The VIth session of the Parliament is coming to its end with a number of draft laws crucial for the further decentralization reform left pending.

The road from Dunaevtsi to Mynkivtsi winds between the hills, there are plenty of trees on the roadsides with nut trees mixed with ashes, cherry plums and sycamores. Sometimes one can see well-looking fields in gaps between the trees. This year’s summer is not very warm. From time to time clouds come unexpectedly, the wind blows and the rain starts. This is exactly what we are going through now – the wind has brought some rain. We have reached some small village. A brand-new public bus stop now serves as a shelter for kids trying to get away from the wind and the rain. Some dozens of meters further we see a kind of the village center including a well with a new log cabin and some newly refurbished public building with a shield on it. We make a stop. The building turns out to be the office of the amalgamated hromada of Dunaevtsi accommodating the head of the hromadas and the healthcare point. All this is located in the small village of Sosnivka with only like 100 residents!

Passing other villages belonging to the amalgamated hromada of Dunaevtsi, we more than once saw same-looking bus stops and log cabins for wells. They seem to be a sign signaling that this or that village belongs to the newly established amalgamated hromada of Dunaevtsi which is one of the biggest in Ukraine uniting 50 villages around one town. The local residents now see that the motto “the city pays its tribute to the village” has already become true. All villages now have bus stops where you can hide from the rain and the wind, many villages now enjoy pipelines for central water supply, and in some villages where central water supply is still pending wells have been restored.

It seems like one could find quite a number of such cases in Ukraine. Within two years of the local self-government reform 413 amalgamated hromadas were created. 150 more are waiting for the Central Election Committee to assign elections for them. The Central Election Committee sticks to its modus operandi, however, and is not in a hurry to do this finding new reasons every time to prevent the creation of new hromadas, especially those on the borders of artificially created Soviet districts or those located around towns of regional significance.

The Government, international partners of Ukraine and residents of the new amalgamated hromadas are telling about the success of the decentralization process, whereas the members of the “Opposition” Block and the “Batkivshchyna” faction prefer to tell about “flops” and “horrors” of the Ukrainian rural areas. 

In the meantime, the district level of public governance has become a schene for an almost unmasked warfare which the district governors are waging against the amalgamated hromadas. They can’t agree that the unlimited power of districts over villages and towns is ending, whereas the latter do not want to tolerate the remnants of the district dominance.

In this situation, the fast and effective adoption of legislation needed to accompany the reform of local self-government and the territorial structure of public administration would be an efficient tool to prevent the stalemate of the reform. Unfortunately, this hazard is still present and it is rather based on psychological factors. 

First, the most active leaders who were the first to believe in the future of the amalgamated hromadas have already done their job and reached success in the new hromadas. Thus, the potential of the most passionate leaders has, unfortunately, decreased. Second, the district level of governance has started to oppose the reform vehemently, because it is losing its powers, importance and influence. Third, the citizens are now aware that MPs – first of all, those elected in single-member districts and populists – are not quite happy about the increasing capacities of municipalities and the automatic distribution of public funds and expect resistance from them as well which jeopardizes the irreversibility of the reform. 

These fears do not come out of the blue. The VIth session of the Parliament is coming to the end, but a number of draft laws remain pending. These draft laws are crucial for the further progress of the reform and for the dynamic development of the territories in Ukraine which can be ensured by the amalgamated municipalities. Failure to adopt them in the last days of the current Parliament’s session can be a signal for those who have no clear opinion yet: “Stop decentralization!”

The most acute issues of the decentralization process are as follows.

1. Omni-presence of local self-government

Everyone is already sick and tired of the omni-presence issue of local self-government. Everyone is talking about this including both members of the Parliament’s majority to the opposition factions. However, nobody in the Parliament seems worried that the draft legislation which can help turn the slogans into reality has been pending for almost two years already. The key problem of the so-called “omni-presence” of local self-government is that municipalities do not have decisive powers to manage territories located beyond the borders of settlements. Municipalities cannot plan the development of that territory, they can’t regulate its maintenance and control its condition. The main Parliament’s committee responsible for solving this problem is the Committee for Construction, Amenities and Municipal Housing Services. This committee seems to have to be quite free of politics, and its area of responsibility does not seem political at all. But… it was the decision of this Committee’s members of the previous legislative period who favored construction tycoons and took this right away from the local self-government bodies. The new Parliament tried more than once to give this right back to local self-government, but somehow it has not worked out so far. Now, there are several draft laws which try to solve this problem in different ways: 

1) Draft Law “On Amendments to the Law of Ukraine “On the Regulation of the Urban Construction Activity”” (introducing new types of urban construction documents at the local level) No .4390 dated April 12, 2016. This draft law is very simple and praxis-oriented, it introduces the so-called “territorial planning scheme” for all municipalities making it possible to stop patchy chaotic development of territories beyond the borders of settlements decided at the district (instead of municipal) level. Unfortunately, the Committee did not accept it for consideration.

