states require clearance for spending above a stated maximum. In Mexico and Nigeria local budgets must be approved by the state legislatures. Expenditure decisions are also directly or indirectly shaped by the superior orders of government. Brazil is unique in that its Constitution prescribes that municipalities should direct no less than 25% of tax revenue and major grants to education and no less than 15% to health. Although the spending power of Spanish local governments is formally very extensive, budgets are in reality conditioned by other orders of government, as central and regional laws determine tasks for which provision must be made locally.

supervision of local governments Financial control of local governments is but one aspect of the supervisory role that states routinely play. In most countries, states also have various intervention powers, including the dismissal of democratically elected councils. Both the extent of these intervention powers and their practice further elucidate the space of local self-government. Given that supervision (and the variety of intrusions permitted) goes to the heart of local autonomy, local governments may defend their autonomy before the courts in the countries where local government is constitutionally recognized. In accordance with the dual model, where local government falls within the competence of states, supervision lies at the core of that competence. The scope of supervision may vary from state to state. In Switzerland regional difference is pronounced: municipalities in the German-speaking part have greater autonomy than those in the French-speaking part. Supervision by the federal government is the exception. In Brazil the federal

426

Nico Steytler

Ministry of Finance exercises supervision to ensure compliance with legal requirements related to a range of financial activities. Federal line departments also monitor the spending of conditional grants, and state governments do not exercise regular supervision. In South Africa the national government’s monitoring role is at arms length because only the provinces can instigate investigations into municipal finances. However, with direct flows of conditional grants from the national departments to municipalities, the former also exercise a monitoring function. The intervention powers of states are mostly confined to enforcing the applicable legal framework, be it state or federal law, leaving policy and implementation choices to municipalities. In Switzerland a clear distinction is made between local governments’ areas of autonomous decision making and their areas of delegated responsibilities. In the former, supervision relates only to questions of legality, whereas in the latter, cantons may also review the appropriateness of decisions. A similar approach is followed in Germany and Spain. In South Africa intervention measures include provinces instructing municipalities on a course of action or even performing functions that a municipality has failed to perform. The most extreme instance of intervention is the dismissal of elected councils and appointment of administrators, a power held by the states in all countries. Although extensive supervisory powers are present in all countries, indicating the subordinate constitutional position of local governments, the practice paints a different picture. Intrusive supervision is very rare in some countries, but more regular in others. One explanatory factor is that the extent and level of intrusion by state governments is highly dependent on the stability and strength of local governments. Although Swiss cantons have intervention powers in cases of bankrupt municipalities, they seldom need to use them. The same applies in Germany and Austria. In Germany, Spain, and Canada, informal and cooperative measures are used to assist and guide municipalities; formal measures are used only as a measure of last resort. In contrast, where skills are unevenly distributed and corruption more commonplace – as in South Africa – interventions are much more prevalent. A second factor is the size of the municipality and the relative strength of the state; supervision of metropolitan municipalities in South Africa is often beyond the reach of provincial departments. A third factor is the political culture in a particular state, as exemplified in Australia. Although intervention powers defy local autonomy, the argument made by Andreas Kiefer and Franz Schausberger with reference to Austria holds true elsewhere as well. It is not so much the extent of intervention powers by the states that threatens local autonomy because these powers are usually implemented in a municipal friendly way. Rather, local autonomy is hollowed out financially through the imposition of increasing numbers of

Comparative Conclusions

427

cost-intensive functions, thus limiting municipalities’ ability to define and act on their own priorities.

intergovernmental relations Contrary to the hierarchical supervisory model underpinning local-state relations in most countries in this volume, the practice of intergovernmental relations is often more equalitarian. Furthermore, contrary to the dual federalism model, which places local government firmly under the wing of the states, there is increasing interaction between local and federal governments. Given the overlap in responsibilities, extensive financial relations, and the need to coproduce services, cooperation between the three orders of government is a necessary consequence. Moreover, extensive collaboration is needed where local governments are required to implement policies and legislation formulated by the other orders of government.18 In local governments’ relations with both states and federal governments, organized local government plays a crucial role in articulating and defending their interests. State-Local Relations Within the dominant constitutional and statutory framework, local governments’ primary relationship is with the states. Usually, there is a ministry or department responsible for local government, but most sector departments interact with local governments both bureaucratically and politically. The interaction often reflects a more equal relationship than what the formal legal structures suggest. In Australia the contradictory situation of municipalities being creatures of statute, yet mostly financially independent, has led to a relationship based on partnership, as reflected in numerous cooperation protocols concluded between local and state governments. Although Young describes local governments in Canada as “policy takers, not full partners,” there are recent provincial initiatives to involve municipalities in joint planning. Such developments are also found in Mexico and Nigeria. At the state level, organized local government plays an important role in most countries, voicing the concerns of its members and, in some countries, becoming a formal negotiating partner of state governments. In states where local governments have no direct linkages with the federal government, the states play the role of intermediary of local concerns. Federal-Local Relations An emerging trend in at least six of the twelve countries in this study is a formalized relationship between local and federal governments. This is to

428

Nico Steytler

be expected in Brazil and South Africa, where local government is recognized as a fully fledged order of government. In the more centralized federations, such as Austria and Spain, where federal legislation regulates local governments, formal executive linkages are also found. Even in the traditional dyadic federations, such as Switzerland and Australia, local governments participate in federal intergovernmental forums. In the United States, Canada, Germany, and Nigeria, the interaction is much more informal; organized local governments act as lobby groups rather than as negotiating partners. Where organized local government is weak, as in Mexico and India, interaction is absent or limited. The focus of the federal government’s engagement with local government is usually consultation on federal policy or legislation affecting local government. Different modes of consultation are discernable. The most formal mode is local governments’ participation in federal institutions through their representatives in organized local government. Less formal is the inclusion of local governments in decision-making processes through various consultation procedures. South Africa is unique in that organized local government is a nonvoting member of the second house of the national Parliament, the National Council of Provinces. It is also a member of the peak intergovernmental relations forum, the President’s Coordinating Council, along with the provincial premiers. In Spain organized local government participates in two cooperative structures: the National Commission of Local Administration and the General Conference on Local Matters, the latter being a body that includes the autonomous communities. In Australia organized local government is a member of the Council of Australian Governments, comprising the executives of the federal and state governments. Some consultation forums are very specific in focus. In Switzerland the Tripartite Conference of Swiss Agglomerations, comprising the federal government, the cantons, and organized local government, promotes vertical cooperation in policy fields relevant to metropolitan areas. Ladner describes this development as the first step away from traditional cooperative federalism – comprising the federal government and the cantons only – and toward multisphere governance. Likewise, in Canada the federal government has signed tripartite agreements with two cities, Vancouver and Winnipeg, and with their provinces, British Columbia and Manitoba, on key issues of urban development. The emergence of tri-level policymaking comes with its costs. Tripartite negotiation causes delays and generates high transaction costs, and the management of such relations can be overly complex. Consultation and consensus seeking also impact on accountability; where responsibility is widely shared, the accountability of each sphere becomes murky. Finally, it should be mentioned that local governments in the eu countries also play a consultative role in eu decision making. Austria, Germany,

Comparative Conclusions

429

and Spain have local representation on the country delegation to the eu Committee of the Regions, the advisory body to the eu Commission on matters affecting regions and local government. Organized Local Government Given the sheer numbers of local governments, their effective engagement with the state and federal governments on local issues must, inevitably, be channelled through organized local government. South Africa and Austria have gone as far as explicitly accommodating the need for organized local government in their constitutions. The role of organized local government in intergovernmental relations varies across countries. In those countries where local governments have no formal relations with the federal government, organized local government acts as a lobby group for local governments, as is the case in the United States and Nigeria. In Australia, Austria, South Africa, Spain, and Switzerland, the relationship has been formalized; organized local government represents its members on a variety of formal and informal state and federal bodies. In Austria the two organized local government bodies have become formal negotiating partners, having been given the constitutional authority to sign agreements, such as a stability pact on debt, on behalf of all local governments. The strength of organized local government bodies lies in their ability to represent the full spectrum of local governments in a nonpartisan manner. Only in Mexico and in two Austrian Länder are these bodies organized along party lines. In the federal arena, single peak bodies representing the full range of local governments are found in Australia, Canada, Nigeria, South Africa, and Spain. Given the diversity of interests of local governments, the countervailing trend is the organization of local governments along the urban-rural divide in Austria, Brazil, Germany, Switzerland, the United States, and some Canadian provinces (where there are also divisions along linguistic lines). Separate institutions have been established by the county governments in the United States and Germany. The task of representing the common interests of highly diverse local governments is difficult. Large cities distrust the ability of local government associations to represent their interests adequately. In Canada, Toronto and Montreal have accordingly left their local government bodies and prefer to deal directly with their provinces. Given the multiplicity of local governments, organized local government plays a vital role in the development of local government as an order of government. Its task is to articulate and defend local governments’ common interests in a nonpartisan voice. In this endeavour, it labours under some inherent weaknesses. Unlike states, which relate to federal governments in

430

Nico Steytler

pursuit of their own interests, organized local government does so in a representative capacity and in circumstances where it is often difficult to forge a common view for different institutions with divergent interests. As voluntary associations, organized local government bodies cannot (except in Austria) bind local governments as an order of government, making them weak negotiating partners from a state and federal perspective. Consequently, large urban municipalities instead develop their own direct relations with the state and federal governments.

political culture of local governance In most of the countries under review, there is a strong democratic culture in local communities. With the exception of Nigeria, local elections are held regularly, with varying degrees of popular participation. Although local government is the government closest to the people, this does not uniformly translate into high local interest. Apart from mandatory voting in Brazil and most of the Australian states, high voter participation is reported in Austria, India, Nigeria, Spain, and Switzerland, with local government elections showing an even higher voter turnout than in state and federal elections in India and Switzerland. By contrast, in Canada, Germany, Mexico, South Africa, and some Australian states, significantly lower levels of voter turnout than in state and federal elections are encountered. In the United States the turnout is linked closely with whether local elections coincide with state and presidential elections. Increasingly, other methods of participatory democracy are gaining currency. As noted above, various instruments of popular participation (e.g., referenda, initiatives, and participatory budgeting) are used between elections, although not always with much success. Whereas in Brazil participatory budgeting and community councils are hailed, in Spain the impact of the new instruments of participation has frequently been minimal. Yet in Canada participation through nongovernmental civic organizations, which are issue-orientated, appears to be on the increase. What makes local politics distinct from state and federal politics is that it is by and large a part-time activity drawing on a strong voluntary ethic. Although executive mayors in large cities hold full-time positions, elected councillors in all the jurisdictions occupy their positions on a part-time basis, often with only their out-of-pocket expenses covered. The voluntary nature of local participation has mixed results. Whereas high interest is recorded in India, candidates for election are not always forthcoming in Switzerland and Austria. That local government is closest to the people also does not necessarily translate into elected representatives being descriptively reflective of the communities they represent. Women are still largely underrepresented.

