MINISTRY OF REGIONAL DEVELOPMENT AND PUBLIC WORKS

DECENTRALIZATION STRATEGY

2016 – 2025

2016

2

Table of Contents

Introduction 4

I. ANALYTIC PART 6

I.1. Overview of the development of the decentralization process of the central government since

1991 until the adoption of the Decentralization Strategy in 2006. 6

I. 2. Analysis of the implementation of the Decentralization Strategy, implemented in the period

2006-2015 20 2.1. Evaluation of the degree of implementation of the strategic objectives of the Decentralization

Strategy. 20 2.2. Achieved results and impact of implemented measures 26 2.3. Non-implemented measures and consequences of their non-implementation 27 2.3.1. Measures not implemented under Strategic Objective 1 27 2.3.2. Measures not implemented under Strategic Objective 2 28 2.3.3. Measures not implemented under Strategic Objective 3 30 2.3.4. Consequences of non-implementation of the measures 30 2.4. International comparisons on Bulgaria's progress in the field of decentralization compated to

unitary EU Member States 32 2.5. Second monitoring report of the Congress of Local and Regional Authorities of Europe 35 2.6. Implementation of the Strategy for Innovation and Good Governance at Local Level of the

Council of Europe 36 2.7. Conclusions on implementation of the measures of the Strategy for 2006-2015 37 2.8. Evaluation of the Activities of CDSG 39 2.8.1. Establishment, changes and functions of CDSG 39 2.8.2. Sessions of CDSG and topics discussed 39 2.8.3. Presence of CDSG members at the Council sessions 40 2.8.4. Evaluation of the activity of CDSG 42 2.8.5. Conclusions on the activity of CDSG 42

I. 3. Conclusions on the development of the governance decentralization process in the period 1991

to 2015 43

I. 4. Evaluation of the decentralization process by sector 46 4.1. Analysis and evaluation of the decentralization process in the Education sector 46 4.1.1. Sector governance and control 46 4.1.2. Funding of the service/activity 49 4.1.3. Ownership on assets/operation of assets associated with the service provision process 51 4.1.4. Appointment and dismissal of the management and human resources 51 4.1.5. Identified areas of concern and opportunities for further development of the

decentralization process 51 4.2. Analysis and evaluation of the decentralization process in the Social Affairs sector 52 4.2.1. Sector management and control 52 4.2.2. Funding of the service/activity 54 4.2.3. Ownership on assets/operation of assets associated with the service provision process 54 4.2.4. Appointment and dismissal of the management and human resources 55 4.2.5. Identified areas of concern and opportunities for further development of the

decentralization process 55 4.3. Analysis and evaluation of the decentralization process in the Culture sector 55 4.3.1. Sector management and control 55 4.3.2. Funding of the activity 57 4.3.3. Ownership on assets/operation of assets associated with the service provision process 58

3

4.3.4. Appointment and dismissal of the management and human resources 58 4.3.5. Identified areas of concern and opportunities for further development of the

decentralization process 59 4.4. Analysis and evaluation of the decentralization process in the Security sector 59 4.4.1. Sector management and control 59 4.4.2. Funding of the service/activity 61 4.4.3. Ownership on assets/operation of assets associated with the service provision process 62 4.4.4. Appointment and dismissal of the management and human resources 62 4.4.5. Identified areas of concern and opportunities for further development of the

decentralization process 63 4.5. Analysis and evaluation of the decentralization process in the Public Administration sector63 4.5.1. Sector management and control 63 4.5.2. Funding of the service/activity 66 4.5.3 Ownership on assets/operation of assets associated with the service provision process 67 4.5.4. Appointment and dismissal of the management and human resources 67 4.5.5. Identified areas of concern and opportunities for further development of the

decentralization process 70

I. 5. Quanitfied SWOT analysis of the overall state governance decentralization process over the

analysed period 73

I. 6. Analysis of the identified problem areas applying the problem tree method and setting the

objectives based on this method 79

II. STRATEGIC PART 87

II.1. Vision, strategic objectives and priorities 87

II.2. Monitoring, update and coordination of the implementstion of the Decentralization Strategy91 2.1. Institutional commitment for implementation of the Decentralization Strategy 91 2.2. Monitoring the implementation of the Decentralization Strategy 91 2.3. Decentralization Strategy update 94 2.4. Link with other national strategies 94

II. 3. Sources of funding of the Decentralization Strategy 95

List of references 97

List of Abbreviations 100

ANNEXES 102 ANNEX No 1 103 Glossary of Terms 103

4

Introduction

Since the late 80s of the 20th century, the policy reform in the developing countries and the countries

in transition was carried out in the context of democratization. More and more countries in the world took

the path of democratic forms of governance, responding to national and international pressure. In democratic

regimes, governments were facing the need to work effectively, efficiently, transparently responding to

people's needs. The reactions to this pressure were dictated by the development of the following major

trends:

- Globalisation of the world economy, liberalisation of national economies and regionalisation of

national development.

Rapid changes in global economy, pushing it relentlessly towards global integration, would require

governments to rethink their strategies for regional and local development and to establish new

systems of governance through which to build economically viable and socially just societies.

- Conversion of the role of the state.

The state must increasingly withdraw from its role as a producer of goods and services.

- Change in the state - civil society interaction.

Nowadays, there are ways or forms of policy-making that are no longer possible or acceptable for a

large part of society. The citizens strengthen their demand to have the right to participate in a more

direct way in the processes of decision making, especially on those issues that are directly related to

the problems of everyday life.

- Increasing complexity and "subjectivity" of people's needs.

People increasingly want to have a democratic system of governance, not only to exercise their right

of vote in the elections for local and national authorities. They increasingly want to participate at

various levels of governance where decisions are made that directly affect them. International

organizations pay great attention to ideas like „good governance“and „decentralization“ when

dealing with reform processes in the management of various sectors.

Since the 80s of the 20th century, the principles of good governance were discussed and

implemented in public administrations. Good governance builds on the understanding of traditional

governance. This is generally achieved by applying the principles of economic efficiency in the public

sector. Central and local government must appear in their capacity of a good owner, effectively managing

public property through the principles of strategic management. The issues of good governance and the

corresponding examples of the behavior of public officials are closely linked with the overall aspirations of

democratic states to enhance the quality of public services at all levels of governance.

In the early 90s of the 20th century, after implementation of the political changes, the local

authorities (municipalities) in Bulgaria gradually began to form their own field of competences. This process

5

started with the adoption of the Constitution of the Republic of Bulgaria (CRB) in 1991 and continued until

the end of the century with the adoption of key laws that laid the grounds for reforms in various spheres of

the social and political life of the country. Back then, fundamental laws in the area of local self-government

were adopted such as: Local Self-Government and Local Administration Act (LSGLAA, 1991), Local

Elections Act (LEA, 2995), Administrative and Territorial Structure of the Republic of Bulgaria Act

(ATSRBA, 1995), Territorial Division of Stolichna Municipality and Major Cities Act ((TDSMMCA,

1995), Municipal Property Act (MPA, 2996), Local Taxes and Fees Act (LTFA, 1997) and the Municipal

Budgets Act (MBA, 1998).

In May 1992, Bulgaria became a member of the oldest political organization on the continent - the

Council of Europe (CoE). In September 1995, the National Assembly (NA) ratified the European Charter of

Local Self-Government (ECLSG) thus it became part of national law and took precedence over it. The

Charter obligated all states that had ratified it to secure and protect the political, administrative, and financial

autonomy of territorial communities.

In this regard, a number of changes were made with respect to the structure and functioning of the

local self-government. Unfortunately, the legislation in the area of local self-government outlined the

contours of the field of local competencies, but maintained the unbalanced system of transfer of

responsibilities for providing services without the necessary decision-making powers with regard to the

provision and financing of those services. This situation did not allow local authorities to conduct an

independent local policy, taking the responsibility for the consequences arising thereof to the local

community.

The attempts by the central government to resolve emerging problems "piece by piece", maintaining

the old system of relationships, led to increasing its complexity and difficulties in functioning. This led to a

common understanding of the need to develop appropriate strategic document on decentralization.

In this regard in 2006, by Decision of the Council of Ministers (CoM) No 424 dated 05.06.2006, the

Decentralization Strategy for the period 2006-2015 was adopted. The main goal of the Decentralization

Strategy was to increase government efficiency by implementing a series of measures aimed at achieving

three strategic objectives, namely:

Strategic Objective 1. Step up the transfer of powers and resources from the state

bodies to the municipalities with a view to strengthen local self-government;

Strategic Objective 2. Optimize the functional competences of the district governor and the

territorial units of the central executive bodies for coordination of the sectoral policies at

regional level;

Strategic Objective 3. Develop local self-government within the municipality.

Two 4-year Programmes (2006-2009 and 2010-2013) and a Programme (Roadmap) for the period

2014-2015 were adopted for the duration of the Decentralization Startegy.

6

In 2007, the Government of Bulgaria approved the implementation of the Strategy for Innovation and

Good Governance at Local Level (STGGLL) of the CoE. The main objective of the Strategy was to

stimulate and mobilize action at national and local level for continuous improvement of local governance in

accordance with the 12 principles of good democratic governance and putting citizens at the heart of all

democratic institutions and processes. In 2010 Bulgaria became the first Member State of the CoE,

accredited to award the European Label on Innovation and Good Governance at local level. This European

reward is given to local authorities that have proved compliance with the 12 principles laid down in the

Strategy. In 2011, Bulgaria became the first state in CoE, which successfully conducted the procedure for

the award of the European Label. Since then, three procedures were held for awarding the European Label to

Bulgarian municipalities.

The main achievements of the implementation of the Decentralization Strategy 2006 - 2015, were as

follows: The change in the Constitution of the Republic of Bulgaria in 2007, which led to the granting of tax

powers to the municipalities; Regulation of the distribution of subsidies for municipal roads and the transfer

of the patent tax to the municipalities as their own source of income; Increasing municipal revenues from

concession contracts; Implementation of the Strategy for Innovation and Good Governance at Local Level of

CoE.

It is necessary to draw up a new strategy for the period 2016-2025 due to the expiration of the

validity of the current Strategy and due to the low rate of implementation of the measures set in it, and given

the new global and national challenges.

I. ANALYTIC PART

I.1. Overview of the development of the decentralization process of the central

government since 1991 until the adoption of the Decentralization Strategy in 2006.

The process of decentralization started with the enactment of the new Constitution of the Republic of

Bulgaria, effective as of 13 June 1991. The process took place at different speeds, often accompanied by

contradictory assessments and results. Three stages may be conditionally distinguished for the period 1991-

2006: The first stage covers the period from 1991 to 1995, the second stage is from 1996 to 2000 and the

third stage is from 2001 to 2006.

The first stage clarified the principles and forms of decentralization. The basic principles of the

legislation on local self-government and local administration were formed in the eponymous chapter of the

Constitution. The constitutional texts brought some fundamentally new rules representing a starting point for

the reform in the administrative and territorial structure (ATS) of Bulgaria and of the local self-government.

They set the system of state governance at three levels: central, district and municipal. The Constitution

7

launched a process of transition and consolidation of the country as a social, legal, and democratic state, of

building a new political and economic system, of democratization of political life and decentralization of the

government. All this called for starting a comprehensive administrative and territorial reform in the country

to ensure consistent implementation of measures to change the territorial, functional, and institutional

organization and structure of local authorities in the general government system of the country.

Within the framework of this reform a number of measures were envisaged in relation to the

development of the decentralization at national, district, and local level. The active preparation of the legal

bases for conducting the administrative and territorial reform in the long run was a characteristic feature of

this stage. This reform aimed at establishing a modern and effective functional structure. The law aimed to

create the legal framework for the administrative and territorial structure, to strengthen the decentralization

processes, to ensure the formation of viable territorial communities and local authorities with strong powers

and responsibilities. The main provisions of the Constitution were further developed and specified in the

Administrative and Territorial Structure of the Republic of Bulgaria Act, adopted in July 1995. The act

introduced the term "administrative-territorial structure" and repealed to term "administrative-territorial

division.“ The division assumes imposing administrative decisions while the administrative-territorial

structure requires deliberate and continuous process of administrative and territorial changes in accordance

with the will of people and the interests of the state.

The Administrative and Territorial Structure of the Republic of Bulgaria Act defines as main

structural units on the territory of Bulgaria the municipalities and the districts, in line with the Constitution,

as well as the mayoralties and the city districts in cities with population over 300 000 as composite

administrative-territorial units (ATU). All administrative-territorial units, except for the cit districts in the

big cities, are characterized by territory, boundaries, population, name, and an administrative center.

With the adoption of this law a very important regulatory framework came into effect, containing

defined conditions and criteria for the formation of units, subject to the law, and the relevant procedures,

which turned the law into a needed regulator of the process of improvement of the administrative and

territorial structure. It contributed to the creation of administrative-territorial units, operating as closely as

possible to the population and established a more efficient functioning of the local self-government. In 1991

there were 9 districts and 255 municipalities in Bulgaria, their number and boundaries remained the same as

they were before 1989. As a result of the created opportunity to apply the right of territorial self-

determination, at the end of 2015 the number of the municipalities increased to 265. In 1999 a new

administrative and territorial structure was established at district level and the number of districts increased

to 28.

Local Self-Government and Local Administration Act was adopted in 1991, which set the minimum

scope of powers of municipalities, mayoralties and the major city districts and the municipal councils were

given the right to expand or supplement them. The Local Self-Government and Local Administration Act

8

introduced in reality the principle of separation of powers in the management of the municipality. The

collective body of local self-government - the municipal council and the local executive body in the

municipality - the mayor, were relatively independent in performing their functions. They were elected

bodies and could not be dissolved by other state institutions, except in some special cases provided for in the

Local Self-Government and Local Administration Act.

This law regulated also the possibility for association of municipalities in the country. The

association was voluntary for solving problems and tasks of common interest. Different forms of regional

associations of municipalities (RAM) emerged during the period under review. In most of the cases, the

associations were formed on geographical principle and their aim was to assist each other in solving typical

for the region issues. The Association of Rhodope Municipalities was founded in 1992 with headquarters in

the city of Smolyan. It included 17 municipalities of the Rhodope region and rendered assistance in a broad

range of consultancy services. The Association of Black Sea Municipalities was founded in the same year as

well, with headquarters in the city of Varna, which brought together 18 municipalities along the Black Sea.

The Association of Danube River Municipalities "Danube" was founded in 1993 with headquarters in the

city of Belene and it brought together 27 municipalities from the Danube region. RAM "Maritza",

headquartered in the city of Haskovo, RAM „Central Stara Planina", headquartered in the city of Gabrovo

and the Regional Association of Municipalities "Trakiya", headquartered in the city of Stara Zagora were

founded on a later stage.

A characteristic feature of these associations was that before the foundation of the National

Association of Municipalities in the Republic of Bulgaria (NAMRB), they aimed to represent and defend the

interests of the participating municipalities before the state and other authorities. Subsequently these

functions largely switched to NAMRB. It was difficult to readjust geographically established associations of

municipalities and to change the nature of their activities and their orientation towards solving specific

projects and tasks. As a result their activities lost their individuality and decreased drastically; including the

role they played in the local government processes.

The National Association of Municipalities in the Republic of Bulgaria was established in 1996.

Currently, all the municipalities in the country are its members. It is built on the principles of voluntariness

and equality of its members. It is registered as a legal entity under the Persons and Family Act and its main

purpose is to protect the common interests of its members and the development of local self-government.

Each municipality may become a member if it accepts the by-laws, aims, and tasks of NAMRB. The

managing bodies of the association are the General Assembly, the management board and the supervisory

board. The General Assembly has adopted the principle of equality and each member has one vote.

Initially, Local Self-Government and Local Administration Act provided also for the introduction of

local government at province (okolia) level, such as in the period 1879-1947 and in the period

9

1949 - 1959. The idea was this level of local government to be the first regional level with some limited

functions in the local self-government. The political representation was institutionalized on the basis of

indirect elections - province councils, which were planned to be formed by delegated representation from the

municipal councils. A governor of the province was to be appointed for this executive body. This level in the

government system was not introduced in practice due to difficulties emerging from economic and political

factors and was repealed with the amendments of the Local Self-Government and Local Administration Act

in 1995.

In May 1992, Bulgaria became a member of the oldest political organization on the continent - the

Council of Europe (CoE). Thus, Bulgaria declared its commitment to the core values of the CoE -

protection of human rights, rule of law and democracy. Bulgarian local authorities were given the

opportunity to participate in the Congress of Local and Regional Authorities of CoE through their

representatives and to commit themselves to the common European policies for the development of the local

self-government. Bulgarian municipalities gained a real opportunity to exchange expertise and best practices

between themselves and with other municipalities from the other Member States of CoE. In September

1995, the National Assembly ratified the European Charter of Local Self-Government.

The Transformation and Privatization of the State and Municipal Enterprises Act was adopted in the

same year..

The Local Elections Act came into effect on 25 July 1995. This law established the conditions and

procedures for the election of municipal councilors, mayors of municipalities, mayors of city districts, and

mayors of mayoralties directly by the population. The implementation of the Local Self-Government and

Local Administration Act, the Administrative and Territorial Structure of the Republic of Bulgaria Act and

the Local Elections Act created conditions for the formation of elected municipal bodies and strengthened

the municipal level of self-government, which in turn started the rational transition towards decentralization

of the central government. The entire system of the municipal and district self-government was built, which

in turn was a decisive step towards strengthening local democracy.

The Territorial Division of Stolichna Municipality and Major Cities Act came into effect in 1995,

which re-affirmed the division of the big cities into quarters that existed since then. The amendments to the

Local Self-Government and Local Administration Act in the same year, introduced urban decentralization

and constituted representation at city district level in the cities divided into city districts - Sofia, Plovdiv and

Varna. Elections for local authorities were held based on the proportional electoral system for the municipal

and city district councilors and based on the majoritarian electoral system for the mayors of municipalities,

city districts1 and mayoralties The citizens had the right to one vote for the list of municipal councilors, one

vote for the list of city district councilors, one vote for mayor of municipality, one vote for mayor of city

district and one vote for mayor of mayoralty. The bodies of the city district self-government were

1 City district mayors were elected in the period 1995-1999, 2007-2011, and currently, after 2015 local elections.

10

institutionalized - city district councils2, which were elected proportionately and city district mayors elected

directly by the voters. These local representations did not have the necessary functional and financial

independence to be bodies of the self-governance as a result of which they were representations with

supporting functions to the municipal councils. Consequently in 1999, with amendments to the Local Self-

Government and Local Administration Act, the city district councils were closed

In the period under review, during the development of the decentralization process several major

amendments were adopted in the Administrative and Territorial Structure of the Republic of Bulgaria Act,

through which the status of a populated place or of a group of populated places that formed a mayoralty had

been defined based on the number of the population. The rate varied between population of 100 and 500 in

total in the populated places that formed a mayoralty.3

Chart1 Minimum number of inhabitants for the formation of a mayoralty in the period 1995-2015

During this period, from 1991 to 1995, a serious attention was paid to the administrative

decentralization with regard to the definition of competences and responsibilities of the local government in

specific spheres of activity. The problem was a result of the need to seek new legislative arrangements and

political decision, primarily in terms of the incomplete and contradictory regulations regarding the issues

related to the powers, functions and duties of the local authorities, on the one hand and on the other hand, in

accordance with the views for expansion of the autonomy of the local authorities there was a need to refine

the volume and scope of the specific powers of these authorities. The formulation and regulation of the

powers of local authorities was conducted on the basis of defined guiding principles. Basically, these were

2 In the period from 1948 to 1988, there were city district people's councils

3 The conditions to create a mayoralty changed since the adoption of the Administrative and Territorial Structure of the Republic

of Bulgaria Act as follows: In 1995 -100 inhabitants, 1999 - 500 inhabitants, 2003 - 250 inhabitants, 2007 - 150 inhabitants, 2011 -

350 inhabitants and 2014 - 100 inhabitants.

11

the principle of general competence, the principle of universality and the principle of subsidiarity. In

accordance with the European criteria two main spheres of activity were formed - independent and delegated

sphere of activity. In refining the independent sphere of activity the so-called "block separation of powers"

was applied seeking to achieve a balance between rights and responsibilities.

Typical feature of the model of self-government in Bulgaria was that in 1991 through the Local Self-

Government and Local Administration Act, the sphere of competences of the local authorities was defined

as broadly as possible acknowledging the right of general competence of the body of the self-government to

resolve issues of local importance, which were not in the sphere of competence of other authorities. In the

first years of the transition period it created serious difficulties in the operation of the local authorities

working in unreformed legal environment, providing broad competences of the central authorities. Gradually

the legislation was reformed and the distribution of powers was made more precise.

The second stage covers the period 1996-2000.The Referendum Act came into force in 1996 and

regulated the forms of direct democracy. It is through the elements of direct democracy (referendum, general

assembly of the population, subscription) that the direct relation between the individual and the legislative

and executive authorities is created. Reducing the party's monopoly on ideology and the higher degree of

personal commitment in decision-making enhances the quality of the decisions by reaching a consensus on

the objectives and the ways of development of society.

Municipal Property Act, adopted in 1996, marked the beginning of decentralization in terms of

public property and gave the material and financial foundations of the local government. The legislation

governing the local finances was adopted in that period - the Local Taxes and Fees Act (1997) and the

Municipal Budgets Act (1998). Although the Constitution and the Local Self-Government and Local

Administration Act, adopted in 1991, guaranteed the principle of autonomy of municipal budgets, the

special law on municipal budgeting was adopted seven years later.

During that period, local budgeting was regulated by the provisions laid down in the Chapter

“Municipal Property and Finances” of the Local Self-Government and Local Administration Act. The

provisions were too general, the continuous amendments and supplements to the reforming tax and financial

legislation placed municipal authorities in a situation of almost total dependence on the will of the central

legislative and executive authorities, which substantially affected the rights of self-government and limited

the opportunities to carry out their own local policy.

As a result of the structural deficit in the local finances, resulting from the limited municipal powers

and due to the systemic allocation of insufficient funding resources with regard to the responsibilities

assigned by the state, the outstanding liabilities of the municipalities grew considerably. The financial

condition of the municipalities deteriorated in the period 1998-2000 and local finances were characterized

by:

Increasing structural deficit;

12

Discrepancy between spending needs and powers over local revenues;

Unclear transfer of spending responsibilities of municipalities;

Decline in revenues from shared taxes;

Additional subsidies affecting negatively the financial stability and discipline;

Low rates and revenues from local taxes and fees;

Limited powers over own revenue;

Very limited capital expenditure.

In tracing the dynamics in the structure of revenues in municipal budgets in the period until 1998, it

was found out that the share of local revenues was a relatively small part of the total municipal revenues.

The data in Table 1 show that more than 80% of the revenues in the municipal budgets were formed by state

subsides and shared taxes. This discouraged local authorities to develop an independent fiscal policy and

was a prerequisite for conflicts between the local and central government. In turn, the central government

used the mechanisms of re-distribution and tried to maintain a balance, which practically kept down and

controlled the local development.

Table 1. Revenue Structure of Municipal Budgets (in %)4

Types of revenue 1994 1995 1996 1997 1998

State subsidies 44.23 41.86 32.75 34.79 36.61

Shared taxes 33.96 37.21 46.05 55.65 46.58

Local revenues 18.42 18.96 19.27 9.23 15.50

Attracted revenues 3.39 1.97 1.93 0.33 1.31

In 1998, the adopted Administration Act (AA) defined the levels of the government system - central

and local, where the local system included the district and municipal administration.

In March the same year, a delegation of the Congress of the Local and Regional Authorities (CLRA)

of the Council of Europe visited Bulgaria to monitor the state of local and regional democracy and the

compliance of the national legislation with the provisions of ECLSG. Based on the monitoring report of the

delegation, CLRA adopted Recommendation 45 (1998). The Congress noted in the Recommendation, that

there were a number of issues that deserve special attention and made specific recommendations to Bulgaria.

Some of the more important are:

With regard to responsibilities and local finances:

4 Source: Ivanov, St.: The system of local taxes and fees in Bulgaria - opportunities for future development, B: National

conference on local tax legislation, Sofia, 2000, NAMRB

13

To adopt clear guidelines on those responsibilities that are shared between the state and the

municipalities by a draft law, setting out the basic principles, and by creating appropriate

structures and procedures to correct the existing imbalance between the rights and

responsibilities and to achieve a fair distribution of powers thus resolving any issues related

to their implementation in practice;

To build a better balance between the financial resources of local authorities and their tasks,

especially in the area of "shared responsibilities";

To increase the share of own resources at the expense of state transfers;

To ensure municipal authorities have sufficient buildings, in quantitative and qualitative

terms, to perform their financial and administrative functions.

With regard to regionalization:

Consider the establishment of bodies of regional self-government, based on the guidelines

given in ECLSG, referring to the expertise of CLRA and its Chamber of Regions in this

sphere;

Until achieving outcomes of a significant legislative reform, setting the second level of self-

government with democratically constituted decision-making authorities:

- To develop without delay, a method for economic and territorial planning based on the

principle of subsidiarity;

- To clarify the relationship between "regional spatial planning" and "regional

development";

- To develop, with the assistance of interested municipal authorities, schemes for regional

development within existing local and regional administrative bodies;

- To grant powers and necessary resources to the representatives of the state administration

at regional level to facilitate the coordination of all development programmes drawn up

by the municipalities; such coordination should form the basis for financial equalization

of municipalities.

- To discuss the establishment of regional development funds;

- Not to overlook interregional cooperation or programmes for geographical development;

In 1999 the Regional Development Act (RDA) was adopted. The adoption of RDA initiated the

creation of a regional development policy in Bulgaria and opened the way for preparation and opening of

negotiations on accession to the European Union (EU) The law created opportunities for implementing

effective policies and creating conditions for sustainable integrated development and economic growth in

the planning regions (currently level II regions) and the municipalities. During the analyzed period, the

Bulgarian municipalities began to develop their capacity for strategic planning. The purpose of this planning

is socio-economic development of the municipality, a process in which local communities define their future

and determine the steps to achieve it given the available local resources.

14

The efforts in that period were focused primarily on looking for actual framework for financial

autonomy of local authorities. This problem was directly bound to the assumption that decentralization of

competences should be adequately linked to the decentralization of resources. This meant that the realization

of the independent sphere of activity of the territorial communities should be ensured by comparable in size

and scope own revenues being an integral defining part of their budgets.

As shown in Table 2, as of 2000, at the end of that stage of development of the decentralization

process, the central government still retained a significant share in most of the areas under review. It was

only the collection and disposal of residential waste, cleaning streets, nurseries, kindergartens and care

homes, local roads and public transportation that were trasferred entirely to the power of local authorities.

Table 2: Distribution of functions depending on the level of governance as of 20005

Functions Municipali

ties

Districts Central government

EDUCATION

Pre-school х х

Primary х х

Secondary х х

Vocational х х

SOCIAL WELFARE

Nurseries х

Kindergartens х

Care homes х

Care for homeless and needy х х

HEALTHCARE

Polyclinic health service

Health prophylaxis and prevention х х

Hospitals х х

Hygiene and epidemiology activities х х

CULTURE, LEISURE AND SPORTS

Theater and music institutions х х

Museums х х

Libraries х х

Community centers х х

Parks х х

5 The Table used is from: Drumeva, E. Local Government in Bulgaria, In: Kandeva, E (Ed.) Stabilization of Local Government,

OSI/LGI 2001, p. 175-177

15

Sports and leisure

Maintaining building for cultural

events

х х

ECONOMIC SERVICES

Water supply х х

Sewerage х

Electricity х

Gas х

Heating х х

ENVIRONMENT

Waste collection х

Waste disposal х

Street cleaning х

Cemeteries х

Environmental Protection х

PUBLIC TRANSPORT

Roads х х

Lighting х х

Public transport х х

URBAN DEVELOPMENT

Town planning х х х

Regional/spatial planning х х

Local economic development х х х

Tourism х х х

GENERAL ADMINISTRATION

Administrative functions (licenses) х х

Local Police х

Fire Brigades х

Civil Defense х х х

Consumer protection х х

The third stage started in early 2001. The Cooperation Agreement between the Council of Ministers

(CoM) and NAMRB was signed the same year in December, outlining the main problems and areas where

changes were needed:

16

Define clearly the spending responsibilities of the central and local authorities and ensure

adequate revenue base for the municipalities;

Increase the fiscal independence of Bulgarian municipalities;

Enhance the capacity of municipalities to infrastructure financing;

Improve budgetary environment at central and local level;

Fiscal relations between central and local authorities to be considered as a uniform system in the

implementation of reforms, not as a compilation of separate components - taxes, subsidies, etc.;

Determine short-, medium- and long-term goals of the reforms;

Sustained involvement of stakeholders with a comprehensive reform;

Determine the most appropriate way for institutionalization of the reforms and the process.

By Decree of CoM No 138 dated 11 March 2002, a Fiscal Decentralization Working Group was

established to the Council of Ministers in pursuance of the above-mentioned agreement. On 13 June 2002,

the Council of Ministers adopted the Concept for Fiscal Decentralization, prepared by the Fiscal

Decentralization Working Group and the Programme for its implementation for the period 2002-2005. The

process of fiscal decentralization in Bulgaria started with the adoption of the Concept.