2) Draft Law “On Amendments to Certain Laws of Ukraine to Extend the Powers of the Local Self-Government Bodies of Municipalities onto the Entire Territory of Respective Village, Settlement and Town Hromadas” No. 5253 dated October 07, 2016. This draft law develops ideas presented in draft law No. 4390, makes some of the regulations more detailed and enables local councils to regulate the development of territories beyond the borders of settlements. Despite the importance of this draft law, especially for the amalgamated municipalities, the Committee postponed its consideration. 

3) Draft Law on amendments to the Law of Ukraine “On the Regulation of Urban Construction” No. 6403 dated April 21, 2017, which also partially settles issues related to the planning of the territory of amalgamated municipalities. However, this draft law, contrary to draft law No. 5253, does not allow other municipalities – including those consisting of 2 to 20 settlements even without amalgamation – to plan their territory.  

That is why the adoption of draft law No. 6403 or No. 5253 (taking into account the regulations of No. 6403) before the end of the VIth session must be a top priority both for the Committee for Construction and for the whole Parliament. This is an indicator showing if the Committee for Construction, Amenities and Municipal Housing Services is interested in the overall development of territories in Ukraine or only favors big construction companies. 

It is also worth mentioning that the dream of local self-government bodies to get hold of the land beyond the borders of their settlements can only result in their territorial expansion, if the mentioned draft law is adopted. Without spatial planning, it would be hardly possible to secure further development, and the process itself would turn into a fast and unregulated free-of-charge land sharing between citizens. 

2. Districts as a problem

The district level is now actually the main opponent resisting the creation of new amalgamated municipalities. This has a clear psychological background, since the heads of district councils and district administrations who aspired to take over a powerful position were suddenly confronted with the fact that their capacities are waning compared to the capacities and, hence, influence and authority of the heads of amalgamated municipalities. Also, the financial resources of districts where one or several amalgamated municipalities have been created tend to become tiny with the district councils being degraded into a body which only votes on the district budget consisting, in fact, of transfers from the state budget only.

The sheer size and financial capacities of some of the districts are now lower compared to the new amalgamated municipalities. Below is an example from Khmelnytsky region:

 

Districts/number of residents	Amalgamated municipalities/number of residents
Bilohirya – 27,125	Dunaevtsi – 39,620
Vinkivtsi – 24,698	Volochysk – 34,394
Letychiv – 28,433	Letychiv – 19,838
Novoushytsk – 29,184	Novouschytsk – 27,028
Stara Synyava – 20,633	Stara Synyava – 20,633
Teofipol – 2,721	Chemerivtsi – 28,012

 

As far as the financial capacities are concerned, the situation is even more impressive. The revenues of Volochysk district for the current year are UAH 248.4m including the tax revenues equal to UAH 5.94m; transfers from the state budget amount UAH 236.9m! Thus, the district’s own revenues account for 2.5% of the total budget only! 

At the same time, the budget revenues of the amalgamated municipality of Volochysk are UAH 173.29m with the tax revenues and transfers from the state budget being equal to UAH 85.3m and UAH 83.8m accordingly.  

The situation with the districts’ own revenues is even worse in Letychiv and Stara Synyava districts, since Letychiv district has two amalgamated municipalities and in Stara Synyava district the only amalgamated municipality covers the territory of the whole district. The result of it is that the district actually does not have any own tax revenues.

The amalgamated municipality of Stara Synyava was created on the basis of all 17 village and one settlement municipalities located in the district, its territory covers 662.2 км², the amalgamated municipality has 20,433 residents. The settlement council has 26 members. The district council of Stara Synyava also has 26 members, the district council office has 7 employees (down from 10 in 2016), the planned spending for the district council office in 2017 is equal to UAH 239,000 (down from UAH 799,800 in 2016). 

It must be said that in 2016 the amalgamated municipality transferred funds to support the district council. However, this kind of charity is not planned in 2017 given the municipality’s relationship with the district which is far from perfect. That is why the district expects a deficit equal to UAH 494.6 thousand including UAH 373.6 thousand for salaries (salaries for 7 months) and UAH 48 thousand for energy supply. There are no noteworthy sources to cover this deficit. As per June 1, 2017, the salary debt for the second half of May amounting UAH 12 thousand has already been registered (according to a functional study conducted by the Minregion — А.Т.). In fact, the efforts of politicians to avoid conflicts with the district level of public governance result in a very alarming situation, when two representative bodies co-exist on the same territory – council of the respective amalgamated municipality and district council. In this case, the latter does not have any powers and resources anymore but still exists.

This problem must be solved as fast as possible, because the budget process for 2018 starts in the autumn of 2017. It will inevitably be marked by a bunch of problems regarding the balance of the district budgets in districts with the amalgamated municipality covering the whole district’s territory or only a part of it. Normally, these are the most capable municipalities which tend to amalgamate, which means the loss of revenues for the respective district. Transfers allotted to the rest of the district can’t cover the costs of public objects remaining under the district’s control in mostly weak village municipalities which are not amalgamated. 

To address this problem, the draft law “On the Procedure of the Creation, Liquidation of Districts, Setting and Changing their Borders” (No. 6636 dated June 22, 2017) must be adopted. 