Comparative Conclusions

431

Under the 1993 amendments to the Indian Constitution, one-third of councillors must be women, and the Scheduled Classes and Scheduled Tribes must also be represented in proportion to their demographic distribution. The 40% female representation achieved in South Africa stems from political party policy. Whereas India’s mandatory obligation of one-third women also applies to the chairpersonships of local authorities, most countries report very low levels of women in leadership positions, with the highest (around 20%) recorded in Switzerland and the United States. In most of the countries in this volume, the local political life is by and large driven by political parties. No Swiss municipality or Indian panchayat is too small for party contestation. In Austria, Mexico, South Africa, and Spain, party lists are built into the electoral system. There are, however, some notable exceptions. In the United States, Canada, and Australia, the majority of councils operate on a nonpartisan basis, although the political parties are always present in the wings, with elections in the major cities in Canada and the United States being contested along party lines. There may be a resurgence of a nonpartisan approach to local politics, with civic formations focusing on single issues, as witnessed in Germany, Switzerland, and Austria. In most countries, local politics form an inextricable part of the national political party system and are therefore dominated by the major national parties. Few local parties have much success at the polls. Spain is probably the only country where truly local parties govern small towns and cities, but this is only with the support of one of the larger parties. Inclusion in the national party formations has both advantages and disadvantages. Connections with party leaders in the state and federal governments are an important communication channel for intergovernmental relations. This is exemplified by the potentially multiple mandates of politicians in Switzerland and Austria.19 The downside is that it is a one-way communication channel marked by the rule of party bosses in the state or federal capitals who crowd out local issues,20 as in South Africa, Nigeria, and Mexico. The local-state-federal connectivity is further illustrated by the fact that in many countries local government is the stepping stone to a career in state or federal politics. Mayors of large cities may progress to higher office, and some may even have presidential ambitions (e.g., in Brazil and the United States). At the same time, national parties have a great interest in determining municipal leadership in major cities. In South Africa and Nigeria the leadership of major cities is decided at party headquarters. Velasco Caballero captures this broader reality with reference to Spain, pointing out the disconnect between the constitutional guarantee of local autonomy and the domination of local matters by national parties.

432

Nico Steytler

e m er g i n g th em e s a n d i s s ue s : lo c a l g ov e rn m en t and the evolution of the federal system The emergence of local government as an institution of self-government over the past half-century has seen the slow reshaping of federal systems. Not only has the hierarchy between local governments and states been attenuated, but states no longer exclusively mediate local interests to federal governments. Direct relations between federal governments and local governments are increasing, and local government is emerging, in at least some countries, as a partner in the federal governance system, albeit performing only a junior role. The role and place of local government in federal systems is dynamic, and the challenges that local governments face and the emerging trends in dealing with them will indicate how federal systems may evolve. Three interconnected issues stand out: (1) the undifferentiated approach to local governments, (2) the autonomy of local government, and (3) metropolitan governance. A common issue is the growing dichotomy between the relatively few large and powerful urban municipalities (home to the majority of the population and economic output) and the thousands of small rural municipalities, often declining in population and reliant on financial transfers for survival. Whereas the urban municipalities have access to some tax sources, notably property taxes and business taxes, to fund an array of services, small municipalities struggle to raise their own revenue. The divergence of interests is also manifest in the difficulty organized local government has in representing all local governments effectively. Different responses to the dichotomy are evident. First, the notion of uniform local government institutions, all with the same functions and powers, is questioned. In some countries (e.g., Canada, Spain, Brazil, Mexico, and South Africa), there are calls for asymmetry – more responsibilities and financial resources for the urban municipalities, a development that is already underway in Canada. In contrast to this trend is the explicit celebration of smallness in Austria, where the constitutional guarantee of a uniform system of local government is imminent. Although the amalgamation of both urban and rural municipalities remains on the political agenda in a number of countries, there is little progress due to voter opposition. With the continuing amalgamation process in Australia being the exception, the overall trend does not point to a process of substantially reducing the number of municipalities. Where local governments are large and unevenly distributed across a country, as in Nigeria, the calls are for increased numbers. Given the norm of numerous small local governments, the focus has instead shifted to greater intermunicipal cooperation. Such cooperation may stretch across state boundaries but also – in

Comparative Conclusions

433

the European Union – across international borders. Again, as the experience of Switzerland shows, cooperation raises questions of democratic decision making and control where participating municipalities vary in size. Akin to concerns about diversity in size are issues around the variety of local government institutions. In Spain and South Africa the utility of second-tier local governments is questioned. The second common issue is the concern about the whittling away of local autonomy, manifested in a number of trends. In India, Nigeria, and Mexico, the concern is the excessive control of state government over various local decisions. More common is the complaint that financial autonomy is routinely hollowed out by the assignation of more and more responsibilities to local government by superior orders of government but without matching funds. In some countries, the matter is to be addressed by legal reforms, such as in Germany, where reform of the Basic Law will seek to ensure steady and adequate funding for all orders of government in light of their responsibilities. Local autonomy is also undercut where local governments must rely on transfers to fund local functions, thereby creating dependency. Moreover, the extensive use of tied transfers further reduces the discretion of local governments. Local autonomy is also internally compromised in developing countries by a lack of local administrative skills, as is apparent in Brazil, Mexico, Nigeria, and South Africa. The promotion of local autonomy is not uncontested. Although states increasingly assign new functions to local governments and stress financial self-reliance, they also perceive the growth of local autonomy – particularly of strong urban municipalities – as a zero-sum game in relation to their own powers since an increase in local powers means a decrease in their own. The long-term development of “hourglass” federalism, with strong central and local governments and a declining state government in the middle, is feared and resisted by states. In Australia the development of local autonomy is fostered by the federal government. This reflects a shift in power from the states to the federal government, where the latter doles out direct financial aid to municipalities and brings local government into the centre as a member of important federal intergovernmental forums. Recognition of local government in the federal Constitution is also on the agenda of the new Labour government. In Canada, on the other hand, with the new Conservative government, the primacy of provincial-federal relations is asserted, making it unlikely that local government will emerge from the shadow of the provinces. Direct funding of local governments by the federal government is also strongly resisted by the Indian states. The calls for greater autonomy come from the urban municipalities in the metropolitan regions that confront the twin challenges of facilitating national economic growth and addressing the stark social inequality associated

434

Nico Steytler

with urbanization, particularly in developing countries. The trends in metropolitan governance are divergent, with local government not the only player in the field. The progressive consolidation of local governments in metropolitan regions to provide a single governance structure is not evident. Where large consolidated municipalities have been created in the United States, Canada, and South Africa, they do not always include the entire metropolitan region. More emphasis is placed on cooperative initiatives by the municipalities in the region to jointly provide functions with spillover effects. The governance of the metropolitan regions is also increasingly done in partnership with states and, in some countries, with the federal government. On the basis of the case studies, it is difficult to probe the larger questions of whether, or what kind of, federal arrangements appear to foster more democratic, politically vital, and economically healthy cities. Are they to be found in the federal systems that accord the greatest autonomy to cities, operating within a triangular relationship with the state and federal governments? Are German cities, which have a measure of constitutional autonomy, producing better results than, say, Canadian cities, which have no constitutional recognition? Are the South African metropolitan municipalities outperforming the more fractured Brazilian cities, and does the constitutionally entrenched position of local government in South Africa and Brazil make their cities better able to deal with poverty and economic development than their counterparts in Mexico and India? These are vital questions that should be further explored on the basis of comparable indicators of the democratic and economic well-being of cities. Equally important is the question of whether the governance difficulties of cities in developing countries are attributable to the federal system or arise from the fact of underdevelopment itself. This relationship can be explored only through suitable comparison with centralized systems where cities have little or no autonomy. A further question is the challenges that globalization may pose to local governments, an issue that does not feature significantly in the chapters of this volume.21 The competition between cities, noted in Brazil, for global investments through various tax concessions is not a common theme. The regional integration of Europe, however, is keenly felt in the eu member countries of Austria, Germany, and Spain. More than two-thirds of all eu legislation has a bearing on state and local governments. Local governments in Austria fear that compliance with a new open-procurement policy will have an adverse effect on local economic development. The participation of local government in the consultative processes of the European Union, notably the Committee of the Regions, is thus important but, as reported in the case of Germany, gives them little clout. The importance of local government as an order of government is likely to grow. In some of the countries, it enjoys a higher level of trust than the

Comparative Conclusions

435

other orders of government. Given that local government is closest to the people, its innovative representative and participatory democracy processes and structures are more likely to bear fruit. There are indications that local governments are responding innovatively to the demands of the time by providing a range of new social services (e.g., caring for an aging population and integrating immigrants) and by responding to environmental matters such as climate change. These attributes will underscore the value of local governments as a governance partner in federal systems. In comparison to states, local governments are much more limited in terms of functions, funds, and the freedom to make policy choices. Although the dual federalism model holds for a number of countries, thus confining local government relations primarily to states, significant shifts – often informal – suggest that local government is recognized as a partner in the business of governance. The Australian experience illustrates best John Kincaid’s observation that because federalism is a dynamic mode of democratic government, it makes “relationships more important than structures per se.”22 There is a disjuncture between the constitutional fiction of state subservience and the practice of intergovernmental relations. Local government’s autonomous role in the governance of some countries is significant enough to define the federal character of that country. Although local government is as yet, at best, only a “half” or “junior” partner, multisphere government is an emerging reality. It brings with it new challenges such as managing the increased complexity of relationships, addressing the slowness in consultation and decision-making processes, and ensuring the accountability of the three orders of government.

notes 1 Cheryl Saunders, “Legislative, Executive, and Judicial Institutions: A Synthesis,” in Legislative, Executive, and Judicial Governance in Federal Countries, ed. Katy le Roy and Cheryl Saunders, 344–84 (Montreal and Kingston: McGill-Queen’s University Press, 2006), 344–6. 2 It should be noted that the definition of what constitutes “urban” is locally defined, making data on urbanization only imprecisely comparable. 3 un Data, country profiles, figures for 2006, http://data.un.org/CountryProfiles (viewed 15 August 2008). 4 Saunders, “Legislative,” 374. 5 See J. Tyler Dickovick, “Municipalization as Central Government Strategy: CentralRegional-Local Politics in Peru, Brazil and South Africa,” Publius: The Journal of Federalism 37 (Winter 2007): 1–25. 6 See Rudolf Mastenbroek and Nico Steytler, “Local Government and Development: The New Constitutional Enterprise,” Law, Democracy and Development 1, no. 2 (1997): 233–50.