The Concept for Fiscal Decentralization determined the main areas of change related to the

separation of spending responsibilities of the state and the municipalities, financing of the state spending

responsibilities assigned to municipalities, financing of municipal spending responsibilities, and

improvements to the legal framework for preparation and execution of municipal budgets.

The Fiscal Decentralization Programme for 2002-2005, specified the Concept by identifying the

tasks, deadlines, and responsible implementing institutions.

On 12 September 2002, the Council of Ministers adopted Decision No 612 on separation of the

activities, financed through the municipal budgets, to state and municipal, and defined the standards for

staffing levels and standards for maintenance of the state activities in education, healthcare, social assistance

and social services, and culture in 2003. The development of the standards aimed at financial provision of

the spending responsibilities assigned by the state to the municipalities in a fair and transparent way.

In September the same year, the Council of Ministers adopted a system for monitoring and

evaluation of the fiscal decentralization, as a result of which the government approved annually a report on

the results of the reform.

In December in that same year, amendments and supplements to the Local Taxes and Fees Act were

adopted, which introduced essential changes to the concept of municipal fees:

General rules were established for setting service fees and charges;

Maximum discretionary power was granted to the municipalities, and opportunities were created

for development of local municipal policies;

The principle to cover the cost of the services was introduces;

17

The municipalities were granted the powers to establish rate levels; and determine ways of

service delivery.

That same year, amendments were adopted to the Corporate Income Tax Act and the Personal

Income Tax Act by which the

corporate income tax was eliminated as a municipal revenue source and was replaced with the full amount

of proceeds from the personal income Tax.

The State Budget Act for 2003, adopted in December 2002, the section concerning the relationship

with the municipalities, introduced new principles for delegation of activities by the state.

In accordance with their enhanced powers and the provisions of the Local Taxes and Fees Act, the

municipalities adopted ordinances in 2003 to regulate the procedures for conducting the local policy in terms

of their own revenues.

A Municipal Borrowing Working Group was established by Order of the Council of Minister, dated

6 August 2003, which objective was to prepare a law regulating the terms and conditions and the procedures

for issuance of municipal debt.

An updated Fiscal Decentralization Programme was adopted on 11 September 2003 with regard to

the new challenges that emerged in the course of its implementation. The changes to the Municipal Budgets

Act were adopted in November 2003, which reflected the principles and approaches laid down in the

Concept and Programme for Fiscal Decentralization, especially with regard to the separation of the spending

responsibilities of the state and the

municipalities As a result of the amendments to the MBA in 2004, the municipalities adopted ordinances

that formed the autonomous local fiscal policy of the local authorities.

The Municipal Debt Act (MDA) came into force on 1 June 2005 and it governed the type and

purpose of the municipal debt and its maximum amount and regulated the procedures for selection of the

financial institution and the financial intermediary when issuing municipal securities.

In conclusion, it should be noted that the concept for fiscal decentralization did not fulfill all targeted

measures, but created good conditions and attitudes with regard to the irreversibility of the reforms towards

decentralization of the state government.

Typical for this stage was the consolidation of the administrative-territorial reform and the

administrative reform and the problems of the decentralizations began to be considered together with the

processes of deconcentration in the central executive power. Special attention was paid to the modernization

of the state administration. By Decision No 671 of 24.09.2003, CoM adopted the Strategy for Modernization

of the Public Administration - from Accession to Integration, 2003-2006, incorporating a special section on

the decentralization of the state government. It raised a number of important issues to address within the

three-year period, which were reflected in the Plan to the strategy. Specific tasks from the Plan were solved

during that period, with specific focus on drawing out a Decentralization Programme to combine Fiscal

Decentralization with the decentralization of the powers and functions (section “Decentralization of the

18

State Government” to the Strategy), on finding solutions for the creation of a second level of self-

governance and on optimizing the functions of the territorial units of the central administrations.

The retrospective overview of the process of decentralization in the period 1991-2006 indicates the

following:

The adoption of CRB laid the foundations of the decentralization process ;

A local self-government model was established corresponding to the form of polity - parliamentary

republic, unitary state;

The administrative reform had a major impact on the process of decentralization as a result of the

rising need for revaluation of some of its objectives, priorities and mechanisms;

The abolition of district councils in 1991 and deletion of part of the provinces in 1995 from

LSGLAA, and the new ATU at district level in 1999 were steps in the opposite direction compated

to global trends towards regionalization;

A significant progress was achieved in the distribution of competences between different levels of

government;

Processes developed without a strategic document to describe the priorities and sequence of the

decentralization process;

It was in 2002 when the decentralization process was included in a strategic document - Strategy for

Modernization of the Public Administration; The Concept for Fiscal Decentralization was adopted

in the same year, which was not bound by the above Strategy. The process of fiscal decentralization

started in Bulgaria with the adoption of this Concept. The Concept for Fiscal Decentralization did

not fulfill all targeted measures, but created conditions for irreversibility of the reforms towards

decentralization of the state governance.

Local self-governance in the period 1991-2006 had to a great extent a declarative nature in terms of

the fiscal policy of the municipalities.

In the period 2002-2006 there was a significant progress in the fiscal decentralization. Increased

amounts entered the municipalities through the increased general countervailable subsidy, transfers

were envisaged to compensate the revenues from the repealed road tax, the own resources of the

municipalities were increased as a result of the updated property tax;

The existing mechanism for determining budgetary relations between municipalities and the central

budget was improved as well as the transparency and stability of the criteria used for the

distribution of government transfers so as to avoid political dependence of higher levels of

19

governance for funding. The transfers to municipal budgets were determined on objective criteria

set out in the Mechanism for determining the budgetary relations between municipalities and the

central budget for 2005 and 2006;

The Municipality Budgets Act regulated the municipal compensations for expenditures additionally

awarded to local budgets.

The freedom of local authorities to change the amount of taxes and fees collected in their budgets

was increased. Since 2003, local authorities had the power to independently determine the amount

of local taxes;;

Since 2005, municipalities established their own revenue units, which strengthened their

commitment to revenue collection and the collection rate;

Structured dialog between municipalities and central government. In 2005, a Cooperation Agreement

was signed between the Council of Ministers and the National Association of Municipalities in the

Republic of Bulgaria.

First steps were made in the decentralization of powers to the municipal level in the state government

system.

Rules were established for the designation of local representatives, which changed during the years,

but maintained the right of the citizens to elect directly their representatives in the local

government;

The right of citizens of territorial self-determination was regulated by law and it laid the beginning of

the municipal association, as well as the inter-municipal cooperation.

Separation of activities carried out by the municipalities was introduced - local and delegated by the

central government;

Despite substantial progress in the constitution of a democratic state in 2006, Bulgaria was still

highly centralized. Local governance may be described as declarative, as far as the fiscal

decentralization has not been implemented and as a result own resources of municipalities to

implement local activities have not been ensured;

During that period, the process of decentralization was barely represented in political debates and the

actions of the government to draft a Decentralization Strategy and the Programme for its

implementation were dictated by the necessity for Bulgaria to prepare for an effective EU

membership.

20

I. 2. Analysis of the implementation of the Decentralization Strategy, implemented in

the period 2006-2015

2.1. Evaluation of the degree of implementation of the strategic objectives of the

Decentralization Strategy.

In 2006 the government adopted a Decentralization Strategy with a time horizon 2015. This

document adopted a new strategic approach for the development of the decentralization process.

Programmes were drawn up for its implementation, which envisage specific measures to achieve the

strategic objectives and priorities. The first Programme for the implementation of the Decentralization

Strategy covers the period 2006-2009. Decentralization Strategy and the Programme for its implementation

for the period up to 2009 were an expression of continuity and consistency of the government policies.

These strategic documents defined the long-term and short-term objectives and priorities of decentralization.

These two documents aimed at deepening the processes of transfer of powers and resources to the local

authorities, which started with the implementation of the first government Programme for Fiscal

Decentralization in the period 2002-2005. The Decentralization Strategy is a document with long-term

horizon of implementation based on a comprehensive analysis of the state of play of the interaction between

the different levels of territorial governance.

Unlike the previous Concept for Decentralization, which main focus was financial relationships

between central and local government, the Strategy extended the reform further by combining fiscal

decentralization with the processes of decentralization of powers and functions to municipalities and

supplemented the reform process with priorities and measures for decentralization at further two levels of

relationships:

1. Between central authorities, its territorial units and district governors;

2. Between municipalities, on the one hand and on the other, mayors of mayoralties and public-

service institutions,

The Strategy took into account the challenges facing the reform that arose from our membership in

the EU and the resulting need to provide a closer link between the process of decentralization and the

regional development policy in the country.

The vision of the strategy was defined as "delivering more efficient and effective public services,

which are affordable and correspond to the needs of the citizens.“ The Strategy comprised logically

interconnected strategic objectives (basic development guidelines) and priorities (actions, related to the

implementation of the strategic objectives|) which were specified in the Programme for Implementation of

the Decentralization Strategy for the period 2006-2009 as measures, responsible institutions for their

21

implementation and deadlines. The Strategy focused on three strategic objectives corresponding to the main

issues in the relationships between public institutions:

Strategic Objective 1. Step up transfer of powers and resources from the state

bodies to the municipalities with a view to strengthen local self-government;

Strategic Objective 2. Optimize the functional competences of the district governor and the

territorial units of the central executive bodies for coordination of the sectoral policies at regional

level;

Strategic Objective 3. Develop local self-government within the municipality.

Strategic Objective 1 was a priority objective in terms of the decentralization reform not only as a

sensitive issue, but also as a time frame for its implementation. Its implementation leading to a redistribution

of powers and resources between the state and the municipalities was a condition and a prerequisite for

expanding the scope of the decentralization reform.

Strategic Objective 2 was crucial for increasing the operating efficiency of all public authorities. The

main tasks here were related to rethinking the functions, structure and scope of the territorial units of the

ministries, improve the coordination of their actions at regional level and optimize the powers of regional

governors.

Strategic Objective 3 was the next step in the implementation of the decentralization reform. It was

aimed at bringing together the institutions responsible for the provision of services to their users.

The main positive change in the implementation of the first Programme for Implementation of the

Decentralization Strategy was the provision of tax powers to the municipalities through amendments to the

Constitution. These powers enabled the municipal councils to determine the local taxes as provided for and

within the limits set in the Local Taxes and Fees Act and the amount of local fees as per the procedure

established by the same LTFA. Thus, conditions were created since the beginning of 2008 for the

municipalities to conduct their actual fiscal policies by setting local tax rates within the limits set by LTFA.

The main results of the changes were achieving the 8% share of municipal revenues to gross domestic

product (GDP) and 20% share of municipal expenditure in total public expenditure of the country (2008).

The distribution of the subsidies for municipal roads was regulated as well. The patent tax was

transferred to the municipalities as their own source of income. In the period 2006-2009, the municipalities

began to provide new social services in the community. Care homes for raising and educating children

deprived of parental care were transferred for financing to the municipalities, while vocational schools

remained under the central government. In quantitative terms, redistribution of resources in favor of the

municipalities was observed.

Positive structural changes in the local finances were realized. The share of the own revenues

reached 35.8% (2007) but as a result of the global economic and financial crisis in the last quarter of 2008

they decreased to 32.4%. The investments reached 28.6% of total municipal expenditures.

22

Along with the positive changes, a decline in the growth rate of municipal expenditures was observed

compared to the corresponding rate of the public expenditure. The share of the unplanned state transfers to

municipal budgets increased not following transparent rules for their allocation. The financing costs

designated by the State for mandated services lag behind inflation, forcing municipalities to divert

increasing amounts of local revenues for their financing.

The first Programme for Implementation of the Decentralization Strategy expired in a complicated

situation caused by the global financial and economic crisis. Its influence was manifested in the last quarter

of 2008, but particularly affected the municipal budgets in 2009, when the own revenues of the local

authorities decreased by BGN 260 million, which was 15% of their amount over the previous year. In 2009,

the amount of the own revenues decreased to 29.32% compared to 32.44% in 2008.

At the beginning of 2010, due to the expiry of the duration of the first Programme, the Ministry of

Regional Development and Public Works (MRDPW) started work on developing a new programme for the

period 2010 - 2013. In the course of the work on the new programme the need for a change in the current

strategy was established, therefore simultaneously with the development of the Programme, the necessary

update of the Decentralization Strategy was made.

A new approach was adopted in the preparation of the updated Decentralization Strategy. The

strategic objectives, priorities, and measures of the Decentralization Strategy were set for a broad and in-

depth discussion with the participation of representatives of all ministries, members of parliament, district

governors, NAMRB, experts on local self-governance, non-governmental organizations (NGO) and the

academia. Any new proposal for inclusion in the updated strategy was discussed in details, assessing the

ability of its implementation in terms of the financial and economic crisis.

The updated Decentralization Strategy and the Programme for Implementation for the period 2010-

1013 were adopted by a Decree of the Council of Ministers No 454 dated 2 July 2010. The vision of the

updated Strategy was defined as optimum distribution of the powers and resources between the different

government levels for the provision of higher quality services to the citizens. The second strategic objective

of the old Decentralization Strategy was changed and it was defined as follows: "Optimize the functional

competences of the district governor for coordination of the sectoral policies at regional level";

With the participation of Bulgaria in the pilot Programme for the implementation of the Strategy for

Innovation and Good Governance at Local Level of the CoE and the actions for its implementation, a new

key priority was added to Strategic Objective 1 "Effective implementation of the principle of good

governance". It paid special attention to the strengthening of local democracy.

Strategic Objective 2 was crucial for increasing the effectiveness and functioning of all public

authorities. The main tasks here related to the improvement of the coordination of the actions at regional

level and optimization of the powers of the district governors. A new priority was included to expand the

functions of the Regional and District Development Councils (DDC).

23

Less than half of the measures (46.7%) under the Decentralization Programme for the period 2010-

2013 were implemented. The implementation of Strategic Objective 2 created serious problems i.e. in the

field of transfer of powers from central government to its regional structures and in particular the creation of

strong district administration, able to coordinate sectoral policies at regional level. This was directly

reflected on the unability of the State to conduct an effective policy on regional development.

The process of decentralization was also blocked during the implementation of Strategic Objective I.

This became apparent by the refusal of the central authorities to transfer part of the personal income tax

revenues (PITR) as own revenue source of the municipalities. In a crisis that affected seriously the own

revenues of the municipalities (a decrease by BGN 260 million in 2009), the central authorities did not

implement the measures included in the Programme that would have partially eased the financial condition

of the municipalities. In 2011, the central government did just the opposite reducing state transfers to the

municipalities by BGN 400 million.

The increase of the municipal revenues from concession contracts, the transfer of the unused state

owned properties from the ministries to the municipalities and the transfer of the immovable cultural values

for maintenance and management by the municipalities could be qualified as positive changes.

The implementation of the second Programme for the period 2010-2013 imposed the conclusion that

a process of centralisation of the state governance was underway. Seen from that perspective, the

Programme did not contribute to the achievement of the Strategy - decentralization of services, powers, and

resources from higher to lower levels of governance. The main reasons were the impact of the global

economic and financial crisis, the remaining dependency of the attitude of the government to the local

authorities on the state budget subsidies, respectively, on the will of the central government.

Typical of the first two Programmes on Implementations of the Decentralization Strategy was

broadening the scope of decentralization - except for the relations between the state and local governments

(Strategic Objective 1), they were envisaging transfer of powers to the district governors, in order to

coordinate sectoral policies at regional level (Strategic Objective 2) and to develop local government within

the municipality (Strategic Objective 3). Another characteristic of the two Programmes was that within each

strategic objective they had formulated a number of mplementing measures

Building on the experience from the implementation of the two Programmes, at the end of 2013,

the Council for Decentralization discussed and adopted a draft Programme (Roadmap) for the

implementation of the Decentralization Strategy for the period 2014-20156. Instead of many

actions seeking to cover all aspects and spheres of decentralization, attention was focused on two

strategic objectives defined in the Decentralization Strategy - the first and the third one;

Few, mostly unfulfilled key measures of the previous programmes aimed at:

6 The Programme was submitted for consideration at a session of the Council of Ministers in February 2014, but it was not

approved.

24

Increasing the own revenue base of municipalities - new LTFA (part of PITR, other property

taxes);

Increasing the investment capacity and powers of the municipalities;

Transfer of powers on management of delegated services;

Increasing the objectivity and efficiency in the allocation of national resources;

Increasing the capacity and the responsibility of local authorities to conduct local policies -

sustainable definition of their own sphere of activity in a new LSGLAA.

The implementation of these measures aimed to create the necessary conditions for the next stage of

decentralization and to prepare for the next Decentralization Strategy 2016-2025.

The main source of information on the status of implementation of the measures under the

Programmes on Implementation of the Decentralization Strategy are the annual reports on the

implementation of the Strategy, approved by the Council of Ministers.

For the purpose of the analysis, the following classification is used:

The measure is “Implemented” when all the actions are fulfilled and the intended results achieved.

The measure is “Partially implemented” when part of the actions are fulfilled and some of the

intended results achieved.

The measure is “In progress” when actions are undertaken for the implementation of the measure in

the current year and the deadline for its implementation continues in the next year/s.

The status of the measure is “Not started” when the implementation of the planned activities has not

started in the current year, but the deadline for its implementation is in the next year/s;

The measure is “Not implemented” when the deadline for its implementation is in the current year

and the expected results are not achieved.

Table 3 Implementation of the measures under the Programmes for Decentralization 2006-2015

Implement

ation

Partial In progress Not started Not

implemented

Total

Programme for Implementation of the Decentralization Strategy 2006-2009

SO1 26 13 0 4 6 49

SO2 7 7 0 1 1 16

SO3 10 2 0 0 1 13

Total 43 22 0 5 8 78

Programme for Implementation of the Decentralization Strategy 2010-2013

SO1 13 4 9 2 8 36

SO2 3 7 1 0 1 12

SO3 0 7 3 0 2 12

Total 16 18 13 2 11 60

25

Programme for Implementation of the Decentralization Strategy 2014-2013

SO1 0 1 4 4 3 12

SO3 0 0 0 1 0 1

Total 0 1 4 5 3 13

Total

2006 -

2015

59 41 17 12 22 151

% 39.07 % 27.15 % 11.25 % 7.94 % 14.56 % 100%

As seen from Table 3 the results of the implementation of the measures under the Programmes on

Implementation of the Decentralization Strategy 2006-2015 can be defined as unsatisfactory. In the course

of the ten year implementation period of the Decentralization Startegy only 39.07% of the measures have

been implemented. The low rate of implementation is a fact that must be considered in assessing the realism

of the objectives and the priorities set in the new strategy, as well as for improving the monitoring and

strengthening the capacity of the advisory body - the Council for Decentralization of State Governance

(CDSG).

The report on the implementation by objectives shows that the measures under Strategic Objective 1

are with the highest level of performance, followed by the measures under Strategic Objective 3 and finally

the measures under Strategic Objective 2. This is indicated on Chart 2.

Chart 2 Implementation of the measures under the Strategic Objectives for the period 2006-2014

26

During the preparation of the annual monitoring reports on the implementation of the

Decentralization Strategy in the period 2006-2015 and in the process of implementation of the Methodology

for calculating the value of indicators, adopted by Decision No 2 of CDSG dated 2008, a number of

weaknesses have been found. Most of the indicators, especially those where the data is presented by the

National Statistical Institute (NSI) and the Ministry of Finance (MoF) are not maintained any more or are

irrelevant regarding the decentralization process. This requires to establish a new system of indicators for

reporting on the implementation of the Decentralization Strategy.

2.2. Achieved results and impact of implemented measures

Based on the data from the annual reports on the implementation of the Decentralization Strategy, a

complete list was prepared of the implemented measures and results achieved. The complete list is presented

in Annex 1. The most important are as follows:

1. Considerable increase of the schools and kindergartens, applying the delegated budget system

(100% of the municipalities apply the delegated budget system in municipal schools as of 2008

and 43% of all the municipalities in Bulgaria apply this system in kindergartens (data as of

02.2015).

2. Care homes for children deprived of parental care were decentralized as a delegated service to the

municipalities.

3. The Constitution of the Republic of Bulgaria and the Local Taxes and Fees Act were amended

providing for tax powers to the municipalities and full powers on municipal fees.

4. Local taxes were supplemented by the patent tax.

5. 50% of the revenues from sate concessions at the location of the concession area were transferred

to the municipalities for maintenance of the municipal infrastructure and there was a considerable

increase of the municipal revenues from concessions.

6. A considerable number of properties owned by the state were transferred to the municipalities.

7. A single-member stock company was established with state participation in the capital, named

Fund for Local Authorities and Governments in Bulgaria - FLAG EAD. The aim of the Fund is to

provide financial assistance to municipalities for the absorption of funds from the Structural Funds

and the Cohesion Fund of the EU by financing the preparation of projects and pre-financing the

costs under approved projects.

8. The legal powers of the municipalities increased by attracting investments through granting or

sale of real property or through limited rights in rem under preferential conditions (without tender

or competition procedures, free of charge or at the value based on the evaluation of a licensed

evaluator) for implementation of investment projects by local and foreign investors.

9. Broad representation of NAMRB and the municipalities in working groups for drafting statutory

instruments in CoM and separate ministries, in monitoring committees etc.

27

10. A legal framework was established for inter-municipal and public-private partnership.

11. The mechanism for distribution of the general countervailable subsidy was improved.

12. The administrative control on development and construction was improved, distinguishing the

powers of the supervisory bodies of the municipal administration and the National Construction

Control Directorate, and increased the powers of local authorities.

13. Some of the deposits of mineral waters, exclusive state property, were granted for management to

the municipalities.

14. All port facilities that did not meet the criterion of public utility and importance for the national

economy, were declared ports of regional importance, and port properties were transferred to the

respective municipalities, such as ports Tsarevo, Pomorie, Ahtopol, "Pristis" in Rousse and

"Drustur" in Silistra. The regime for providing such facilities to the municipalities was relieved,

thus creating possibilities for external financing (under EU projects as well) regarding their

protection and provision of relevant services.

2.3. Non-implemented measures and consequences of their non-implementation

2.3.1. Measures not implemented under Strategic Objective 1

Although the measures under Strategic Objective 1 were with the highest rate of implementation, yet

there were a considerable number of not implemented measures. The most important are:

Decentralization Programme 2010-2013 defined 5 basic directions for continuing the decentralization

process, among which increase of the own revenues by increasing revenues from local taxes, restructuring of

the tax system and introduction of new taxes. Two goals were defined to measure the degree of

decentralization in Bulgaria: Achieving a share of 50% of municipal investments in the Consolidated Fiscal

Programme (CFP) and 50% share of own revenues in the total municipal budget revenues. Degree of

implementation of the first goal: 32.7% in 2009, 22.2% in 2010, 19.1% in 2011, 14.1% in 2012.

Degree of implementation of the second goal: 29.3% in 2009, 32.7% in 2010, 36.6% in 2011, 37.1%

in 2012 and 36.8% in 2013. At the same time, the amount of own revenues reached in 2013 the “pre-crisis”

level of 2008 in nominal terms, while the actual drop compared to 2008 was by 12%. In practice, the main

reason for the increase of the share of own revenues was the decrease in other municipal revenues -state

transfers, attracted resources, transitional residues.

Measure 1, Priority 2 of Strategic Objective 1 was not implemented “Improvement of the regulatory

framework of local taxes and fees”, including the conversion of part of the state personal income tax into a

local tax, establishing a fiscal connection with the business for implementation of support mechanisms by

the municipalities, supplementing property taxes on property exempt to date and extending the powers of

municipal councils to introduce tax incentives and burdens.

28

2.3.2. Measures not implemented under Strategic Objective 2

Review on the status of implementation of the Programs for Implementation of the Strategy for

2006-2015 showed that measures under Strategic Objective 2 (35.71%) were with the lowest degree of

implementation. The low degree of implementation of Strategic Objective 2 became even more striking

given that a considerable part of the measures reported as implemented under Strategic Objective 2

practically failed, as they did not produce actual results:

The issue with the coordination of the territorial units of the central administration was resolved and

the respective measure reported as implemented by the preparation of a report and conducting a

discussion forum;

Expansion of the discretion of the district administrations to implement the powers and functions of

supra-municipal importance and increase of the administrative capacity of the district

administration as a beneficiary of the funds under EU programmes through the preparation of

analytical reports;

Building mechanisms to coordinate the activity of the territorial units of the central executive

authorities and the district governor for implementation of sectoral policies and provision of

administrative services was reported as implemented based on a prepared analytical report and a

recommendation by CDSG.

The measure “To create information centers to the district governors for services provided by the

territorial units of the central executive authorities and for the investment possibilities of the

municipalities in the district” and the measure aimed at strengthening the coordinating functions of

the District Development Councils (DDC) were reported as implemented based on submitted

analytical reports; the measure “Enhance the coordination between central executive authorities and

district governors” was reported as implemented based on the amendments to the Administration

Act dated 2006, pursuant to which (Article 31(1), items 6 to 8) the district governor liaises with the

territorial units of the central executive authorities on the territory of the district and controls the

implementation of acts and the activities of the heads of the said units and supervises the activity of

the territorial units of ministries and other administrative structures, which provide administrative

services on the territory of the district, irrespective of their hierarchical subordination, coordinates

and controls the implementation of acts and the activities of the heads of the territorial units of the

central executive administration on the territory of the district;

Insuring interdependence between the district development strategy and sectoral strategies affecting

the development of the district was reported as implemented based on the adoption of a

Methodology for preparation of an interim evaluation of the implementation of the district

development strategies providing an independent evaluation of the implementation of the objectives

and the priorities of the strategic document for the district development and compliance and

29

coherence of the district development strategy with the strategic objectives for development of the

separate sectors for the same period;

The measure for enhancing the role of DDC as bodies for implementation of the state policy and for

regional coordination was reported as implemented based on the amendments to Article 21 and

Article 22 of RDA in 2012, by which the District Development Council was empowered to discuss

and approve the district development strategy and the regional scheme for spatial development of

the district, to approve the rules and regulations for the organization and the activity of the standing

commissions to the district development council, to coordinate general regional plans for the

systems and the facilities of the Water Supply and Sewerage Company (WSSC), pursuant to the

Water Act, the general plans for agglomerations with over 10 000 population equivalent for WSSC

systems and facilities, the investment programmes to the general plans of agglomerations with over

10 000 population equivalent for WSSC systems and facilities. Pursuant to the provisions of Article

22(5) of RDA by decision of the district development council, standing commissions were

established for spatial development, territorial development and construction as well as standing

commissions in the area of industry, new technologies, transportation and energy, tourism and

environment, health, education and labour market. The amendments in RDA broadened

considerably the functions and the competences of DDC with regard to the district development

policy, while the mechanism for coordination of the sectoral and regional policy started to function

through the standing commissions.

Two partially implemented measures for development of a methodology for determining the number

of human resources of the district administrations and for development of a methodology for

financing the activities of the district administrations, including by setting standards for the

maintenance of district administrations had the status of partially implemented for a few years

based on draft methodology prepared and submitted to the district governors.

On the issue on the reform of the governance at district level, for the duration of the Decentralization

Strategy, a number of ideas were proposed:

1. In 2007, in an analytical report “Study the practice of EU Member States with functioning two-

level system of local self-governance” three versions were proposed for the number of units at the second

level of self-governance indicating and strengths and the meeknesses of each on;

2. In 2009, five scenarios were presented in an analysis of the decentralization in Bulgaria7;

3. In 2011, the second monitoring report of the Congress of the Local and Regional Authorities of

the Council of Europe on the condition of the local and regional democracy in Bulgaria indicated that

current "regional government" was simply a form of territorial organization of the central government,

7 "District Level Self-Governance Reform" within the frames of a Twinning Project with partners from the Republic of France and

the Republic of Latvia.

30

which had nothing to do with real decentralization. It was recalled that in 1998 the Congress had

recommended the establishment of an effective regional self-government, which had not happened8. It laid

down three alternatives for the development of the regionalization in Bulgaria.

Most of the state administration functions in the deconcentrated structures at regional level and its

uncoordinated efforts lead to ineffective policies and results. This requires, in the Decentralization Startegy

for the period 2016-2025 to pay special attention of the reform in the regional structures of the central

executive authorities and to develop mechanisms for coordination and harmonization of the policies

implemented within the territory of the district to achieve synergy in terms of their impact and integration,

and to interrelate the activities performed.

2.3.3. Measures not implemented under Strategic Objective 3

Irrespective of the reported rate of implementation of the measures under Strategic Objective 3

(38.1%), there is no progress for the entire period as to the overcoming of the centralized model at municipal

level at the expense of more powers to the mayoralties. Out of 5 measures, envisaged in the Programme for

the period 2010-2013 only one measure was reported as completed on the grounds that in 2013 NAMRB

conducted 48 trainings with the participation of over 1500 mayors of mayoralties.

In 2014 and 2015, CDSG discussed twice the topic for decentralization of the municipalities through

granting more functions and resources to the mayoralties. The 2014 report on the implementation of the

Decentralization Strategy recommended the municipalities, as the most interested party, to set an example

and offer transfer of services, powers and resources to mayoralties, expand the scope of application of

delegated budgets and involve local communities in development and implementation of policies for local

development.

