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LOCAL GOVERNANCE IN ESTONIA

professor JUSSI S. JAUHIAINEN University of Oulu University of Tartu jussi.jauhiainen@oulu.fi. INTRODUCTION MAIN CHALLENGES TERRITORIAL GOVERNANCE LOCAL REFORM INITIATIVES, 1997–2005 CONCLUSIONS. LOCAL GOVERNANCE IN ESTONIA. Estonia is a small country with few resources

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LOCAL GOVERNANCE IN ESTONIA

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  1. professor JUSSI S. JAUHIAINEN University of Oulu University of Tartu jussi.jauhiainen@oulu.fi INTRODUCTION MAIN CHALLENGES TERRITORIAL GOVERNANCE LOCAL REFORM INITIATIVES, 1997–2005 CONCLUSIONS LOCAL GOVERNANCE IN ESTONIA

  2. Estonia is a small country with few resources For such a compact country (45,200 square km, population 1,351,000) Estonia has a too fragmented territorial administration the median amount of population for Estonian 15 counties is 40,000 inhabitants. There are 241 municipalities (including 39 towns) on the average, the size of a municipality is 13 x 13 km with 2,000 inhabitants The size of Estonia is 2/3 that of Latvia Population amount in Estonia is about one million inhabitants less than in Latvia In both countries the capital region has an overwhelming role: over 1/3 of population and in many economic fields 2/3 of activities Both counties have a weak regional administration and a fragmented local level with many very small municipalities INTRODUCTION

  3. MUNICIPALITIES 1999 / 2003 Municipalities in Estonia, 1999 and 2003 ---------------------------------------------------------------------------------------- number of 1999 1999 share 2003 2003 share Inhabitants municipalities of total municipalities of total ---------------------------------------------------------------------------------------- 1 – 999 23 9.1% 27 11.2% 1,000 – 4,999 197 77.6% 170 70.6% 5,000 – 9,999 19 7.5% 30 12.4% 10,000 – 49,999 10 3.9% 11 4.5% 50,000 – 99,999 3 1.2% 1 0.4% 100,000 – 2 0.8% 2 0.8% ---------------------------------------------------------------------------------------- Total 254 100% 241 100% ----------------------------------------------------------------------------------------  over four out of five municipalities have less than 5,000 inhabitants

  4. Economy modernised 1990 – 2000 75 % jobs lost in agriculture 41 % jobs lost in industry 8 % jobs more in services Economy from 2000 to 2003 4,700 jobs lost in agriculture 700 jobs more in industry 20,000 jobs more in services Modest size of Estonian economy GDP of 8,000 million € in 2004 Functional urban regions 10 with over 20,000 inhabitants 5 with over 50,000 inhabitants Estonia lost over 200,000 inhabitants (-14 %) since 1990 and a possible loss of 200,000 – 400,000 by the year 2030 one third of the population are not ethnically Estonians and most of them speak Russian or other Slavonic languages 10 % have not citizenship population declines in all towns but suburban growth takes place near to largest towns in Latvia similar demographic and economic trends Strong need for efficient local governance in both countries ECONOMY AND DEMOGRAPHY AS MAJOR CHALLENGES

  5. POPULATION DEVELOPMENT OUTSIDE OF TOWNS 1989 - 2000 Population growth in the suburban areas around three major towns Tallinn Tartu Pärnu  employment Decline in the north-eastern region: Narva Kohtla-Järve  unemployment • POPULATION DEVELOPMENT OF RURAL MUNICIPALITIES, 1989 - 2000

  6. Territorial or local governance pertains to forms of management of territorial resources at regional and local scales. Governance is a dynamic process of hierarchies (idealised mode of democratic government and public bureaucracy) markets (arenas for economic actors) networks (self-regulatory structures within particular policy sector) communities (organisation of development without state government) Governance increasingly involves trans-scalar and interjurisdictional dimensions, which stress the limits of effectiveness of given geographical rationales for governmental and administrative activity (Gualini 2001) Good territorial governance is needed for efficient and transparent policies for local employment and economy Division of powers between supranational, national, regional and local administration, including public and private sector GOOD TERRITORIAL GOVERNANCE

  7. Issues Central Government Local Government ------------------------------------------------------------------------------------------------Defence Entire responsibility No direct responsibility Justice / Int. safety Entire responsibility No direct responsibility Police services National police No direct responsibility For. econ. relations Entire responsibility No direct responsibility Education All universities and research institutions; Construction, operation and maintenance of Teacher training; textbooks; some inv. primary and secondary schools, kindergartens grants and art schools, sport facilities, houses of culture community centres, vocational and sport schools; Teacher’s salaries and soc. security; School transport Health Research medical institutes, special Capital investment and maintenance for municipal service hospitals and tertiary hospitals hospitals; municipal doctor Roads Construction of national highways; Maintenance of local networks and streets Maintenance of state highways and any other roads linking cities and villages Public Intercity buses by State enterprise; Local public transport Transportation Airports; railway subsidy, subsidy for local transportation Fire protection Fire protection services Emergency services Culture and sport National library and museums Local libraries, cultural centres, museums, and sport centres Sanitation No direct responsibility Garbage collection and street cleaning Water and sewage Some investment grants Operation and capital expenditures Public utilities Electricity and gas provided District heating state enterprises Housing No direct responsibility Housing maintenance and communal services Social welfare Unemployment benefits, subsidies to Elderly care, home visits and other social services, local governments for other welfare allowances Environment National environment issues Local environment issues