436

Nico Steytler

7 Given India’s process of urbanization, the Constitution also provides for the crossover between rural and urban governance, and states may establish urban panchayats for areas in transition from rural to urban. 8 See, for example, John W. Ekstedt, “International Perspectives on Aboriginal SelfGovernment,” in Aboriginal Self-Government in Canada: Current Trends and Issues, ed. John H. Hylton, 45–60 (Saskatoon: Purich, 1999). 9 un Habitat, State of the World’s Cities 2006/7: The Millennium Development Goals and Urban Sustainability: 30 Years of Shaping the Habitat Agenda, http://www.unhabitat.org/ documents/media_centre/sowcr2006/SOWCR%202.pdf (viewed 19 December 2008). 10 See Enid Slack, “Managing the Coordination of Service Delivery in Metropolitan Cities: The Role of Metropolitan Governance,” Policy Research Working Paper no. 4317, World Bank, August 2007, http://www.utoronto.ca/mcis/imfg/pdf/ world%20bank%20paper%20Aug%2007.pdf (viewed 21 July 2008). 11 Douglas M. Brown calls the states “city-states” “in the sense that they make all truly strategic urban development decisions.” See his “Federal-Municipal Relations in Australia,” in Spheres of Governance: Comparative Studies of Cities in Multilevel Governance Systems, ed. Harvey Lazar and Christian Leuprecht, 97–124 (Montreal and Kingston: McGill-Queen’s University Press, 2007), 118. 12 Thomas J. Courchene, “Citistates and the State of Cities: Political-Economy and Fiscal-Federalism Dimensions,” in Canada: The State of the Federation 2004 – MunicipalFederal-Provincial Relations in Canada, ed. Robert Young and Christian Leuprecht, 83–118 (Montreal and Kingston: McGill-Queen’s University Press, 2004), 96. 13 Constitution of 1917, Article 115. 14 Federal Constitution of 1999, Article 50.1. 15 Constitution of 1996, Section 151(3). 16 stc 214/1989, fj 11. 17 Constitution of 1917, Article 115.IV. 18 See Ronald L. Watts, “Comparative Conclusions,” in Distribution of Powers and Responsibilities in Federal Countries, ed. Akhtar Majeed, Ronald L. Watts, and Douglas M. Brown, 322– 50 (Montreal and Kingston: McGill-Queen’s University, 2006), 329. 19 See Christian Leuprecht and Harvey Lazar, “From Multilevel to ‘Multi-Order’ Governance?” in Spheres of Governance: Comparative Studies of Cities in Multilevel Governance Systems, ed. Harvey Lazar and Christian Leuprecht, 1–22 (Montreal and Kingston: McGill-Queen’s University Press, 2007), 9. 20 See also ibid., 10. 21 On the limited impact of globalization on federal systems, see Harvey Lazar, Hamish Telford, and Ronald L. Watts, eds, The Impact of Global and Regional Integration on Federal Systems: A Comparative Analysis (Montreal and Kingston: McGillQueen’s University Press, 2003). 22 John Kincaid, “The Competitive Challenge to Cooperative Federalism: A Theory of Federal Democracy,” in Competition among States and Local Governments: Efficiency and Equity in American Federalism, ed. Daphne A. Kenyon and John Kincaid, 87–114 (Washington, DC: Urban Institute Press, 1991), 88.

Contributors

m a r t i n b u r g i is chair of German and European Public Law and director of the Research Institute for Modernization of Administrative Law and Government Procurement Law in the Faculty of Law at Ruhr-University Bochum. He is a member of the Board of Directors of the Institute for Mining and Energy Law, University of Bochum. Dr Burgi is an official expert for parliamentary institutions, a legal consultant for stock exchange enterprises, and a national and European-wide lecturer. His research areas include: modernization and privatization of the state; administration and local government in the international context; legal protection before international courts; and the role of regions and municipalities in the global change. He has published ten books and over eighty articles on these and other subjects. h a b u g a l a d i m a is associate professor of political science and deputy director, Academic Planning Division, University of Jos, Nigeria. Dr Galadima holds a PhD in international relations and strategic studies, University of Jos (2006). His research interests include comparative federalism and intergovernmental relations. He has been a member of several academic associations, such as the Nigerian Political Science Association, Nigerian Society of International Affairs, and the Institute of Governance and Social Research, Jos. His recent publications include “Peace-Building and Sustainable Human Security: The Nigerian Experience” (African Renaissance, 2006); and “The Shadow of Sharia over Nigerian Federalism,” with J. Isawa Elaigwu (Publius: the Journal of Federalism, 2003). s o l g a r s o n b r a u l e p i n t o is currently a researcher at the Federal University of Rio de Janeiro in Brazil. She has worked as senior economist for the National Bank of Economic and Social Development and as secretary of finance for the City of Rio de Janeiro (1996 and 2000). She has a

438

Contributors

PhD in urban and regional planning from the Federal University of Rio de Janeiro, Brazil, and has taught finance and economics at Candido Mendes University, Brazil. She is a past president of the Association of Secretariats of Finance in Capital Cities (abrasf), where she coordinated discussions on tax reform, fiscal responsibility law, and other topics relevant to the city. b o r i s g r a i z b o r d is coordinator of the program for Advanced Studies in Environment and Sustainable Development (lead-Mexico) and a research professor at the Center for Demographic, Urban, and Environmental Studies, El Colegio de México. His research has focused on population, the environment, industrial pollution, development of medium-sized cities, metropolitan transport, and regional development in Mexico. He has a masters’ degree in urban geography from the University of Durham, United Kingdom, and a PhD in social geography from the London School of Economics and Political Science. He has written more than 100 chapters and articles and has published or co-authored six books. r a k e s h h o o j a (PhD social sciences) is director of hcm Rajasthan State Institute of Public Administration and additional chief secretary (training), Government of Rajasthan, Jaipur. He has worked for the Government of India and the Government of Rajasthan at central, state, and substate levels. He is chief editor of Prashasnika (a journal on administration) and editor of asti Journal of Training and Development and is on the editorial boards of the journals Management in Government, Administrative Change, and Indian Book Chronicle. Besides 375 articles, reviews, and research papers in books and journals, Dr Hooja has authored/edited twenty-four books. His books won Government of Rajasthan cash awards in 1988 and again in 2007. His areas of interest include land and water management, decentralized and district planning, rural development, development administration, governmental systems, and globalization. He is vice chairman of the Rajasthan Regional Branch of the Indian Institute of Public Administration. a n d r e a s k i e f e r is director of the European Affairs Department of Land Salzburg regional administration, Austria. As such, he represents Salzburg in associations and networks like the Assembly of European Regions (aer) and the network of regions with legislative powers (reg leg), and he works with the eu’s Committee of the Regions as well as with the Council of Europe’s Congress of Local and Regional Authorities. He is a former secretary general of the Conference of Presidents of Regions with Legislative Powers and has worked as a common representative of the Austrian Länder in institutional matters in the eu and the Council of Europe since 1999. His lectures and publications focus on regionalism, federalism, subsidiarity, the Committee of the Regions, and interregional cooperation.

Contributors

439

j o h n k i n c a i d is the Robert B. and Helen S. Meyner Professor of Government and Public Service and director of the Meyner Center for the Study of State and Local Government at Lafayette College, Easton, Pennsylvania. He is the editor of Publius: The Journal of Federalism, editor of a series of books on the governments and politics of the American states, and an elected fellow of the National Academy of Public Administration. He is the former executive director of the US Advisory Commission on Intergovernmental Relations, Washington, DC, and author of various works on federalism and intergovernmental relations. a n d r e a s l a d n e r is professor of Swiss administration and political institutions at the Swiss Graduate School of Public Administration (idheap) in Lausanne. His research focuses on administrative and institutional reforms, federalism, municipalities, and political parties. He has conducted several major research projects with the Swiss National Science Foundation and authored numerous books and articles on these topics. His most recent book, Demokratie in den Gemeinden. Der Einfluss der Gemeindegrösse und anderer Faktoren auf die Qualität der Demokratie in den Gemeinden, written with Marc Bühlmann in 2007, analyzes the influence of municipal size on the quality of democracy in Swiss municipalities. His work has been published in several leading academic journals, including West European Politics, Electoral Studies, and Party Politics. g e o r g e m a t h e w, PhD, is founder and director of the Institute of Social Sciences, New Delhi. Academic positions he has held include: fellow, South Asian Studies Centre, University of Chicago (1981-82); visiting professor, University of Padova (1988); Fulbright Fellowship, University of Chicago (1991); and Shastri Indo-Canadian Institute 2005 Faculty Research Programme Fellowship, Trent University. He serves as a member on committees and commissions or task forces of the federal and state governments in India as well as on the boards of national and international organizations related to democracy, development, and human rights. His major works focus on governance in India, local government systems, development and decentralization, and gender equity. m i c h a e l a . pa g a n o is dean of the College of Urban Planning and Public Affairs and professor of public administration at the University of Illinois at Chicago (uic), fellow of the National Academy of Public Administration, co-editor of the journal Urban Affairs Review, and faculty fellow of the Great Cities Institute, uic. He has published numerous articles and books on urban finance, capital budgeting, federalism, transportation policy, infrastructure, urban development, and fiscal policy. He is co-editor of The Dynamics of Federalism in National and Supranational Political Systems

440

Contributors

(2007). Dr Pagano earned a BA from Pennsylvania State University and a PhD from the University of Texas at Austin. l u i z c e s a r d e q u e i r o z r i b e i r o is a professor at the Federal University of Rio de Janeiro. He earned a master’s degree in social economic development from the University of Paris and a PhD in architecture and urban planning from the University of São Paulo. His research interests include housing crises, real estate capital, real estate production, education, and segregation. His publications include “The City Statute and the Brazilian Question” (2004) and The Housing Crisis in the Big Cities: From the Housing Problem to the Urban Reform (1996). He is also the coordinator for Observatório das Metrópoles, an urban development research organization in Brazil. g r a h a m s a n s o m has been associate professor and director of the Centre for Local Government, University of Technology Sydney (uts), since 1998. Prior to this, he was chief executive officer of the Australian Local Government Association, where he represented local government on high-level intergovernment forums, including the Council of Australian Governments, and negotiated the Commonwealth-Local Government Accord and other agreements. Sansom has also held senior positions in local councils and state agencies and has advised all levels of government in Australia on public policy issues. He has worked on a variety of international projects in the fields of local government training, research and capacity building, urban development, public-private partnerships, and intergovernment relations. f r a n z s c h a u s b e r g e r is a professor of history at the University of Salzburg. He studied philosophy and history at the University of Salzburg, where he earned his doctorate in 1973. From 1994 to 1996 he was a lecturer in social and economic history at the University of Linz, after which he became governor of Land Salzburg until 2004. He is chairman of the Institute of the Regions of Europe; member of the Committee of the Regions since 1996; and chairman of the Dr Wilfried Haslauer Library, a research institute for political historical studies, since 1992. He has published over 150 books and articles on the politics and history of Austria and the European Union. n i c o s t e y t l e r is the director of the Community Law Centre of the University of the Western Cape, a research and advocacy institute that works for the realization of the democratic values and human rights enshrined in South Africa’s Constitution. He has been involved in the development of the new constitutional order for the past decade. He was a technical advisor to the Constitutional Assembly drafting the 1996 Constitution (1995–96) as well as a technical advisor to the Western Cape Provincial Legislature on the

Contributors

441

drafting of a provincial constitution (1996–97). His main field of research is intergovernmental relations and local government. f r a n c i s c o ve l a s c o c a b a l l e r o received his doctorate in law from the autonomous University of Madrid (1994). He taught as associate professor of administrative law until 1997, after which he became full professor at the University of Madrid, and in 2003 was made Director of the Institute on Local Law at the same university. He has also worked as a lawyer at the Constitutional Court of Spain (1999-2001). His recent publications on local law include “Local Self-Government and Subsidiarity in the Reform of the Statutes of Autonomy” (Anuario del Gobierno Local, 2004); and “The Law of Madrid in the Legal System” (Estudios sobre la Ley de Capitalidad y de Régimen especial de Madrid, 2006). j a a p d e v i s s e r holds a doctorate in law from Utrecht University and a master’s in law from the University of the Western Cape, where he is currently an associate professor with the Community Law Centre. He is an editor for the Local Government Bulletin and has published, presented, and taught on matters pertaining to decentralization, local government, and human rights in South Africa. Dr de Visser has worked as a consultant for various South African and international organizations. Recent assignments have dealt with matters such as decentralization in the Democratic Republic of Congo, intergovernmental relations in Ethiopia, and the national policy review of the provincial and local government system in South Africa. r o b e r t y o u n g is a professor of political science at the University of Western Ontario. He holds the Canada Research Chair in Multilevel Governance. He is the author of The Secession of Quebec and the Future of Canada (1995) and The Struggle for Quebec (1999). Currently interested in public policy in municipalities, he is leading a large research project on this topic, which has recently produced Municipal-Federal-Provincial Relations in Canada (2006) and will soon produce Municipal Government in Canada’s Provinces. Co-director of the Political Economy Research Group at Western, he is associated with several think-tanks and is a past president of the Canadian Political Science Association.

