745th meeting – 14 March 2001

Item 12.5

Financial resources of local authorities in relation to their responsibilities:
a litmus test for subsidiarity
CLRAE Recommendation 79 (2000)
Draft reply
(CM/Del/Dec(2000)719/12.1 and (2001)744/1.1, CM(2000)100 and (2001)12)



The Deputies adopted the following reply to CLRAE Recommendation 79 (2000): 

“The Committee of Ministers has considered Congress Recommendation 79 (2000) on the financial resources of local authorities in relation to their responsibilities: a litmus test for subsidiarity with much attention. It congratulates the Congress on the continuity, seriousness and quality of its work. 

The Committee of Ministers shares the view of the Congress that the right balance should be found between the implementation of decentralisation of responsibilities and the financial resources of local authorities. 

The Committee of Ministers has transmitted the Recommendation to the governments and parliaments of the Council of Europe member states and has supported the idea of a World Charter of Local Self-Government (the Permanent Representatives of the Council of Europe member states to the United Nations, both in New York and Nairobi, were informed of this support). 

As regards the wish of the Congress that the question of local authorities' resources be considered taking into account Appendix I to Recommendation 79, the Committee of Ministers would like to inform the Congress that at its 719th meeting (6 September 2000), it has adopted Recommendation(2000)14 on “Local taxation, financial equalisation and grants to local authorities”. Recommendation 79 (2000), as well as the CLRAE reports on which this is based, have been duly taken into account during the preparation of this legal instrument by the CDLR.

The Committee of Ministers wishes to mention that a Conference on “Local democracy at the dawn of the 21st century” will be held on 3 and 4 May 2001 in Riga, as a special event to mark Latvia's Chairmanship of the Committee of Ministers of the Council of Europe (November 2000 – May 2001). The relation between local authorities' resources and responsibilities will be duly examined at this Conference. The CLRAE will be involved in its organisation. 

Finally, the Committee of Ministers underlines that the establishment of sound financial arrangements for local government has been and remains a main objective of the CDLR work. Within the Intergovernmental Programme of Activities for 2001, the following three activities are devoted to major problems concerning local authorities finance and budget: 

- risks arising from local authorities' financial obligations and the recovery of local authorities in financial difficulties; 

- budgetary procedures and budget management at local authority level; 

- recovery of local and regional authorities in financial difficulties. 

The CDLR will continue paying great attention to the need of ensuring the right balance between local government financial resources and responsibilities. 

Furthermore, the programmes for democratic stability give a prominent role to the legislative assistance for the preparation of legislation on local finance and themanagement of public local services as well as to the technical assistance activities in this area.”