2.3.4. Consequences of non-implementation of the measures

The consequences of non-implementation of the measures from the Strategy are associated with the

overall delay of the process of decentralization, especially in the period after 2009.

Consequences of non-implementation of the measures under SO 1

Negative consequence of non-implementation of the measures under SO 1:

1. Municipalities could not adequately implement support mechanisms and as a result potential

investments were not realized and new jobs were not opened;

2. To the detriment of citizens municipalities are not engaged sufficiently in the preservation of

public order;

3. The quality of a number of delegated activities (excluding social services), which are in essence

local activities, could not be improved significantly due to the centralized way of governance and financing.

8 Recommendation 45 (1998) on the condition of the local and regional self-governance in the Republic of Bulgaria.

31

4. The capacity of some of the municipalities to develop and implement projects under EU funds did

not allow the implementation of more and larger projects.

5. The limited opportunities for participation of municipalities and local community in the provision

of educational services lead to deterioration of the quality of education and increasing the number of

dropouts.

Consequences of non-implementation of the measures under SO 2

Negative consequence of non-implementation of the measures under SO 2 due to lack of political

will for reform at district level:

1. The administrative reform of outsourced territorial units of the ministries and the rest of the

central authorities, constituting about 60% of the entire administration, may not start; As a result, the

number of territorial units of the central executive authorities and the number of their employees are one of

the highest in Europe The presence of central authority in place and the solution of local problems by

ministries are in contrast with the practice of EU Member States.

2. The established closed vertical model strongly hinders the coordination between the

structures of the state administration at district level, which leads to low effectiveness in the implementation

of the sectoral policies and to high sate expenditures.

3. It is not possible to develop a sustainable decentralization of the municipalities. Non-typical

for the scope of local government tasks with supra-municipal and regional importance are often outsourced

to the municipalities which are subsequently withdrawn and transferred to other authorities.

4. It is not possible to synchronize the actions of the institutions at district level. The

constitutional powers of the district governor, related to the regional development policies, are not supported

by sufficient legal mechanisms in effect and with real instruments for their implementation. Practically, the

district is not a leader and an engine of the development policy and of attracting investments.

5. It is not possible to proceed with the process of decentralization of the planning and

programming of the absorption of the EU funds. As a result, Bulgaria has implemented a highly centralized

model.

Consequences of non-implementation of the measures under SO 3

Due to the non-implementation of the measures under SO 3, decisions on a number of management

issues continue to be made by authorities who are not close enough to citizens, contrary to Article 4 of

ECLSG.

Administrative services are still far from the service users, who need to travel to the municipal and

district center for many services. As of 31.12.2014, 169 administrative services have been provided by the

municipalities and only between 3 to 5 services, mainly referred to the civil status, could be delivered in the

mayoralties. For the rest of the services, hundreds of users are spending time and resources to use the

services provided by the local authorities.

32

Community involvement in the formulation of local policies through the use of forms of direct

democracy is very low.

2.4. International comparisons on Bulgaria's progress in the field of decentralization compated

to unitary EU Member States

The system for evaluation of the results from the implementation of the Decentralization Strategy and

Programme uses indicators for evaluating and ranking the degree of decentralization, established by the

World Bank Institute and the Organization for Economic Cooperation and Development. It is used to

measure the progress of Bulgaria in terms of decentralization processes through the use of key indicators as

comparison to the Member States in the EU

The following circumstances are taken into account in preparing of the qualitative analysis of the

ranking of Bulgaria among other European countries:

Local government data include the municipal and any other levels of local self-governance, if any.

Individual indicators of the degree of decentralization relate the level of local revenues or

expenditures to: population, GDP, corresponding amount of total public revenues or expenditures.

The comparative analysis of the individual countries through indicators measuring local government

per capita shows rather the level of socio-economic development of the countries concerned and not

the degree of decentralization of public governance. Bulgaria, as the poorest country in the EU

usually ranks last, or on one of the last places in the ranking.

When using indicators referring the local government to GDP, the share of the entire public sector in

the GDP should be taken into account. In 2010, for example, the average share of total public revenues in

GDP of the EU-28 Member States was 44.1% while for Bulgaria it was 34.3%. Naturally, a greater share of

the public sector means a larger amount of the local revenues ceteris paribus; respectively they will have a

larger share in GDP. In 2010, the share of local revenues in GDP9 for EU-28 was 11.9%, while for Bulgaria

- 7.0%. At the same time, the share of local revenues in total public revenues on average for EU-28 is

27.0%, while for Bulgaria - 20.4%. The most representative are the indicators that show the share of local

government across the entire public sector, i.e allocation of resources between the central and local of

governments.

In comparing the degree of decentralization it should be taken into account the way of calculating

local government in Bulgaria i.e. whether it should include only budget revenues, respectively expenditures,

or it should include also the financial flows under the European projects, which are reported in an off-budget

account. Uneven absorption of EU funds led to growing differences between the two types of evaluations in

recent years. There are also differences in the evaluations for Bulgaria when calculating the municipal

indicators under the national methodology and under GFS, used by Eurostat.

9 According to Eurostat as of 17.02.2014.

33

All these circumstances affect the comparative assessments of the degree of decentralization in

Bulgaria and other European countries. The results of the comparative analysis are based on the following

key indicators:

1. Local revenues/GDP

2. Share of local expenditures in total public expenditures

3. Share of local tax revenues in total tax revenues

4. Share of local investments in total public investments

Table 4 International comparisons between EU and Bulgaria on key indicators for the period 2006-2014

2006 2007 2008 2009 2010 2011 2012 2013 2014

European Union (2810

Member States)

Percentage of

municipal revenues in

GDP 10.9% 10.9% 11.1% 11.7% 11.6% 11.4% 11.5% 11.4% 11.3%

Share of municipal

expenditures in CFP 24.5% 24.6% 24.4% 24.2% 23.9% 23.9% 23.7% 23.5% 23.5%

Share of municipal

tax revenues in total

tax revenues; 14.4% 14.3% 14.6% 15.2% 14.5% 15.1% 15.3% 15.2% 15.1%

Share of municipal

budget investments in

total public

investments 46.1% 45.8% 44.2% 44.2% 43.6% 43.5% 43.8% 45.2% 44.8%

Bulgaria - according to Eurostat data

Percentage of

municipal revenues in

GDP 6.5% 6.2% 6.7% 7.4% 7.3% 6.7% 6.9% 8.3% 8.9%

Share of municipal

expenditures in CFP 18.8% 17.0% 19.1% 20.8% 19.9% 19.6% 19.1% 21.0% 21.3%

Share of municipal

tax revenues in total

tax revenues; 3.2% 3.5% 3.9% 3.8% 3.9% 4.1% 4.0% 4.1% 4.3%

Share of municipal

budget investments in

total public

investments 29.6% 31.2% 33.8% 38.2% 32.6% 32.5% 39.2% 51.3% 59.9%

Bulgaria -according to data from municipal budgets

Percentage of

municipal revenues in

GDP 7.0% 7.4% 7.7% 7.3% 6.4% 5.8% 5.7% 6.1% 6.7%

Share of municipal

expenditures in CFP 18.0% 18.4% 19.6% 18.5% 16.1% 15.7% 14.8% 14.6% 15.1%

Share of municipal

tax revenues in total

tax revenues; 7.4% 6.7% 2.9% 2.7% 2.9% 3.0% 3.0% 3.1% 3.1%

Share of municipal

budget investments in

total public 27.8% 28.9% 33.3% 32.7% 21.6% 19.1% 14.1% 14.5% 17.9% 10

The EU Member States in 2006 are 25, in the period 2007-2013 - 27 while in the middle of 2013 - 28.

34

investments

The main results of the comparative analysis are as follows:

Data show that since 2009, on average for EU-28 a slight decrease of the share of local government

is observed in both macro indicators - percentage of municipal revenues in GDP and share of municipal

expenditures in total public expenditures. This means that the economic and financial crisis has slowed

down the process of decentralization in the EU Member States.

The calculations for Bulgaria by both methods show different trends. According to Eurostat data,

where the funds absorbed under the EU prorgrammes are included in the indicators for local government

there is a positive trend of increasing all observed indicators. Calculations based on municipal budgets show

the opposite trend - a decrease.

A more detailed analysis of trends shows that the indicators for Bulgaria increased slightly compared

to the average for the EU-28 by 2009 (according to Eurostat), then a slight reduction or rather retention of

the level achieved by 2012 and a strong increase in the last 2-3 years of the study period. Calculations based

on municipal budgets show an increase in the indicators by 2008, followed by a sharp drop during the crisis

years and a slight increase over the last 1-2 years without reaching the pre-crisis levels.

The biggest difference is observed in the indicator “share of municipal investments in total public

investment”. It is seen that according to municipal budgets, the share of investment dropped sharply in the

last five years of the study period. According to Eurostat data, local investments in Bulgaria in 2014

increased by over 2.3 times compared to 2012, while their share in total public investments grew by 20

percentage points and reached 59.9%, which ranked our country first among unitary EU countries. For

comparison, in 2006 Bulgaria was ranked at the modest 20th place with a share of 29.6%. This increase

reflects on the level as well, respectively on the share of the revenues of the local government to GDP and of

municipal expenditures in total public expenditures, representing about 50-60% of their increase.

As a result of the relative increase in local revenues over the last two years of the analyzed period,

their percentage to GDP increased by two percentage points reaching 8.9% in 2014. For comparison, in

2006 the level of this indicator was 6.5%, in 2009 7.4%, 2012 - 6.9%. Bulgaria moved from 18th place to

16th place, ahead of Litva and Ireland.

Bulgaria moved up with 4 places - from 18th to 14th place under the indicator “share of local

expenditures in total public expenditure” by increasing its level from 18.8% in 2006 to 21.3% in 2014.

Compared to the average level for the EU- 28, Bulgaria increased its share from 77.0 percent to 90.7 percent

ahead of Ireland, France, Hungary and Slovenia.

Relatively, the situation of the municipal authorities is the worst in terms of the indicator for the

share of local tax revenue in total tax revenues. For the period under review, Bulgaria moved up from 22nd

place to 20th place ahead of Greece and Slovakia. The level of this indicator for the municipalities in

Bulgaria in 2014 was only 28.5% of the average for EU-28.

35

Main conclusion of the international comparisons on Bulgaria's progress in the field of

decentralization versus unitary EU Member States for the period 2006-2014:

1. The global financial and economic crisis has led to the delay of the process of decentralization in

the EU;

2. The funds received by municipalities in Bulgaria under European programmes do not complement

but rather supplant regular sources of funding for local services.

3. The comparative improvement of the level of indicators reflecting the degree of decentralization in

Bulgaria is due to economic factors rather than to significant changes in the relationship between

public authorities;

4. The biggest difference in the revenue structure of local authorities in Bulgaria compared to those

in other EU countries is the extremely low share of local taxes.

2.5. Second monitoring report of the Congress of Local and Regional Authorities of Europe

In 2010, a delegation of the Congress of the Local and Regional Authorities visited Bulgaria to

monitor the state of local and regional democracy and the compliance of the national legislation with the

provisions of ECLSG.

The delegation of the Congress worked out a monitoring report on the state of local and regional

democracy in Bulgaria based on information gathered during the visit, study of the laws governing this issue

and documents submitted by national experts and international organizations, The delegation made an

assessment in the report of the implementation of the recommendations addressed to Bulgaria in the first

Monitoring Report 1998, of the compliance with the provisions of ECLSG and a comprehensive review of

the obligations and commitments undertaken to date. Based on the conclusions of the report at the 21st

session of the Congress (18-20 October 2011) Recommendation 310 (2011) was adopted titled: “Local and

Regional Democracy in Bulgaria” The Congress noted in the Recommendation, that there were a number of

issues that deserve special attention and made specific recommendations to Bulgaria. Some of the more

important are:

- To provide sufficient financial resources to local authorities according to their competencies and

responsibilities by revising the legal regulations on the financing of municipalities;

- To grant local authorities more powers to provide a level of local autonomy, corresponding to the

requirements of ECLSG, namely Article 4(4), Article 4(5), and Article 8;

- To conduct direct elections for councils at all levels of local government without distinction based

on population;

- To revise the legislation on the control of administrative acts relating to own competences to ensure

that any revocation of such an act is carried out only by court order at the request of the district governor;

36

- To revise the legislation on the control of local authorities to specify the release and dissolution

cases;

- To ensure effective judicial protection of local authorities, giving them the appropriate right of

referral to ordinary courts;

- To promote ongoing dialogue between all stakeholders to reach consensus on the most appropriate

way of implementing decentralization in the interest of Bulgaria and to achieve the principles enshrined in

the Reference Framework for Regional Democracy.

2.6. Implementation of the Strategy for Innovation and Good Governance at Local Level of the

Council of Europe

A Strategy for Innovation and Good Governance at Local Level of the Council of Europe was

adopted at the 15th session of the Conference of European Ministers, responsible for local and regional

governance. held in October 2007 in Valencia, Spain. In October 2007, the Government of the Republic of

Bulgaria approved the Strategy and Bulgaria agreed to participate in its pilot implementation. Thus, Bulgaria

joined the pilot group of countries, along with the Republic of Italy, Kingdom of Spain, Kingdom of Norway

and Kingdom of Belgium, which developed their National Action Plans to implement the objectives of the

Strategy.

The objectives of the strategy were to put citizens at the heart of all democratic institutions; to

improve the quality of local public services, create, and approve institutional prerequisites for better local

government in accordance with the European Charter of Local Self-Government and other standards of CoE.

The implementation of the Strategy was conducted in partnership between NAMB and the central

government by the MRDPW.

The main objective of the Strategy was to stimulate and mobilize action at national and local level for

continuous improvement of local governance in accordance with the 12 principles of good democratic

governance and to put citizens at the heart of all democratic institutions and processes.

In 2010, the implementation of the Strategy for Innovation and Good Governance at Local Level was

included in the measures of the Programme for Implementation of Decentralization Strategy 2010-2013. A

new priority 7 was created under Strategic Objective 1 - "Effective application of the principles of sound

governance at local level of the Council of Europe."

By Decision No 3 of 2010 of CDSG, Rules of Procedure of the Commission for awarding the Label

of Innovation and Good Governance at Local Level were adopted. The Rules of Procedure govern the

structure, functions, and organization of the Commission for awarding the Label for Innovation and Good

Governance at Local Level and its Secretariat in accordance with the procedures of CoE. Chairman of the

Commission was the Minister of Regional Development and its members were representatives of the

Ombudsman, of the municipalities and districts, of NAMRB, NGOs, the media and the academia. The

37

Secretariat of the Commission was the Directorate General for Strategic Planning of Regional Development

and Administrative-Territorial Division (DG SPRDATD) of MRDPW. At the end of 2010, Bulgaria,

represented by the Commission, first of the Member States of CoE was accredited to award the Label.

In 2011, Bulgaria became the first Member State in CoE, which successfully conducted the

procedure for the award of the European Label. Thirteen municipalities were awarded - Dimitrovgrad,

Dobrich, Dolna Banya, Karlovo, Kirkovo, Knezha, Lyaskovetя, Pernik, Svilengrad, Svishtov, Smolyan,

Sofia, Targovishte. The validity period of the Label is 2 years. In this connection, it was provided, the

procedure for awarding the Label in Bulgaria to be held every two years.

In 2013, the Second Procedure for awarding the Label was held. This high award was granted to 16

municipalities that proved compliance with the 12 principles of good governance and committed themselves

to implement them actively in their future activities. The Label for 2013-2015 under the Second Procedure

was awarded to the following municipalities: Byala Slatina, Pernik, Pomorie, Ruse, Svishtov, Smolyan,

Smyadovo, Stolichna Municipality, Troyan, Targovishte.

The Third procedure was held in the period March 2014-April 2015 and the Label was awarded to 18

municipalities in a ceremony held during the Annual Meeting of Local Authorities in the city of Plovdiv in

May 2015.

Based on the information in the Annual Report of the National Authority for awarding the Label and

its submission to the CoE, the high activity of participation of municipalities in the procedures on awarding

the Label, and the feedback from the representatives of CoE it could be concluded that the actions to

implement the Strategy were extremely successful.

2.7. Conclusions on implementation of the measures of the Strategy for 2006-2015

The main conclusion for the period under review was that the process of decentralization slowed

down considerably because of the impact of the global financial and economic crisis and the

ongoing financial policy during that period. The municipalities were the most affected by the

crisis public institutions;

The results of the Decentralization Strategy for 2006-2015 could be defined as unsatisfactory as

only 39% of the measures were implemented. None of the three Strategic Objective were

implemented in full. The overall activities on implementing the Decentralization Strategy in the

period 2006-2015 did not contribute to the achievement of the main objective - decentralization of

services, powers, and resources from higher to lower levels of government.

38

In the period 2010-2013, a process of centralisation of the state governance was going on. Key

reforms in the sphere of transfer of resources and powers to local authorities were not

implemented; there was no progress in the restructuring of the municipal services. Urgent

measures are needed to revise the legislation concerning the functioning of local self-government

and its conformity with ECLSG.

The measures under Strategic Objective 2 were with the lowest rate of implementation (35.71%).

Lack of progress on this strategic objective was particularly worrying given that the Programme

for Implementation of the Strategy for the period 2010-2013 explicitly placed the district

governance reform as one of the five basic guidelines for continuing the process of

decentralization. The low rate of implementation was a fact that should be considered in assessing

the realism of the objectives and the priorities set in the new strategy, as well as in improving the

monitoring and strengthening the capacity of the advisory body.

The decentralization process progressed in high tides and low tides; there was lack of stability and

security in many of the reforms. Despite the objectives, priorities and measures adopted by the

MoC a lot of them were not implemented. None of the indicators for reporting the progress on

fiscal decentralization, set out in the Programme for the Implementation of the Decentralization

Strategy 2010 - 2013 were reached. To achieve significant progress in the process of

decentralization, it is necessary to have a broad political support in the long term to ensure

sustainability of reforms and upgrade the results. An important step in this direction could be done

if the new strategy is approved by the Council of Ministers and submitted for adoption by the

National Assembly.

With the amendments of Article 141 of CRB in February 2007, Municipal Councils were given

the right to determine local taxes and local fees pursuant to the conditions, procedure and within

the limits established by LTFA. Thus, for the first time in more than 60 years tax powers were

given to municipalities. However, no significant changes in terms of local tax environment were

observed after the amendments to the Constitution of the Republic of Bulgaria. Local taxes and

fees remained relatively the same.

In preparing the Annual Monitoring Reports on the implementation of the Decentralization

Strategy in the period 2006-2015 it became clear that many of the indicators were no longer

supported by statistical data or were irrelevant to the process of decentralization. This requires to

develop a new system of indicators for reporting on the implementation of the Decentralization

Strategy.

39

2.8. Evaluation of the Activities of CDSG

2.8.1. Establishment, changes and functions of CDSG

The Council for Decentralization of State Governance was established by Decision No 540 of the

Council of Ministers, dated 2006, as a body to manage and coordinate the process. The composition and the

functions of the Council were defined in the Decentralization Strategy. The Chairman of the Council was the

Minister of Regional Development and Public Works while its members were deputy ministers, district

governors, and representatives of NAMRB. The Secretariat of the Council was a directorate general in the

administration of CoM. The strategy envisaged the number of council members, representatives of local

authorities, to be equal to the number of members, representatives of the central government. The

establishment of CDSG was provided for in the Decentralization Strategy, where the Council was defined as

an advisory body of CoM, which:

Supports CoM in the implementation of the state policy in the sphere of decentralization;

Monitors, analyzes and coordinates the implementation of the Strategy and the measures, set in

the Programme for Implementation of the Strategy;

Discusses drafts of statutory instruments, which have a substantial impact on district and

municipal administrations as well as legal proposals to the state authorities.

Submits to the Council of Ministers proposals for changes in national legislation on

decentralization

Coordinates the actions and measures undertaken by state authorities, organizations and

institutions as well as by the local authorities in the sphere of decentralization;

Monitors annually the progress of the objectives of the Decentralization Strategy.

By Council of Ministers Decree (CMD) No 277 of 6 October 2011, the functions of CDSG pass to

the Administrative Reform Council (ARC). The merger of CDSG and ARC aimed at optimizing the

coordination of the administration reform and the process of decentralization.

The Council for Decentralization of State Governance was reestablsihed by COD No 157 of 1

August 2013. Chair of the Council is the Minister of Regional Development and Public Works, the

Secretariate is DG SPRDATD at MRDPW.

2.8.2. Sessions of CDSG and topics discussed

Table 5 Information for CDSG sessions held by years

2006 2007 2008 2009 2010 2011 201311

2014

Number of

sessions held

2 7 5 2 5 2 2 2

11

Note: In 2012, CDSG did not existed as a separate Council

40

The data show that the Council did not hold regular sessions in the period from 2006 to 2015. The

Council did not hold regular sessions in 2006, 2009, 2011, 2013, and 2014. After its reestablishment in

2013, the Council conducted less than the legally specified number of sessions (3).

In the two years since its reestablishment in 2013, the Council dealt mainly with organizational

matters such as the annual projects for the implementation of the Decentralization Strategy, the development

of a new strategy and composition of working groups.

2.8.3. Presence of CDSG members at the Council sessions

An important indicator of the performance and effectiveness of each advisory council is what

percentage of the members attend sessions, and whether the sessions involve incumbent council members or

their alternates. Due to the different requirements set in the individual Programmes for Implementation of

the Decentralization Strategy, the number of members ensuring the necessary quorum for the sessions of

CDSG are reviewed separately for the sessions held in the period 2006-2008, 2009 – 2011 and 2013 – 2015.

In the period 2006 - 2008, pursuant to Article 2 of the Council of Ministers Decision No 540 of 2006,

the Council comprised of 31 members. The quorum was 50% of the permanent members i.e. 16 members.

Table 6 Presence of incumbent members at the sessions of CDSG in the period 2006-2008

2006 2007 2008

Date of

session

Number of

incumbent

members

present

Date of

session

Number of

incumbent

members

present

Date of

session

Number of

incumbent

members

present

14.09. 19 16.02 15 23.03 12

07.11. 17 19.03 12 28.05 10

03.04. No data 24.06 9

11.5. 6 22.07 8

07.08 8 07.10 7

12.09 9

12.12. 10

Percentage of

present

incumbent

members

58.06% in total for 2006 39.35% in total for 2007 29.67% in total for 2008

This Table shows that only in 2006 a relatively high level of representation of incumbent members

was ensured during the 14 sessions held in the three-year period from 2006 to 2008.

In the period 2009 - 2011, pursuant to Article 2 of the Council of Ministers Decision No 282 of 2009,

the Council comprised of 37 members, out of which 21 permanent members and 16 with the right to vote on

matters within their competence. The quorum was 50% of the permanent members i.e. 11 permanent

members.

41

Table 7 Presence of incumbent members at the sessions of CDSG in the period 2009-2011

2009 2010 2011

Date of

session

Number

of

incumbent

members

present

Date of

session

Number

of

incumbent

members

present

Date of

session

Number

of

incumbent

members

present

11.03 10 19.01 8 13.07 9

02.08. 8 25.05. 18 13.09. 6

29.07. 9

4.10. 18

17.12. 17

Percentage of

present

incumbent

members

24.32% in total for 2009 48.10% in total for 2010 20.27% in total for 2011

This Table shows that the participation of incumbent members in the 9 sessions of CDSG held in the

three-year period from 2009 to 2011 was very low..

In the period 2013 - 2015, pursuant to Article 2 of the Council of Ministers Decision No 157 of 2013,

the Council comprised of 40 members, out of which 18 permanent members and 22 with the right to vote on

matters within their competence. The quorum was 50% of the permanent members i.e. 10 permanent

members.

Table 8 Presence at the sessions of CDSG in the period 2013-2015

Date of

session

12.09.2013 17.12.2013 05.03.2014 26.05.2014 26.05.2015

Presence 10 incumbent

members

2 alternates

8 incumbent

members

3 alternates

8 incumbent

members

3 alternates

7 incumbent

members and

5 alternates

9 incumbent

members

2 alternates

Percentage of

present

incumbent

members

25% 20% 20% 17.5% 22.5%

During the passed period, the Council held sessions at the verge of the quorum prescribed in Council

of Minister Decree No 157. This means that the institutions, which have not participated on regular basis or

have not been represented by the incumbent members, are not interested in the process of decentralization.

42

Another important reason for the low interest in the work of CDSG is in the insignificance of the topic

discussed.

A quality indicator for the performance of CDSG is also the presence of its Chairman at the sessions.

2.8.4. Evaluation of the activity of CDSG

Annual evaluation of the activities of CDSG may be found in the Annual Reports on the

Implementation of the Decentralization Strategy. The conclusion based on these reports is that the two main

functions of the Council has not been fulfilled, namely: 1) to serve as a place of dialogue between the

authorities and 2) to shape the decentralization policy.

Evaluation of the activities of the Council can be deduced also from the Cooperation Agreement

between NAMRB and CoM for the period 2009-2013. Item ІІ.2. of the Agreement provides for reforming

the composition and activities of the Council in order to increase the effectiveness of its work, which clearly

shows the views of local authorities on the effectiveness of the Council.

Failure to implement the objectives of the Decentralization Strategy is the most important,

indisputable and objective indicator of the inefficient work of CDSG. The analysis of the agendas of the

sessions of the Council from 2006 to 2015 shows why the Council has not fulfilled its tasks. The prevailing

topics in the agendas were insignificant or irrelevant to the process of decentralization, for example, working

programme of the Council, drafts of annual reports on the implementation of the Strategy, STGGLL related

reports, different analytical reports without subsequent proposals for legislative changes. The main part of

the CDSG agenda should be draft laws, draft decrees and decisions of CoM. CDSG did not express its

opinion on the draft state budget in the context of the process of decentralization of the state governance.

CDSG was not consulted with regard to the minimum number of mayoralties, on the annual decisions on

standards for the activities delegated by the state. No discussions were held on any draft law affecting the

municipalities, including the new Pre-School and School Education Act. The main burden on the

coordination of drafts of statuary documents in their adoption by CoM and the National Assembly is left

with NAMRB.

2.8.5. Conclusions on the activity of CDSG

The Council did not perform effectively its functions on supporting CoM in the implementation of

the national policy on decentralization. The Council did not turn into a place for discussion of

drafts of important statutory instruments with a significant impact on district and municipal

administrations;

The merger of CDSG and ARC at the end of 2011, aimed at optimizing the coordination of the

administration reform and the process of decentralization, did not have a positive effect on the

process of decentralization because after the merger there was not a single session of ARC on

43

issues related to decentralization. Objective evaluation requires to point out that since the middle

of 2011, the implementation of the Decentralization Strategy was practically discontinued.

CDSG is not active enough an is not an engine of the decentralization process. The Council has

not held regular sessions in the period from 2006 to 2011. The Council has not held regular

sessions in 2006, 2009 and 2011. During the three years after its reestablishment (2013,2014 and

2015), the Council has conducted less than the legally specified number of sessions (3).

The rate of participation of incumbent members in the composition of CDSG at the session of the

Council is low.

The composition of CDSG is not sufficiently representative.

I. 3. Conclusions on the development of the governance decentralization process in the

period 1991 to 2015

The results from the analysis show that the decentralization process takes place at a slow and

contradictory pace, and even suspended in some cases. Therefore, in could be assumed that in 2015 the

characteristics of the local self-government in Bulgaria were far from being in compliance with the

requirements of the European Charter of Local Self-Government and the EU average indicators for the

decentralization of public governance. The main problems hindering the development of the decentralization

process during the analysed period are the following:

The issue about decentralization in practice does not take a sufficiently important place. The main

commitment of the national authorities is related to the economic situation in the country.

Actually, a lot of experts point out that in their opinion it is very difficult for a decentralization

policy to take place under a currency board and global economic and financial crisis. They are

concerned that such a process which could imply transfer of resources, incl. competences

concerning the decision-making on the use of these resources, to the lower levels of the

governance system can have a negative effect on the management of the macroeconomic

variables.

There is no genuine and deep understanding among the politicians and civil servants who have

been engaged in different ways and at different levels with the decentralization issue, that it is

really necessary for the country to undertake a process of effective decentralization of governance.

The politicians responsible for the necessary decisions on carrying out the decentralization

process do not have a clear vision about what has to be done. The decentralization process is a

problem of much more a political rather than technical nature. Provision of political support to

44

such a complex and multilateral process is essential for its implementation and a key factor to

success;

The politicians tend to view decentralization more as a problem than as a necessary and integral

part of reaching solutions to country's problems related conserning its development and

modernisation. This in itself is due to the fact that despite of including "good governance" as an

essential issue in the national programme, a big part of the politicians still have not realised the

necessary link between "good governance" and decentralization.

Decentralization is not a subject area which in the public opinion is considered to be an integral

part of the efforts for achieving "good governance". The issue about "good governance" in not just

fragmented to pieces which seem not to be integrated in a single governance system, but which

are also not clearly defined and described in details within a public debate.

A problem to the political decentralization in Bulgaria is the lack of territorially-based local

communities' NGOs which are united to safeguard their interests. The existing civil society organisations are

structured more around a sectoral principle and protect the interests of certain social groups but not of the

local community as a whole (i.e. the people living in a certain area and using common social, technical and

institutional infrastructure). The low active citizenship results in a low participation of citizens in the

development, adoption and control over the implementation of the municipal policies.

