Recommendations on the 2018 budget project of Zugdidi Municipality
Transparency International Georgia periodically publishes evaluations of budgets of various municipalities. Here we present recommendations on the 2018 budget project of Zugdidi Municipality. The project was presented by the City Hall of Zugdidi Municipality on November 29 of 2017.
- Violation of budget presentation deadline
The City Hall of Zugdidi Municipality violated a deadline for budget presentation defined by law, which is November 15 and presented the budget project on November 29. In our opinion this was caused by two factors:
- The timeline for presentation of a budget project by the City Hall to the City Council coincided with the process of the merger of the municipality of City of Zugdidi and Community of Zugdidi, the new mayor of Zugdidi started his duty on November 13th. The risk of belated presentation of the budget was not taken into account when decision on merging of the 7 self-governing communities and the city was made and the Parliament didn’t define special dates for development and presentation of the budget of the new municipality;
- The municipalities of the Community of Zugdidi and City of Zugdidi could have started working on the 2018 budget project at the start of the merger process, however they didn’t use this opportunity.
2. Decreased receivables in the budget
The 2018 budget project of Zugdidi Municipality projects receivables in the amount of GEL 35 100 000, which is almost GEL 2 million less (6%) than current combined receivables of now defunct Community of Zugdidi and City of Zugdidi (GEL 37 042 200).
Representatives of Georgian government stated that the merging of the municipalities of 7 self-governing communities and the city would not decrease their combined budget.
3. Non-programmatic budget
The 2018 budget project of Zugdidi Municipality doesn’t include a program section, the Council only discusses the budget balance, explanatory note, classification of expenditure and non-financial assets, which is a violation of the Budget Code and the Order N385 of the Minister of Finance “On approval of program budget methodology”, issued in 2011. The municipality has a legal obligation to have a programmatic budget, which starting at the planning stage should be oriented on results. Therefore:
- Qualitative and quantitative indicators for measuring expected final and interim results must be attached to every budget program and subprogram;
- Deadlines for achieving final and interim results must be attached to every budget program and subprogram. It is important to define a deadline for interim results, as it can be used as a progress indicator for the final goal;
- Expected final and interim results of every budget program and subprogram must be presented. The project must be clearly defined and must clearly reflect the future condition that it aims to achieve;
- Each program must include information about agency, structural entity (service, department) that is responsible for it, allowing the municipality to evaluate achieved results, and if necessary, to review performance of persons responsible for the program.
Zugdidi Municipality can rely on the experience of the Government of the Autonomous Republic of Adjara, which was the first one in the budget history of Georgia that created a programmatic budget, and which has received positive evaluation from international and local experts, including Transparency International Georgia.
4. Priority Document
The 2018 budget project of Zugdidi Municipality doesn’t include a priority document (only the explanatory note includes very limited information on priorities), which is a violation of Articles 76 and 77 of the Budget Code. Therefore, it is unknown what are short-term and long-term goals of the municipality.
The explanatory note states that priorities of Zugdidi Municipality for 2018 and the following three years are:
- Creating attractive investment environment;
- Significant improvement of infrastructure;
- Increase in access and quality of pre-school education;
- Financial support of cultural, sport, monument protection and youth programs.
According to the Budget Code, a municipality is required to have a priority document, methodology of which is described in the Order N385 of the Minister of Finance “On approval of program budget methodology”, issued in 2011.
A priority document is one of the most important documents, as it represents a main development plan of a municipality and provides information on mid-term action plans. A priority document should include an analysis of budget performance of a previous year; priorities of the year and following three years and programs and subprograms to be implemented within these priority frameworks, goals, results and indicators for evaluation of expected results.
Without taking these recommendations into account, the 2018 budget program of Zugdidi municipality cannot be considered as programmatic, especially taking into account that a person interested in the budget project cannot clearly see the programs and subprograms planned in the budget, as well as, expected results of these programs.
II. Recommendations regarding individual programs of the 2018 budget project of Zugdidi Municipality
The budget project allocates GEL 13 555 700 to “infrastructure building, rehabilitation and exploitation” programs, however the budget doesn’t present any information which actions the municipality plans to take in regards to these programs. Therefore, the budget project doesn’t provide any information where and which infrastructure problems are planned to be resolved in 2018.
This program requires more details, at least it should reflect information on major projects planned for implementation in 2018.
2. Investment Environment
The explanatory note of the budget project mentions that one of the priorities for Zugdidi municipality is creation of an attractive investment environment. However, neither the explanatory notes, nor the budget project define any specific actions that are planned to be taken to improve the investment environment. Therefore, it is unclear, if the goal of the municipality is to create a investor-friendly environment, what obstructs making these actions public.
3. Financing of local diocese
The 2018 budget of Zugdidi Municipality allocates four times more financial resources to the local diocese than in the previous year - the budget allocates GEL 400,000 to the Church, GEL 100,000 will be spent on construction of Iveria Icon Church, GEL 200,000 on reconstruction of Kortskheli Monastery, GEL 20,000 on celebration of Vlakernoba Holiday and GEL 80,000 on smaller projects.
Taking into account limited budget resources, financing of the Church will be an extra burden for the municipality, while the Patriarchate has large financial resources at its disposal and can independently finance aforementioned expenditures.
4. Municipal transportation
The 2018 budget project allocates GEL 100 000 to the program of municipal transportation, which, in our opinion, isn’t sufficient, taking into account the following factors:
- Buses owned by the municipality are old and in poor condition;
- Municipal buses service only several administrative units.
Therefore, it is necessary that Zugdidi Municipality present a plan for the renewal of buses and expansion of the service to the whole municipality, which should already be taken into account when designing the next year’s budget.
5. Subprogram for helping citizens with disabilities
‘Social security and rehabilitation program for persons with disabilities’ will be financed with GEL 200 000. In our opinion, this amount is not sufficient for addressing this issue in the municipality.
- Around 2000 persons with disabilities are registered in the Zugdidi municipality, including persons in wheelchairs. There is no appropriate infrastructure for their free movement;
- In several locations, wheelchair accessible structures are installed without proper standards; Conditions are particularly restrictive on streets, pavements and street crossings;
- None of the municipal transports are adopted to the needs of persons with disabilities.
In our opinion, the municipality, along with other public agencies should ensure availability of proper infrastructure for free movement of persons in wheelchairs. Municipal transportation should also be adopted to these needs, and street lights should be equipped with sound signals.
6. Non-profit (Non-commercial) Legal Entities
According to the explanatory note of the 2018 budget project of Zugdidi Municipality, “the process of merging of NNLEs and structural reorganization has already begun, and according to the government order has to be finished by the end of the year.”
According to studies published by Transparency International Georgia in 2016 and 2017, number of employees at NNLEs and their salaries increase periodically, which is a significant burden on the municipality budget.
It’s crucial that Zugdidi Municipality be focused on saving on administrative spending, as, in our opinion, the primary interests of the population are solution to social and infrastructure problems. Therefore, Zugdidi Municipality should establish a new legal entity only in cases of absolute necessity. The City Hall and the Council should be guided by the public interest and should focus on improving availability and quality of municipal services through effective management and smart human resources policies.