This page intentionally left blank

Participating Experts

We gratefully acknowledge the input of the following experts who participated in the theme of Local Government and Metropolitan Regions in Federal Systems. Although participants contributed their knowledge and experience, they are in no way responsible for the contents of this book. Musa Abba-Aji, Borno State Ministry of Education, Nigeria Marc-Antoine Adam, Institute of Intergovernmental Relations, Canada Ashraf Adams, MCA, South Africa Christie Adejoh, Marthee’s International, Nigeria Abdullah Akpaki, Ministry for Local Government and Chieftaincy Affairs, Nigeria Pamel Althoff, Illinois State Senate, US Graciela Amaro Hernández, Instituto Municipal de Planeación, León Guanajuato, Mexico Adakai Amayah, University of Jos, Nigeria Cuitláhuac Anda Mendoza, Coordinación Metropolitana Estado de México, Mexico George Anderson, Forum of Federations, Canada Kerstin Andreae, Bundestag, Germany Caroline Andrew, University of Ottawa, Canada Mishra Anil Dutta, National Gandhi Museum, India Daniel Arn, Advokaturbüro Arn and Friederich, Switzerland Juan Arrieta Martínez de Pisón, Universidad Castilla-La Mancha, Spain Rita Athas, City of Chicago, US Obdulio Avila Mayo, Cámara de Diputados, Mexico Sergio de Azevedo, Universidade Estadual do Norte Fluminense, Brazil Reuben Baatjies, Community Law Centre, South Africa Lacir Baldusco, Prefeitura Municipal de São Paulo, Brazil Renee Barbaro, New South Wales Local Government and Shires Associations, Australia

444

Participating Experts

Bill Barnes, National League of Cities, US Joseph Bassey, University of Calabar, Nigeria Baburao Baviskar, Unversity of Delhi, India Paul Bell, Australian Local Government Association, Australia Adrian Beresford-Wylie, Australian Local Government Association, Australia Sergio Besserman Viana, Prefeitura da Cidade do Rio de Janeiro, Brazil Tariq Bhatti, Social Sciences and Humanities Research Council, Canada Mara D. Biasi Ferrari Pinto, Instituto Brasileiro de Administração Municipal, Brazil Randy Blankenhorn, Chicago Metroplitan Agency for Planning, US Raoul Blindenbacher, Forum of Federations, Canada and Switzerland Tim-Rainer Bornholt, Kommunalpolitische Vereinigung der Christlich Demokratische Union Deutschlands und Christlich-Soziale Union Deutschland, Germany Anita Brandon, Indira Gandhi Panchayati Raj and Gramin Vikas Sansthan, India Juan Bravo, Ayuntamiento de Madrid, Spain Markus Brohm, Ruhr-Universität Bochum, Germany Consuella Brown, Woods Fund of Chicago, US Gonzalo Brun, Federación Española de Municipios y Provincias, Spain Martin Burgi, Ruhr-Universität Bochum, Germany Werner Bussmann, Bundesamt für Justiz, Switzerland Enrique Cabrero, Centro de Investigación y Docencia Económica, Mexico Roland Calia, Illinois Institute of Technology, US Renee Campbell, Wollongong City Council, Australia Christian Cappis, Espace Mittelland, Switzerland Alcides Carneiro, Prefeitura do Rio, Brazil Francesc Xavier Casas i Masjoan, Ayuntamiento de Barcelona, Spain Cecilia Castro, Prefeitura do Rio, Brazil María del Rosario Castro Lozano, Instituto Nacional para el Federalismo y el Desarrollo Municipal, Mexico Rupak Chattopadhyay, Forum of Federations, Canada Annette Christmas, Community Law Centre, South Africa Terry Clark, University of Chicago, US Carol Coletta, ceo’s for Cities, US Vanessa Crimmins, Council of Capital City Lord Mayors, Australia Sulamis Dain, Universidade do Estado do Rio de Janeiro, Brazil Bruce Davidson, Local Government Managers Australia (National), Australia Michael Davidson, Campaign for Sensible Growth, US Plangsat Dayil, University of Jos, Nigeria Silvia Diez, Universidad Autónoma de Madrid, Spain Bill Dodge, Regional Excellence Consulting, US Chris Duggan, Canadian High Commission, Nigeria

Participating Experts

445

José Luis Durán Reveles, Naucalpan de Juárez, Mexico Frédéric Duvinage, Agglomération Trinationale de Bâle, Switzerland Richard Dye, Lake Forest College, US Karl Edtstadler, Salzburg Landtagskanzlei, Austria Franicisca Egbuniwe, Federal Ministry of Inter-Governmental Affairs, Youth Development and Special Duties, Nigeria Christopher Ehanmo, Nigerian Navy, Nigeria Roberto Eibenschutz Hartman, Universidad Autónoma Metropolitana, Mexico Mike Einhorn, Mayor of Crete, US J. Isawa Elaigwu, Institute of Governance and Social Research, Nigeria Joy Elamon, SDC-CapDeck – Capacity Development for Decentralisation in Kerala, India Armando Enríquez Flores, Cámara de Senadores, Mexico Friedel Erlenkämper, Eßer Rechtsanwälte Partnerschaft, Germany Umar Farouk Auta, Abuja Municipal Area Council, Nigeria Rick Feiock, Florida State University, US Sérgio Ferrari, Universidade Cândido Mendes, Brazil Yonatan Fessha, Community Law Centre, South Africa Nancy Firfer, Chicago Metropolis 2020, US Thomas Fleiner, Institut für Föderalismus, Switzerland Tomás Font i Llovet, Universidad de Barcelona, Spain Themba Fosi, Department of Provincial and Local Government, South Africa Kathryn Foster, State University of New York-Buffalo, US Earl Fry, Brigham Young University, US Ramiro Fuente, Agencia efe, Spain Habib M. Gajo, Abuja Area Council, Nigeria Habu Galadima, University of Jos, Nigeria Ibrahim B. Galadima, Ministry for Local Government, Lafia Nassarawa State, Nigeria Ramón Galindo Noriega, Cámara de Senadores, Mexico Ali Garba, Institute of Governance and Social Research, Nigeria Javier Garciadiego Dantán, El Colegio de México, Mexico Sol Garson Braule Pinto, Instituto de Planejamento Urbano e Regional, Brazil Urs Geissmann, Schweizerischer Städteverband, Switzerland Elisabeth Gerber, University of Michigan, US Buddhadeb Ghosh, Expert on Local Governance, India Roger Gibbins, Canada West Foundation, Canada Greg Gillespie, Privy Council Office, Canada Peter Glauser, Bundesamt für Statistik, Switzerland Anne Golden, Conference Board of Canada, Canada

446

Participating Experts

Scott Goldstein, Metropolitan Planning Council, US Gustavo Gomes Machado, Governo do Estado de Minas Gerais, Brazil Boris Graizbord, Programa de Estudios Avanzados en Desarrollo Sustentable y Medio Ambiente, Mexico Carlos Graizbord, ex-director, Instituto Municipal de Planeación de la ciudad de Tijuana, Mexico Atul Gupta, Inter-State Secretariat Council, India José Luis Gutiérrez Cureño, San Cristobal Ecatepec de Morelos, Mexico Nicole Gysin, Konferenz der Kantonsregierungen, Switzerland Stephen Hains, City of Salisbury, Australia Robin Hambleton, University of Illinois at Chicago, US David Hamilton, Roosevelt University, US Stefan Hammer, Universität Wien, Austria Julie Hamos, Illinois State Representative, US Karen Harrison, Cape Winelands District Municipality, South Africa Rebecca Hendrick, University of Illinois at Chicago, US Joseph Hoereth, University of Illinois at Chicago, US René Holenstein, Direktion für Entwicklung und Zusammenarbeit, Switzerland Rakesh Hooja, hcm Rajasthan Institute of Public Administration, India Grant Hopcroft, City of London, Canada Martin Horak, University of Western Ontario, Canada Josef Hörmandinger, Salzburg Landtagskanzlei, Austria Brian Howe, University of Melbourne, Australia Martin Huber, Salzburger Gemeindeverband, Austria Paul Huber, LuzernPlus, Switzerland Karl Irresberger, Bundeskanzleramt, Austria Yvette Jaggi, Université Lausanne, Switzerland Jacob John, Kerala Development Society, India Jaya Josie, Fiscal and Financial Commission, South Africa Dennis Judd, University of Illinois at Chicago, US Orlando Junior, Federação de Órgãos para Assistência Social e Educacional, Brazil Stephan Keller, Städte- und Gemeindebund Nordrhein-Westfalen, Germany Andreas Kiefer, Land Salzburg, Austria John Kincaid, Lafayette College, US Jeroen Klink, Universidade Federal do abc, Brazil James Knight, Federation of Canadian Municipalities, Canada Felix Knuepling, Forum of Federations, Canada and Germany Judith Kossy, Policy Planning Partnership, US Daniel Kübler, Universität Zürich, Switzerland Andreas Ladner, Institut de Hautes Études en Administration Publique, Switzerland

Participating Experts

447

Mark Laroche, City of Gatineau, Canada Fitzroy Lee, District of Columbia Office of Revenue Analysis, US Johan Leibbrandt, Ekurhuleni Metropolitan Municipality, South Africa Karl Lengheimer, Landtag von Niederösterreich, Austria Heiri Leuthold, Universität Zürich, Switzerland José Luis Lezama de la Torre, El Colegio de México, Mexico Georg Lienbacher, Bundeskanzleramt, Austria Bonnie Lindstrom, Northwestern University, US José Luis Llovera Abreu, Desarrollo Urbano y Suelo Secretaría de Desarrollo Social, Mexico John Lorinc, journalist, Canada David-Alexandre MacDonald, Forum of Federations, Canada Rod Macdonell, Forum of Federations, Canada Janice MacKinnon, University of Saskatchewan, Canada Mahmond Madawakin Gini, Dala Local Government Council, Nigeria Christian Maiwald, Bundesministerium des Innern, Germany Akhtar Majeed, Hamdard University, India Elisenda Malaret, Congreso de los Diputados de España, Spain George Mathew, Institute of Social Sciences, India Sidney Mathias, representative, Illinois State, US Thandekile Mbunge, Gauteng Department of Local Government, South Africa Clare McArdle, Department for Victorian Communities, Australia Kelly McCarthy, University of Western Ontario, Canada Evan McKenzie, University of Illinois at Chicago, US Manuel Medina, Fundación Democracia y Gobierno Local, Spain Madeleine Meier, Justiz- und Sicherheitsdepartement, Switzerland David Merriman, Loyola University, US Geraldine Mettler, Department of Local Government in Gauteng, South Africa Johann Mettler, Palmer Development Group, South Africa Anne-Marie Minder, Swiss Agency for Development and Cooperation, South Africa Thomas Minger, Konferenz der Kantonsregierungen, Switzerland Vuyo Mlokoti, Municipal Demarcation Board, South Africa Helmut Mödlhammer, Gemeinde Hallwang, Austria Bidyut Mohanty, Institute of Social Sciences, India Paul Moist, Canadian Union of Public Employees, Canada Mary Mom, Benue Ministry of Justice, Nigeria Rubén Monroy Luna, Instituto Nacional para el Federalismo y el Desarrollo Municipal, Mexico Sihle Moon, South African Local Government Association Western Cape, South Africa