This is actually a transitional law making it possible to transform the district level of governance step by step. For example, bigger districts could be created allowing – for a while – the parallel existence of amalgamated and separate municipalities. Bigger territories are easier for balancing the budgets of public institutions in separate municipalities. This draft law is also important, because it has to demonstrate: making districts bigger should not be feared, and the administrations of such districts can gain precious experience for the work in their new role as true bodies of executive power and not some hybrid of state power and local self-government with the competence of executive power overlapping with the powers of local self-government.

At this point, it must be made clear that the operation of district councils in districts where one big amalgamated municipality exists just can’t be stopped without amendments to some other legislation. District councils have some important powers including the assessment of land plots located beyond the borders of towns and villages. District councils are entitled to approve the territorial planning scheme of districts and the detailed development scheme of the territory beyond the borders of towns and villages. The proposed soft approach to the district issue takes these realities into account and provides for a step-by-step transition to the new district division.

3. The final “YES” to the voluntary amalgamation

Having adopted the law allowing municipalities to join existing amalgamated municipalities, the Parliament created opportunities to strengthen and to multiply the already existing successful municipalities which have already amalgamated and proven their effectiveness. 

However, this process is challenged by another question: do amalgamated municipalities which are joined by other municipalities remain compatible with the plan for the creation of municipalities which is a condition for the direct relations with the state budget? This is rather a rhetoric question, but the existing space for interpretation makes amalgamated municipalities risk-averse and unwilling to accept new members too fast. 

That is why the adoption of the draft law “On Amendments to the Budget Code of Ukraine (regarding the voluntary accession of municipalities)” No. 4773 dated June 3, 2016, would solve the issue of funding warranties for amalgamated municipalities accepting new members and turn the right of accession into practice.

It must be mentioned that the draft law was approved in the first reading back on September 20, 2016, and has stuck in the responsible Parliament’s committee since then.

4. Towns of regional significance and decentralization

After the budgetary decentralization, towns of regional significance actually received everything they wanted. They already had necessary powers, and the budgetary decentralization gave them money. On the other hand, the elections of the mayor and town council members are an expensive adventure. That is why the towns of regional significance did not have that much enthusiasm for the process of voluntary amalgamation. There were not many people wishing to go through the elections again, another reason to stay away from the process was the special view of the Central Election Committee which did not announce elections in those few cases when towns of regional significance initiated the creation of amalgamated municipalities. Thus, towns of regional significance now stay away from the creation of new municipalities. Also, some of them interpret this process as a threat to their own development, since amalgamated municipalities were created just around them leaving them without space for further development.

Taking this into consideration, it would be logical to combine the increased role and responsibility of towns for the development of rural areas around them with the possibility for the towns of regional significance to join the amalgamation process without having to stage elections again. 

Opportunities for the complex development of towns of regional significance and territories around them are provided in the draft law No. 6466 “On Amendments to the Law of Ukraine “On the Voluntary Amalgamation of Municipalities”” (regarding the voluntary accession of village and settlement municipalities to the municipalities of towns of regional significance).

The adoption of this draft law would intensify the process of urban development, give opportunities for the balance of interests between the towns of regional significance as growth hubs and rural areas around them which are keen to improve the quality of life for their residents.

5. Service at local self-government bodies

All in all, the new amalgamated municipalities can demonstrate quite good results in their development. Their new management structures are often innovative and effective. But the key point is the motivation of qualified personnel. Some incentives for public servants are stipulated in the law “On Public Service”, but they are not enough.

The Parliament owes something to the territories: employees of local self-government which received new powers and new responsibilities in the course of decentralization must receive a new updated legislation. It must be mentioned that the law “On Service at Local Self-Government Bodies” (draft law No. 2489 dated March 30, 2015) was adopted by the Parliament, but it was vetoed by the President. The responsible Parliament’s committee has already integrated the remarks of the Head of State to submit it again for adoption.

I don’t know if the Parliament can do the minimum it owes to local self-government. MPs do not spend enough time working on draft legislation. In this context, I think back about the performance of the Parliament of the 1^st legislative period. If it had had the same productivity as our today’s Parliament, we would still be a part of the Soviet Union.

As far as local self-government is concerned, I must say the following: decentralization which is pursued quite actively also has significant political consequences. Surveys already demonstrate increasing trust of citizens to the heads and deputies of amalgamated municipalities. People link their hopes for improvements in their municipalities with these people. This motivates local leaders to the further political career. 

In the next elections, we will see a part of the leaders of the new amalgamated municipalities balloting for the Parliament and political parties will be recruiting the most successful of them. Obviously, these potential MPs will remember what political parties and in what way supported the decentralization reform in the Parliament of the current legislative period.

In regard to the next steps the Parliament might take to provide the legal basis to the decentralization process, we must say that our Parliament and our Government seriously lag behind in their ability to react to the needs which are arising in the reform process. Creation of further 100 to 150 amalgamated municipalities by the end of the year will for sure put the completion of the reform at all levels of the administrative and territorial structure on the agenda. 

Are the Ukrainian politicians ready for that?