The different forms of direct democracy still have not been used very often in the Bulgarian governance

practice. The collection of written submissions and the organisation of referenda to solve problems that are

important for the local development is not a common practice in the Bulgarian municipalities. This means

that citizens' participation in the political life is restricted.

In the area of administrative decentralization the large centralisation of public services on the

prevention of crime against households and persons, especially in villages, as well as on the theft of crop and

the combat against fires, floods and other accidental disasters of local nature are to be pointed out as

unsolved problems. In this respect, it can be outlines that the municipalities have insufficient capabilities to

plan and manage the delegated services.

The problematic areas in the field of administrative decentralization are formed on two levels:

Sub-municipal level, i.e. within the framework of the municipality – the decentralization within

the municipalities develops at unsteady pace. The mayoralties inhabited by about 30% of the

Bulgarian residents nearly do not have any functions in the provision of public services. The

ongoing changes of the requirements on the size of the population that is necessary for the

establishment of mayoralties with a varying number of the total population between 100 and 500

people forming the mayoralty, as well as the inconsistent policy with regards to the zoning of the

cities, all have a negative impact on the decentralization prospects at this level.

45

Supra-municipal level – necessity of changes in the legal basis that regulates the intermunicipal

cooperation for the provision of common services.

Currently, the financial decentralization is not accepted as means for improving the municipalities'

financial situation. The main problem leading to the suspension of the reform in the area of financial

decentralization was the lack of funding resources for the municipal services. In general, it could be assumed

that a legal act can provide for an anticipated transfer of functions to the municipalities without the provision

of the necessary financial resources which is contrary to the provisions of Article 9 of the European Charter

of Local Self-Government. Bulgaria ratified the Charter by a Ratification Act, adopted by the 37th National

Assembly of the Republic of Bulgaria on 17.03.1995. With the Ratification of the European Charter of

Local Self-Government Act the Charter becomes a part of the national legislation and takes precedence over

it within the meaning of Article 5(4), of the Constitution of the Republic of Bulgaria. Therefore, it should be

taken into consideration that the provision of public services that are not secured with financial resources

influences their quality and the access to them.

The other unsolved problems in the area of financial decentralization are the following:

In terms of their volume the activities delegated to the local authorities are still beyond their own

activities. There is no clear division between the delegated powers and local authorities' own

powers which is a key finding in the Second Monitoring Report of the Council of Europe.

The administrative reform and financial decentralization processes should be implemented in

coordination in the future. With its progress the decentralization process has obviously reached to

a point when to continue the financial decentralization will be crucial, i.e. without the

implementation of measures for the financial decentralization other decentralization measures

would not be really possible. Currently, the decisions on public investments are concentrated in

the Ministry of Finance. Municipalities are empowered to take independent decisions for a small

percentage of the local budget's revenues and costs.

The own sources of revenue are limited and constitute an insufficient share of the municipal

budgets for most of the municipalities. This makes them unreliable partners of the EU funds in co-

funding of local projects. The financial decentralization is a necessary condition for developing a

municipal credit market and for raising the municipalities' capabilities for funding outside the

central budget;

Certain insufficiencies in the formula for the local authorities funding and difficulties in providing

financial resources from the state sometimes allow for circumvention of the objective mechanism

for financial regulation and the transition to "manual handling", i.e. distribution of the available

resources according to the principle that "everyone should get a bit", where the state continues to

be a guarantor of the local deficits. The municipalities should have a control over their revenues in

order to be able to analyse the effectiveness of one of their activities or another.

46

There are various legal opportunities and prerequisites for increasing the revenue section of the

municipal budgets through the use of bank loans, issue of municipal bonds, creation of conditions

for the participation of the municipality in national and international programmes, attraction of

investors and other that are not sufficiently familiar to the local authorities neither used by them.

The local authorities are not empowered to determine tax incentives for certain taxpayers and do

not have opportunities for fixing user charges for optional services provided by the municipalities.

The cost generation powers of the municipalities are restricted with regards to the delegated

services;

The lack of regulation for setting the general amount of the capital subsidy has led to its formation

on a residual principle, where the amount of the additional subsidy for capital expenditure

distributed among the municipalities was set without any rules and often exceeded 50% of the

actual amount of the provided capital subsidies.

I. 4. Evaluation of the decentralization process by sector

The sector analysis reviews, examines and evaluates the processes of transferring powers and

resources from central to local authorities in some of the more important sectors with regards to the

development of the decentralizations process, such as: education, social services, culture, security and public

administration.

The structure of the sector analysis is identical and includes: sector governance and control;

ownership on assets; human resources recruitment and dismissal. Conclusions on the sector decentralization

are presented at the end of each sector analysis.

4.1. Analysis and evaluation of the decentralization process in the Education sector

4.1.1. Sector governance and control

In the final stage of developing this analysis, a Pre-school and School Education Act was adopted

and published in the SG No 79/13.10.2015. One of the issues in the reasons to the draft law is that the new

Act will speed up the processes of administrative reform and decentralization of governance through

transferring powers and resources from central authorities to the local self-government12

. As the regulations

provided for in the Act which would have changed the existing practice in reality are still missing, the

analysis is focused on the applicable legislation until the Pre-school and School Education Act coming in

force.

The main characteristic of the education sector governance system, incl. pre-school, primary and

secondary education, is that it is subject to shared responsibility between the central and municipal

12

http://www.parliament.bg/bg/bills/ID/15077/

47

government levels13

. In view to the current task to evaluate the implementation of the Decentralization

Strategy, the education sector governance system is reviewed and evaluated in the light of its level of

decentralization. The incurred changes in the governance system, funding, ownership of resources, control

and human resources have been evaluated of whether they result in additional decentralization of

governance or not.

The cases of shared competence in managing a certain sector require clear definition of the

responsibilities and powers of the individual institutions. This is a mandatory condition for the functioning

of the relevant sector.

Under the National Education Act14

the municipalities in Bulgaria have the responsibility to ensure

and control the following15

:

compulsory pre-school education of children and school education of pupils up to the age of 16;

health services and the safety of kindergartens and schools and children and pupils by establishing

school health settings for outpatient medical care;

provision of funds for the maintenance, construction, furnishing and general

repairs of municipality-owed schools, kindergartens and support units;

provision of funds for the implementation of the national learning requirements with regards to

the curricular, organisation of the learning process, necessary teaching documentation and all

other national requirements in this area;

provision of conditions for canteens, hostels, recreation, sports facilities and transport for children,

pupils and teachers, as well as free transport and full-day organisation of the school-day in line

with the requirements set by the central authorities;

scholarships and special grants to pupils.

This regulation ensures the key role of the central authorities in managing education, and mainly the

role of the Ministry of Education and Science. The responsibilities of the local authorities can be described

rather as obligations to provide children with access to pre-school and school education and with little or no

powers to really manage education with regards to funding, defining of curricula, organisation of the

learning process and selection of human resources.

A positive step towards expanding citizens participation in the management of the sector was

introduced in 2011 with a Council of Ministers Decision No 367/29.12.2011 for the implementation of the

2012 State Budget containing the requirement for the school principals to provide information on the

implementation of the delegated school budget at a general meeting of the employees and the Board of

Trustees on a quarterly basis.

13

Higher education has been excluded from this analysis. 14

The National Education Act is repealed by Art. 6(1) of the transitional and final provisions of the Pre-school and School Education Act – SG No 79 of 13 October 2015, entered into force on 01.08.2016,

15 Article 36(1) of the National Education Act.

48

In practice, the district governors (administrations) are not involved in the education management

process and have no powers and/or resources transferred to raise their management and coordination

capacity in this area.

The central authorities through the Ministry of Education and Science and the district education

inspectors keep their powers to decide on the curricula and the organisation of the learning process, to

regulate the requirements "at the exit" of the system and to keep their key role in the human resource

management.

The processes of providing the "education" service is centralised.

Kindergartens, nurseries and schools are identified as "state" or "municipal" according to their main

source of funding – state or municipal budget, respectively. State schools are governed by the Ministry of

Education and Science, Ministry of Culture, Ministry of Youth and Sports and Ministry of Agriculture and

Food. Kindergartens and nurseries are by rule municipal, however there are some exceptions – there are

some kindergartens and nurseries to the Ministry of Defence.

The opening and closing of municipal schools is done by an Order of the Minister of Education and

Science following a proposal of the relevant municipal council, and state schools – only by an Order of the

Minister of Education and Science. Until 1998 the opening, closing and conversion of municipal schools

was done only by an Order of the Minister of Education without the need for the municipal authorities to

participate in that process. The participation of the municipal council that is provided for with amendments

to the law in 1998, is a step towards the decentralization of governance in the sector of secondary education.

Municipal kindergartens are opened, closed and converted by an Order of the municipality mayor

following a decision of the municipal council.

The Strategy for Decentralization 2006 – 2015 provides for the transfer of vocational and specialised

schools from the authority of the relevant ministries to the municipalities as a delegated service, provided

that they are not of national relevance. In the period 2010 to 2014 16 vocational schools and one specialised

school were transferred to the municipalities with their buildings being subject to deed procedure of property

from public-state to public-municipal ownership. Although the issue concerns only the expansion of the

scope of the delegated services, the ministries continue to manage vocational and specialised schools with

the argument that they are of national relevance. The status of "a school of national relevance" is

reconfirmed in the new Pre-school and School Education Act .

The School and Pre-school Education Development National Programme 2006–2015 contains a

special section dedicated to the decentralization of the management of the school education system.

According to the programme, on the one hand, it is necessary for the principle of subsidiarity to be followed

– decisions are to be taken at a level which is closest to those who will implement them and to those directly

affected by them. The state should retain its decision-making powers only in the cases when taking the

decision at a different level is not possible or is unjustifiable. On the other hand, the relationship between the

central government and the local authorities does not respect the principle of subsidiarity. These are

49

authorities that draw their legitimacy independently from each other, therefore the relationship between

them is of mutual balance, cooperation and control. The state should retain the opportunity to set the

common standards for the quality of education and to conduct controls regarding their compliance within the

whole country. Under the contemporary conditions, the role of the Ministry of Education and Science should

change from administrative-and-operative to control-and-regulative. The regional inspectorates of education

should be disengaged from administrative-and-management powers and established as units for developing

methodological activities and control. The process should continue both in the area of financial

decentralization and the decentralization of powers. At the same time decentralization cannot stop at

municipality level but should continue towards individual schools, while respecting the principle where

empowerment means more responsibilities.

4.1.2. Funding of the service/activity

The system for funding the pre-school and school education is characterised by a major change that

incurred in the analysed period – the introduction of the delegated budgets in 2008. In respect to the

Financial Decentralization Concept adopted in 2002, there are two types of activities being regulated –

responsibilities delegated by the central government to the municipalities, and local responsibilities. The

educational services fall within the scope of the "delegated activities" category, i.e. they remain fully funded

by the state, except for the kindergartens and certain additional services, e.g. the canteens. Pre-school

education (kindergartens) is funded by the municipalities and as additionally funded municipal activities by

the central government.

Uniform expenditure standards were introduced in 2007 as well as a new funding system "based on

an individual pupil" up to the level of primary authorising officers which, in their turn, fund schools directly:

Ministry of Education and Science, Ministry of Culture, Ministry of Youth and Sports, Ministry of

Agriculture and Food and municipalities. The uniform expenditure standard is differentiated on the basis of

the population density and not according to specific learning tasks (curricular) for the pupils. For the

specialised schools of arts the standard is defined according to the type of the school. There are three

standards applied only to the schools of arts and culture.

Another step towards decentralization was also made in 2008 – the budget based on the "delegated

budget" formula covered also the financial interconnection between the primary authorising officers and

schools. This secondary allocation mechanism is also based on an individual pupil and is 100% targeted.

The new system does not provide for the increase of the financial independence of municipalities because it

does not allow the re-allocation of funds between different institutions in view of the local priorities. Since

2008 all schools in the country have been implementing the delegated budgets system. A wide range of

trainings to promote and facilitated the implementation of this system have taken place in implementing the

Decentralization Strategy in force. This Strategy provided for the application of delegated budgets to the

50

kindergartens as well. In this regard, a number of information sessions and trainings to promote the

introduction of delegated budgets to the kindergartens have taken place.

From 2007 to 2015 the share of municipalities which kindergartens are on delegated budgets has

increased from 2.4% to 45%.

Figure 2. Share of municipalities which kindergartens are on delegated budgets for the period 2007-2015

In 2015, 865 out of the 1919 kindergartens applied delegated budgets. There is an obvious positive

development – more and more kindergartens apply delegated budgets – and we have reasons to believe that

this trend will continue.

Despite all mentioned considerations, the application of delegated budgets can be evaluated

positively in view to the decentralization process because in reality powers and responsibilities are delegated

top-down the governance system. At the same time, the exhausted opportunities for increasing own income

results in demotivating local authorities to introduce new local services or to expand the scope and quality of

the existing ones. The provision of new public services by the municipalities is bound to the fact they are

defined as delegated services, i.e. the municipalities exchange "powers against funding"16

.

16

Annual Report 2015 "Economic Development and Policies in Bulgaria: Evaluations and Prospects", Economic Research

Institute at the Bulgarian Academy of Science, p. 86.

51

4.1.3. Ownership on assets/operation of assets associated with the service provision process

The school buildings are either public municipal or, respectively, state property to be used by the

municipalities.

4.1.4. Appointment and dismissal of the management and human resources

Principals of municipal kindergartens are appointed by an orde of the municipality mayor after a

competition procedure under the Labour Code. The municipality mayor has been granted this power since

1991 to date.

Principals of municipal schools are appointed and have their employment terminated by the director

of the relevant regional inspectorate of education. Principals of public schools are appointed by the Minister

of Education and Science, and principals of public sports schools – by the Minister of Youth and Sports.

This human resource management system leads to an extremely centralised management approach – powers

are fully with the Ministry of Education and Science and its territorial units.

Since 2002 municipalities have been empowered to nominate their representatives in the selection

boards for the "principal" post of municipal schools. This does not provide municipalities with the

opportunity to appoint the principals of municipal schools independently but still includes municipalities in

the selection process at least of the experts who take that post. In implementing the measures under the

Decentralization Strategy there are a number of proposals for amendments in the legislation providing for a

more significant involvement of municipalities in the appointment of school principals, however these

proposals have not been accepted. The Pre-school and School Education Act does not provide for such

measures. This means that human resource management at this stage will continue to be centralised.

4.1.5. Identified areas of concern and opportunities for further development of the

decentralization process

a main step towards decentralization of governance in the education sector for the period 2007–

2014 is the transition to the delegated budgets system. The evaluation of its results is

contradictory. On the one hand, this by far is "suspension" of powers and can be evaluated in a

positive way. On the other hand, delegated tasks could be easily centralised again.

It is necessary for the educational services of local relevance to be transformed from delegated

activities to services of local responsibility.

The distribution of powers in education does not comply with the principle of subsidiarity. It is

necessary to enhance the involvement of local authorities in the process of selecting and

appointing the principals of municipal schools and the control of human resources in the

educational system;

52

involvement of local authorities in setting the training standards – requirements, contents, etc.

4.2. Analysis and evaluation of the decentralization process in the Social Affairs sector

4.2.1. Sector management and control

The social affairs sectors includes a considerable number of activities. This analysis includes only the

activities which local authorities are empowered to implement and which are subject of the Decentralization

Strategy 2006–2015.

Municipalities have their role and powers in areas like child protection policy, prevention of juvenile

delinquency, securing the child adoption procedures, working with people with disabilities and their

integration, maintenance of social housing, application of measures for rehabilitation of oppressed people,

working with talented children, integration of ethnic minority groups and promotion of employment and

adults training. The Decentralization Strategy included measures in the area of social services management.

The other areas remain outside the scope of the measure for decentralization of governance. Their

management remains centralised and the powers of the municipalities are mainly related to the

implementation requirements of the relevant activities, as laid down in the legislative and non-legislative

acts.

Social services are provided by the state, municipalities, legal and natural persons carrying out

commercial activities, as well as legal entities established under the legislation of another EU Member State,

or a third country within the European Economic Area.

The municipality mayor can assign the management of social services, both the state-delegated and

the local services, to subcontractors – either natural or legal entities, by means of competition, or by means

of contracting with a single applicant. Social service providers who are included in the Register of the

Agency for Social Assistance can participate in the competitions. Social services can be provided also in

joint participation on contractual grounds between the state, municipalities and natural or legal entities17.

Since 2010 the municipality mayor has been obliged to organise the preparation of a strategy for social

services development on municipal level and its implementation plan which are approved by the municipal

council by a mandatory voting, as well as by the relevant Social Assistance Directorates.

No serious changes towards decentralization have incurred in the institutional and administrative

management system during the examined period (except for the already mentioned transfer of powers

concerning planning to the district governors). There is shared responsibility of government within the

sector between the local authorities and central government – a part of the social services are defined as

local activities, while the rest as state-delegated activities.

17 Social Assistance Act, promulgated SG No56 /19.05.1998 , last amendment - SG No98 /28.11.2014

53

The sector has made real steps towards encouraging civil society to participate in the decision-

making process. This contributes to higher transparency of management process and to the promotion of

decentralization trends.

Exercising public control on the implementation of activities concerning social assistance and social

services is preformed following a municipal council decision providing for the establishment of a public

consultative board. The public consultative board to the municipality assists for the implementation of social

assistance and social services policy, and supports the development of regional strategies as well as

municipal programmes, plans and projects regarding social assistance and social services, as well as for

coordinating the provision of social services by external service providers. The public consultative board

consists of minimum 7 people, incl. manages of social services, representatives of external social services

providers and stakeholders interested in the social assistance and social services activities. This creates the

grounds for evaluating the establishment of the public consultative boards as a positive step towards the

decentralization of governance in this sector.

The indicators for served users/places by one employee have increased for all social services. The

social reform that has been taking place for serval years now aiming to decrease the number of people in the

specialised institutions, can be considered a positive trend. The data analysis shows that in the period 2008–

2011 the number of people placed in the specialised institutions decreased from 16 450 to 12 827 people,

and those in the day-care centres increased from 2728 to 4124 people. On the other hand, the costs for one

person in the day-care centres are reduced considerably.

The performance indicator for the decentralization process in the area of social services constitutes a

share of the municipal budget which is spent for the provision of services. All municipal costs are reported

under this indicator. In 2009 the administrative costs amounted to BGN 68.6 per citizen, while the share of

services was 89.1%. In the next years the share of services costs slightly dropped down – to 87.9% of the

total costs for 2011, and the costs for the administration of the services were kept nearly at the same level –

BGN 69.3 per citizen. In 2012–2013 the share of the services costs remained constant – 88% in 2012 and

88.1% in 2013, while the costs for the administration of the services decreased to BGN 68.0 per citizen in

2012 and increased to BGN 73.0 per citizen in 2013. In 2014 the share of the services costs was already

88.5% where the costs for their administration amounted to the average of BGN 78.4 per citizen18

. The

analysis of this data shows that the efficiency of the services provided to the citizens did not change

sufficiently during the analysed period (2006–2015).

Provision of social services by external service providers, NGOs and companies is one of the

measures provided for in the Decentralization Strategy. At the end of 2010 the total number of the external

service providers was 943. In 2011 the number of the registered external service providers was 108 and in

18

The data that has been used is taken from the Annual Reports on the Decentralisation Strategy and the Programme for its

implementation for the period 2008–2014.

54

2013 they amounted to 655. 639 orders leading to the cancellation of 1276 certificates for the provision of

social services to 544 service providers were released in 2013.

At a municipal level the indicator named „share of municipalities providing social services through

external service providers“ gives the most accurate information on the extent to which local authorities are

willing to transfer this activity to external players. This way of provision of the services in 2008 was applied

in 26 municipalities within the country (9.84% of all municipalities). The share of municipalities using

external service providers of social services initially grows up but after 2010 slightly drops down. However,

this can be considered as a positive trend.

Figure 3. Share of municipalities providing social services through external service providers

4.2.2. Funding of the service/activity

Social assistance and social services are funded by the following: state budget; municipal budgets;

national and international programmes; donations from local and foreign natural and legal entities; Social

Protection Fund; fees paid by the service users. The social services that are identified as local activities rely

on funding mainly from the municipal budgets, and the state-delegated activities – from the state budget.

4.2.3. Ownership on assets/operation of assets associated with the service provision process

The ownership on assets depends both on the type of the social service and activity and on the

relevant service provider, i.e. the municipality providing the services either as local or delegated activities,

or a natural or legal entity providing the services as an external provider. Respectively, the activities and the

55

possibly necessary property in the form of buildings could be and are of all possible types – public and

private municipality-owned, public and private state-owned and privately owned.

4.2.4. Appointment and dismissal of the management and human resources

The municipality mayor manages the social services on the territory of the relevant municipality

where these services are state-delegated and local activities, and he/she is also an employer of the managers

of these services. Employer of the staff is the manager of the relevant social services provider.

4.2.5. Identified areas of concern and opportunities for further development of the

decentralization process

increased funding for delegated activities;

participation of municipalities in setting the standards for the provision of social services;

more active involvement of civil society organisations not only in providing social services but

also in the process of managing the sector;

development of comprehensive social services in order to assess and meet the specific needs of

each individual case in the most precise way.

4.3. Analysis and evaluation of the decentralization process in the Culture sector

4.3.1. Sector management and control

The management of the sector falls within the responsibilities both of local authorities and central

government. The legislation provides for the existence of both state and municipal cultural institutes.

Cultural institutes are either state or municipal organisations established under special law or act of an

executive or local authority body. Municipal cultural institutes are legal entities with own budgets, which are

established, transformed or closed under a decision of the municipal council coordinated with the Minister

of Culture. Regional cultural institutes are legal entities with own budgets which execute cultural activities

mainly on the territory pointed out in the act for their establishment. Regional cultural institutes are

established, transformed and closed by the Council of Ministers based on a proposal of the Minister of

Culture, coordinated with the District Governor, and following a decision of the Municipal Council on the

territory of cultural institute's head office.

Municipalities formulate and implement their policy for the protection and development of culture by

combining the principles of the national policy in the field of culture with the local conditions and traditions.

In implementing their functions the municipalities are supported by public-expert councils and commissions

that involve representatives of creative unions, interested institutions and organisations as well as individual

56

artists and experts. The public-expert councils and commissions have an advisory role. They are established

for a certain period under a municipality mayor's order19

.

Museums are main cultural institutes. They are either state or municipal – the state museums are

funded by the state budget, and the municipal ones – by the municipal budget. The state and the

municipalities can establish museums of joint participation either together or in partnership with natural or

legal entities. These museums are cultural organisations within the meaning of the Law for Protection and

Development of Culture, registered under theLaw on Non-profit Legal Entities to operate in public benefit –

museum activities. Regardless of the type of organisation and their ownership, museums are managed under

the following system – the methodological management is performed by the Ministry of Culture. The

administrative and organisational management is performed by the municipality mayor or the owner, and in

the area of research and development - by the Bulgarian Academy of Science and the relevant institutions

and research and development institutes and bodies.

District governors have limited powers in the coordination of the investigation and research of

immovable cultural properties and the categorisation and protection of the traced ones.

One of the oldest cultural institutes in the Bulgarian society is the so called chitalishte. Chitalishtes

are traditional Bulgarian self-managed cultural and educational associations located in the settlements,

which also perform public cultural and educational tasks. Chitalishtes are non-profit legal entities.

Municipalities have powers to organise and manage the chitalishtes' activities. The chairpersons of the

people's chitalishtes on the territory of the relevant municipality submit the proposals for the their next

year's activities to the mayor. The municipality mayor submits the proposals to the municipal council which,

in turn, agrees on the annual development programme of the chitalishtes' activities in the relevant

municipality. The programme is implemented by the chitalishtes under financially supported contracts

concluded with the municipality mayor.

Stage Cultural Institutes are located within the whole country. A great part of them are state-owned

authorised officers by sub-delegation to the Ministry of Culture. These cultural institutes determine their

tasks and structure independently according to the subject of their activity in line with Art. 4(2)(1) of the

Law for Protection and Development of Culture.

There are also a few municipal cultural institute in the field of theatre, music and dancing. The

relationships between the managers of the municipal cultural institutes and the municipality mayor are

subject to a competition procedure under the Labour Code. The conditions of the competition are

coordinated with the Ministry of Culture.

The music and dance institutes, drama and muppet theatres are also funded according to their

ownership. The state-owned are funded by the Ministry of Culture with the assistance of the municipalities,

while the municipal stage institutes are fully financed from the municipal budgets.

19

Law for Protection and Development of Culture, prom. SG. No 50/01.06.1999.

57

The existing legislative framework provides for a highly centralised framework for the management

of the sector. Municipalities are able to formulate their own cultural policy but it has to comply with the

national policy in that field. The requirements for the activities of the cultural institutes are also determined

on a central government level.

Cultural institutes' operations are controlled by the municipalities and the central government.

Article 16 of the Law for Protection and Development of Culture provides for the establishment of

public-expert councils and commissions. The public-expert councils and commissions involve

representatives of creative unions, interested institutions and organisations as well as individual artists and

experts. The public-expert councils and commissions are advisory bodies established for certain branches of

culture and for a period of time by an Order of the Minister of Culture.

4.3.2. Funding of the activity

Funding of the activity and the ownership on the assets of the different institutes depends directly on

whether they are state, municipal or a private. State cultural institutes are fully or partially funded by the

Ministry of Culture through the municipal budgets on the grounds of contracts with the Ministry of Culture,

or by legal or natural entities. Municipal cultural institutes are funded from the municipal budgets. In

developing the municipal budgets for the relevant year the amount of the subsidy for each of the municipal

institutes cannot be lower than the amount in the previous year, regardless of the income generated from

their activities.

Regional cultural institutes have several sources of funding. Firstly, they are funded by the

municipalities on which territory their head offices are located, and their maintenance is supported by

targeted additional funds from the state budget. Secondly, they are funded by payments into their budgets by

the municipalities on which territory the cultural institutes operate, where the amounts are determined on an

annual basis by decisions of the relevant municipal councils.

The state museums are funded from the state budget, and the municipal and regional museums –

from the municipal budget. Regional museums are funded by:

1. the municipalities on which territory their head offices are located, and their maintenance is

supported by targeted additional funds from the state budget;

2. payments into their budgets by the municipalities on which the museums operate, where the

amounts are determined on an annual basis by decisions of the relevant municipal councils.

The state and the municipalities can establish museums of joint participation either together or in

partnership with natural or legal entities. These museums are cultural organisations within the meaning of

the Law for Protection and Development of Culture and they are registered in line with the provisions of the

Law on Non-profit Legal Entities to operate in public benefit – museum activities.

The chitalishtes receive annual subsidy. The rules and mechanisms for the allocation of the annual

subsidy are developed by the Ministry of Culture in coordination with the district administrations and

58

municipalities. Following a municipal council's decisions the chitalishtes can be additionally financed above

the annual subsidy with funds from the municipality's own income. Provided that there is insufficient

funding for the repair and maintenance of the chitalishte buildings, such funds are provided from the

municipal council.

Libraries are funded from the state budget through the delegated budgets system, and the chitalishte

libraries – from the chitalishtes' budgets. The municipalities themselves also provide funding for the

development of library activities.

The music and dance institutes, drama and muppet theatres are also funded according to their

ownership. The state-owned are funded by the Ministry of Culture with the assistance of the municipalities,

while the municipal stage institutes are fully financed from the municipal budgets.

The Law for Protection and Development of Culture requires from the municipalities to establish a

Municipal Culture Fund. Such fund is established by a Municipal Council Decision and the municipal

council also agrees on Fund's Operation Rules. The Fund is financed by: targeted programmes and projects

in the field of culture; donations, wills and sponsorship by Bulgarian and foreign natural and legal entities;

Fund's accounts interests; sources determined by a municipal council's decision. The aim of this Fund is to

support activities such as: programmes and projects in the field of culture; organisation of cultural events;

funding of cultural initiatives with Bulgarian and international participation in partnership with natural or

legal entities; hobby art; provision of scholarships to talented children and young people.

4.3.3. Ownership on assets/operation of assets associated with the service provision process

The ownership on assets can also be various – municipal, state or private according to the status of

the individual cultural institute. In 2011 the Law on the Cultural Heritage was amended which facilitated the

transfer procedure of immovable archaeological valuables to be managed by the municipalities. This can be

considered as a positive step towards supporting the municipalities in the implementation of their

independent cultural policy.

Concerning their type of ownership the museums are state-, municipality- and privately- or jointly-

owned, and according to their territorial scope, they are national, i.e. operating within the whole country;

regional, i.e. operating on the territory of two or more municipalities, and local, i.e. operating within one

municipality.

4.3.4. Appointment and dismissal of the management and human resources

The managers of all cultural institutes are appointed after a competition procedure under the Labour

Code for a period of 4 years. The competition conditions for the manager's position of municipal and

regional cultural institutes should be coordinated with the Ministry of Culture. After the relevant

competition procedures the managers are appointed an Order of the Municipality Mayor. The human

resources management system in the sector of culture provides considerable freedom to local authorities in

59

selecting the relevant staff. However, on a national level as well there are requirements for the relevant

position and it is necessary that each procedure is coordinated with the central government.