448

Participating Experts

Dalia Moreno López, Instituto Nacional para el Federalismo y el Desarrollo Municipal, Mexico Karen Mossberger, University of Illinois at Chicago, US Thomas Murawski, Mayor of Midlothian, US Brian Murphy, member of Parliament, House of Commons, Canada Sreenivasa Murthy, Karnataka Department of Rural Development and Panchayati Raj, India Rama Naidu, Democracy and Development Programme, South Africa Jamila Nasir, Unijos Faculty of Law, Nigeria Sebastiao Netto, Ministério das Cidades, Brazil Chantal Nicod, Direktion für Entwicklung und Zusammenarbeit, Switzerland Matsobane Nkoko, Gauteng Department of Local Government, South Africa Janbernd Oebbecke, Universität Münster, Germany Nurudeen Ogbara, Nigerian Bar Association Ikorodu Branch, Nigeria Wolf Okresek, Forum of Federations Board of Directors, formerly of Department of the Federal Chancellery, Austria Abelardo de Oliveira Filho, Ministério das Cidades, Brazil Andre Olivier, Organisational Development Africa, South Africa Barry O’Neill, Federal Department of Transport and Regional Services, Australia Enrique Orduña, Ministerio de Administración Pública, Spain Adam Ostry, Infrastructure Canada, Canada Ibrahim Othman, University of Jos, Nigeria Michael Pagano, University of Illinois at Chicago, US Mahi Pal, Haryana Institute of Rural Development, India Alberto Paranhos, un-habitat, Brazil David Parks, Forum of Federations, Canada Carmen Pascual, Partido Popular, Spain K.K. Patnaik, formerly of Rural and Panchayati Raj Bhubaneswar, India Neal Peirce, Citistates Group, US José Angel Pérez Hernández, president, Municipio de Torreón, Mexico Daniel Enrique Pérez Torres, private consultant, Mexico David Perry, Great Cities Institute, US Thomas Pfisterer, Ständerat, Switzerland Erika Poethig, MacArthur Foundation, US Cayetano Prieto Romero, Ayuntamiento de Madrid, Spain Luiz Cesar de Queiroz Ribeiro, Instituto de Planejamento Urbano e Regional, Brazil Paula Ravanelli Losada, Subchefia de Assuntos Federativos- Presidência, Brazil John Ravlic, Local Government Managers Australia (national), Australia

Participating Experts

449

S. Ramachandra Reddy, former member of Parliament, India Octaviano Rendón Arce, president, Municipio de Gómez Palacio, Mexico Mike Reynolds, Speaker of the Legislative Assembly, Queensland Parliament, Australia Fernando Rezende, Fundação Getúlio Vargas, Brazil Robert Rich, University of Illinois, US Sepp Rieder, Österreichischer Städtebund, Austria Horst Risse, Bundesrat, Germany Gilberto Marcos A. Rodrigues, Universidade Católoca de Santos, Brazil José Manuel Rodríguez Alvarez, Secretaría de Estado de Cooperación Territorial, Spain Ash Narain Roy, journalist, India Ofelia Saavedra Archundia, Instituto Nacional para el Federalismo y el Desarrollo Municipal, Mexico Nehushta Samuel, bbc World Service Trust Nigeria, Nigeria Andrew Sancton, University of Western Ontario, Canada Graham Sansom, University of Technology Sydney, Australia Leticia Santín, Investigadores en Gobiernos Locales Mexicanos, Mexico Nelson Saule, Institutto Polis, Brazil Cheryl Saunders, University of Melbourne, Australia Franz Schausberger, Institut der Regionen Europas, Austria Jeff Schielke, mayor, Batavia, US Martin Schuler, Ecole Polytechnique Fédérale de Lausanne, Switzerland Karin Schulte, Stadtentwicklung Zürich, Switzerland Marguerite Scott, Tasmania Department of Premier and Cabinet, Australia Jaime Sempere Campello, El Colegio de México, Mexico Uzma Shakir, Ontario Council of Agencies Serving Immigrants, Canada Shayne Silcox, City of Belmont, Australia Dick Simpson, University of Illinois at Chicago, US B.N. Singh, Association of Municipalities and Development Authorities, India Santosh Singh, Institute of Social Sciences, India K.C. Sivaramakrishnan, Institute of Social Sciences, India Enid Slack, Institute on Municipal Finance and Governance, Canada Horacio Sobarzo, El Colegio de México, Mexico Markus Söbbeke, Deutscher Städtetag, Germany Luis Jaime Sobrino, El Colegio de México, Mexico José de Jesús Sosa López, Desarrollo Institucional de la Vida Pública, ac, Mexico Laura Sour Vargas, Centro de Investigación y Docencia Económicas, Mexico Reto Steiner, Universität Bern, Switzerland Frank Steinfort, Stadt Mülheim an der Ruhr, Germany

450

Participating Experts

Nico Steytler, University of the Western Cape, South Africa K. Subha, Insitute of Social Sciences, India Joachim Suerbaum, Universität Würzburg, Germany Meenakshi Sundaram, National Institute of Advanced Studies, India Todd Swanstrom, Saint Louis University, US Bill Testa, Federal Reserve Bank of Chicago, US Ron Thomas, Chicago Metropolitan Agency for Planning, US Georg Tobler, Bundesamt für Raumentwicklung, Switzerland Mike Tryon, Illinois State Representative, US Solomon Lechesa Tsenoli, National Assembly, South Africa Vicente Ugalde Saldaña, El Colegio de México, Mexico Juan María Vázquez García, Diputación de Badajoz, Spain Francisco Velasco Caballero, Universidad Autónoma de Madrid, Spain Enio Verri, Universidade Estadual de Maringá, Brazil Sheila Villanova Borba, Fundação de Economia e Estatística, Brazil Jaap de Visser, University of the Western Cape, South Africa Carlos Viver Pi-Sunyer, Institut d’ Estudis Autónomics de Cataluyna, Spain Siddq Wahid, Islamic University of Science and Technology, India Christian Waldhoff, Universität Bonn, Germany Catia Wanderlei Lubambo, Fundação Joaquim Nabuco, Brazil Esteban Wario Hernández, Gobierno del Estado de Jalisco, Mexico Rachel Weber, University of Illinois at Chicago, US Roger Wilkins, CitiGroup, Australia Ross Woodward, New South Wales Department of Local Government, Australia Alfonso Yerga, Centro de Estudios Andaluces, Spain Sita Devi Yerrneni, Local Dairy All Women Society, India Robert Young, University of Western Ontario, Canada Manuel Zafra, Ministerio de Administraciones Públicas, Spain Polar T. Zeigi, Akwanga West Local Government Rinze, Nigeria

Index

Accountability, local government: Australia, 16–17; Austria, 55–6; Brazil, 85; Canada, 118; Federal Court of Accounts (Brazil), 93; Nigeria, 253, 254, 255 Advisory Committee on Intergovernmental Relations (acir, usa), 380 algon (Nigeria), 257, 258 Amalgamations: Australia, 11, 16; Canada, 111, 119–20, 121; Germany, 140–1; Mexico, 205, 226; Switzerland, 331, 337, 338, 340, 354–5 Amsterdam Treaty, 66 anc (South Africa), 275 Apartheid (South Africa), 271; local governance and, 271; planning, 278 Associations, voluntary: Austria, 38, 39 Australia, Commonwealth of: Advisory Council for Intergovernmental Relations, 23; Council of Australian Governments (coag), 23–4; country overview, 9–10; demographics, 9; federal structure, 9–10; Inter-Governmental Agreement, 25; intergovernmental relations, 22–7, 30–1; Local Government and Cost Shifting inquiry, 24– 5; metropolitan regions and, 17–18; National Competition Policy, 14; Roads to Recovery Program, 21, 24; Special premiers Conferences, 23

– local councils, 11–12; accountability, 16–17; amalgamations, 11, 16; election of, 27–8; growth of, 15, 16, 30; metropolitan regions and, 18; structure and role of, 15–16; sustainable development, 16; triple bottom line, 16 – local government: activities, 10; Acts governing, 12, 14, 15; constitutional recognition of, 8, 12–14, 29, 31; corporate management role, 16; cost shifting to, 20; debt levels, 18, 19; decision making, 17; emerging issues and trends, 28–32; financial powers and responsibilities, 20; financing, 18–21; functions of, 14–16; General Assembly of Local Government, 27; grants to, 19, 20–1, 23; history, structures, and institutions of, 10– 12; Labor government and, 30–2; metropolitan areas and, 17–18; organizations of, 26–2; parliamentary resolution re, 14; political culture, 27–8; powers of, 14; referenda re, 12–13; relationship with federal government, 8–9, 21–5, 28–9; relationship with state governments, 25–6; revenues and expenditures, 10; role of, 13–14, 15; strategic planning role, 16; supervision of, 21–2

452

Index

Australian Local Government Associations (alga), 23–4, 26–7, 29 Austria, Länder: Commission for Complaints to the Public, 55; constitutions of, 42; courts of auditors, 55; municipalities and, 44; supervision of municipalities, 55–6 – local government: associations of municipalities, 57–8; autonomous competences of, 47, 49; average expenditures of, 54; budgets of, 53; cities’ international involvement, 52; citizen involvement, 49, 50; clrae, participation in, 65–6; constitutional recognition of, 46–7; cor and, 66–7; Council of Europe and, 67–8; delegated tasks, 48, 49; esteem for, 38; eu cross-border cooperation, 67–8; financing of, 52–4; fiscal relations with Länder, 59–60; history, structure, and institutions of, 42–6; intermunicipal cooperation, 45–6; internal audits, 56; loans, 54; managing impact of eu membership, 64–5, 67–8; mayors, 49, 62–63; political actors of, 48–9; political culture of, 61– 3; powers, functions, and governance, 47–52; property tax, 53; public expenditures, 48; relations with federal government, 60–1; rights and responsibilities, 43–4; service provision, 48; small structure of, 38; supervision of, 54–6; system of government, 40–1; transfer of tasks to, 46; transfer payments, 53–4; trends and developments, 63–8; Vienna, 50–2; voter participation, 61 – municipalities: associations of municipalities, 57–8; budgets, 54–5; constitutional recognition of municipalities, 68; councils, 48–50, 62; intermunicipal cooperation, 45–6; municipal tax, 53; municipalities,

44–5, 54–6, 61–3; partnerships, 67; services, variations in, 59–60 – Republic of: budgetary policies, 59, T60; citizen consultations, 50; consultation mechanism and stability pact, 58–61; demographics, 38–9; European Union membership, 57, 58, 64–5, 67–8; Financial Equalization Act, 2008, 53; financial equalization law, 58; intergovernmental relations, 56–61; legal system, 40; overview of, 38–42; political parties, 41–2 Austrian Association of Cities and Towns, 56–7 Austrian Association of Municipalities, 56 Austrian Conference on Spatial Planning, 60–1 Barcelona (Spain), 305–6, 311 Basic Constitutional and Transitional Provision Amendment Decree No. 33 (Nigeria), 241 Basle-City (Switzerland), 334, 356 Berlin (Germany), 141 Berne (Switzerland), 339 Bombay Model (India), 180 Borrowing power, municipalities: Brazil, 89–90 Brasilia, 82 Brazil: alternating centralization/decentralization, 76, 79–83; Council of the Cities, 94; democracy and decentralization, 76, 79, 81–2; demographics, 77; division of competences, 85–6; economy of, 77–8, 82; elections, 95–6; Fiscal Responsibility Law (lrf), 88, 89, 95; gradual urbanization, 80; indigenous peoples, 82; intergovernmental relations, 93–5; judiciary, 78; metropolitan regions (mrs), 98–9; Ministry of

