Increasing the funds for the municipal administration as main priority for NAMRB in the forthcoming budget update



Further increase of the funds for the activity "Municipal Administration" by at least BGN 50.3 million is a main priority for NAMRB in the forthcoming negotiations for the update of the state budget, said Vladimir Georgiev, Mayor of Samokov Municipality and member of NAMRB Management Board during the discussion forum on the second day of the National Meeting of Municipal Financiers. Municipalities are in dire need of a mechanism to retain qualified staff and attract young professionals, he stressed. Local administrations should have sufficient funds for full implementation of the Ordinance on salaries of civil servants. At the moment there is no possibility to link the attestation assessments and the responsibilities of the employees with their salaries. Commitments in all areas of competence of local administrations are growing and require a systematic increase in knowledge and competencies, and limited resources do not even allow compensating for the costs arising from the national income policy for 2022.


During the forum, the Mayor of Montana and member of NAMRB Management Board presented the key municipal priorities on the parameters of the Budget 2023 before the municipal financiers. He noted that the procedure for drafting the state budget for the next year has already begun with unclear inflation parameters, a sharp rise in energy prices, a serious increase the costs for construction materials and labor, new conditions of income policy and the need to take non-traditional decisions to support and integrate those fleeing the war in Ukraine. Against this background, the municipalities are at the final stage of the implementation of projects from the programming period 2014 - 2020 and expect a better pace of payments and more clarity on the mechanisms for project implementation set out in the Recovery and Resilience Plan. In addition a ban on taking on long-term municipal debt and the preparation for the introduction of new bases for calculating solid waste are factors with potential for significant impact on municipal budgets, Zhivkov stressed.

The NAMRB leadership will insist in the new budget to include a priority for decent pay for municipal employees at all levels. It is called on state institutions to be more open about planned changes to the area of insurance that will affect civil servants and greater expediency regarding decisions to introduce a mechanism for indexation of construction contracts. In the days of the National Meeting of Financiers, it was repeatedly stressed by representatives of the Ministry of Finance that there was a delay in the investment processes in the municipalities. The lack of adequacy market opportunities is one of the main reasons for this.

At the Ministry of Finance at expert level, work on the budget update has already begun, but at the moment the priority is the anti-crisis measures announced by the government, some of which also affect the municipalities, stressed Jeni Nacheva - Director of the Directorate "Finance of municipalities". She listened to the problems raised by the municipalities and assured that by September an intensive joint work with the NAMRB team is to find acceptable solutions to be reflected in the Draft State Budget.

NAMRB Executive director Silvia Gerogieva Tilvia Georgieva also informs about the short-term tasks that affect the work of the municipalities as a whole and on local finances. First of all, these are the new tasks related to citizens of Ukraine enjoying temporary protection status. During their stay they enjoy all the rights of Bulgarian citizens and must be provided at local level with access to kindergartens, education, children's school health care, social services. A significant part of the integration tasks of Ukrainian citizens are expected to be assigned to the municipalities, but so far there is no clarity on the scope and specific guidelines for their implementation. As a result of the NAMRB's efforts, an additional 500 million euro has already been provided from the Budget of the Regional Development Fund for epair of the fourth-class road network and Water and Sanitation projects in small settlements. The application order is published on the website of the Ministry, and the projects at an advanced stage of readiness have been submitted in the past 2 months by NAMRB.

Proposals submitted to the National Assembly for amendment and supplementation of the Public Procurement Act aim at regulating the process of indexation of construction contracts. There is also a legal possibility to index existing contracts. There are upcoming changes to the Rules of application of the Public Procurement Act and preparation of the Methodology for price Indexation. NAMRB has already sent the proposals and notes documents to all municipalities, Silvia Georgieva stressed and reminded that it is important to properly document the whole process of communication with the contractors in order to respect the reasons for indexation of each individual contract. Of particular importance is the fact that some of the operational program have an understanding with the unspent funds to compensate for the expensive construction activities, but unfortunately – not at all. This means that municipalities that will proceed with indexing will also have to provide for an additional resource from their own resources.

Currently, there is no progress on the NAMRB's request for municipalities to be compensated for the high prices of energy carriers, the Executive Director recalled. The Association has prepared detailed estimates and submitted a proposal to the Minister of Finance for the allocation of 110 million euro for municipalities. The announced anti-crisis measures provide for a new compensation package, which should also apply to municipalities, but this will only become clear after the adoption of the relevant documents. This circumstance gives grounds for some optimism that high electricity bills will be partially offset, but, unfortunately, there is still no development in terms of gas appreciation, said Silvia Georgieva. Other problems addressed to the Minister of Finance are in waiting mode: for clarity on the scope and content of the term "ongoing repair", because of the discrepancies in the legal definitions in different documents, as well as for the revoked right of municipalities to use the funds from the deductions under the Spatial Planning Act because of arbitrary interpretations of the law. Guidelines of the Ministry of Finance on the legal possibility of concluding tripartite agreements for financial corrections imposed on projects with European funding are also pending.

Although symbolic, the participants in the plenary session of the National Meeting of Financiers from the municipalities marked the 15th anniversary of the FLAG fund. Its Executive Director Nadia Dinkynova stressed that the public importance of the Fund cannot be properly assessed, although the numbers say a lot: supported over 1700 projects in 220 municipalities with more than 2 billion euros. Also the FLAG fund team will present the new opportunities to support the municipalities in the upcoming programming period.