Museums are managed regardless of the type of the organisation and ownership:

in methodological terms – by the Ministry of Culture;

in administrative and organisational terms – by the municipality mayor or the owner;

in terms of the research and development activities – by the Bulgarian Academy of Science and

the relevant institutional body, research and development institutes and institutions.

4.3.5. Identified areas of concern and opportunities for further development of the

decentralization process

The sector of Culture has a complex management system which is centralised, i.e. municipalities

implement their own cultural policy only after it has been coordinated with the national cultural

policy.

There is a permanent lack of financial resources on a local level for the adequate funding of the

local cultural institutes. This makes it difficult for the municipalities to meet the requirements

imposed by the local government for the implementation of the relevant activity.

It is necessary for the services of local relevance to be transformed from delegated services from

the Function „Recreation, Culture and religious Activities“ to services of local responsibility,

except for those concerning the museums and art galleries. There is also a lack of strategic vision

on the development, status, management and funding of the regional cultural institutes for which

municipalities have insufficient resources and capacity.

4.4. Analysis and evaluation of the decentralization process in the Security sector

4.4.1. Sector management and control

The Security sector contains functions, activities and powers in the sphere of public order, defence

and deployment preparation of the population and protection of the population against disasters and

accidents.

The 2006 Decentralization Strategy and the 2010 Updated Decentralization Strategy included a

measure addressed to this sector – provision of opportunities for the functioning of „municipal police“ units.

After long discussions in 2010, the amendments to the Ministry of Interior Act provided for opportunities

for creating such units, however, „municipal police“ units in practice have been established only in Sofia

Capital Municipality and the municipalities of Burgas, Nesebar, Varna, Plovdiv, Stara Zagora and Yambol.

The „municipal police“ units under the Ministry of Interior Act execute the functional responsibilities of the

municipal self-government bodies concerning the maintenance of public order, security services to

60

safeguard facilities, road safety and administrative and criminal sanctions. The rest of the functions and

activities related to detecting criminal offences and combating organised crime fall within the competences

of the District Directorates of the Ministry of Interior and the territorial units of the General Directorate

„Combating organised crime“.

Municipal authorities are responsible for the implementation of certain activities like the

establishment and financing of commissions for combating juvenile delinquency, maintenance of children

delinquency centres, authorisation and provision of security services assisted by the police at mass public

events provided that there are no „municipal police“ units in place or they are insufficient in size and

capacity.

Within the meaning of art. 46(1)(8) of the Local Self-government and Local Administration Act

municipality or area mayors are responsible for the securing of public order and they are empowered under

Articles 70, 72, 80, 81, 83, 85 and 87 of the Ministry of Interior Act on the relevant territory until the arrival

of the police body. This means that the area or municipality mayors can perform checks in order to establish

the identity of persons, apprehend persons, search people and their belongings, check premises without the

consent of their owners or the people living in them, or in their absence, and use physical power or weapons

as a measure of last resort.

The activities related to the protection against disasters are executed on national, district and

municipal level. Municipality mayors develop municipal Disaster Response Plans. Following a decision of

the municipal council the municipality mayor can organise volunteer formations for protection against

disasters20

. The Disaster Protection Plan provides for the interaction between the units of the Unified Rescue

System and secure opportunities for progressive joining of forces and resources according to the expansion

of the disaster. The coordination of the Unified Rescue System units is done through the operational centres

of the General Directorate „Fire Safety and Protection of Population“ to the Ministry of Interior.

The activities related to the defence and deployment preparation which are executed by the

institutions and the municipal and district administrations are regulated by the Law on Defence and Armed

Forces of the Republic of Bulgaria, Law of the State Reserves and the War Time Reserves, Directive on the

preparation of the central and territorial administration, companies, organisations and public enterprises to

be ready to operate in time of war, adopted with the Council of Ministers Decision No 166/25.03.2002,

Council of Ministers Decision No 258/02.12.2005 on the activities and tasks of the defence and deployment

preparation of the executive bodies and legal entities to perform war-time tasks and the Instructions of the

Interinstitutional Council of Defence Industry and Security of Supply, as well as other regulations.

Interaction between the central government and local authorities

20

Art. 41 of the Disaster Protection Act.

61

Regarding the introduction of unified standards for video surveillance on the territory of the

municipalities

As conventional crime is a result of a number of social factors, the interaction between the central

government and local authorities in this sector is essential. In this respect, joint actions have been undertaken

to introduce unified standards for video surveillance on the territory of the municipalities. Active work is

currently taking place for the establishment of video surveillance systems. The Ministry of Interior has

developed a methodology containing requirements and criteria for the development of video surveillance

systems. This system provides for the law enforcement bodies together with the local authorities to be able

to develop video surveillance systems in the settlements. In this respect, it has been planned for a concept for

the development of an integrated national system for video surveillance and a national crisis centre to be

established. The systems for video surveillance in retail and other establishments visited by a lot of people

will be filed in registers.

Regarding road safety

Road safety is essential for reducing the casualties on the roads. In this respect, it is necessary for the

municipalities to develop security policies in this field designed to be implemented on a local level. The

security policies are developed within the district strategies and programmes, as well as in the municipal

programmes for the improvement of road safety and also reflect in the municipal ordinances (for the

organisation of road traffic, for the public order, etc.).

Regarding the existing prerequisites for radicalisation in certain parts of the country

In certain parts of the country there are prerequisites for radicalisation leading to violence. A number

of legislative, administrative and organisational measures have been adopted on a national level with regards

to the prevention and counteract terrorism, radicalisation and foreign fighters. This is to reaffirm the

declared clear and firm support to all international initiatives in this area. In this respect, a Strategy to

Counteract Radicalisation and Terrorism Decision (2015–2020) and a Plan for the Implementation of the

Strategy for the period 2015–2020 have been adopted by a Decision of the Council of Ministers. These

documents provide for the development of effective cooperation mechanisms between the central

government and local authorities, as well as for the involvement of NGOs and religious organisations.

Regarding the operations on the integration of migrants and refugees

Important emphasis of the local self-government activities are the operations on the integration of

migrants and refugees. In the EU Member States with bigger migrant communities local authorities have

taken the key role in creating conditions for the integration of the migrants on their territories.

4.4.2. Funding of the service/activity

The costs for certain activities like the maintenance of the voluntary formations for protection against

disasters and the defence and deployment preparation are borne by the national budget as a state-delegated

62

activity. The municipality mayors have to provide for funds in the municipal budgets for securing the

implementation of the municipal Disaster Response Plan. Activities like the work of the commissions for

combating juvenile delinquency are borne by the municipal budget.

Providing the municipalities with an opportunity to establish volunteer formations for disaster

response is connected with the strict requirements for the implementation of such activities as well the tools

and mechanisms for their funding.

No additional funds are provided by the state budget or there are no additional own sources of

funding in the municipal budgets which could secure the establishment and maintenance of the „municipal

police“ units in all municipalities. There is a lack of financial opportunities and tools of the municipalities

through which they could maintain the public order and counteract crime against households and persons as

well as the violation of municipal ordinances. Municipalities need also a mechanism for effective

implementation of sanctions and debt recovery in cases of violations of the municipal ordinances.

In addition, in respect to art. 6(6) of Ordinance No 8121з-422/16.04.2015 for the organisation of the

activities of the „municipal police“ unit, prom. SG No 31/28.04.2015, the amount of the funding is

determined according to the agreed number of the staff, the structure of the unit and the contract duration.

Funds for the financial, material and technical support and for the social security of the staff of the

„municipal police“ units is calculated at the agreed amounts for the civil servants of the Ministry of Interior,

and include all remuneration, compensation, social benefits and other costs related to the vocational training

and career development of the employees within the meaning of the Ministry of Interior Act. The funding

for the activities of the „municipal police“ units is provided from the budget of the relevant municipality.

4.4.3. Ownership on assets/operation of assets associated with the service provision process

The part of the services transferred to be implemented by the municipalities, it is provided for that

municipalities should secure assets and ownership for providing „municipal police“ units' services and for

disaster response formations. For all other activities which management is centralised the responsibility

stays with the municipal ownership and the maintenance of assets.

4.4.4. Appointment and dismissal of the management and human resources

The management of the sector is strongly centralised. Municipality and area mayors have limited

powers in managing the different activities in the sector. Municipalities and district administrations play a

support role in the implementation of the Security sector activities, as far as they are delegated state

activities. Municipal authorities are empowered to establish the „municipal police“ units, but within the

meaning of Art. 94 (4) of the Ministry of Interior Act the organisation of these units' operations, the powers

of their employees as well as the requirements for the interactions with the structures of the Ministry of

Interior, are determined by an Ordinance of the Minister of Inferior.

63

The control and methodological guidance of the activities of the „municipal police“ units is executed

by the relevant district directorates and regional offices of the Ministry of Interior. Thus, in practice,

municipal authorities are responsible for the maintenance of the public order, traffic control and the already

mentioned potential functions of the „municipal police“ units. The freedom of the municipal authorities to

take decisions with regards to these activities is strongly limited. For the rest of the activities that are

assigned to be implemented by the municipality, area and mayoralty mayors, the control is with the relevant

legally empowered bodies that constitute a part of the central government, or with its territorial units.

4.4.5. Identified areas of concern and opportunities for further development of the

decentralization process

The Security sector is strongly centralised in view to management, standardisation of activities,

funding and control.

To raise the effectiveness of the actions for securing public order, traffic control, imposition and

collection of fines for violations as well as activities falling within the competences of the

„municipal police“ units, it is necessary for the relevant funding to be provided, however, such

measures are only partial until the implementation of the sector decentralization.

As the existing model for the establishment of „municipal police“ units is obviously not suitable

for the small- and medium-sized municipalities, it needs to be reconsidered;

Insufficient administrative and financial capacity of local authorities, especially of medium- and

small-sized municipalities for protection against disasters, fires and emergency situations;

The volunteer formations for disaster response at local level are underdeveloped, incl. the

establishment and securing of volunteer formations for disaster response with financial and human

resources, facilities and equipment, and motivation to participate.

4.5. Analysis and evaluation of the decentralization process in the Public Administration sector

4.5.1. Sector management and control

Administrative reform that has been taking place in Bulgaria puts serious demands to the public

administration. These demands are aimed at developing of such administrative management that will be

more effective and more open to the needs of the citizens. The key driving force of every modern

administrative system is the provision of quality public services fully corresponding to the needs of people.

In Bulgaria traditionally emphasis has always been put on what is common and unique of its kind in

the approach for developing the central and local administration. This is reflected in the adopted

Administration Act and Civil Servants Act. The adoption of these two acts is an important step towards the

development of the Bulgarian legislation and its harmonisation and accession to the EU structures. The two

acts should be considered and evaluated in parallel due to the nature of public relations which are the subject

64

of their regulation. While the Administration Act is based on the principle that should be used as a basis for

the establishment of the administrative units of the central and regional government bodies, the Civil

Servants Act determines the main principles for the occurrence, performance, amendment and termination of

the civil servants' term of office and powers as well as their role in the execution of their functions, as

provided for by the legal acts and by the appointment bodies.

The Administration Act provides for the separation of the administration to central and territorial.

The territorial administration includes the municipal and district administrations as well as the specialised

territorial structures of the central administration. The subject of analysis in the following pages are the

district administrations.

The adoption of the Law of the Administrative Territorial Structure of the Republic of Bulgaria in

1995 provided for a very important legislation to come into force that includes formulated conditions and

criteria for the establishment of the units that are subject of this law, as well as for the setting of relevant

procedures, which turned it into a necessary regulator of the administrative territorial structure. This law

contributed to the establishment of the administrative territorial units working closely with the population

and made the self-government process functioning more effective.

Currently, country's territory is divided into 28 districts covering 265 municipalities. Within the

meaning of the Administration Act, the management of the administrative territorial units is executed by

territorial bodies of the executive power and its administrations. For the districts, these are the district

governors and for the municipalities – the municipality mayors.

District administration

The district is the administrative territorial unit for the implementation of the regional policy,

performance of governance locally and provision of balanced compliance between the national and local

interests. Self-governance is not performed on district's territory and the District Governor is the sole

authority of the executive power. The District Governor is appointed by a Council of Ministers Decision and

is empowered to perform the functions provided for in the legislation. District Governor's functions are

rather general and are in the area of state policy implementation, coordination and control in respecting the

legality in general. A little more specific are District Governor's functions in the field of state ownership on

the territory of the district and on the regional development.

The District Governor can issue orders falling within the limits of his/her powers. The District

Governor is empowered to control the legitimacy of the acts and activities of the local self-government

bodies and local administration. The District Governor can bring unlawful acts back into new discussion

with the municipal councils or to challenge them before the relevant Administrative Court. The District

Governor can repeal unlawful acts of the municipality mayors. District Governor's orders can be appealed to

the relevant Administrative Court.

65

District Governor's operations are supported by Deputy District Governors and by District

Administration. The Deputy District Governors are appointed by the Prime Minister.

Municipal administration

The municipality is the main administrative territorial unit where self-government is executed. Self-

government represents the right and the real opportunity for the citizens and the local authorities elected by

them to regulate and manage a substantial part of the public activities within the law and their responsibility,

and in the community's interest. Self-government is implemented through the local authorities. The local

authorities are the municipal bodies which are empowered by law to take certain management decisions. In

Bulgaria these are the municipal councils and mayors. Both of them are elected directly by the electorate.

The direct participation of the citizens in the municipal activities and the development of the municipal

policy is guaranteed by the law. The residents of the municipality can exercise this power mainly through

four forms: local referendum, general assembly, written submissions and local elections.

In the Bulgarian legislation the powers of the different bodies of the local authorities, i.e. the

municipal councils and the mayors, are clearly differentiated. In their prevailing part the specific powers of

the individual bodies are subject to regulation in Rules of Procedure and Ordinances adopted by the

municipal councils in implementing the special legislation provisions. It should be emphasised that the

powers of the municipal councils can be assigned only by a law, while the powers of the mayors can be

assigned also by acts of the central executive bodies and the President of the Republic of Bulgaria.

The body of the executive power in the municipality is the mayor. Unlike the district governor, the

mayor is subject to electoral mandate, i.e. the mayor is elected by the population for a 4-year period. The

mayor is responsible for the implementation of the municipal council's decisions. This means that the mayor

and his/her team, i.e. deputy mayors, municipality secretary and municipal administration, should provide

for the implementation of these decisions. The mayor is responsible to the electorate, law and municipal

council for his/her activities. The functions of the municipality's mayor are provided for in the Local Self-

government and Local Administration Act. The mayor also operates in his/her capacity as of a local

government representative to the municipality. Being a public administrative body, the mayor organises the

execution of the tasks provided for in the legislation, the President's and the Council of Ministers acts.

However, in cases provided for by a law, the mayor can perform functions assigned by the central

government bodies.

The relationship between the municipal council and the mayor are based on the opportunity for the

collective body to repeal mayor's acts performed in breach of the decisions. The municipality mayor can

bring unlawful or inappropriate acts back into new discussion with the municipal council. Challenging

should be submitted in a written form within 7 days and has a postponing impact. Provided that after the

revision the municipal council reaffirms its decision, the mayor must implement it, or if the decision is in

breach of the law, the mayor must refer to the relevant Administrative Court. The municipal council, in turn,

66

can repeal administrative acts, issued by the municipality mayor which are in breach of the acts adopted by

the council, within 14 days after their receipt. The same term applies to the challenging of unlawful

administrative acts, issued by the municipality mayor, to the relevant Administrative Court. Municipal

council's acts can be challenged to the relevant Administrative Court.

One of the important powers of the municipal council is to determine the municipal administration

structure and the funds for the remuneration of the staff from the municipal budget, on the grounds of a

mayor's decision. The Administration Act, Civil Servants Act and the regulations for their implementation

can also be considered as laws that are directly and immediately related to the structuring of the municipal

administration and the functioning of its main units, respectively – the competences of the different staff

categories.

The essential role in the performance control system is plaid by the mayor in his/her capacity of a

head of the administration. The mayor is supported by the municipality secretary who is empowered to

organise the activities of the administration.

The Strategy for Decentralization 2006 – 2015 does not contain a specific priority for the

development and strengthening of the municipal administration. In 2010 the Priority 7 „Effective application

of the good governance principle of the Council of Europe on a local level“ was incorporated in the Strategic

Objective 1. The performance evaluation of the measures included in the programme is positive. It is

necessary to expand the activities for promoting the Good Governance Label and to raise municipalities'

motivation to apply for its granting.

4.5.2. Funding of the service/activity

District administration

The activities of the administration and the maintenance of the premises is borne fully by the Council

of Ministers budget.

Municipal administration

The funding of the municipal administration is a shared responsibility between the central

government and local authorities. The funds for the remuneration of the municipal administration staff are

provided by the state budget according to the allocation of local and state-delegated activities which is

approved by the Council of Ministers on an annual basis. The financing of the „Municipal administration“

activity is a local operation and secured with funds from the municipal budget. The costs for the municipal

administration in the period 2008–2011 were relatively stable with a slight increase of their relative share of

the municipal cost in 2011 and 2012, but after that the show a minor drop down again. The 2014 Report on

67

the Implementation of the State Budget of the Republic of Bulgaria shows a growth in the remuneration

costs in the municipalities compared to 201321

.

4.5.3 Ownership on assets/operation of assets associated with the service provision process

District administration

The premises of the district administration are state property and the fund for their maintenance is a

part of the state budget.

Municipal administration

The premises of the municipal administration are public municipal property. The provision of the

funding for their maintenance is fully within the responsibility of local authority.

4.5.4. Appointment and dismissal of the management and human resources

In general, despite of the measure taken throughout the years to regulate the number of the

administration staff on municipal and district level, no balance has been reach in relation to the performed

functions and activities. The high level of governance centralisation in most of the sectors and the

considerably higher salaries in the administrations of the central government attracts better trained experts

which creates a risk for decreasing the capacity and quality of services in the administrations of the small-

and medium-sized municipalities, as well as in the district administrations.

District administration

The District Governor is the head of the district administration and constitutes a body for appointing

the civil servants, and the District Governor is also the employer of the employed staff. The District

Governor's rights and duties are provided for in the Labour Code and the Civil Servants Act and include

management, leadership and control functions with regards to the organisation of administration's activities

and human resource management.

District administrations are a part of the executive power administration and follow a common model

of internal organisational structure. The model provides for subdividing each administration to a general and

specialised one, where each of them includes directorates, departments and sectors. District administrations'

structure is uniform which can be evaluated positively. All district administrations apply the same rules of

procedure, namely the Rules of Procedure of the District Administrations. According to these Rules of

Procedure district administrations are structured into two directorates. The general administration is

organised in the Directorate „Administrative and legal services, finance and property management“, and the

specialised administration is organised in the Directorate „Administrative control, regional development and

21

2014 Report on the Implementation of the State Budget of the Republic of Bulgaria, p.70

68

state property“. The Rules of Procedure contain separate annexes on the number of the individual units

within each district administration. In 2015 the number of employees in the district administrations varied

from 25 employees (Pernik District) to 57 employees (Sofia-City District).

The structure of the district administrations is unified, it is approved by the Council of Ministers and

looks as follows22

:

Chart 5 District administration structure

Not any ministry has taken advantage of the opportunity provided under Art. 44 of the

Administration Act to organise their territorial units within the structure of the district administration.

The same job posts as in the central administration apply also to the district administration.

According to the data in the 2014 Report on the Status of Public Administration the total number of district

administrations for the last three years decreased compared to the 2007 levels. In 2012 this number was

1068, and in 2013 and 2014 – 967. Currently, the number of people employed in the district administrations

is comparable to their number in 1999.

Municipal administration

The municipality mayor is a body responsible for the employment of a municipal administration

staff, and thus, their employer, except for the administration in the areas and mayoralties where this function

is executed by either the area or mayoralty mayor, respectively. Therefore, the mayors' rights and duties are

as provided for in the Labour Code and the Civil Servants Act and include management, leadership and

22

Source: Administrative register: http://ar2.government.bg/ras/preview.html

69

control functions with regards to the organisation of administration's activities and human resource

management.

The essential role in the performance control system is plaid by the mayor in his/her capacity of a

head of the administration. The mayor is supported by deputy mayors and municipality secretary who are

empowered to organise the activities of the administration.

The municipal administration is a part of the executive power administration and follows a common

model of internal organisational structure. This model provides for subdividing each administration to a

general and specialised one, where each of them included directorates, departments and sectors. With

regards to the municipal administration, the Local Self-government and Local Administration Act and the

Classification of Positions in the Administration provide for the establishment of specific rules which equip

municipal administrations with more opportunities for setting out their structure. For example, unlike the

central government administrations, departments and sectors in municipalities can be organised also as

independent structural units without being part of directorates or departments. For the municipal

administrations, the number of employees in the specialised administration is higher (above 70% of the total

number of employees where for the central government administration it is not less than 60%). There are

lower standards for the number of employees in the municipality directorates and departments: the number

of employees in a central administration directorate is not less than 11 people of permanent staff, and for

municipal administrations of municipalities with a population of 50 000 people this number is not less than 7

people of permanent staff; the number of employees in a central administration department is not less than 6

people of permanent staff, and for municipal administrations of municipalities with a population of 50 000

people this number is not less than 4 people of permanent staff.

According to the data in latest 2014 Report on the Status of the Administration the number of

employees in the municipal administrations slightly increases from 22 248 people of permanent staff in 2012

to 22 252 people of permanent staff in 2014. The number of employees in the municipal administrations of

areas in the big cities has increased from 1925 to 1943,5 people of permanent staff, accordingly. 23

The data

of the National Statistical Institute which methodology differs from the methodology used for determining

the number of employees in the annual reports on the status of the administration, show that in March 2015

the municipal administrations permanent staff accounted 33 124. Unlike the central government

administration where there has been a considerable decrease in the number of employees for the last 4 years,

the number of employees in the municipal administration has not dropped down. Amendments to the

Administration Act adopted in 2012 provided for a prohibition for increasing the total number of employees

in the administrations as set to the date of entering the Act into force, however, this requirement does not

apply to the municipalities.

23

Report on the Implementation of the 2014 Decentralisation Strategy and Programme.

70

The same job posts as in the central administration apply also to the municipal administration. A

number of specific municipal job posts is provided for, e.g. chief architect and chief engineer.

It should be mentioned that the share of women in the territorial structures of the European countries

is also higher than the share of men.

According to the above mentioned NSI as a source of data, since 2009 the structure of employees

based on their level of education has shown that the share of staff with higher education is 55% of the total

employees. The employees with university degrees in economics have the highest share of 20,8%, followed

by the employees with a technical degree – 13,1% The level of education of women is higher than those of

the men.

From e territorial point of view there are significant differences on municipal level. The employees'

level of education goes up with the increase of the demographic mass of the municipalities, i.e. of their

centres. The highest level of education belongs to the employees in the municipal administration and the

capital city mayoralties. The employees of the municipal administrations of the bigger cities also have a high

level of education.

The municipal council is empowered to establish municipal administration services in different areas,

mayoralties, settlements or parts of them, and to decide on the their functions.

In the municipal budgets the costs for the maintenance of the municipal administrations are included

under the Function „Common public services“, state-delegated activities, activity 122 „Municipal

administration“.

4.5.5. Identified areas of concern and opportunities for further development of the

decentralization process

The Public Administration sector has contemporary regulation in compliance with the status of an

EU Member State. A part of the municipal staff has the status of civil servants. The problems are

related to the vocational training of the municipal administration staff of the small- and medium-

sized municipalities;

the reported weaknesses of the public administration are related to bad practices in employing the

administration's staff, as well to the insufficient effectiveness of the anti-corruption mechanisms

and the low level of the e-government services;

The control of the district governor on the activities of local authorities is insufficient and the right

balance between the supervision and the interference in their operations is not always found;

Extremely important issues have emerged during the implementation of the administrative and

territorial reform in the country, some of which have not yet found their proper solutions There are

71

controversial opinions on the further development of the process for improving the functional and

institutional organisation of local authorities. In this respect, the very important issue is whether it

is necessary to re-structure the second self-government level districts or the second self-

government level itself, i.e. regional level, to be above the district level in view to the

achievement of effectiveness and efficiency of governance.

There are several key aspects concerning the practical application of the Administration Act and

the Civil Servants Act in the re-structuring of municipal administrations and the problems

resulting from its implementation:

- The mandatory structuring (under the provisions of the Administration Act) of the municipal

administration into directorates does not take into account the specific characteristics of the

activities of the municipalities and the number of their employees. It is undisputable that the

unification of the structure of the administration's bodies is a step forward in the right

direction. At the same time, however, with regards to the municipalities it also has its

disadvantages. The mandatory units provided for in the general administration does not fully

correspond to the specific activities of the municipal administration, as in certain aspects a

part of the units also perform functions that rather apply to the activities of the specialised

administration;

- The demands for the number of employees had a particularly negative impact on the

individual units, i.e. directorates, departments, sectors which, in turn, forced the small

municipalities (with small number of employees) to form in practice two directorates as the

district administrations, i.e. the structuring has an impact on the following: general

administration – one directorate, and specialised administration – one directorate. Hardly such

a structure could give information about the activities of the individual aspects in one

municipal administration. It should not be forgotten that one of the purposes of the

administration in the municipalities is the provision of quality services to the population

which could hardly be guaranteed by an administration which number of employees is less

than the „optimal minimum“ that, in turn, leads to the creation of a series of complementary

side functions of the experts working in the administrations.

- After the first local democratic elections the administrative capacity of the municipalities

gradually stated to raise. This capacity building process suffered by the weaknesses and

disadvantages of the administrative governance that were common for the whole country –

political purge, unjustified structural changes, formal competitions, insufficient motivation of

the staff, etc. These were piled up additionally with other negative influences. For example,

decisions for equal cuts of the central and local administration were taken nearly every year

72

not taking into consideration that one of them is getting free from already unspecific activates

and the other one is in the process of development.

- It is difficult to find people with the necessary knowledge, skills and qualifications for the

leading positions in the municipal administrations. It is not a secret that at the moment in

many small- and medium-sized municipalities there are vacant permanent employment posts

which (or rather which functions) are executed under services contracts – lawyers, chief

architects, chief engineers, etc. The unattractive salary also matters.

- The nature of the self-government tasks themselves, i.e. to meet the daily needs of people,

requires the application of such model of the local services which involves more NGOs and

civil society organisations. In essence, the local administration capacity in every developed

democracy is enriched and further developed by a number of charity and volunteer activities

of the local community. This particular essential characteristic defines the big variety within

the local administrative structures which follow the social and demographic specifics of the

territorial community, reflecting the direction of the civil sector development in it.

- In the recent years, the local administration was involved and participated in various training

programmes. The subject area of these trainings was identified not so much by the needs on

local level, than by the aims and interests of the programmes which funded these trainings. It

appeared that one and the same municipal employees were trained several times in similar

subjects but by different training organisations. There is this obvious paradox that in having a

considerably high relative share of the municipal employees time dedicated to training and

improvement, they are missing skills and capacity to implement important municipal tasks.

We talk about skills to develop successful projects, to organise their effective implementation

in line with the requirements of the funding body; to identify, evaluate and justify local

priories, to deliver municipal marketing activities, etc. At present, there is no sustainable

mechanism for developing, maintaining and raising the administrative capacity on municipal

level. A large part of the trainings, for example, the trainings provided by the Institute of

Public Administration, National Association of Municipalities in the Republic of Bulgaria

and other institutions and NGOs are of rather inconsistent nature and in specific subject areas

usually related to absorption of EU funds and to the legislation in a few restricted areas. It has

to be underlined that the issues concerning the administrative capacity of the municipal and

district administrations staff are included in the Strategy for the Development of Public

Administration 2014–2020 and detailed in the Programme for its implementation. That is why

it is necessary for certain priorities and measures to be included in the Decentralization

Strategy which are related to the administrative capacity of the territorial administration.

73

- There is high risk for appointing unskilled employees in the municipal administrations of the

small- and medium-sized municipalities due to the limited selection opportunities, the strong

dependence on political parties' or family ties and the relatively low levels of salaries. In a lot

of municipalities there are no applicants to comply to the necessary education and minimum

requirements. Traditionally, local government is not well supported with exerts. Polarisation

and the change of staff related to it, the low level of expertise and the insufficient

remuneration have determined a low public status of the local administration.

- Insufficient amount of work is done in the local authorities and the level of the automation of

management, implementation of high-efficiency technologies in the execution of powers, the

application of the contemporary methods and information exchange procedures is still very

low. Information technologies are not an end of themselves but a tool with a big potential of

improving the quality of the services and the civil society participation. Local authorities play

a key role in the communication with the citizens. Local administrations have different

success with regards to the administrative services they provide. In general, country's

progress is bigger in the implementation of the „one stop shop“ services compared to the

development of the e-services. Some municipal administrations have already gained good

experience in the „one stop shop“ services and this organisational principle reflects in the

operation of the Information and Administrative Services Centres for citizens. With regards to

the e-services, two thirds of the municipalities do not provide such services24

. Unfortunately,

local and national authorities still do not operate towards the implementation of the e-

government. It is about time for a working group of experts in that area to analyse the

experience both in the country and in the world practice. The analysis should be used as a

basis for the development of an Ordinance to regulate the rules of data exchange between the

information systems. The coordination and funding of this activity should be secured by the

state, and namely, by the structures responsible for the implementation of the E-government

Strategy. Further delay of the activities in this aspect will have a retaining effect to the full

use and development of the functioning information systems of the public administration and

municipalities. The implementation of the provision of on-line administrative service will

also be retained.