Index the Cities, 94; Municipalist Campaign, 81; operational responsibilities, governments, 86; overview of, 77–9; political party system, 78–9, 96; property tax, 89; regional and social equality, 80; Secretariat of Institutional Relations, 94; structure of government, 78; voter turnout, 96 – local government: accountability, 85; citizen participation, 96–7, 100; constitutional recognition of, 83–5; cooperative mechanism, 82, 85, 100, 101; emerging issues and trends, 98– 101; exclusive concurrent competences, 86–7; federal-municipal relations, 94–5; financing, 89–92; globalization and, 101; governance role of, 85–8; historical development of, 79–80; intergovernmental transfers to, 82, 90–1, 100; overview of, 76; participatory budgeting, 98; political culture of, 95–8; political vs financial autonomy, 76, 84, 92; popular participation, 96–7, 100; private sector participation, 88; service delivery, 82, 87– 8, 92; state-municipal relations, 95; supervision of, 93, 94 – municipalities: borrowing power, 89– 90; budgets, 90–1, 92; collective associations, 95; constitutional units, as, 85; creating new municipalities, 83; expenditures, 91–2; intermunicipal consortia, 87–8; mayors, 88, 95; municipal autonomy, 80, 81, 84, 85, 94; municipal councils, 97–8, 100–1; municipal fees, 89; per capita revenue, 91; political institutions of, 88; public service delivery, 82, 87–8; relations with states, 89, 95; relationship with federal government, 94–5; revenues, 89; right to self-organization, 85; symmetric approach to municipal issues, 82, 83, 84, 100; tax powers/bases, 89

453

Bremen (Germany), 141 Brisbane (Australia), 10, 17, 18 British Columbia (Canada), 113, 126 cabildo (Mexico), 212, 213 Canada: Association of Municipalities of Ontario (amo), 122; demographics, 108; economy, 108–109; emerging issues and trends, 127–8; intergovernmental relations, 120–6; metropolitan regions, 120; National Capital Commission (ncc), 123; New Deal, 123–4, 125; overview, 108–9; political party system, 109; structure of government, 109 – local government: accountability, 118, 126; agencies, 111; amalgamations, 112, 121; census metropolitan areas (cmas), 111; constitutional recognition of, 113–14; dominating cities, 110; elections, 126; federal institutions for, 124; First Nations and, 112; governance role of, 114–16; history, structure, and institutions, 109– 12; implementing provincial policies, 115; mayors, 114, 116; metropolitan authorities, 112; metropolitan regions, scale of, 111–12; Ontario system, 110; participation in, 126–7; political culture of, 126–7; provincial departments, 121; regional authorities, 111; relationship with federal government, 123–6; relationship with provinces, 113, 120–3; school boards, 111; supervision of, 118, 119–20; vertical fiscal imbalance, 118; women candidates, 127 Canadian municipalities: amalgamations, 119–20; autonomy of, 119; cooperation among, 111; disparities among, 128; expenditures, 118; Federation of Canadian Municipalities (fcm), 123; finances of, 116; functions

454

Index

of, 114–15; infrastructure deficit, 118; legislation of, 116; municipal councils, 115–16; number of, 110– 11; property taxes and, 117, 118; provincial associations of, 121–2; provincial supervision of, 119–20; relationship with provincial government, 119–20; resources, shortage of, 127–8; revenue-sharing agreements, 117; revenues of, 117; shared functions, 115; specific-purpose transfer payments, 117; taxation powers of, 117 centrope, 52 Chicago (usa), 372, 383, 385 Citizen participation: Austria, 49, 50; Brazil, 96–7, 100; Canada, 126–7; Germany, 145, 147, 148; Spain, 323; Switzerland, 333–4, 344, 346, 352–3; usa, 380 City of Cape Town (South Africa), 274, 278 City-states (Germany), 141 Commonwealth of Australia, see Australia, Commonwealth of Community consultations: Australia, 16 Community Development Association (cda) (Nigeria), 249 Congress of Local and Regional Authorities of Europe (clrae), 65–66 Consolidated governments, 404 Constitution of the United Mexican States, 202 Constitutional recognition – of local government(s): Australia, 8, 12–14, 29, 31; Austria, 46–7; Austrian municipalities, 68; Brazil, 83–85; Canada, 113–14; comparisons re, 406–9; forms of, 407–9; Germany, 143–6; India, 174–7; Nigeria, 245–6; significance of, 410–11; South Africa, 274–6; Spain, 306–308; subnational,

409–10; Switzerland, 338–40; usa, 373 – of municipalities: Mexico, 206–9 Consultation mechanism and stability pact (Austria), 58–61 Cooperative agreements: usa, 370, 371–2 Cortés, Hernán, 204 Council of Europe, 65, 67 Council of European Municipalities and Regions (cemr), 64 Council of the Regions (cor), 66–7 Counties (Germany), 140, 143 Country characteristics, comparisons re, 394–6 Darwin (Australia), 17, 18 Debt, local government: Australia, 18, 19; Brazil, 89–90 Decision making: Australia, 16 Delegaciones: Mexico, 205–6 Delhi (India), 181–2, 183 District municipalities, 291 Elections, local government: Australia, 27–8; Brazil, 95–6; Canada, 126; India, 179, 192–3; Mexico, 208, 212, 225; Nigeria, 259, 260; Spain, 312, 314, 322; Switzerland, 353; usa, 381 Emerging themes and issues, comparisons re, 432–5 Equalization formulae: usa, 370, 377 EUrocities, 52 European City of Culture 2010 project, 142 European Commission, 66 European Grouping for Territorial Cooperation (ectc), 67–8 European Union: Austrian membership in, 57, 58, 67; Germany and, 148, 155–6; Spain and, 321 Expenditures, local government: Australia, 10; Austria, 48, 54; Brazil,

Index 91–2; Canada, 118; comparisons re, 425; Germany, 149, T152; India, 177, 179, 188; Mexico, 210, T211; Nigeria, 248; South Africa, 285; Spain, 310–11, 318; usa, 374 Federal capital cities, 405–6 Federal Capital Territory: Nigeria, 237, 243, 252 Federal Court of Accounts (Brazil), 93 Federal Districts (Mexico), 205–206, 208 Federal Executive Council (fec) (Nigeria), 237 Federal-local relations, comparisons re, 427–9 Federation Account (Nigeria), 250, 251 Financial Crimes Commission (Nigeria), 256 Financial Equalization Act, 2008 (Austria), 53 Financing local government: Australia, 18–21; Austria, 52–4; Brazil, 89– 92; Canada, 116–18; comparisons re, 418–25; expenditure, 425; Germany, 148–52; India, 185–9; Mexico, 214– 20; Nigeria, 250–5; own-source revenues, 420–2; South Africa, 281–4; Spain, 314–18; Switzerland, 345; usa, 374–8; transfers, 422–4 Fiscal Responsibility law (lrf, Brazil), 88, 89, 95 Fox, Vicente, 225 Franco, General Francisco, 303, 306 Frankfurt (Germany), 147 Frankfurt/Main (Germany), 142 Gauteng (South Africa), 191 General Agreement on Trade and Services (gats), 64 Geneva (Switzerland), 334, 356 German Association of Cities (Germany), 15

455

German Association of Towns and Municipalities (Germany), 155 German County Association (Germany), 155 Germany: Basic Law, 137, 149, 156; bottom-up democracy, as, 145; citystates, nature of, 141–2; counties, 140, 143; demographics, 138; electoral rights and the eu, 148; Federal Constitutional Court, 145, 148; financing local government, 148–52; German Democratic Republic (gdr) (Soviet zone), 140; German federation, 137; intergovernmental relations, 153–6; metropolitan regions, 142; New Public Management, 148; political system/parties, 138–9; population, 138; reunification, 140 – Länder: administrative powers, 154; Berlin, Bremen, and Hamburg as, 141; federal/länder law-making re local autonomy, 144; local government relationship, 148, 152–4 – local government: administration, 140; amalgamation of small communities, 140–1; annulling intruding federal law, 145; Basic Law (1949) and local governance, 139–40; borrowing and, 149, 151; budgets, 149, 150–1; citizen participation, 145, 147, 148; commercial taxes, 149; constitutional origins, 139–40; core sphere " responsibilities, 144–5; counties and self-government, 143; cross-border leasing income, 151; cross-order cooperation, 157–8; cultural/ethnic issues, 157; debt burdens, 151; delegated duties, 147, 148, 149; diverse local governments, 140; efficiency of, 147; emerging issues and trends, 157–8; eu lobbying and, 155–6; expenditures, 149, T152; federation-local government

456

Index

relations, 154–5; financing, 148–52, 157; free voters’ associations, 156; gender issues, 156; history, structures, and institutions, 139–40; immigration issues, 157; income/ funding sources, 149–50; independent city status, 140; intergovernmental relations, 153–6; international (framework) agreements, 158; joint administrative units, 141; joint taxes, 150; lobbying associations of, 155; local autonomy, 137, 143, 144; local excise taxes, 149–50; local self-governance concept, 141, 144, 146; mayors and, 147; organizational structure, 148; political parties and, 156; property taxes, 149; public corporations, 142; public services levies and fees, 149–50; public spending supervision, 151; reallocations of power, 147–8; recent expansion of executive powers, 148; recent federal reforms, 155; regulation by Länder, 152–3; revenue sources, T152; revenue-generating activities, 150; self-governance notion, 145; service delivery, 148, 158; shared public service agencies, 142–3; state nature of local administration, 146–7; transfer payments, 150, 152; transfrontier cooperation, 158; ultra vires inapplicable, 14; voter turnout, 156–7; weak institutional role in eu, 156; women’s representation, 156 – municipalities: intermunicipal cooperation, 154; municipal bylaws, 146; municipal councils and, 147; municipalities, 140–1; municipalization, 145; Prussian Municipal Code, 139 Governance role of local government(s): Australia, 8; Brazil, 85–8; Canada, 114–16; comparisons re,

411–18; focus of powers and functions, 413–16; Germany, 146–8; India, 177–85; institutions exercising power, 416–18; Mexico, 209–13; Nigeria, 246–8; source of powers and functions, 411–13; South Africa, 276–9; Spain, 308–14; Switzerland, 340–5; usa, 373–4 Grants: Australia, 19, 20–1, 20–1, 23; India, 187; Spain, 316–17. See also Transfers payments; Transfers Guadalajara (Mexico), 205, 223 Guadalajara Metropolitan Area (Mexico), 226 Hamburg (Germany), 141 Hansa (Germany), 139 History, structures, and institutions of local government, comparisons re, 396–7 House of Traditional Leaders (South Africa), 273–4 Immigration: Germany, 157; Spain, 300 Independent Corrupt Practices Commission (Nigeria), 256 Independent National Electoral Commission (Nigeria), 262 India: All India Council of Mayors (aicm), 180; Association of Local Governance of India (algi), 191; bottom-up planning, 195–6; decentralization, 171–2, 173, 193; demographics, 167; division of powers, 169; economy, 167; egalitarianism, 196; elected president, 168; election commission, 168; Indian National Congress, 169; institutions of selfgovernment concept, 176; intergovernmental relations, 170, 190–1; judiciary, 170; legal system, 170; National Development Council