  8. the representative of the Government at the regional level is the county governor, appointed to the office by the Government for a term of five years. The county governors in 15 counties are the link between the Government and local governments. The main issues regarding local level (i.e. municipalities) are that the county governor: represents the interests of the state in the county and care for the comprehensive and balanced development of the county co-ordinates the co-operation of regional offices of ministries and other agencies of executive power and municipalities in the county concludes, by authorisation of the Government, administration contracts with municipalities for performance of state obligations by them supervises the legality of secondary legislation of the councils and governments of municipal units and the legality and purposefulness of the use of state assets in the use or control of municipal units informs the Government and municipalities on regional policy and other issues concerning relations between the central administration and the municipalities REGIONAL LEVEL: COUNTIES

  9. COUNTIES: REFORM? • Recently, the county governors have argued for directly elected and politically more autonomous councils of counties, but such concentration of power to the elected regional (county) councils would require a change in the Constitution. • This argument has been put forward due to weak local level • the need to establish a politically and economically competent subnational authority in Estonia, especially regarding regional policy • In the formation of regional governance in Estonia there are different power interests between central, regional and local authorities.  The collective demand by the country governors for more substantial powers over local authorities would mean a particular interpretation of subsidiarity that does not facilitate the formation of stronger political and economic governance and networks at the local level

  10. LOCAL GOVERNMENT • The Constitution indicates the separation of the tasks of the central and local authorities. Local governments resolve and organise issues assigned to them by law if not assigned by law to other persons for organisation and resolution. • the decision-making power in local everyday matters is decentralised to local government following the European principles of local self-governance of the European Local Government Charter • it is not clearly expressed whether the position of local government derives from principles and theories community or state-centrism • Estonia inherited the autocratic Soviet model of public administration that only imitates the democracy.  the amount of tasks undertaken by local government has increased despite the state funding for that has not increased in the same way  tensions between the central and local governments in shaping local governance are rising

  11. Budget revenue of Estonian local governments in 2002: taxation (39 %) financial support and revenue intended for specific purposes (33) loans and interest (8 %) municipal enterprises (6 %) municipal agencies and municipal assets (3 %) other revenue (1 %)  the role of individual income tax has diminished from 48 to 35 % LOCAL GOVERNMENT revenue • The share of local governments is about 6–9 % of the national GDP. • over two-thirds of Estonian municipalities have own annual revenues under one million euro. • The average personal income differences per capita between the richest and the poorest Estonian municipalities are over eightfold • 35 municipalities have over 50 % loan burden of their total budget and 35 municipalities have between 40 and 50 % • In eight municipalities the share of individual income tax was over half of the total local revenue

  12. INVESTMENTS in 2000 in Tallinn 99.7 % of investment funds are from own incomes in towns with over 10,000 inhabitants 52.9 % of investment funds are from own income and 24.7 % from ministries. in rural municipalities with less than 1,500 inhabitants 27.4 % of investments funds derived from own income and 49.4 % from ministries LOCAL GOVERNMENT expenditure Expenditures of Estonian local governments in 2002: • education (44 %) • other (18 %) • economic services (14 %) • general administration (9 %) • social welfare (8 %) • culture and art (7 %) • Expenditure related to duties of the state imposed by law on a local government is funded from the state budget.

  13. The first reform attempt towards new local governance took place from January 1997 to February 1999 The Government indicated the need to reduce significantly the amount of municipalities, however, not to alter their political role. the number of local governments could be reduced to 100 The more distant is a municipality from the capital, the weaker is its socio-economic development potential The Government argued that the expensive and ineffective administrative system was a problem for the development of Estonia. The public sector suffered from rigid hierarchies, inadequate professional training and administration, and lack of qualification, motivation and co-ordination studies, organised discussions and proposed models for administrative-territorial reform of local government under the PHARE Programme LOCAL REFORM: ATTEMPT 1

  14. The second reform attempt began with the new Government in 1999. In 2001, the Government approved the programme for territorial-administrative reform to achieve a novel, flexible, quality and efficient local government. the general minimum amount of inhabitants in municipalities would be 3,500 and near to larger towns 4,500. The immediate hinterland of municipal centre should belong to the same municipality. majority (52 %) of municipalities was against the reform proposal and only 13 % municipalities (30) directly in favour, 31 % conditionally in favour, and 4 % without opinion media debates indicated the administrative reform as necessary to be conducted slowly but in a radical way main argument was the size and the number of municipalities  main weakness of the reform initiative was its poor design of organisational structure with the requirements and opportunities of the local government. LOCAL REFORM: ATTEMPT 2

  15. The third attempt towards local governance started in 2002, currently in progress. The administrative weakness and economic inefficiency of local government was still the main argument The aim is to enhance the administrational ability and the efficiency of project applications of local governments, improve the availability and quality of public services of local governments and to develop their cooperation ability. In 2004, decree to co-ordinate and promote the voluntary merger of local governments financial premium for merging 100,000 to 200,000 euro per respective local government an additional issue is the new regional policy guidelines, which consider specialised competing and co-operating urban regions and networks as possibilities for innovative regional development LOCAL REFORM: ATTEMPT 3

  16. Estonia and Latvia have few human and economic resources  need to use them very well current Estonian territorial administration does not support the organisation of such resources in appropriate way Need to make a reform towards local governance, but in Estonia there are three failed attemps, mostly due to inadeguate political organisation of the reform  The full answer is not a simple substantial reduction in the amount of territorial administrative entities Co-operation and identification of initiatives to generate better economic and social development Professionalisation of administrative, management and leadership skills Decentralisation of decision-making in regional policy at subnational level Clear independence of local budgets from the state More intensive inter-municipal and inter-regional co-operation Territorial and public administration reforms are necessary but feasible only if they enhance local governance, subsidiarity and democracy combining territorial reform with new urban policy mean that local governance is taken seriously in Estonian regional and local economic policies, similar possibility exists also for Latvia CONCLUSIONS

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