I. 5. Quanitfied SWOT analysis of the overall state governance decentralization process

over the analysed period

The analysis of strengths, weaknesses, opportunities and threats (SWOT analysis) is a method

originating from strategic business planning, and since the 1980s it has been widely used in regional and

24

Regional profiles: 2015 Development Indicators, Institute for Market Economy, 2015.

74

local development planning. SWOT analysis aims to extract and categorize the most important conclusions

of the analysis and to justify the definition and formulation of the strategic part.

The conclusions/findings of the analysis forming the state of the analyzed object or process are

divided into four categories depending on their nature (favourable or not), and whether or not they are

inherent to the object of study (in this case the decentralization of state governance in Bulgaria), or they are

resulting from external environment (international trends):

a. internal to the object of study - strengths and weaknesses;

b. external - threats and opportunities.

The four categories are presented in a four-cell table.

The elements of the strategic part - vision, goals, priorities, and measures are identified and defined

based on the distribution and the ratio of conclusions of the analysis and these four categories (strengths and

weaknesses, threats and opportunities for the object). In this respect, it may be assumed that SWOT analysis

is a bridge between the findings of the analysis and the formulation of guidelines for future development.

For quantitative assessment of the ratio of categories/findings of the analysis, the so-called quantified

(quantitative) SWOT analysis is used. This analysis employs the most important findings obtained from the

analysis (redefined and summarized, if required), ranging them from 0 to 10 depending on their

importance/significance or on the extent of their manifestation. The average of these ratings by categories

are indicated on the axes of a two-dimensional Cartesian coordinate system.

Using this method, the ratios between the categories of conclusions are calculated based on the areas

located between the values on the axes for each quadrant. Quadrant with the largest area is crucial to the

formulation of strategy. If the largest area is obtained in:

Quadrant I (located between the axis of opportunities and weaknesses), then the strategy should be

towards diversification, i.e. using the existing favourable factors and improving the weaknesses;

Quadrant II (located between the axes of opportunities and strengths) - the strategy is aggressive, i.e.

increasing the area - enhancing the strengths and using the opportunities;

Quadrant III - (located between the axes of threats and strengths) - recovery strategy, i.e. recovering

the strengths, while reducing or limiting the threats;

Quadrant IV - (located between the axes of threats and weaknesses) - defensive strategy, recovery

and moving to another quadrant.

In determining the strategic objectives, we aim at either connecting favourable factors (strengths and

opportunities), and/or eliminating or transforming, or neutralizing the unfavourable ones (weaknesses and

threats) based on favourable factors.

75

Table 9. Quantified SWOT analysis of the decentralization process

Strengths Rating Weaknesses Rating

Availability of trained human

resources in the field of

decentralization 6.4

Lack of consensus on a model for

future administrative-territorial

organisation with respect to the

second level of governance

9.2

Experience in developing strategic

documents on decentralization 6.4

Imperfect legislation regulating

intermunicipal cooperation to

produce and provide common

services

7.8

Achieved good level of

decentralization in certain sectors 6.6

Improper division of municipal

services to delegated, whereas a

number of outsourced services meet

the criteria for local services

8.4

Established forms of dialogue

between central and local authorities 7.0

Incoherence of responsibilities for

the provision of services in certain

sectors and the powers and resources

of municipalities

8.0

The existence of individual powers

of local authorities in governance,

funding, and human resources

selection

6.4

Ineffective operation of CDSG

7.6

Tax powers of municipalities and

established local tax administration 6.8

Small share of municipalities’ own

revenues 6.4

Presence of properly operating

municipal associations, incl.

NAMRB 6.4

Lack of capacity to locally deal with:

domestic crime, especially in

villages; theft of harvest; fires,

floods, and other disasters

6.4

Municipalities have property rights

to perform their functions and for

the purposes of local development 8.0

Lack and/or shortage of highly

qualified expert and managerial

positions in small and medium-sized

municipalities

7.0

Local self-government in Bulgaria

has a long tradition 7.0

Strong dominance of sectoral policies

and lack of levers for their

coordination at district level

7.3

76

Increased share of municipalities’

own revenues 5.2

Insufficient number of representive

members of CDSG 6.9

Availability of forms of democratic

decision-making (public forums,

mayoral councils, etc.)

6.7

Limited powers for municipal control

over school principals 6.2

Increased transparency of formation

and distribution of state transfers 6.0

Limited responsibilities for costs in

terms of delegated services 7.0

Local authorities play an important

role in managing local and regional

development and rich experience in

project implementation

6.7

Lack of effective mechanisms for

civilian control over the actions of

elected municipal councillors and

mayors

7.6

There are various forms of citizen

participation in the formulation and

implementation of local policies 6.0

Low participation of local

community in the development,

implementation, and monitoring of

municipal policies

7.3

Municipalities offer a wide range of

services for citizens and business 7.2

Availability of practice to delegate

powers and resources to

municipalities and municipal

departments to provide services

6.8

Strengths – total rating: 6.6 Weaknesses – total rating: 7.3

Opportunities Rating Threats Rating

Impact of the deepening integration

of Bulgaria into the European

structures on the social and economic

development 5.0

The presence of global issues such as

the economic and financial crisis,

issues with refugees, etc. diverts

public attention and contributes to

the reduction of priority of

decentralization process

7.8

77

Implementation of the principles of

good local governance allows for the

gradual increase of the effectiveness

and efficiency of local communities

5.8

Centralist traditions of public

authorities in Bulgaria 7.9

Decentralization of municipalities by

providing them with more functions

and resources

6.0

Lack of coordination between

different institutions at local,

regional, and central level

7.6

EU membership is a source of

additional funds for development and

an example of successfully

implemented decentralization models

7.4

Domination of mayors’ political

interests of over those of local

communities 7.8

Achieving effectiveness and

efficiency by building a second level

self-government and redistribution of

roles and responsibilities between the

levels of government - central and

local

7.0

The issue of decentralization is

ranked high enough on the list of

national priorities 8.0

Bulgaria’s membership in the

Council of Europe and the

ratification of the European Charter

of Local Self-Government (ECLSG)

is an external factor, which

stimulates positive changes in local

self-government

7.0

Lack of understanding of the benefits

of decentralization

8.0

Expanding the involvement of civil

society in the processes of decision-

making requires the development of

decentralization process

6.4

Opposition on behalf of politicians

and central administration to

decentralization process 8.9

Adoption of the new

Decentralization Strategy by the

National Assembly

7.2

Large public issues at national level -

low income, pensions, high

unemployment, bad health services,

no security, etc. dominate and

relatively downplay the existing local

issues caused by the lack of

conditions for the development of

7.5

78

local self-government

Strong centrifugal forces in

Bulgarian society (social

stratification, lack of unifying ideas,

emigration)

7.6

Opportunities – total rating: 6.5 Threats - total rating: 7.8

Chart 6. Quantified SWOT analysis

In the period under review, the result of the SWOT analysis of the decentralization process of self-

government in Bulgaria is characterized by the following ratings: strengths (6.6), weaknesses (7.3),

opportunities (6.5) and the magnitude of the threats is (7.8).

As seen from the results of the quantified SWOT analysis in Table 6 and Chart 9, the factors of

analysis form a rhomb-like figure with almost equal sides and areas in the coordinate system. The largest

area resulting from the ratio between the categories of findings is located between the axes of threats and

Strengths

Weaknesses

Threats Opportunities

79

weaknesses, i.e. in the fourth quadrant. These results indicate that defensive strategy should be implemented.

This strategy aims maximum economy of resources and involves reduction of the volume of activities.

I. 6. Analysis of the identified problem areas applying the problem tree method and

setting the objectives based on this method

One of the most effective ways to formulate objectives that are relevant (appropriate), specific

enough, hierarchically subordinate, and clear goal-tool correlation, is by using the issue analysis method, by

developing an issue tree. Its application has two main stages:

1. Developing an issue tree.

2. Transforming the issue tree into an objective tree.

The issue can be defined as a discrepancy between the existing and the desired situation. The most

important aspects of the analysis of the existing situation is the identification of the issues and the

establishment of causality between the existing issues. A well-targeted intervention requires good

knowledge of causality resulting to the current state of issues. This is extremely important since a typical

and common mistake is to move from identifying a single issue directly to actions to solve it without

knowing the reasons for it. This results in treating the symptoms without treating the disease and it often

creates new issues. Without understanding the root causes, the measures adopted might be ineffective, or

even worse – they could have more negative effects.

The development of the issue tree includes two steps:

1. Identifying the key issues;

2. Developing an issue tree to establish cause and effect.

The issues must be included and should be drawn from the analysis of the condition. If external

factors are crucial, then intervention from the State may be unnecessary or should focus on mitigation

measures, rather than the intervention of uncontrolled causality.

In the development of an issue tree, one major (main) issue is chosen and it is decomposed by

searching (clarification) of its causes. The main issue is recorded and then a second related issue. Then:

If the second issue is the cause of the first one, go to the lower level (first level);

If the second issue is a consequence of the first one, move on to the upper level (third level);

If it’s neither cause nor effect, it is recorded at the same level (second level).

With the expansion of the tree, the remaining issues are attached to it in the same manner. The review of

the analysis of the issues could lead to the occurrence of another main issue at a later stage, but this doesn’t

affect its validity.

80

Using the issue tree method described above, the following issues were identified defining poor

environment for the functioning of public institutions, leading to unsatisfactory level of services for citizens

and businesses: They are shown in the summary figure of issue tree below.

The benefits of the issue tree method are found in its visual presentation, which provides greater clarity

for decision-makers and other stakeholders. Another great advantage of developing an issue tree is that it’s

possible to move on to an objective tree almost directly. The issue tree illustrates the negative aspects of the

current situation, while the objective tree shows the positive aspects of a desired future state. To that end

issues should be redefined into goals. The objective tree is a mirror image of the issue tree. Cause and effect

are transformed into money and results. Thus, the objective tree gives us a clear view of the desired future

situation - the vision and hierarchy of resources - strategic objectives and results that will be obtained with

the implementation of priorities and measures set out in the strategic part of the Strategy and the Program for

its implementation.

81

Table 10. Issue tree

Administrative decentralization Financial decentralization Political decentralization Regional development

Issues –

effect (third

level)

1.1. Lack of capacity to locally deal with:

domestic crime, especially in villages; theft

of harvest; fires, floods, and other acts of

God of local nature.

1.2.Lack of opportunities to provide

optional municipal services

1.3.Limited opportunities for municipal

control over school principals

1.4.Limited powers of mayors and

directors of municipal departments

1.5.Imperfect legislation regulating

intermunicipal cooperation to produce and

provide common services

1.6. Improper division of municipal

services to delegated and local

2.1. Small share of municipalities’

own revenues

2.2.Small share of tax revenues in

municipal budgets

2.3.Lack of rules for determining

the total amount of capital subsidy

2.4.Limited powers for costs for

delegated services

2.5.Lack of opportunities for

determining user fees for optional

municipal services

3.1. Lack of civil society

organisations united by territory

3.2.Insufficient involvement of

local community in the

development, implementation, and

monitoring of municipal policies

3.3.Lack of regulation of the

involvement of municipalities in

the development of legislation on

local self-government

3.4.Limited capacity of

municipalities to determine cost

standards for delegated activities

4.1. Ineffective national policy

for regional development

4.2.Increase of social and

economic disparities in regional

development

4.3. Negative demographic

processes, migration,

depopulation

4.4.Failure to maintain and use

existing social and technical

infrastructure in underdeveloped

regions

Issues

(second

level)

1. Limited scope of local competences 2. Lack of financial resources

at local level

3. Inefficient mechanisms for

civil control over the actions of

local officials

4. Failure of the State to

involve in correcting regional

disparities - no national

financial instrument

Issues –

cause (first

level)

I. Unbalanced distribution of

functions and managerial powers

II. Unbalanced distribution of

financial resources

III. Lack of civil organizations to

represent local community

IV. Existence of a

centralized model of

government

82

Resulting

issue (third

level)

Resulting issue

from 1st level issue

and 3rd

level cause

(second level)

Root issue

(first level)

Chart 7. Issue tree

EFFECT

CAUSE

1.1

1.2

1.3

1.4

1.5

1.6

2.1

2.2

2.3

2.4

2.5

3.1

3.2

3.3

3.4

4.1

4.2

4.3

4.4

1

2 3

4

I

II III IV

83

Table 11 presents the objective tree. As shown in the table, the main (strategic) objective is aimed at

solving the main issue by addressing/changing the root issue. This objective will be achieved through the

implementation of specific objectives (priorities) and operational objectives - specific measures set out in the

Programme for Strategy Implementation.

The objectives and the relevant issues are presented hierarchically:

The achievement of strategic objectives affects the system of relations between central and local

authorities by contributing to their change;

Specific objectives - priorities are focused on achieving results in certain areas by solving the

resulting issues;

The operational objectives are specific measures whose implementation shall lead in reverse order to

the achievement of the specific and strategic objectives, and ultimately to the creation of that

environment, to that future state defined in the Vision.

For example, concerning administrative decentralization, the solution to the main issue (the limited

scope of local competences), due to the unbalanced vertical distribution of functions and powers (root issue)

is sought by implementation of the strategic objective focused on transferring powers and functions from

central authorities to local authorities. This will be achieved through several priorities envisaging the

following: providing new municipal services in the Security sector and cooperation of municipalities to

provide common services; increasing municipal powers in the field of municipal education and by

transforming delegated services to local services; expanding the powers of municipalities and local service

institutions.

As shown in the table, the main (strategic) objective is aimed at solving the main issue by

addressing/changing the root issue. This objective will be achieved through the implementation of specific

objectives (priorities) and operational objectives - specific measures set out in the Programme for Strategy

Implementation.

84

Table 11. Objective tree

Administrative

decentralization

Financial decentralization Political decentralization Regional development

Specific

objectives

(priorities)

Increasing the scope of

municipal services provided by

local authorities;

Transforming delegated

services to local services;

• Increasing the capacity of

municipalities to control

school education.

Expansion of own receivables

of municipalities;

Improving financial discipline

in municipalities;

Improving the effectiveness

and efficiency of municipal

expenditures.

Encouraging the creation

of civil society structures by

territory and their

involvement in defining

adopting, implementing and

monitoring of local policies;

Expanding the

involvement of municipal

structures in decisions

affecting their interests;

Equal involvement of local

authorities in developing

legislation on local self-

government.

Creation of deconcentrated

institutions at regional level;

Strengthening the capacity of

regional institutions and

expanding their scope of

competence;

Exploring opportunities to

create a second level local

self-government.

Main (strategic)

objective

Transfering powers and

functions from central

authorities to local authorities

Improving quality and

efficiency of municipal services

Citizen control over the

actions of public institutions

Increasing the influence of

regional institutions for a

coordinated regional

development policy

The objectives and the relevant issues are presented hierarchically:

The achievement of strategic objectives affects the system of relations between central and local

authorities by contributing to their change;

Specific objectives - priorities are focused on achieving results in certain areas by solving the

resulting issues;

The operational objectives are specific measures whose implementation shall lead in reverse

order to the achievement of the specific and strategic objectives, and ultimately to the creation

of that environment, to that future state defined in the Vision.

For example, concerning administrative decentralization, the solution to the main issue (the limited

scope of local competences), due to the unbalanced vertical distribution of functions and powers (root

issue) is sought by implementation of the strategic objective focused on transferring powers and

functions from central authorities to local authorities. This will be achieved through several priorities

envisaging the following: providing new municipal services in the Security sector and cooperation of

municipalities to provide common services; increasing municipal powers in the field of municipal

education and by transforming delegated services to local services; expanding the powers of

municipalities and local service institutions.

Citizens have no control over the actions of local representatives, mainly due to the lack of interest

of the population living in a particular area. Most, if not all, civil society organisations in Bulgaria are

based on the sectoral principle, rather than the territorial principle. Therefore, the main objective - civil

control over the actions of local representatives will be achieved by: promoting the establishment of

such structures actively involved in the process of definition, adoption, implementation, and monitoring

of local policies. Strengthening horizontal correlations rather than hierarchical subordination will be also

achieved by expanding the involvement of municipal structures in decisions affecting their interests and

by seeking effective mechanisms for equal involvement of local authorities in the development of

legislation on local self-government. The practice so far shows that “agreements” do not always result in

cooperation.

Second level regions of EU Member States are the main territorial units via which the European

Cohesion Policy is implemented. In Bulgaria, the approach is formal, both in determining their borders,

and in their management. As a result, the main responsibility - to develop a regional development plan -

is realised through identical analyses, unified objectives and priorities, and territorially independant

sectoral measures.

86

This strategic objective is also aimed at strengthening horizontal correlations among stakeholders at

regional level. This implies, first, establishing a public institution at this level, strengthening its capacity,

and providing actual powers that allow for the conducting of a coordinated policy to develop the

relevant regions. The third priority - studying the opportunities to establish a second level local self-

government - aims to provide answers regarding the necessity of its establishment, the scope of services

provided, as well as the sources of revenue.

II. STRATEGIC PART

II.1. Vision, strategic objectives and priorities

Suitable environment for the effective and efficient functioning of public institutions is present,

where the scope of their responsibilities for carrying out public functions complies with the principle of

subsidiarity, and they have adequate rights and resources for decision-making and funding the provision

of the corresponding public services to consumers. This balance between services, resources, and

competence is often impaired. Usually, central authorities keep all resources and rights, while delegating

the responsibility for service provision. The shortage of funds in municipalities compared to necessary

expenses results in the reduction of the scope for users, or to the reduction of service quality. Ceteris

paribus, there is a relative over-funding at central level, leading to inefficient utilization of public

resources.

Imbalances at local level may also be seen in the presence of national restrictions on the

distribution of resources for different types of municipal services, or the powers of local authorities, in

decision-making regarding funds utilization. Fairness in the distribution of powers and resources is often

impaired as a consequence of the lack of connection between the local community and the elected

representatives in local government. This leads to the absence of dependence of local government on

taxpayers and voters, which negatively affects the selection of appropriate services, identification of

local objectives and development priorities, and efficient utilization of local public resources.

In cases where there is local imbalance, i.e. fewer services and/or lack of rights and resources

required for their provision, the adequate national policy is called decentralization. The concept for

future development of decentralization in Bulgaria should determine the direction for process

development in order to achieve optimal results corresponding to the status of Bulgaria as an EU

Member State and state governance should ensure the provision of quality public services to citizens and

businesses, balance of territorial specifics and nationwide priorities, promoting economic growth and

innovation, preservation and development of local democracy, as well as achieving efficiency and

effectiveness of management actions. To that end, in the next decade important political decisions must

be made and management actions must be adopted in the following areas:

Delegating powers and functions from central authorities to local authorities in key sectors;

Establishing adequate distribution of resources at central and local levels;

Increasing the efficiency of local self-government;

Enhancing the provision of regional services, aimed at investment and growth.

The vision expresses the direction and ultimate objective of decentralization of government. It

outlines the expectations and future characteristics of the desired result of the implementation of the

88

Decentralization Strategy. The vision of the state of decentralization of government in Bulgaria in 2025

is determined as follows:

Authorities at local and regional level provide quality public services with active

involvement of citizens in government.

Efforts will be directed towards:

Sustainable, efficient, and transparent municipal finance, and creating conditions for regional

development and economic growth;

Conducting local policy in favour of Bulgarian citizens;

Improving the scope, effectiveness, and quality of local services.

The vision so defined can be achieved in the presence of:

Distribution of services in different levels of territorial governance in compliance with the

principle of subsidiarity;

Linking the responsibilities to provide the services at all levels of government to the relevant

powers and sufficient own resources;

Linking the amount of financial resources to quality of service;

Conditions to increase effectiveness of the functioning of public institutions;

Partnership with citizens and businesses in determining the type, volume, quality, and prices

of public services, and in the process of their implementation;

Effective control of citizens over the institutions providing public services.

The vision can be achieved by working on four strategic objectives and the relevant priority

areas resulting from the analysis.

Strategic Objective 1 - Transfer of powers and functions from central to local authority in

key sectors

This strategic objective is essential to the decentralization process. Currently, there is a

significant centralization in the main public services sectors.

Decisions in this case, presented as priorities 1 to 4, are the result of the analysis of the Security,

Education, Social Activities, and Culture sectors. One important area of impact is related to increasing

the capacity of local authorities to deal with domestic crime, especially in villages; theft of harvest;

protection in the event of fires, floods, and other disasters of local nature. The range of local services

will also increase with the possibility of association of municipalities to provide common services.

Local powers will increase by transforming a part of the delegated services into local services. The level

of autonomy to be reached with the decentralization process is sector-specific. Particular attention is

89

paid to pre-school and school education, where municipalities should retain discretion to decide in

favour of local community. The decentralization process should continue and extend to cover municipal

bodies - town halls and service institutions. The priorities of the Strategic Objective 1 are as follows:

Priority 1. Increasing the capacity of local authorities for the provision of additional municipal

services.

Priority 2. Conversion of services delegated to municipalities into local ones.

Priority 3. Establishing conditions for the participation of municipalities in the development of

municipal educational institutions.

Priority 4. Increasing the powers of town halls and directors of municipal institutions.

Strategic Objective 2 - Establishment of optimum distribution of resources between the

central and local level

If Strategic Objective 1 sets out the framework of the decentralization process, Strategic

Objective 2 shows the resources for decentralization. The priorities of the Strategic Objective 2 are as

follows:

Priority 1. Expansion of municipalities' revenue bases.

Priority 2. Analysis of municipal responsibilities.

Strategic Objective 3 - Civil control upon actions of public institutions.

Strategic Objective 3 is a response to the identified imbalance between the powers of public

institutions and the effectiveness of bottom-up control over their activities. This imbalance forms

conditions for authoritarian government and encourages corruption, political pressure, and decisions

made in favor of lobbying circles. Emphasis is put on the need to encourage municipalities to implement

the principles of good governance and to create conditions for active involvement of citizens in the

process of development and implementation of local policies. The priorities in this strategic objective

are as follows:

Priority 1. Equal participation of local authorities in the development of the regulatory basis

concerning local self-government.

Priority 2. Increasing participation of municipal structures in decision-making, affecting their

competence.

Priority 3. Promotion of the establishment of civil structures on a territorial basis and their

participation in the process of formation, adoption, implementation, and monitoring of the

implementation of local policies.

Strategic Objective 4 - Increasing the influence of regional institutions for the

implementation of coordinated policy for regional development

90

Strategic Objective 4 aims at solving the issues associated with the effective provision of

services and coordination of governance at regional level.

The first priority area in this case is related to the creation of conditions for balanced

development of regions in the country by establishing public institutions at this level and strengthening

their capacity by providing adequate powers and resources for governance.

Another priority is related to the research and preparation for the introduction of a second level

of self-governance and forming administrative capacity for implementing powers. One of the key points

is to work on raising awareness of all stakeholders regarding the importance of the second level of self-

government to improve efficiency in the provision of supra-municipal services to citizens and

businesses.

After establishing the new substructures, mechanisms are to be established to monitor and report

the effect of the territorial reform. Depending on the results, measures shall be developed to strengthen

public institutions, existing at the relevant levels. The priorities of Strategic Objective 4 are as follows:

Priority 1. Creation of deconcentrated institutions at regional level.

Priority 2. Strengthening the capacity of regional institutions and broadening their field of

competence.

Priority 3. Research on the options for the establishment of a second level of local self-

governance.

II.2. Monitoring, update and coordination of the implementstion of the

Decentralization Strategy

2.1. Institutional commitment for implementation of the Decentralization Strategy

Management and coordination of the implementation of the Decentralization Strategy should still

be implemented by the Council for Decentralization of State Governance. For the Council to operate

effectively, the Council of Ministers must ensure:

Strengthening the function of CDSG as a point of dialogue between authorities, especially

when discussing draft laws related to decentralization;

Refining the structure and members of CDSG in order to increase representation and

efficiency of Council’s operations;

Ensuring the holding of regular meetings required for the functioning of the Council;

Ensuring that CDSG members attend the meetings;

Providing CDSG with resources to operate efficiently and effectively.

For the purpose of ensuring broad political consensus to implement Strategy objectives,

accountability for CDSG operation should be improved and the results of the Council’s operation should

be reported not only to the Council of Ministers, but to the National Assembly as well.

2.2. Monitoring the implementation of the Decentralization Strategy

The Council for Decentralization of State Governance shall perform annual monitoring to

achieve Strategy objectives. The Secretariat of CDSG shall organize and coordinate the preparation of

the annual report on the implementation of the Decentralization Strategy. Monitoring shall be performed

by applying a System for Monitoring and Assessing the Implementation of the Decentralization Strategy

2016-2025. This system includes:

2.2.1. Determining key performance indicators and reference values to be achieved by

implementing the Strategy.

The extent of reaching target levels shall be assessed per annum as per the six KPIs shown in

Table 12.

92

Table 12. KPIs and reference values be achieved by implementing the Strategy

KPIs Levels reached Average

level EU-

28

Target levels

2008 2014 2017 2025

Share of municipal revenues

in GDP 7.7% 6.7% 11.3% 8% 10%

Share of municipal

expenditures in CFP 19.6% 15.1% 23.5% 18% 23%

Share of municipal tax

revenue in total tax revenue 2.9% 3.1% 15.1% 6% 15%

Share of own revenue in total

revenue of municipal budgets 32.4% 34.1% .. 40% 60%

Share of expenses for local

activities of all municipal

expenditures

57.6% 52.0% .. 60% 80%

Method

1. Determine the annual values of individual indicators and to their value for the previous year:

For 2015-2017 incl. - add 1/3 of the difference between 2017-2014;

For 2018-2025 incl. - add 1/8 of the difference between 2025-2017;

2. The obtained value of indicators is divided by the estimate defined under item 1 and the

performance percentage is calculated;

Should the value of the above ratio exceed 1, this is overfulfillment;

Should the value of the above ratio fall between the proportion of last year’s value and

the expected level and 1, this is non-fulfillment;

Should the value of the above ratio is less than the ratio between t last year’s value and

the expected level, this is development in the wrong direction (centralization);

2.2.2. Implementation of the decentralization policy at national level, i.e. what is the

vertical distribution of resources, i.e. are these oriented to lower levels of government.

Key indicator: Ratio of cost growth in CFP to cost growth in municipal budgets. Should this

ratio exceed 1, that means that there is a policy towards decentralization. Should the ratio be below 1,

that means public expenditures are concentrated in the central institutions.

Other indicators:

Ratio of municipal revenues in GDP;

Share of municipal expenditures in all costs in CFP;

93

Share of municipal taxes in total tax revenues.

2.2.3. Assessment of powers of local authorities regarding budget revenue and expenditure

Key indicator: Share of own revenues in total municipal revenues

2.2.4. Assessment of municipalities’ financial standing - difference between municipal

revenues and expenditures

Key indicator: Budget balance - budget revenues (exncluding Para. 95) less budget spending

Other indicators:

Gross balance - (municipal revenues plus arrears) - municipal costs plus arrears;

Net operating balance - municipal revenue less current municipal expenditures;

Ratio of municipal revenue growth to municipal expenditure growth

2.2.5. Assessment of the dynamics of municipal budgets

Key indicator: Municipal revenue growth

Other indicators:

Own revenue growth;

Municipal expenditure growth;

CAPEX growth.

2.2.6. Qualitative analysis

Control of local authorities on local taxes and fees. Tax effort. Covering costs with revenues

from local fees for kindergartens and Social Assistance Directorates.

Control of local authorities on recruitment and determination of wages. Share of labour costs

in running costs.

Control of local authorities on CAPEX solutions and opportunities for debt financing.

Control of local authorities on planning and implementation of municipal budgets.

2.2.7. Analyses and assessment of municipalities of critical financial standing

Key indicator: Net operating balance <0

Other indicators:

Revenue/cost growth <1;

Revenue growth of the municipality/revenue growth of all municipalities <1;

Share of arrears/all costs> 5%.

94

2.2.8. Citizen satisfaction with municipal services provided

Sociological research. The following shall be analyzed:

Awareness of citizens to public services provided;

Public services used by citizens;

Public opinion on the quality, access, cost, time to provide public services;

Public opinion on the kindness and helpfulness of the staff upon the provision of public

services.

2.2.9. Sources of information to establish a System for monitoring and evaluation of the

implementation of the Decentralization Startegy

Official information, published on the websites of the respective primary budget spending

authorities, incl. MF, MRDPW, NSI.

2.3. Decentralization Strategy update

To implement the Strategy, programmes are prepared, which envisage specific measures to

achieve the set out strategic objectives and priorities. The Strategy must be updated after the expiry of

the first programme.