Index (ndc), 170; overview of, 167–70; political party system of, 168–9; structure of government, 168; urban governance, 173, T174 – local government, F178; borrowing powers, 186–7; cantonment boards, 176; city corporations, 174; commissioner system, 180; constitutional amendments re, 195; constitutional recognition, 174–7; democracy and, 168, 172, 176, 179; District Planning Committee (dpc), 183; elections, 179, 192–3; expenditures, 177, 179, 188; financing, 185–9; fiscal relations with states, 189; functions, divisions of, 177; governance role of, 177–85; gram sabha, 179; grants, 187; history, structure, and institutions of, 170–4, 179–85; Kolkata Metropolitan Planning Committee (kmpc), 184–5; Kolkata Municipal Corporation (kmc), 180–1; mayor-in-council (mic), 180– 1; mayors, 180–1; metropolitan areas, 173–4, 183; metropolitan cities, 173–4, T175; Metropolitan Planning Committee (mpc), 184; multilevel federalism, 193–6; overview, 167; own-source revenue, 185, 186; political culture of, 191–3; president-incouncil system, 181; revenue, 185; rural local boards, 171; supervison of, 189–90; system of, F178; taxing powers, 185–6; tribal areas, 176; voter turnout, 193; women and, 179, 192, 196 – municipalities, 174–5; borrowing, 186–7; expenditures, 188–9; municipal councils, 171; taxes, 185–6 – panchayats: borrowing, 186–7; constitutional recognition, 173, 174–7; Delhi, in, 182; democracy and, 172–3; effect on governance, 196; executive

457

of, 180; functions of, 177; government staff, 179; history of, 170–4; taxes, 185 – states: control of local government, 189–90; devolution of powers, 194– 5; districts, 169–70; division of powers, 169; fund-audit departments, 189; funding local government, 185, 186; state finance commissions (sfcs), 187–8; transferring functions to local government, 179 Indigenous peoples: Brazil, 82; Canada, 112; India, 176; Mexico, 206 Infrastructure grants (South Africa), 283 Inkatha Freedom Party (South Africa), 274 Intergovernmental relations: Australia, 22–7, 30–1; Austria, 56–61; Brazil, 82, 85, 87–8, 93–5; Canada, 120–6; comparisons re, 427–30; Germany, 153–6; India, 190–1; legislation (South Africa), 288–9; Mexico, 222– 4, 228–9; Nigeria, 256–9; South Africa, 283, 287–9; Spain, 319–21; Switzerland, 348–51; usa, 379–80 Intergovernmental Relations Framework Act (South Africa), 288, 289 Intermunicipal cooperation: Austria, 45–6; Brazil, 87—8; comparisons re, 404; Germany, 154; Mexico, 207; Swiss Confederation, 338, 354–5, 404 Johannesburg (South Africa), 278, 282 Kingdom of Spain, See Spain Lagos (Nigeria), 243, 244; city demographics, 244 Lagos Mega-City Metropolitan Development Authority (lmcda) (Nigeria), 244 Law of Fiscal Coordination (lcf) (Mexico), 216

458

Index

League of Rhenish Towns, 139 Local government institutions: basic multipurpose unit, 398; comparisons re, 397–400; consolidation of, 400–2; indigenous local government institutions, 399–400; multiplicity of, 400– 2; single-purpose municipal governments, 309, 403; size and, 401–2; two-tier structures, 398–9 Local Government Reform Committee (Nigeria), 239–40 Local Government Service Commission (Nigeria), 247–8 Los Angeles (usa), 372 Maastricht Treaty, 66 Madhya Predesh (India), 181 Madrid (Spain), 300, 306, 311–12 Mayor-in-council system (India), 180–1 Mayors: Austria, 49, 61–3; Brazil, 88, 95; Canada, 114, 116; German local government and, 147; India, 180–1; Mexico, 212; Spain, 303, 312–13, 322–3 Melbourne (Australia), 18, 21 metrex, 52 Metropolitan (regional) governance: usa, 371, 382 Metropolitan regions: Australia, 8, 17– 18; Brazil, 98–9; Canada, 120; Germany, 142; governance of, comparisons re, 402–6; India, 173–4, 183, T175; Nigeria, 262; South Africa, 272–3, 275, 276; Spain, 305–6 Mexico: conditional grants and subsidies (aportaciones), 216; Congress law-making powers, 208; constitution and free municipality (municipio libre), 204; constitution of, 202, 204; constitutional and democratic reform, 205–206; decentralization/democratization, 203, 224–5; demographics, 202; diverse standard of living, 217; economy, 202;

emerging issues and trends, 203–4; ethnicity, 202; expenditure distribution per level of government, T211; Federal District (df), 205–6, 208, 223, 227; federal-state competences, 220; federal system of government, 204; federal tax revenue power, 217–18; fiscal decentralization, 214–15; Fiscal Pact, 216; freedom of speech, 203; gender imbalance and elections, 225; governor’s role, 221, 222; grants and transfers, 216, 217; greenhouse gas emissions, 227; infrastructure funding, 227; Institute of Planning Research (inip), 211; intergovernmental relations, 222–4; language, 202; metropolitan regions and governance, 223; nafta and new governance, 224–5; new political pluralism, 225; Organic Law, 206; overview, 201– 4; patronage systems, 224; political parties, 203; politics and fiscal relations, 223; Ramo 33, 216; revenue sharing, 216; Social Infrastructure Transfer Fund, 217; State Electoral Institute (Commission), 206; states and new governance, 225; states’ expenditures, 210, T211; urban growth, 202 – local government: administrative costs, 211; Assembly of Representatives, 205–6; autonomy and municipalities, 226; citizen participation, 213, 214, 225; constitutional recognition of, 206–9; decentralization issues, 226; delegaciones, 205–6; demographics, 205; election of councils, 208; elections, 225; emerging issues, 225; federal/state decision-making re, 224; financial powers and, 207; financing, 214–20 governance and political culture, 224–5; governance role of, 209–13;

Index governors and patronage, 221, 222; history, structure, and institutions of, 204–6; indigenous population, 206; intergovernmental relations, 228–9; large metropolitan areas, 205; local councils, 208, 221, 222, 225; local politics and national parties, 225; local property tax revenue, 218; mayors and town councils, 212, 214; metropolitan areas, 219, 226, 227; Mexico City Metropolitan Area, 205; partidizacion and local decisions, 214; payroll taxes and states, 215; planning and, 211–12; property taxes, 219; Ramo 33, 223; revenue and, 208, 215; taxing powers limited, 215; transfers and subsidies (revenue sharing), 216; urbanization process (amalgamation), 205 – municipalities: administrative responsibilities/powers, 208–9, 210; autonomy and, 206; cabildo, 23, 212; challenges facing, 228–9; Constitution and, 206–209; constitution and free municipality (municipio libre), 204; councils, 212–13; debt, 215–16; department heads, 212; disparities among, 204–5, 210; diverse municipal corporations, 213; expenditures, 210, T211; free municipality principle, 204–5; income, types of, 215; indigenous peoples and, 206; intermunicipal cooperation, 207; loans to, 207; local public administration and, 208–9; Municipal Planning Institute (implan), 211, 212; political autonomy of, 209; political parties, 203, 212, 213, 214; public income sources, T218; public service (delivery), 209; relationship with state government, 207, 222–3; right of reply, 220–1; self-government and, 209; unconditional grants to, 218

459

Mexico City (Mexico), 205; partidizacions, and, 214 Monterrey (Mexico), 205 Montesquieu, 343 Munich (Germany), 147 Municipal Demarcation Board (South Africa), 280 Municipal Infrastructure Grant (mig) (South Africa), 282 Municipal Planning Institute (implan) (Mexico), 211, 212 nafta (North American Free Trade Agreement), 201, 224–5 National Council of Provinces (South Africa), 275, 286 National Institution for Federalism and Municipal Development (inafed) (Mexico), 222 National Population Commission (Nigeria), 244 National Public Service Act (South Africa), 279 National System of Fiscal Coordination (sncf) (Mexico), 216–17 National Water Rehabilitation Program (nwrp) (Nigeria), 257 Native Administration (Nigeria), 238 Native Authority Ordinances (Nigeria), 239 New Deal (Canada), 123–4, 125 New Public Management: Germany, 148, 150; Switzerland, 347–8 New South Wales (Australia), 20, 21, 27; Better Practice Reviews, 22; relations with state government, 26 New York, City of (usa), 372 Nigeria: accountability issues, 253, 254, 255; algon and intergovernment relations, 258–9; Association of Local Government of Nigeria (algon), 257; constitutionally assigned powers, 238; corruption, 254, 262;

460

Index

decentralization, 240, 262; demographics, 235–36; economy, 236; elections, 237, 260, Federal Capital Territory, 237, 243, 252; federal national priorities/local initiatives, 257; Federation Account allocations, 250, 251; federation, as, 236, 237; funding issues re local government areas, 241, 242, 243; intergovernmental relations, 256–9; intergovernmental transfers/grants, 252; Lagos, 262; Lagos metropolitan area, 243, 244; Lagos state, 244; legal system, 238; local councils, 259, 260; mega-cities, 262; Native Authority, 238, 239; overview, 235–8; schools construction, 257; service delivery responsibilities, 247; state government’s withholding deductions, 253; states and intergovernmental transfers, 252–3; traditional governance, 244–5; traditional rulers, 244–5; uniform local government reforms (1976), 240; vat tax, 252; women’s representation, 259, 260 – local councils: autonomy issues, 256; elected local councils, 240; elections, 259, 260; federal-local council relationship, 256–7; funding issues, 241, 242, 243; internal revenue and, 250; lack of independent powers, 256–7; local government councils, 249; problems with state relations, 258 – local government: accountability, 253, 254, 255; administration-like nature, 261; anti-corruption agencies and, 256; areas, 241–2; 243 autonomy of public service administration, 247–8; autonomy reforms, 240–1; borrowing by, 250; budgets and, 254, 255–6; bureaucracy, 248; constitution and, 243, 245; culture of silence, 257; democratic rule reform, 248; deputy governors and local government bureaus,

240–1; development and algon, 259; economic planning, 246–7; emerging issues and trends, 261–2; exclusive activities, 247; executive councils, 249; executive vs legislative issues, 261–2; expenditures by, 248; Federation Account allocations, 250, 251; financing of, 250–5; governance reform issues, 262; governance role, 246–8; grants, 252; Guidelines for Local Government Reform, 240; history, structures, and institutions of, 238–45; legislative councils, 249; local council and internal revenue, 250; national policy issues with state governments, 258; powers (legislative etc.) of councils, 245; presidential system, 249, 261; referendum for, 242; relationship with state government, 240, 241, 250; revenue sources, 250, 252; service delivery and, 247; state legislated institutions of, 246; subsidiary principle applied, 240; taxing powers, 246; warrant chiefs, 239 – states: financial oversight of local government, 252–6; governors, 246; state-local government relations, 257– 8; state-shared responsibilities, 246–7 Nova Scotia (Canada), 116 Ontario (Canada), 113, 118, 120 Organized local government, comparisons re, 429–30 Own-source revenues, comparisons re, 420–2 Participatory budgeting: Brazil, 98 Peoples’ Democratic Party (pdp) (Nigeria): elections and, 260–61 Perth (Australia), 18 Political culture of local governance: Australia, 27–8; Austria, 61–3; Brazil,

