Recommendations regarding the draft budget of the Zugdidi Municipality of 2019
Similarly to the last year’s budget, the draft budget of 2019 that has been submitted for consideration to the City Council of Zugdidi fails to fully meet the requirements and goals of program budgeting. The document fails to provide interested persons with information about infrastructural, social, and other projects planned for 2019.
TI Georgia is presenting its observations and recommendations regarding the draft budget of next year.
The draft budget of the Zugdidi Municipality of 2019 fails to meet the criteria of program budgeting. It does not fully include information on concrete activities to be carried out in 2019, which contradicts the requirements of the Budget Code of Georgia and of Order No. 385 of the Minister of Finance of Georgia of 2011 on the Approval of Methodology of Program Budgeting. The municipality is obliged to have a full program-based budget, which should be result-oriented right from the planning stage. Therefore:
- The budget should give citizens full information on activities to be carried out in each administrative unit;
- Programs and subprograms of the budget should be accompanied by final and interim expected results, although each of them should be complete, measurable, and clearly formulated;
- Final and interim expected results of programs/subprograms should be formulated clearly. The draft budget should be formulated clearly and should reflect the concrete future situation for which it is implemented. In most cases, the results presented in the draft budget are unclear and don’t contain full information;
- All programs should be accompanied by information on the body or structural unit (service, division) responsible for their implementation (some programs are accompanied by this information), which will enable the municipality to assess the results achieved at the end of the year and, in necessary, to hold the respective individuals responsible;
- The budget should include a breakdown of budgets of non-entrepreneurial (non-commercial) legal entities (N(N)LE) and limited liability companies (LLC) to be funded by the municipality, and it should be clear on what the legal entities spend the funds allocated for them.
Recommendations regarding individual programs of the 2019 budget of the Zugdidi Municipality
The draft budget allocates GEL 13,816,100 for the program of ‘Construction, rehabilitation and exploitation of infrastructure‘, although it does not say what concrete measures the municipality is going to take in this area. Accordingly, the draft budget does not provide interested persons with information on what concrete infrastructural problems the municipality is planning to resolve for 2019 and where.
This program requires more concrete details. At least, it’s necessary to provide information on large projects planned to be carried out in 2019.
The explanatory note to the draft budget of the Zugdidi Municipality of 2019 says that one of the priorities of the municipality is to ‘create an appealing investment climate‘. However, neither the explanatory note nor the document on priorities indicates what concrete measures are planned to create an appealing investment climate. Accordingly, it is unclear what prevents the municipality from publicizing the list of these measures if the creation of an appealing investment climate is its priority.
Needs identified by members of civil councils
On November 16 this year, TI Georgia published a list of needs and infrastructural problems identified by members of our civil councils whose resolution is demanded by the local population.
It is important that the Zugdidi Municipality start studying the identified problems in a timely manner, to reflect them in the 2019 budget, and, due to the enormity of certain problems, to prepare a special application to the Ministry of Regional Development and Infrastructure so that the agency will mobilize additional funds.
Promotion of pre-school education program
The draft budget allocates GEL 5 million for the program of promotion of pre-school education. We think that the municipality should make efforts to renovate kindergarten buildings and increase the remuneration of teachers. It is also problematic that the majority of kindergarten yards lack the necessary infrastructure – there are no playgrounds and the children spend most of the time indoors.
The draft budget of 2019 allocates GEL 150,000 for the municipal transport program, which, we think, is insufficient due to the following circumstances:
- Buses owned by the municipality are old and amortized;
- The municipal buses only serve several administrative units.
Accordingly, it is necessary that the Zugdidi Municipality present a plan for renewal of buses and extension of this service to the entire municipality, which should start from the beginning of the next budget year.
Subprogram of assistance of persons with disabilities
The draft budget allocates GEL 200,000 for persons with disabilities (PwDs) and those with oncological diseases. In our opinion, this sum is not enough for the resolution of such problems, including for addressing infrastructural needs, in the Zugdidi Municipality.
- There are up to 2,000 PwDs registered in the Zugdidi Municipality, including those who move around in wheelchairs, but the municipality lacks infrastructure necessary for their free movement;
- In several places in the city, the rumps that have been installed fail to meet the necessary standards. There is a grave situation in the streets, on sidewalks and crossings;
- Nor a single vehicle used for municipal transportation is adapted for the needs of PwDs.
We believe that the Zugdidi Municipality, together with other public agencies, should take care of arranging the infrastructure necessary for the free movement of PwDs. It is also necessary to adapt public transport and install traffic lights with sound signals.
TI Georgia has published a number of studies on the remuneration of employees of municipal N(N)LEs and LLCs. The organization emphasizes that the budgetary burden that such N(N)LEs impose on self-government bodies is problematic.
As of October 2017, a total of 2,052 people were employed in 9 N(N)LEs created by the Zugdidi Municipality, whose total monthly remuneration amounted to GEL 1,111,086, which equals about GEL 13 million per year.
Two LLCs established by the municipality employed 46 people, and their total monthly remuneration amounted to GEL 29,252, which equals GEL 354,300 per year.
In total, the Zugdidi Municipality spends about GEL 13,687,000 annually on the salaries of employees of N(N)LEs and LLCs.
If we add up the salaries of employees of the City Hall and the City Council of Zugdidi and those of employees of N(N)LEs and LLCs, as of 2018, their total annual amount exceeds GEL 19 million, which reaches almost half (45%) of the budget of the Zugdidi Municipality (GEL 42,082,600).
TI Georgia calls upon the Zugdidi Municipality to:
- Study the activities which the municipal services of the City Hall will not be able to properly carry out and which require the creation of a separate LLC or N(N)LE, in parallel with the development of the draft budget of 2019;
- The Zugdidi City Hall should define the areas in which the powers of N(N)LEs, LLCs, and municipal services of the City Hall are duplicated;
- After these stages, it is important to decrease the number of both legal entities and their employees to the necessary minimum.
The draft budget of Zugdidi of 2019 cannot be considered as complete from the viewpoint of program budgeting without taking these recommendations into account, the more so that the proposed document fails to give interested persons a full impression on projects planned in the municipality and on their expected results.
We call upon the City Council of Zugdidi to ensure citizens’ involvement in the consideration of the budget as much as possible and to reflect relevant changes in the draft budget in order to resolve problems identified by the population, including by members of the civil councils of TI Georgia