2.4. Link with other national strategies

The State Administration Development Strategy 2014-2020 is functionally linked to this

Strategy. It provides for measures to improve the coordination and structure of the administration at

local level, including:

Building local capacity to manage decentralized functions in the field of education, health,

and social services, while enhancing citizen involvement and control;

Coordinating the activities of district governors and regional offices in solving regional

issues;

Improving information exchange between central administrations, regional administrations,

and municipalities by establishing appropriate information systems;

Consolidating the territorial units of the central administration without compromising the

implementation of the control functions of the administration;

Establishing a consolidated territorial structure of certain ministries of the region;

95

Including territorial units of the central administration in the regional administration, where

appropriate;

Changing the statute and powers of regional development councils to increase their

responsibility and improve their effectiveness.

Therefore, such priorities and measures are not included in this Strategy. Decentralization

Strategy is synchronized with the approved sectoral strategies in the field of education, home affairs,

social policy, and culture.

In addition, this Strategy incorporates the main guidelines included in the monitoring reports of

the EU on the state of local democracy.

II. 3. Sources of funding of the Decentralization Strategy

The Strategy is financed from the state budget and funds from the operational programmes of the

Council of Europe.

Ensuring the funding for implementing the measures under the programmes for Decentralization

Strategy implementation are planned and provided by the institutions responsible for their

implementation.

96

Contents of tables and charts

Table 1. Revenue Structure of Municipal Budgets (in %) _________________________________ 122

Table 2. Distribution of functions depending on the level of governance as of 2000 ____________ 144

Table 3. Implementation of the measures under the Programmes for Decentralization 2006-2015 _ 244

Table 4. International comparisons between EU and Bulgaria on key indicators for the period 2006-

2014 ___________________________________________________________________________ 38

Table 5. Information for CDSG sessions held by years ___________________________________ 390

Table 6. Presence of incumbent members at the sessions of CDSG in the period 2006-2008 _____ 400

Table 7. Presence of incumbent members at the sessions of CDSG in the period 2009-2011 _____ 411

Table 8. Presence at the sessions of CDSG in the period 2013-2015 ________________________ 412

Table 9. Quantified SWOT analysis of the decentralization process __________________________ 75

Table 10. Issue tree ________________________________________________________________ 81

Table 11. Objective tree ____________________________________________________________ 84

Table 12. KPIs and reference values be achieved by implementing the Strategy ________________ 92

Chart 1. Minimum number of inhabitants for the formation of a mayoralty in the period 1995-2015 100

Chart 2. Implementation of the measures under the Strategic Objectives for the period 2006-2014 256

Chart 3. Share of municipalities which kindergartens are on delegated budgets for the period 2007-2015

______________________________________________________________________________ 500

Chart 4. Share of municipalities providing social services through external service providers ___ 5454

Chart 5. District administration structure _______________________________________________ 68

Chart 6. Quantified SWOT analysis ___________________________________________________ 78

Chart 7. Issue tree _________________________________________________________________ 82

97

List of references

Regulations and general administrative law acts

1. Constitution of the Republic of Bulgaria;

2. European Charter of Local Self-Government;

3. Law on Territorial Administration of the Republic of Bulgaria;

4. Territorial Division of Sofia Municipality and Major Cities Act;

5. Administration Act;

6. Civil Servants Act;

7. Protection and Development of Culture Act;

8. Cultural Heritage Act;

9. Local Taxes and Fees Act;

10. Local Self-Government and Local Administration Act;

11. Ministry of Interior Act;

12. Public Education Act;

13. Community Centres Act;

14. Public Libraries Act;

15. Municipal Property Act;

16. Municipal Debt Act;

17. Environmental Protection Act;

18. Pre-school and School Education Act;

19. Public Finance Act;

20. Decision No. 633 of 8 September 2014 by the Council of Ministers on the adoption of standards for

activities with physical volume and value delegated by the State in 2015

Strategic and programme documents, reports, agreements

21. Government Programme for Steady Development of Bulgaria 2014 – 2018;

22. Financial Decentralization Concept, adopted by CMD No. 399 of 2002;

23. Financial Decentralization Programme for the period 2002-2005;

24. Decentralization Strategy 2006-2015, adopted by CMD No. 424 of 2006;

25. Programme on the implementation of Decentralization Strategy 2006 – 2009, adopted by CMD No.

424 of 2006;

26. Updated Decentralization Strategy of 2010, adopted by CMD No. 454 of 2010;

27. Programme on the implementation of Decentralization Strategy 2010 – 2013, adopted by CMD No.

454 of 2010;

98

28. Programme on the implementation of Decentralization Strategy 2014 – 2015, adopted by Decision

No. 3 by CDSG of 17.12.2013;

29. Strategy for Innovation and Good Governance at Local Level of the Council of Europe, 2007;

30. State Administration Development Strategy 2014 – 2020;

31. Strategic Plan of NAMRB, 2014 – 2020;

32. Strategy for Development of Road Infrastructure in the Republic of Bulgaria 2016 - 2022;

33. Concept for the Introduction of Shared Services, approved at the meeting of CAR held on 5 March

2015;

34. Strategy for the development of voluntary units for disaster, fire and other emergencies protection

in the Republic of Bulgaria for the period 2012 - 2020, adopted by Protocol No. 39.26 by the Council of

Ministers of 17.10.2012;

35. Report on the implementation of Decentralization Strategy and the Programme on the

implementation of Decentralization Strategy in 2006, adopted by Protocol No. 25.2 of the Council of

Ministers’ session held on 28.06.2007;

36. Report on the implementation of Decentralization Strategy and the Programme on the

implementation of Decentralization Strategy in 2007, adopted by Protocol No. 31.2 of the Council of

Ministers’ session held on 07.08.2008;

37. Report on the implementation of Decentralization Strategy and the Programme on the

implementation of Decentralization Strategy in 2008, adopted by CMD No. 646 of 21.07.2009;

38. Report on the implementation of Decentralization Strategy and the Programme on the

implementation of Decentralization Strategy in 2010, adopted by CMD No. 570 of 28.07.2011;

39. Report on the implementation of Decentralization Strategy and the Programme on the

implementation of Decentralization Strategy in периода 2011-2012, adopted by CMD No. 719 of

22.11.2013;

40. Report on the implementation of Decentralization Strategy and the Programme on the

implementation of Decentralization Strategy in 2013, adopted by Protocol No. 28 of the Council of

Ministers’ session held on 09.07.2014;

41. Report on the implementation of Decentralization Strategy and the Programme on the

implementation of Decentralization Strategy in 2014, adopted by Protocol No. 30 of the Council of

Ministers’ session held on 29.07.2015;

42. Cooperation agreements between the Council of Ministers and NAMRB for the period 2009 – 2013

and 2014 – 2016;

43. Cooperation Agreement between the 43rd

National Assembly and NAMRB;

44. Methods to calculate the value of KPIs, adopted by Decision No. 2 by CDSG of 2008;

99

45. National programme for development of school and pre-school education 2006 – 2015;

46. Study of the practice of the European Union Member States with functioning two levels of local self-

government, 2007, Foundation for Local Government Reform;

47. Annual report 2015 “Economic Development and Policies in Bulgaria: estimates and expectations,”

Institute for Economic Research, BAS;

48. First monitoring report on the situation of local and regional democracy in Bulgaria, CE, 1998;

49. Recommendation 45 (1998) of the Congress of Local and Regional Authorities of the Council of

Europe on the situation of local and regional self-government in the Republic of Bulgaria;

50. Second monitoring report on the situation of local and regional democracy in Bulgaria, CE, 2011;

51. Recommendation 310 (2011) the Congress of Local and Regional Authorities of the Council of

Europe “Local and regional democracy in Bulgaria”;

52. Regional profiles: Development KPIs 2015, Institute for Market Economics, 2015

Publications

53. Brinkerhoff D., Crosby B. – Managing Policy Reform, Data Agency OOD;

54. Marinov, V. – Partners for Development - Partnership Model for Strategic Planning of Local

Development, University Printing House, University of National and World Economy;

55. Stefanova M. – Decentralization as an Aspect of Integration Process, In: Stefanova M., Kalfova E.

(Composition). Decentralization and Integration: Regional and Local Self-Government, S., 2004;

56. Stefanova, M. – Local authorities in Bulgaria, Sofia, St. Kliment Ohridski University Publishing

House, 1997;

57. Ivanov, St. – Local Taxes and Fees System in Bulgaria – Opportunities for Future Development, In:

National Conference on Local Tax Laws, Sofia 2000, National Association of Municipalities in the

Republic of Bulgaria;

58. Decentralization of School Education in Bulgaria, Open Society Institute, 2009;

59. Dalmas, D. – Decentralization in Bulgaria, Sofia, 2009;

60. Local Self-Ggovernment – Conditions and Trends, MRDPW, 2008;

61. Decentralization in Bulgaria – Overall Assessment and Recommendations, Final Consultancy Report,

Herman Correa, UNDP, 1998;

62. Basic Terms and Concepts in the Field of Decentralization, Herman Correa, UNDP, 1998;

63. Decentralization and its Impact on the Capacity of Municipalities and Districts to Utilize EU Funds,

Stanev H., Spiridonova Y., Dzhildzhov A., Open Society Institute, 2006;

64. Drumeva, E. – Local Government in Bulgaria, In: Kandeva, E (Ed.) Stabilization of Local

Government, OSI/LGI 2001

100

Online resources as of 30.09.2015

1. Decentralization Portal: http://www.self.government.bg

2. National Statistical Institute: http://www.nsi.bg

3. Eurostat: http://ec.europa.eu/eurostat

List of Abbreviations

ATU Administrative-Territorial Unit

ATS Administrative-Territorial Structure

BAS Bulgarian Academy of Science

GDP Gross Domestic Product

CDCOC Chief Directorate Combating Organized Crime

CDSPRDATS Chief Directorate Strategic Planning of Regional Development and

Administrative-Territorial Structure

SG State Gazette

PITA Personal Income Tax Act

EAD Sole owner joint stock company

EU European Union

URS Unified Rescue System

ECLSG European Charter of Local Self-Government

AA Administration Act

ATSRBA Administrative and Territorial Structure of the Republic of Bulgaria Act

WA Water Act

CSA Civil Servants Act

PDCA Protection and Development of Culture Act

MIA Ministry of Interior Act

LTFA Local Taxes and Fees Act

LEA Local Elections Act

LSGLAA Local Self-Government and Local Administration Act

MBA Municipal Budgets Act

MPA Municipal Property Act

PSEA Pre-school and School Education Act

RDA Regional Development Act

TDSMMCA Territorial Division of Sofia Municipality and Major Cities Act

TPA Territory Planning Act

101

CSB Consolidated State Budget

CLRAE Congress of Local and Regional Authorities in Europe

CRB Constitution of the Republic of Bulgaria

LC Labour Code

CFP Consolidated Fiscal Program

MoI Ministry of Interior

MAF Ministry of Agriculture and Food

MC Ministry of Culture

MYS Ministry of Youth and Sports

MD Department of Defence

MES Ministry of Education and Science

MRDPW Ministry of Regional Development and Public Works

CM Council of Ministers

MF Ministry of Finance

NGOs Non-Governmental Organizations

NA National Assembly

NSI National Statistical Institute

NAMRB National Association of Municipalities in the Republic of Bulgaria

MoI DD MoI District Directorates

DDC District Development Council

CoMD Council of Ministers’ Decree

CMD Council of Ministers’ Decision

RAM Regional Association of Municipalities

CAR Council for Administrative Reform

MoI SD Sofia Directorate of the Ministry of Interior

CDSG Council for Decentralization of State Governance

СЕ Council of Europe

SIGGLL Strategy for Innovation and Good Governance at Local Level

SADS State Administration Development Strategy

102

ANNEXES

103

ANNEX No 1

Glossary of Terms

Used terms Definition

Tax base or fee Number/amount of taxable units based on which tax liability is

calculated. Where tax base doesn’t cover all tax units, that means that

certain tax units are exempted from taxation. Tax base can be in the

form of an objective indicator of physical volume and value. For

example, the basis to determine the amount of municipal waste fee is an

objective indicator in value, based on which the rate or permil of

proportional fee is determined, or the physical volume, based on which

the fee is determined per unit (e.g., BGN/person, BGN/m3 of water

consumed, etc.).

(Sources: Stoyanov, V., Mihalkova L Finance, S. 1998; Local Taxes and

Fees Act, prom. SG. No. 117 of 10 December 1997., last ammended SG.

No.79 of 13 October 2015)

Globalisation The process of growing economic integration worldwide, whose main

drivers are:

1. Liberalization of international trade and capital movements;

2. Acceleration of technological progress and the advent of the

information society;

3. Deregulation.

These three factors are interrelated.

(Source: Basic Terms and Concepts in Decentralization, prof. Herman

Correa Diaz)

Tax

rate/amount/quota

The tax levied on a taxable unit. Calculated in absolute amount,

percentage, or permil.

(Source: Stoyanov, V., Mihalkova L. Finance, S., 1998; lectures on

economy http://www.bg-ikonomika.com/2010/12/7.html)

Delegated budget Budget of a budget spending authority of second or lower level, for

which the right of changing costs is granted to the relevant budget

spending authority under or based on law.

(Source: § 1 of the Supplementary Provisions of the Public Finance Act,

prom. SG No. 15 of 15 February 2013)

104

Delegated activities Provision of state public services, to which citizens should be granted

equal access in accordance with the effective legislation and which are

wholly or partially funded from the State Budget through municipal

budgets.

(Source: § 1 of the Supplementary Provisions of the Public Finance Act,

prom. SG No. 15 of 15 February 2013)

Delegated services Services, whose management and funding were delegated to

municipalities by the State. However, the responsibility to determine the

types of services, their quality characteristics, accessibility, etc. , are not

delegated.

(Source: Updated Decentralization Strategy of 2010, adopted by CMD

No. 454 of 2010)

Decentralization The process of transfering rights, responsibilities, and resources to

exercise such powers from higher-level to lower-level public

administration. This process aims at providing improved services of

better quality to citizens and businesses. There are three main forms of

decentralization: administrative, political, and financial.

Administrative decentralization at a higher level of territorial

administration transfers two types of rights and responsibilities to lower

levels of management:

authority to make decisions concerning the type, scope, and quality

of public services;

authority to manage the activities related to the provision of

services - opening/closing of structural units, number and structure

of personnel, amount of payment, provision of outsourced services,

ownership, and management control.

Administrative decentralization has three stages: devolution, delegation

and deconcentration.

Devolution. Full rights and responsibilities for providing a service and

its funding can be only granted to a relatively independent and

autonomous public institution. In this case, the first institution waives

responsibility to provide certain services, while the other one is granted

full rights to make decisions on the provision or non-provision of

services, their scope, quality, method of delivery, sources of funding,

105

etc.

Government grants rights to municipalities to provide specific

local services, the responsibility to determine their quantity and quality,

and all other matters relating to their management and funding. The

municipality may in turn transfer the responsibility of mayoralties and

service institutions to solve all issues regarding the provision of local

services.

Delegation is low-level administrative decentralization, where

higher-level of territorial administration grants lower-level

administration the required authority to provide certain services.

Usually, delegated powers are in the field of organisation and

financing. The authority delegating certain rights doesn’t transfer

responsibility to provide the respective services.

Delegated services are one example of such relations between the

government and local authorities. The State delegates to municipalities

the management and funding of the services, but not the responsibility to

determine the types of services, their quality characteristics,

accessibility, etc. Delegated budgets in the education system are a

typical example of such relations between the municipality and service

institutions.

Deconcentration is the transfer of powers and resources to

exercise such powers from a central executive authority to territorial

administrative units falling under its jurisdiction.

Territorial units of the central government are hierarchically

subordinate, they have no financial autonomy and their management is

appointed by the central institution. They pursue goals in its name and

on its behalf.

Deconcentrated territorial units are regional inspectorates and

departments of ministries and agencies. Within a municipality, relations

between the municipal administration, mayoralties and service

institutions are deconcentrated.

The process of delocalisation is an element of decentralization.

This is a process where an institution moves from one place to another

within the country, without any change in institution’s process of

106

decision-making and budget management. For example, when an

institution dealing with maritime transport is physically transferred from

the capital to a seaside city in the country, along with its director, staff,

budget, etc.

Political decentralization is granting rights for decision-making

and controlling their implementation to a wide range of stakeholders or

institutions that are closer to citizens and service users. The larger circle

of people making decisions and monitoring their implementation and the

closer they are to the community, the higher the degree of political

decentralization. Examples of political decentralization are real

possibility of local authorities to participate in the development of

legislation on local self-government, municipalities and heads of

municipal departments - in local regulations regulating their activities;

population and local civic structures - in the development and control of

local policies in terms of types of services, quality, access, management,

and financing.

Financial decentralization is the transfer of resources, sources of

resources, rights to determine their amount, method of use, and

responsibilities for financing public services.

In this sense, the level of fiscal decentralization is determined by:

available types of resources received in the budget at the lower level

of territorial administration and the powers for to determine them,

i.e. the types of revenue and rights in terms of receivables;

the option for a lower level territorial administration to use available

resources, i.e. rights and responsibilities in terms of expenditures.

Rights of local authorities in terms of receivables are associated

with the presence of own revenues, with the option to determine their

type and amount; receiving financial resources from property

management and disposition; option to organize the collection and use

of funds by customers/local community; planning and administration of

their own income; types of subsidies and other transfers from higher

levels of administration; ways to define and allocate them, the degree of

freedom to utilize them, options for lending.

Rights and responsibilities in terms of expenditures of local

107

authorities are associated with the ability to: plan costs; lien on current

savings and transitional residue; reallocation of funds between functions,

activities, types of costs; availability of investment resources; delegating

funds for outsourcing; financial control of funds utilization.

(Source: Updated Decentralization Strategy of 2010, adopted by CMD

No. 454 of 2010)

Good governance In the late 1990s, international organisations started to establish

principles of good governance. Good governance builds on

understanding of traditional governance. It should always be considered

in the context of democratic governance. In the past decade, more and

more citizens organize to expand their influence on policy debates, to

put pressure on their governments so they could be more responsive and

responsible, and to insist on greater participation in governance. These

trends towards authorized participation and proactivity in politics are

present at all levels - from local to national and international level.

Stakeholder participation is at the heart of political process management

and of democratic governance in general.

Since 1980s, the principles of good governance became subject of

discussions worldwide and these started to be introduced in public

administration. This is generally achieved by applying the principles of

economic efficiency in the public sector. The State should prove to be a

good owner, effectively managing public property via the principles of

strategic management. The priority now is the implementation of

management techniques of economic management, reporting if and how

expenditures meet the results achieved. Issues of good governance and

the corresponding examples of the conduct of public officials are closely

linked to overall aspirations of democracies to enhance the quality of

public authorities at all levels.

In October 2007, during the 15th

session of the Conference of European

Ministers responsible for local and regional authorities of the Council of

Europe (CE) in Valencia, Spain, the CE Strategy for Innovation and

Good Governance at local level was adopted. The strategy sets out 12

principles for good governance, namely:

1. Fair Conduct of Elections, Representation and Participation -

108

providing real opportunities for all citizens to exercise their right to

express opinion on matters of public interest;

2. Responsiveness - local authorities continuously meeting the needs and

legitimate expectations of citizens;

3. Efficiency and Effectiveness - ensuring that objectives are met through

optimal use of available resources;

4. Openness and Transparency - ensuring public access to information

and facilitating comprehension of the manner to deal with public affairs;

5. Rule of Law - ensuring fairness, impartiality, and predictability;

6. Ethical Conduct - ensuring that public interest has priority over

personal interests;

7. Competence and Capacity - ensuring that local representatives and

appointed officials are able to perform their duties;

8. Innovation and Openness to Change - ensuring that practical benefit

is derived when new solutions and best practices are introduced;

9. Sustainability and Long-Term Orientation - taking into account the

interests of future generations;

10. Sound Financial Management - ensuring prudent and productive use

of public funds;

11. Human Rights, Cultural Diversity and Social Cohesion - ensuring

that all citizens are protected and their human dignity is respected, as

well as that none of them is being discriminated or excluded from public

life;

12. Accountability - ensuring that officials to be elected and municipal

officials to be appointed assume responsibility for their actions.

(Source: Strategy for Innovation and Good Governance at Local Level

CE)

Service institutions Institutions to provide services in the sectors of social services, health,

and education. These institutions may be owned by a municipality

and/or perform activities that can be either delegated, or local.

Classifications of

municipal

competencies

Within the EU, the most common classification of competencies is

related to own and delegated competencies. Own competencies are

those, which the local community exercises freely and pursuant to the

law, on its own behalf and for which its bodies bear responsibility to

109

voters. They are related to the legal concept of local self-government.

The latter are realised by delegation of powers to local authorities by

government, which rights are exercised on its behalf and under its

control. Such competencies are present in Germany, Spain, France,

Hungary, Italy, and the Netherlands. They are less important in France

due to the dense network of deconcentrated government departments.

The second classification used is the one that distinguishes between

mandatory and optional competencies. This classification doesn’t

correspond to the previous one: for example, mandatory competency can

be both own and delegated competency. Mandatory competency is a

legal obligation of the local community that is the competency holder,

while with optional competence local authorities have the freedom to

exercise it or not. Of course, mandatory competencies require more

detailed regulation. Optional competencies are present in Germany,

France, Hungary, etc.

(Source: Local Democracy and Regional Policy Newsletter, National

Centre for Territorial Development, No. 8 of 2005)

Local taxes Taxes are set and collected by municipalities. The municipal council of

the respective municipality determines the amount of local taxes under

conditions, procedure and within the limits established by LTFA. The

following local taxes are paid to the municipal budget:

Property tax;

Inheritance tax;

Donations tax;

Property transfer tax;

Vehicle tax;

Licence tax;

Tourist tax.

(Source: Local Taxes and Fees Act, prom. SG. No. 117 of 10 December

1997, last ammended SG No.79 of 13October 2015)

Local activities Activities on the provision of public and other types of services,

provided by municipalities based on law and/or decision of the

municipal council and which are not funded as activities delegated by

the State.

110

(Source: § 1 of the Supplementary Provisions of the Public Finance Act,

prom. SG No. 15 of February 2013)

Local fees Fees determined and collected by municipalities. The municipal council

of the respective municipality determines the amount of local taxes

following the procedure set out in LTFA. Local taxes are based on the

necessary technical and administrative resources to provide the service.

Municipalities collect local fees for:

Municipal waste;

Use of markets, fairs, sidewalks, squares, and roadway;

Use of nurseries, children food facilities, child care centres,

specialized institutions providing social services, camps,

dormitories and other municipal social services;

Activities regarding compulsory pre-school education for the use of

nurseries or schools other than for state-funded activities;

Technical services;

Administrative services;

Purchase of grave plots;

General support activities under the Pre-school and School

Education Act, not funded by the State budget and carried out by

the centres for supporting personal development;

Dog ownership;

Other local fees set by law.

(Source: Local Taxes and Fees Act, prom. SG No. 117 of 10 December

1997, last ammended SG No.79 of 13 October 2015)

Local self-government The right and the ability of local communities to regulate and manage

within the law, on their own responsibility and to the benefit of their

population, a substantial share of public affairs. This right is exercised

by councils or assemblies, whose members are appointed by free, secret,

equal, direct and general elections; they may have executive bodies to

report to them.

(Source: European Charter of Local Self-Government)

Modernisation of

administration

The process of improving the management of government (e.g. by

introducing new systems for collecting taxes and fees in order to reduce

111

the possibility of non-payment, etc.)

Municipal

bonds/securities

A bond is an instrument of debt, i.e. for an amount of money lended

from the bondholder to its publisher (issuer). A bond is a type of security

of the creditor, and as such it has a prefixed steady income in the form of

coupons (interest) and repayment of principal at maturity, depending on

the bond type. If the bond issuer is a municipality, there are basically

two types of municipal bonds: bonds secured by tax revenues and bonds

secured by budget revenues. Issuance of municipal bonds is a major

source for solving issues related to the revenues in the municipal budget.

These, however, require detailed research and are used when the

municipality has stable local revenues.

(Source: Handbook for Local Finance and Budget Management, S.,

2003)

Power A feature of business subjects of law. For these subjects of law, legal

capacity and capacity are combined into legal capacity, which is

untypical for individuals (also called power, or competence). Entities

retain this feature throughout the period of their existence.

(Source: Fundamentals of Law and State (lectures) - Chief Assist. G.

Denkov, Sofia University, www.legaltheory.org)

Principle of

subordination

A system where lower levels in the hierarchy are subordinate to higher

levels. The activity of the lower units in the system is determined by the

decisions of superiors. Decisions of some bodies are binding to other

bodies in the system. In hierarchical systems, subordination levels are

usually clearly defined and relations between them are regulated.

Principle of

subsidiarity

Article 4 of ECLSG sets out 6 principles outlining the scope of local

self-government. One of them is the so-called principle of subsidiarity.

In essence, the performance of certain functions should be entrusted to

these authorities who are closest to the citizens and who can perform

them in the most operational and efficient manner, and according to the

specific needs of the local population. This principle must be observed

in the redistribution of functions between different levels of government.

(Source: European Charter of Local Self-Government)

Regionalisation The process of dividing the country into several subnational areas by one

or more criteria. Regionalisation criteria of a country may vary

112

depending on the main purpose of the respective territorial division of

the country: geographical, administrative, and economic.

(Source: Basic Terms and Concepts in Decentralization, prof. Herman

Correa Diaz)

Regional development The process of permanent social changes contributing to lasting and

sustainable community development in a particular region. It implies a

multi-sectoral and complex process related to certain objectives:

economic growth, sustainable development, social integration, quality of

life, protection of the environment.

With the development of the integration process of the country in the

globalized market, municipalities become too small to be able to pursue

a policy aimed at developing its own market dynamics, intended to

satisfy not only the domestic market, but also international markets

characterised by greater competition. Therefore it is necessary to

establish intermediate levels and units of sufficient capacity and powers

to be able to carry out the process of development of the advantages of

the respective region and to participate in the competition for

investment, at both national and international level.

In this sense, regionalisation and regional development are important

concepts in the context of the decentralization process.

(Source: Basic Terms and Concepts in Decentralization, prof. Herman

Correa Diaz)

Own revenue base of

the municipality

Summary designation of all municipal revenues under Art. 45, Para. 1,

item 1 of the PFA.

Own revenues of

municipalities

Own revenues in the municipal budget include:

a) local taxes – under conditions, procedure, and within limits

established by law;

b) fees - under conditions and procedure established by law;

c) services and rights provided by the municipality;

d) disposal of municipal property;

e) fines and pecuniary penalties;

f) interest and default payments;

g) other income;

h) grants and donations;

113

(Source: Public Finance Act, prom. SG No. 15 of 15 February 2013)

Budget relations Budget relations are transfers and temporary interest-free loans.

(Source: § 1 of the Supplementary Provisions of the Public Finance Act,

prom. SG No. 15 of 15 February 2013)

Transfer

A grant between the central budget, budgets, accounts for funds from the

European Union and accounts for other funds, including the provision of

funds to finance specific activities and services, when the provision of

such funds is not considered an expenditure/revenue.

(Source: § 1 of the Supplementary Provisions of the Public Finance Act,

prom. SG No. 15 of 15 February 2013)

Optional services See Classifications of municipal competencies

Forms of polity At substantial level, the State exists in two forms – a unitary (united) and

a federal (union) state, federation. They express the specifics of

structuring and integrating the substance of the state - population and

territory. At this level of manifestation, territorial communities and

political-territorial communities are structured. Integration is realised by

dividing the functions of government between these communities.

Unitary state exists as a political and territorial community. Separate

administrative-territorial communities are present as structural elements

- municipalities, regions, districts, counties, etc. The mechanism of

integration is through one centralized governent, combined with local

self- governance.

Unitary state has one legislative, executive, and judiciary authority,

realised by one legislative body and centralized executive and judicial

authorities. Their sovereign competence is established by one

Constitution and uniform legislation and it covers the entire territory and

population.

Governance efficiency is achieved by deconcentration of executive and

judicial authorities by dividing the activities between central and local

bodies. The legislature and the central bodies of executive and judicial

authorities have a common national competence and express centralized

legal order. Territorial authorities have territorial jurisdiction according

to the administrative-territorial division of the state and the separation of

judicial districts.

114

In the modern state, integration is also realised through decentralization

of authority, expressed in the self-governance of administrative-

territorial communities.

One government is established and implemented in the unitary state. In

this sense, administrative-territorial communities have no government.

The power of local authorities is limited in several ways. First, they

regulate and manage public affairs within the laws. They exercise a

delegated competence and they are not allowed to go beyond that. Local

authorities may not individually determine the scope of their powers.

Their right to regulate and govern is not primary, but derivative, and

therefore - limited. Second, the activities of local authorities is under the

supervision of the government, which is implemented by both the

executive authorities and the judiciary authorities. Third, the very

structure of territorial communities, as well as the organisation of local

bodies is determined by the central government through legislation.

Most Member States are unitary: Bulgaria, France, Greece, Italy, etc.

Federation is the second form of polity. Federalism is a model of

structuring the political-territorial communities and their integration into

a united political community. It is realised through differentiation and

integration of countries.