Index 95–8; Canada, 126–7; comparisons re, 430–2; Germany, 156–7; India, 191–3; Mexico, 224–5; Nigeria, 259– 61; South Africa, 289–90; Spain, 322–3; Switzerland, 351–3; usa, 381 Port Authority of New York (usa), 368 Property tax(es): Austria, 53; Brazil, 89; Canada, 117, 118; Germany, 149; India, 185–6; Mexico, 219, T218; Spain, 315, 316; Switzerland, 346; usa, 374–5 Public-interest groups: usa, 380 Puebla (Mexico), 205 Quebec (Canada), 14–25, 119–20, 126 Queensland (Australia), 11, 17, 18, 26, 30 Referenda: Australia, 12–13; Switzerland, 344–5 Region Bodensee (Germany), 157 Regionalverband Ruhr (Germany), 142 Republic of Austria, see Austria, Republic of Republic of South Africa, see South Africa Revenue Mobilization Allocation and Fiscal Commission (rmafc) (Nigeria), 251, 252 Roads to Recovery Program: Australia, 21, 24 Rousseau, 343 Ruhr (Germany), 142 Salzburg, City of (Austria), 50 Service delivery: Austria, 48, 59–60, 63; Brazil, 82, 87–8, 92; Germany, 148; Mexico and, 209; Nigeria, 247; South Africa, 278, 279, 281, 288; South African municipalities and, 277–8; transfrontier cooperation (Germany), 158; usa, 371

461

Sindico (Mexico), 212 South Africa, local government: allocations, 282; apartheid, 271, 278; autonomy of, 275, 276, 290–1; borrowing, 282; budgets, 283, 288; City of Cape Town (South Africa), 274; colonial state format, 271; conditional grants/specific purpose, 282; constitutional recognition, 274–6; consultation requirement, 275; corruption and fraud, 280–1; delegated federal/provincial powers, 277; democratization of, 272, 273; developmental local government objective, 279, 280–1; expenditures, 285; federal/provincial oversight, 277; financial management requirements, 283, 285; governance institutions, 279–81; governance role, 276–9; history, structures, and institutions of, 270– 4; housing competence, 278; infrastructure grants, 283; intergovernmental relations, 283, 287–9; local governance types, 272–3; management committees, 271; metropolitan areas, 272–3; monitoring role, 285; national government supervisory role, 284; new local government, 274, 275; political culture, 289–90; relations with provincial government, 284, 286–7, 292; revenue sharing, 274; revenue sources, 281–2, 283, T284; service delivery and, 277–9, 281; staffing and employment, 279; subsidiarity principle, 274, 277; supervision of government, 284–7; taxing powers, 276–7; white areas, 271 – municipalities: autonomy limits, 277; bureaucracy transformation, 280; district municipalities, 272–3, 291, 292; financial reporting by, 285;

462

Index

local municipalities, 272–3; metropolitan municipalities, 275, 276, 291; municipal powers, 274, 276; public service and, 279–80 – Republic of: anc and, 275; Constitution, 272, 273; Constitutional Court, 270, 275; emerging issues and trends, 290–92; governance areas, 272–3; Integrated Development Plan (idp), 288; local government transformation, 272–4; overview, 268–70; political parties, 289–90; provinces, 270; provincial government role, 291–2; voter participation, 290; wallto-wall local governance principle, 273–4 South African Cities Network (South Africa), 275, 276 South African Local Government Association (salga), 287–8 South Australia, 26 Spain, autonomous communities, 301; composition of, 305; other entities, 305 Spain, Kingdom of: ancient régime, 302; constitutional structure, 300–1; demographics, 300; division of powers, 304–5; economy, 300; emerging issues and trends, 323–5; intergovernmental relations, 319–21; overview of: 300-1; political party system, 301; Program of Economic Cooperation, 316–7; structure of government, 303–4 – local government: borrowing, 315–16; budgeting power, 317–8; civic participation in, 323; constitutional equality, 319; constitutional recognition of, 306–8; Council of Local Governments, 320; democracy and, 299, 303; efficiency, improving, 324–5; elections, 322; European Union and, 321; financing, 314–18; function, 308;

General Conference on Local Matters, 320; governance role of, 308–14; grants to, 316–17; Historical Territories, 304, 308; history, structure, and institutions of, 302–6; mayors, 303, 322–3; metropolitan areas, 305–6; mixed financing system, 315; municipal councillors, 322–3; National Commission of Local Administration, 320; no universal clause, 308–9; overview of, 299–300; political culture of, 322– 3; relations with autonomous communities, 321; relations with the state, 320–1; revenue, 315–16; right to selfgovernment, 307; supervision of, 318– 19; taxes, 315, 316; two-fold regulation of, 307–8; user fees, 315; women and, 322 – municipalities: assembly of councillors, 312–13; combined public service delivery, 311–12; complementary activities, 309–10; composition of, 305; elections, 312, 314; expenditure, 310–11, 318; functional areas, 309; governance role of, 309–13; history, 302–3; mayors, 312–13; non-obligatory services, 310; organizational regulation, 313; powers of self-organization, 310–11; public service delivery, 309–10, 311 Spain, provinces: governance role of, 313–14; organization of, 308 Spanish Constitution (1812), 303 Spanish Constitution (1978), 312 Spanish Federation of Municipalities and Provinces (femp), 321 Special districts (usa), 403 State-local relations, comparisons re, 427 Supervision of local government(s): Australia, 8, 21–2; Austria, 54–6; Brazil, 93, 94; Canada, 118, 119–201; comparisons re, 425–7; Germany,

Index 152–3; India, 189–90; Mexico, 220– 2; Nigeria, 255–6; South Africa, 284– 7; Spain, 318–19; Switzerland, 346– 8; usa, 378–9 Sustainable development: Australia, 16 Swiss Confederation: agglomerations, 331; citizen participation, 333–4; civil servants and, 343; civil war, 336; confederation, 332; Conference of Delegates, 336; cooperative federalism, 349; Council of States, 349; demographics, 331; economy, 332; emerging issues and trends, 353–6; Emission Centre of the Swiss Municipalities, 346; extraparliamentary commissions, 348; governing bodies, 332; history of, 335–7; intergovernmental relations, 350–1; New Public Management, 347–8; overview, 331–4; political system of, 332– 3; power sharing by parties, 352; referendums, 333; right to vote, grant of, 336; taxes and citizens, 345; Tripartite Conference of Swiss Agglomerations, 338 – local government: agglomerations, 337, 338, 340; amalgamations, 337, 338, 354–5; Basle-City, 334; borrowing, 346; canton revenue, T347; cantonal supervision, 346–8; cantons, 333, 334; cantons’ education/social service competences, 341–2; cantons’ municipal departments, 347, 348; cantons’ role re policymaking, 349; citizen participation, 344, 346, 352–3; citizens’ tax burdens, 345–6; citizenship and, 335; city size and governance issues, 355–6; confederation revenue, T347; diversity of citizenry issues, 356; elections, 353; fiscal autonomy, 339, 340, 354; general residual competence of municipalities, 340; governance role of, 340–5; Greater Zurich

463

area, 356; history, structures, and institutions of, 334–8; income taxes, 346; initiatives, 344–5, 346; intercantonal conferences, 349; local political systems, 343; municipalities/cities lobbying role, 349–50; political culture and, 351–3; property taxes, 346; public expenditures competence, 341–2; referenda, 344–5, 346; regional conventions, 356; school municipalities, 335; subsidiarity principle, 339–40, 348; taxes, 345; transfers, 346, 348, 353–4; women’s representation, 352; Zurich canton, 334 – municipalities: autonomy, 339–40, 348; bankruptcy of, 348; canton legislation re, 339, 343; cantonal supervision of, 345; competences, 339, 340; expenditure competence, 341; fees and charges, 346; fiscal autonomy, 345; intermunicipal cooperation, 338, 354–5; lobbying role re federal decisions, 349–50; local municipal parliament, 343; municipal assembly system, 343, 344; political parties, 351–2; public expenditures, T342; relations with cantons, 339, 341, 342, 350; revenue, T347; school municipalities, 335; singlepurpose municipalities, 335; varying size of, 336–7 Sydney (Australia), 18, 21 Tasmania (Australia), 26 Tax and Expenditure Limitations (tels) (usa), 375 Toronto, Ontario (Canada), 114 Transfers: Austria, 53–4; Brazil, 82, 90–1, 100; Canada, 117; comparisons re, 422–4; Germany, 150, 152; Swiss reforms, 353–4; Switzerland, 346, 348. See also Grants. Triple bottom line: Australia, 16

464

Index

Unfunded Mandates Reform Act (unra, usa), 380 Uniform municipalities (Austria), 44 United Cities and local Government (uclg), 64 United Mexican States, See Mexico United States of America (usa): Advisory Committee on Intergovernmental Relations (acir), 380; demographics, 365; intergovernmental relations, 379–80, 382–3; overview of, 365–6; political party system, 366; Port Authority of New York, 368; residential community associations (rcas), 384; structure of government, 365–6; Unfunded Mandates Reform Act (unra), 380 – local government: adaptability of, 384; balanced-budget requirement, 376; budgets of, 374; consolidations of, 369–71, 383; constitutional recognition of, 373; contracting-out (services), 382; cooperative arrangements, 370, 371, 373–4, 382–3; counties, 366–7; debt levels, 376–7; Dillon’s Rule, 373; elections, 381; expenditures, 374; federal aid to, 378; federal government, relationship with, 378, 379–80; financing, 374–8; functional responsibilities of, 374; globalization and, 384; governance role of, 373–4; history, structures, and institutions, 366–72; home rule, 373; interjurisdictional competition, 372, 383; interlocal agreements, 371–2, 385; issues and trends, 381–5; metropolitan governance (regionalism), 371, 382; municipal corporations,

367; number of, 364, 369; overview of, 364–5; political culture of, 381; property taxes, 374–5; public authorities, 368; public-interest groups, 380; school districts, 369–70, 374; special districts, 367–8; state aid to, 377; states’ relationship with, 364; supervising, 378–9; Tax and Expenditure Limitations (tels), 375; third-party government, 382; townships, 367, 370; transportation issues, 384–5; unbundling services, 383–4; user fees, 375, 383–4, T376; voter turnout, 381 – metropolitan regions, 370; adaptation of, 372 – states: equalization formulae, 370, 377; fiduciary oversight of local government, 379; fiscal noting, 379; mandate reimbursement, 379; schools, control of, 369–70 Universal Basic Education (ube) program (Nigeria), 257 Valley of Mexico (Mexico), 223, 227 vat tax: Germany, 150; Nigeria, 252 Vienna (Austria), 50–52; double functions of, 51; political and administrative system, 51–52 Voter turnout: Austria, 61; Brazil, 95; Canada, 126; Germany, 156–7; India, 193; South Africa, 290; usa, 381 West Bengal (India), 180–1, 192 Winnipeg, Manitoba (Canada), 113– 14 World Trade Organization (wto), 64 Zurich (Switzerland), 337, 356