Federation is an integral state community, which includes the federal

state and the federate members. The federal state includes federats, but

they retain their sovereignty and don’t form a single state. Federalism is

a way of vertical division of authority between the federal state and the

federats as two different state organisations. Each of them establishes

and exercises their state authority, both levels of government being

coordinated, yet independent from each other. When regional authorities

are dependent on the government, this is an unitary state. When the

central government is dependent on regional authorities, this is a

confederation – a union of states. The federation is the middle of these

two extremes: it is a union of states, existing through distribution of

mutually restrictive and independent federal and federate authorities.

Federation is formed on constitutional grounds. Its constitution is

115

through the adoption of a federal constitution.

Federal state unites the population and territory of federats into one and

exercises its own federal authority. This authority is primary and derives

from the united community. All federate citizens become citizens of the

federation.

The authoriuty of the federal state is autonomous and independent.

Federal state has its own legislative body, an executive and a judiciary

body. The legislative body is always bicameral. Lower house (Congress)

expresses the interests of individual federates through their

representatives, while the Upper house (Senate) expresses the interests

of the whole Union.

The ability of the federal state to increase or limit its competence is

stipulated for in the federal constitution by the model of correlation with

the federal government.

Federal State has its own sovereignty and represents an independent

subject of international law.

Within the union, federate members retain their state autonomy. They

form their own government implemented within their territory. Federats

carry out their legislative, executive and judicial powers without

interference and direct control of the central (federal) government. Most

often, sectoral policies such as foreign relations, defence, and finance

remain responsibility of the central government. At the same time,

sectors like home affairs, administrative-territorial structure, justice,

social affairs, education, health, etc. fall within the competence of the

federal units.

Within its territory, each federal state establishes internal ATS and

provides self-government to its territorial communities.

Examples of federal states within the EU are Germany, Austria, and

Belgium.

A confederation is a union of states that more or less retain their

sovereignty. Confederations are formed based on common interests and

full consent (consensus) in decision-making. Switzerland is a typical

example of a confederation.

116

(Source: Fundamentals of Law and State (lectures) - Chief Assist. G.

Denkov, Sofia University, www.legaltheory.org; Buchvarov, M., Geopolitics

- Terminology Guide, Sofia, 1999)

Forms of state

governance

The manifestation of the state at the institutional level reveals a wide

variety of forms defined in the theory as “forms of state governance”.

There are many different definitions of both the content and the types of

forms of governance. There is an objective reason for this - the

continuous development of the organization of the governance of the

state as well as the combination of different types of components, which

makes relative any intuitive claim for completeness of the concept and

strict classification of the manifestations. The form of governance is the

manner of structuring and integration of the higher state authorities,

realized by certain relations to and between them.

The classic division of the forms of governance is monarchy and

republic.

The modern constitutional state maintains the division between

monarchy and republic as formal kinds of forms of state governance.

The content of the forms of governance today is determined by the

integrating relations between central state authorities performing the

three powers. Moreover the relations between the bodies of legislative

and executive powers, which serve as main criterion for determining the

types of forms of governance are displayed in the foreground. This

question does not exclude the formal distinction between monarchy and

republic, but to a great extent depersonalizes it. On the one hand, the

difference between the constitutional and parliamentary monarchy

becomes too relative as the modern monarchies are with parliamentary

governance. On the other hand, almost all republics have a President, but

it is usually combined with parliamentary governance.

That is why the classical division of the forms of Monarchy

(constitutional and parliamentary) and Republic (presidential and

parliamentary) is practically overcome. On the one hand, the

presidential governance is always republican, while the parliamentary

governance exists in the republic and in the monarchy. Britain, Spain,

Sweden, Belgium, the Netherlands, Denmark and Luxembourg are

117

monarchies within the EU.

Practically, currently there are three (republican) forms of governance:

presidential, parliamentary and semi-presidential.

In the presidential governance the President accomplishes the executive

power, and the parliament has the complete legislative power. This is the

form where there is a real and complete separation of both powers. The

President has no right to dissolve parliament, he and his ministers have

no right of legislative initiative, but the Parliament cannot hold them

responsible. The President, under the presidential governance, is elected

by direct or indirect voting and combines the powers of head of state and

of a carrier to the executive power. He alone assigns his ministers who

are responsible only to him. He can change them at any time.

The ministers do not form a government as a collective body, as each

one of them individually implements the policy of the President. He can

convene them for consultations as participants in the consultative body

called “Cabinet”. But this body does not have its own competence and

collective responsibility. Within the Cabinet the President is autocratic,

not first among equals.

Cyprus, Belarus etc., are countries with presidential governance.

The Parliamentary governance is a representative governance in which

the Parliament has a leading role. The leading role is manifested in

control of the governance which implements the executive power. The

Parliament elects the ministers as members of a collective body (Council

of Ministers, Government) and recalls them. The Government is

responsible to the Parliament and this is political and legal basis it to be

formed by the parliamentary party majority. The head of state takes a

special place in the Parliamentary Governance. In a constitutional

monarchy, the Monarch is both head of state and the holder of the

executive power, which he delegates to the Ministers. He is politically

irresponsible and the responsibility is born by them. This compromise

between absolute autocracy and absolute people’s rule was depleted of

content long ago. That is why the Monarch in parliamentary republics

and the President in parliamentary republics remain outside the state

118

power and implement mainly the prerogatives of the Head of state. The

difference between them is that the President is elected, his participation

in the governance is limited by mandate and he is politically responsible,

while the Monarch is inherited and he is politically irresponsible. The

President in the parliamentary governance is elected by the Parliament

but there is a case of direct election (as it is in Bulgaria).

Bulgaria, Greece, Czech Republic, Hungary etc., are countries with

parliamentary governance.

Semi-presidential governance (M. Duverger named it so) is a

republican projection of the constitutional monarchy. The place of the

hereditary Monarch was taken by an elected President. The President is

a Head of state, but unlike the President in the parliamentary governance

he performs real and not symbolic functions. He has prerogatives that

take him out of the sphere of the “neutral” governance. The reason for

this is his direct election. He is directly elected by the sovereign or

through the mediation of “big voters” according to the American model.

The parliamentary Head of state, whether hereditary Monarch or

parliamentary elected President, remains only a symbol and has no

legitimacy comparable to that of the members of Parliament. President

elected on the basis of universal suffrage, is equal in legitimacy to the

Parliament. Hence the political power and might of the President,

enshrined in the semi-presidential governance, derive from it. The

essence of semi-governance is the participation of the President in the

executive power. He divides it with the Prime Minister and he is its

leader.

In various countries, the President acts primarily as a regulator or as a

ruler.

The most important authority of the President, which puts him close to

the homonymous body in the presidential Republic, is the appointment

of government. The parliamentary elections determine the political

configuration of the Parliament. As a Head of state the President assigns

to the parliamentary represented political party to form a government

that he appoints.

France, Romania, Portugal etc., are countries with semi-presidential

119

governance.

(references: Basics of Law and State (lectures) – Chief assistant D.

Denkov, SU, www.legaltheory.org; Buchvarov, M., Geopolitics -

terminology reference book, Sofia, 1999).

ANNEX No. 2

MEASURES IMPLEMENTED FROM THE PROGRAMMES FOR IMPLEMENTATION OF

DECENTRALIZATION STRATEGY FOR THE PERIOD 2006-2009 AND 2010-2013

1. Measures implemented from the Programme for the implementation of the

decentralization Strategy 2006-2009

STRATEGIC GOAL 1 – accelerated devolution of powers and resources from the state bodies to

the municipalities to strengthen the local self-governance

Priority 1. Devolution of the provision of public services from the state to the municipalities

Measure Result

3. Devolution of the homes for children

deprived of parental care, except for those of

national significance to municipalities as a

delegated service.

With changes in the PEA (public education

Act) the homes for children deprived of

parental care were transformed into

specialized institutions for provision of social

services as delegated activity of

municipalities since January 1, 2007.

5. Creation and current provision of

alternative social services in the community.

In 2006 49 new social services in the

community were opened as activity

delegated by the State and in 2007 – 47 new

social services in the community.

7. Exploring of the options for providing by

the municipalities services such as public

police, fire protection, heating, water supply

and sewage, cable TV and other typical

practice in the EU.

An analytical report was prepared with

recommendations for decentralization of

services.

8. Performing of an analysis and evaluation

of the responsibilities of the State and

An analytical report was prepared with

recommendations for improvement of

120

municipalities for maintenance of water

engineering structures and river beds.

services.

Priority 2. Increasing of the own revenue base of the municipalities by providing of new sources of

revenue, increasing of the local powers and devolution of state property

Measure Result

1. Assistance for changing the Constitution

for providing municipal tax powers and full

authority over the municipal taxes.

By Decision No. 1 / 14.9.06 the Council for

Decentralization of State Governance

(CDSG) supported the need of amendments

of the Constitution of the Republic of

Bulgaria related to the provision of tax

powers to municipalities and full authority

over municipal taxes and determined

members which to support the discussion of

amendments in the National Assembly. The

Constitution was changed by the 40th

National Assembly of the Republic of

Bulgaria in January 2007.

2. Providing of powers to municipalities to

determine the rate of the local taxes and the

types of the local taxes.

Amendments of the Constitution of the

Republic of Bulgaria were adopted. Adopted

amendments of the local taxes and fees Act

(LTFA) and in force since 2008.

4. Providing of new tax revenues to

municipalities – land tax, tax on the local

business.

Amendments were made in the LTFA,

providing an opportunity for municipalities

to determine the size of the local taxes and

fees. The local taxes are supplemented with

patent tax.

5. Increasing of the municipal revenues from

concession contracts through expanding of

the scope of municipal concessions.

By amendment and supplement of the ores

and minerals Act it is stipulated the

concession payment amounting to 30 % to be

paid to the budgets of municipalities

according to the location of the concession.

121

6. Granting part of the revenue from state

concessions to municipalities for

maintenance of the municipal infrastructure.

By amendment and supplement of the ores

and minerals Act it is stipulated the

concession payment amounting to 30 % to be

paid to the budgets of the municipalities

according to the location of the concession.

7. Devolution of property – private state

property to municipalities.

By decisions of the Council of Ministers

properties of private state ownership were

transferred to municipalities.

Priority 3. Accelerated increase in the investment capacity and the powers of municipalities to conduct

local investment policy

Measure Result

4. Strengthening of the financial,

administrative and programming capacity of

municipalities for the development, co-

financing and management of investment

projects from funds of the EU.

Trainings have been conducted.

Sole joint stock company was established

with state participation in the capital with

company “Fund of the authorities of local

self-governance in Bulgaria – FLAG” EAD.

New Act for regional development of

municipalities in 2008 was adopted .

Municipalities acquire broader representation

in the regional Councils for development.

5. Increase in the statutory powers of

municipalities to attract investment through

the provision or sale of real estate or limited

property rights under favorable conditions

for realization of investment projects by local

or foreign investors.

By decision of the Council of Ministers No.

832 dated 05.12.2006 a project was adopted

of the amendment and supplement Act of

promotion of investment Act and it was

adopted by the National Assembly of the

Republic of Bulgaria.

Priority 4. Devolution of powers for management of the services delegated to municipalities

Measure Result

5. Evaluation of the results of the application

of standards for funding of the services

delegated in education, health, social care

and culture.

An analytical report was developed for

evaluation of the results from the application

of standards for funding of the services

delegated in education, health, social care

122

and culture. Standards for municipal

administration were developed.

Priority 5. Creation of conditions for inter-municipal cooperation for the purpose of applying for and

management of projects from funds of the EU and provision of services of general interest to the

participating municipalities

Measure Result

2. Creation of normative framework for

inter-municipal and public private

partnership.

Trainings were conducted.

A new chapter VIII “Municipal cooperation”

was created in the local self-governance and

local administration Act (LSGLAA).

By decision of the Council, practical

handbook for public-private partnership was

approved with a set of sample forms of

contracts.

Priority 6. Increasing the objectivity and efficiency in allocating resources and powers based on equal

dialogue between the central and local authority

Measure Result

1. Participation of associations of

municipalities in the monitoring for use of

structural funds of the EU.

A report was prepared.

The National Association of Municipalities

in the Republic of Bulgaria (NAMRB)

participated in the monitoring of the

Operational Programme Regional

Development (OPRD) and at meeting of the

Monitoring Committee of the National

Strategic Reference Framework.

2. Ensuring the participation of NAMRB

participants in working groups to develop

projects of normative acts, concerning the

local governance.

NAMB representatives participate in

working groups to develop projects of

normative acts in the Council of Ministers

and other ministries.

4. Improving the mechanism of distribution

of the total equalizing subsidiary and

inclusion of additional criterion for

financially weaker municipality.

A report and proposals for changes were

prepared – enshrined in the State Budget Act

of the Republic of Bulgaria (SBARB) for

2007.

6. Development of standards for some local Standards for two types of services were

123

activities with the purpose of their

application during 2007 and further

objectification of the criteria for financial

equalization.

developed – children’s establishment and

home social patronage. Improved

mechanism for the distribution of the total

equalizing subsidiary for 2008 (SBARB for

2008).

Priority 7. Increasing the capacity and responsibility of local authorities for formulating and

implementing the municipal policies

Measure Result

2. Building of capacity for participation in

regional policy and management of funds

from the EU funds.

Through the adopted in 2008 new Regional

Development Act it was created a financial

mechanism to assist municipalities in areas

for purposeful support. Trainings were

conducted.

3. Providing technical assistance for the

implementation of municipal development

plans, preparation of quality investment

projects and programs.

Trainings of the local authorities in the six

planned regions of the country were carried

out.

A study of municipal policies and methods of

planning and preparation of quality

investment projects and programs were

carried out.

4. Strengthening the role of the units for the

economic development of municipalities.

Trainings were carried out.

5. Assisting the establishment of regional

and local partnerships at the formulation and

implementation of the local policies with the

participation of social and economic partners.

Trainings were carried out with municipal

officers in the north and south of Bulgaria. A

practical handbook was prepared and

distributed to the municipalities.

Priority 8. Study of opportunities to build a second level of local self-governance

Measure Result

1. Study of practice of member states of the

EU with two functioning levels of local self-

governance.

A report with proposals for options of

building a second level of self-governance

was prepared. Discussion forums were

organized for discussion of the options for

building a second level of self-governance.

124

2. Development of variants of the scope of

services that can be provided most

effectively at the second level of self-

governance.

An analytical report was prepared, discussed

and approved by the Council.

3. Study of possible system of revenue

sources that would finance the services

provided by the second level of local self-

governance.

An analytical report was prepared, discussed

and approved by the Council.

MEASURES UNDER STRATEGIC GOAL 2 - Optimization of the functional competence of the

district governor and the territorial units of the central executive power for coordination of

sectoral policies at regional level

Priority 1. Improvement of the functions, structure and scope of the territorial units of the central

executive power

Measure Result

4. Study of models for coordination of

deconcentrated units in the member states of

the EU with similar administrative and

territorial structure.

A report was prepared.

5. Analyzing the options for organization of

part of the territorial units of the central

executive power in the regional

administration.

A discussion forum was organized.

A report with exemplary list of units which

to be organized in the municipal

administration with recommendations for

normative changes was prepared.

Priority 2. Increasing the capacity and the responsibility of the district administration for conducting

regional policy for implementation of state governance in places and for ensuring consistency between

the national and local interests

Measure Result

2. Expanding the operational independence

of the district administration for

implementation of powers and functions

above the municipal importance.

An analytical report was prepared and

approved by the Council.

3. Increasing the administrative capacity of An analytical report was prepared and

125

the regional administration as a beneficiary

of funds under the EU programs.

approved by the Council.

Five pilot initiatives in 5 districts are realized

within the twinning project under the

PHARE Programme.

Priority 3. Strengthening the coordinating role of the district governor on the acts and actions of the

heads of territorial units of the central executive power in the district territory

Measure Result

2. Developing of mechanisms for

coordination of the territorial units of the

central executive power and the district

governor for implementation of sectoral

policies and the provision of administrative

services.

An analytical report was prepared for

improvement of the coordination

mechanisms for the implementation of

sectoral policies at district level.

Priority 4. Improving the connections between deconcentrated territorial units of the central executive

power and the municipalities within the district

Measure Result

1. Creation of information centers to the

district governors for the services provided

by the territorial units of the central

executive power and investment

opportunities of the municipalities in the

district.

An analytical report was prepared and

approved by the CDSG.

A concept was prepared to restructure the

existing councils and committees at district

level.

4. Strengthening of the coordinating

functions of the regional development

councils.

MEASURES UNDER STRATEGIC GOAL 3 – Development of local self-governance within the

municipality

Priority 1. Expanded application of the system of delegated budgets

Measure Result

1. Increasing the understanding and skills for

the implementation of the system of

delegated budgets.

Seminars and trainings were conducted in

relation to the amendments of the normative

regulations related to the implementation of

the system of delegated budgets.

The report was adopted by the Council.

126

2. Stimulation of the introduction of the

system of delegated budgets.

An analytical report and consultative

development were prepared.

A system of delegated budgets in education

was introduced (State Budget Act of the

Republic of Bulgaria SBARB for 2008)

3. Development of mechanisms to assess

the implementation of the system of

delegated budgets, including a system for

assessing the quality of basic types of

services, an early alarm about the financial

situation of the service institutions.

An analytical report was developed in

relation to the system for assessing the

degree of the delegated budgets and an early

alarm about the financial situation of the

service institutions.

4. Expanding the scope of those applying

the system of delegated budgets and pilot

testing in new spheres.

Since 01.01.2008 all public schools apply the

system of delegated budgets. The possibility

of expanding into other spheres such as

kindergartens is considered.

5. Monitoring is performed of the

development of the system of delegated

budgets. Organizing a national meeting for

sharing practices related to the delegated

budgets.

An analysis was prepared with proposals for

the normative amendments to the Labour

Code and Public Education Act regarding

education, health, social, cultural and

mayoralties.

National meeting was held with

representatives of the local authorities and

NAMRB for sharing best practices about the

delegated budgets.

Priority 2. Capacity utilization of external providers in the provision of public services

Measure Result

1. Increasing the capacity of non-

governmental organizations (NGOs) and

business to provide public services under

contract with local authorities.

Trainings were conducted concerning the

increase in the capacity of NGOs and

business to provide public services under

contract with local authorities.

2. Capacity building (capacity development)

in the municipalities for: determining the

type and scope of the services;

Trainings were organized and conducted for

municipal officials and social workers to

improve the administrative capacity in

127

determining the minimum level of quality

and efficiency of the services; monitoring

and control on the services provided by

external suppliers.

municipalities.

3. Development of public-private

partnerships, outsourcing and other forms of

service provision in the interest of the

population.

An analytical report was prepared.

Priority 3. Creation of conditions for participation of the citizens in the process of forming policies and

making decisions for the local development

Measure Result

2. Development of the public Councils and

their regulation as a means of consultation

with the citizens.

Analyses and studies were performed for

development of the public Councils and their

regulation as a means of consultation with

the citizens.

4. Organizing public forums for discussion

and approval of investment priorities and for

popularization of best practices of the

municipalities.

Public forums on investment policy were

organized. A handbook for participation of

the citizen in the discussion and adoption of

the investment priorities was developed. 2.

2. Measures implemented from the Programme for the implementation of the decentralization

Strategy 2010 – 2013

MEASURES ON STRATEGIC GOAL 1 Accelerated devolution of powers and resources from

the central executive authorities to the municipalities to strengthen the local government

Priority 1. Devolution of the provision of public services from the central to local authorities

Measure Result

2. Increasing the services provided by the

municipalities related to spatial planning and

control in the sphere of construction.

A project was prepared of the Amendment

and Supplement Act (ASA) of the Spatial

Planning Act (SPA), approved by decision

No. 113 of 8th

February of the Council of

Ministers and adopted by the NA, and

promulgated in SG. issue 82 of 26.10.2012.

In October 2012 through the new ASA of

128

SPA amendments were made in the same

direction.

3. Provision of local powers for management

of water engineering structures and river beds.

With the amendment of the Water Act

(WA) (SG. issue 61 of 6.08.2010) the

activities of issuing permits for water

abstraction and use from the dams were

decentralized. The Minister of Environment

and Water issues permits only for the

complex and important dams under

Appendix No. 1 to the Water Law. The

municipalities are provided for use about

3000 municipal dams as the mayors of the

municipalities issue permits for use of these

dams after decision of the municipal

council. The fees for the right to use water

and water sites (dams) as per the tariff

approved by the Council of Ministers are

received by the respective municipality.

For the remaining cases of water abstraction

and use of water sites, permits are issued by

the Directors of the basin directorates.

According to the WA, the policy related to

the operation, construction, reconstruction

and modernization of water systems and

facilities, which are municipal property, is

implemented by the mayor. The

amendment of the Water Act (SG. issue 80

of 2011, effective since 14.10.2011)

regulates that for the cleaning of river beds,

located within the urban area, the mayor of

the municipality shall determine annually,

by order, the sections of the river which

conductivity is reduced.

4. Improving the normative framework for the 1. The ASA of the WA was adopted. The

129

provision of basic local services: water supply

and sewage, waste management.

effect of the amendment is that some of the

deposits of mineral waters, exclusive state

ownership are provided for management of

the municipalities, at their request, after a

decision of the municipal council.

2. A new ASA of the WA was prepared

with leading institution MRDPW. It will

enable the official incorporation of SSZ

(sanitary security zone) around the water

sources for supplying with drinking water.

The ASA of the WA was adopted at first

reading by the National Assembly.

3. A new Act on Waste Management was

adopted (promulgated in SG. Issue No.

53/13.07.2012).

5. Provision to the municipalities rights of

ownership or management of ports, airports

and other transportation terminals with local

and regional importance.

According to the Law on maritime spaces,

inland waterways and ports of the Republic

of Bulgaria (LMSIWPRB) the division of

the ports of sites of regional importance and

sites of national importance is applicable

only to public ports i.e. ports in which

processing of cargo, mail and passenger

service are performed.

Priority 2. Increasing the own revenue base of the municipalities by providing new sources of revenue,

increasing the local powers and devolution of state property

Measure Result

2. Increasing the municipal revenues from concession

contracts by expanding the scope of the municipal

concessions and increasing the revenues from state

concessions of the municiplaities for maintenance of the

municipal infrastructure, the size of the revenue from

state concessions of the municiplaities for maintenance

of the municipal infrastructure.

With the ASA of the MRA (Mineral

Resources Act) of 2010 a unified

authority was created for management

of the ores and minerals, represented

by the Ministry of Economy, Energy

and Tourism with the purpose of

improving the institutional framework

130

for their management.

Ministry of Finance (MF)

The ASC of the Concessions Act

(CA) and the MRA were adopted.

Increase in revenues from concessions

under the municipal budgets after the

adopted amendments:

2010 – 22.6 mln BGN

2011 – 33.4 mln BGN

2012 – 43.9 mln BGN

2013 according to preliminary report

– 37.9 mln BGN.

MRDPW

The Black Sea Coast Development

Act was adopted, promulgated in SG.

issue No. 28, of 19th

March 2013.

5. Facilitating the procedures for provision and

management of immovable cultural property - state

property to municipalities and possibility for co-operation

and management by two or more municipalities.

By decision No. 54 of 15.02.2011 of

the Council of Ministers a bill of the

ASA of the CHA was approved. A

special procedure was regulated for

providing immovable archaeological

cultural values to departments and

municipalities for management - for

activities related to the conservation

and presentation of cultural values

(Art. 12 of the CHA). The Bill was

adopted on 1.07.2011 and

promulgated in SG. Issue No. 54 of

2011.

Priority 3. Accelerated increase in the investment capacity and the powers of municipalities to conduct

local investment policy

131

Measure Result

3. Strengthening the financial, administrative and

programming capacity of municipalities for the

development, co-financing and management of

investment projects, including from funds of the EU.

The NAMRB organizes and conducts

annual meetings of experts on

ecological projects.

Under the OPAC project 28 trainings

were conducted on topics such as

(spatial planning policy and planning,

waste management and environmental

protection, water management and

ecology, energy management, long-

term budget forecasting). Over 600

municipal experts were trained.

4. Granting rights to the municipal councils to introduce

local preferences for class investors, by analogy with the

Investment Promotion Act (IPA).

The ASA of the IPA introduces wider

powers to the mayor for conducting

policy for attracting investments

locally. It is envisaged that municipal

councils to be able to adopt

ordinances for the promotion of

investment of local importance with

which to define the terms and

conditions for issuance of Certificate

class “B” and for the implementation

of incentive measures at municipal

level.

Priority 5. Increasing the objectivity and efficiency in allocating resources and powers based on equal

dialogue between the central and local authority

Measure Result

2. Improvement and creation of permanent mechanism to

assist the municipalities with countervailable subsidy.

The measure is implemented every

year. The mechanism is an Annex to

the annual SBARB.

4. Participation of representatives of the municipalities in

the monitoring for use of funds from the EU Structural

Funds.

Representatives of the municipalities

participate in the monitoring for use of

funds from the EU Structural Funds.

132

5. Regular meetings of representatives of the

municipalities with the OP managing authorities for

resolving current issues.

Regular meetings were held in 2010

of representatives of the local

authorities with the managing

authorities of the operational

programmes.

NAMRB has representatives of the

municipalities in all monitoring

committees of the OP.

6. Participation of the local authorities in the

development of a new mechanism for the management of

the EU Funds for the next planning period,

Representatives of NAMRB

participate in working groups (WG)

for the preparation of the Partnership

Agreement, under the operational

programs, under CBC (Cross Border

Cooperation). Representatives of

NAMRB participate in WG project of

management of the EU Funds Act.

Priority 6. Increasing the capacity and responsibility of the local authorities for formulation and

implementation of the municipal policies

Measure Result

2. More efficient use of the capacity of RAM

(Regional Association of Municipalities) and

professional associations of municipal

employees for formulation and

implementation of the local policies.

NAMRB: Permanent interaction of NAMRB with

the associations of chairmen of MC and secretaries

of municipalities (NACMC and NASMCRB) as

well as RAM upon forming common position

under project of normative acts, at conducting

national forums of the municipalities, Day of

Dialogue with the legislative power etc.

Priority 7. Effective application of the principles of good governance at local level of the Council of

Europe

Measure Result

1. Conducting of information explanatory

campaign among local authorities and

citizens for the implementation of the

Meetings with representatives of the Council of

Europe, Italy, Norway and Belgium was held in

Sofia with the purpose of discussing the Strategy

133

Strategy for Innovation and Good

Governance at local level.

and determining of specific steps for its

implementation in Bulgaria.

2. Creation of the necessary structures and

development of procedures for

implementation of the Strategy for

Innovation and Good Governance at local

level.

The Council for Decentralization of the State

Governance by its decision No. 3 of 29.07.2010

amended by decision No. 4 of 04.10.2010

established National Commission for awarding the

Label for innovations and Good Governance.

3. Awarding of the Label for innovations and

Good Governance.

NAMRB The second procedure for awarding of

the Label for innovations and Good Governance

ended with a ceremony held in October 2013

within the annual meeting of the local authorities.

The Label was awarded to 16 distinguished

Bulgarian municipalities.

4. Development of an annual report by the

National Authority for performed activity on

awarding of the Label and its submission to

the Council of Europe.

The report on the performed activity for awarding

of the Label was elaborated by the Secretariat of

the Commission for awarding the Label. It was

reviewed and accepted by the Commission on

01.11.2011.

STRATEGIC GOAL 2 Optimization of the functional competence of the district governor for the

coordination of sectoral policies at regional level

Priority 1. Increasing the capacity and the responsibility of the district administration for conducting

regional policy for implementation of state governance in place and ensuring consistency between the

national and local interests

Measure Result

4. Improvement of the coordination between

central executive authorities and the district

governors.

The coordination between the central and the

territorial executive authorities should be treated as

diverse and constant process of communication,

mutual awareness, consistency of the policies and

actions and interaction.

5. Ensuring interrelatedness between the

district development strategy and the sectoral

strategies affecting the development of the

district.

Method for preparing interim evaluation of the

implementation of the district development

strategies was prepared in 2010. It was posted on

the website of MRDPW immediately after its

134

preparation together with an exemplary technical

specification for preparation of the interim

evaluation under the PPA. The MRDPW financed

the preparation of a pilot interim evaluation of the

implementation of the district strategy of Plovdiv.

One of the tasks of the evaluation is establishing of

the conformity of the district development strategy

with the applied sectoral policies.

6. Granting rights to the district governors in

the sphere of the development of social

services.

Regional strategies for the development of social

services bound with other strategic and planning

documents were developed.

Priority 3. Increase in the authorities of the regional and district development councils

Measure Result

2. Strengthening the role of the regional

development councils as bodies for

conducting of the state policy and

implementation of regional coordination.

On 26/10/2012, the amendment of the Regional

Development Act was adopted, as the amendments

affecting the implementation of this measure are in

Art.21 and Art. 22. The district governor was

assigned to organize and develop the regional

scheme for the spatial development of the district

as well as to submit the draft document for

discussion and adoption by the RDC.

MEASURES ON STRATEGIC GOAL 3 Development of local self-governance within the

municipality by increasing the managerial and financial autonomy of mayoralties and service

institutions

Priority 2. Increasing the managerial and financial autonomy of mayoralties

Measure Result

4. Strengthening the administrative and

management capacity of the mayoralties for

the implementation of powers provided to

them.

In 2013, NAMRB held 48 trainings attended by

more than 1500 mayors of mayoralties.