1.

According to the European Charter of Local Self-Government (ECLS) the right to local self-government is one of the basic democratic principles in the member states of CE. It means that the inhabitants of the local communities have the right to decide on essential part of the local affairs of public relevance. This right is implemented by the democratic election of representative bodies as well as directly by referendums, at the meetings of local residents, by the civil initiative and by other ways.

Local self-government in Europe is a tradition which is more than hundred years old. Very diverse and various regulations are concerned. The models of local self-government vary among themselves according to volume, structure, and tasks and also according to relations towards a state. Their common characteristic is their leaning to their own tradition or historic development. Various models of local self-government will be preserved also in the future as there is no and cannot be one single model, even within individual (federal) states. The diversity of models is respected also by ECLS and other documents of the CE and also the EU which refer to local and regional communities.

In our area, local self-government was established already in the middle of the previous century by the Austrian temporary Municipalities Act signed by the emperor in 1849 soon after the March Revolution in 1848. On the basis of this Act, the first municipal representatives in Carniola were elected in 1850. In 1862 the skeleton state law on municipalities was passed, which provided the basis for regional laws on municipalities, e. g. for Carniola in 1866. From then on, the legislative arrangement of local self-government continuously went on until 1955 when the municipal system was established which it is said to have abolished the local self-government.

2.

With the introduction and beginning of functioning of new municipalities in 1994, the municipal system was abolished in which the municipality was so-called socio-political community functioning especially in the name of a state; local self-government was partly exercised in local communities. The former community was by the size, number of inhabitants, organisation and field of activity hardly comparable to a classic municipality of Europe. The municipality was like a state in itself. The municipalities were too large to play a role of real classic municipality and too small to play a role of first level state administration or regional community.

The conditions for the abolishment of municipal system occurred with the abolishment of social ownership, as a prevailing form of ownership, self-management with the concept of associated work, delegational system, leading role of the league of communists, etc. which were replaced by the pluralism of ownership, market economy, political pluralism of multi-party system, etc. The characteristics of the municipal system were that the municipality performed the majority of tasks for the state. A municipality had a role of classic municipality, while at the same time it was the basis of society of self-management without state enforcement.

Our municipality as a commune was according to the constitution basic socio-political community, i.e. of the same nature as state community. Therefore, it was not competent only for local matters as a classic municipality but also for the matters of wider, state significance (state in a state). Under the constitution, the municipality was competent on the first level for the indirect implementation of all federal and republic laws and all other regulations, unless explicitly otherwise provided for the individual cases by the law.

The former municipality performed the majority of tasks for the state. Researches showed that after 1974 there were more than 3,000 such tasks and that 80 % of activities of municipal bodies were performed for the state. Under the constitution the municipality was competent for performing all public matters in its area, and that irrespective of the fact if they had local or general state significance, except for those which the law explicitly transferred to the competence of wider socio-political communities. In such a way, the municipality functioned as an integral part of the state, as its first level.

1.

The reform of local self-government in Slovenia had to be started due to a new state which established a new value system with the constitution and among others provided local self-government for the inhabitants of Slovenia. Besides human rights, basic liberties and the principle of separation of powers, the Constitution of the Republic of Slovenia in 1991with its provision of local self-government placed Slovenia among the countries, which want to assure common European standards for determination and protection of the rights of local authorities, which represent the closest level of administration for the citizens and allow them an efficient participation in decision-making related to their every day environment.

For the implementation of local self-government in Slovenia, the following targets were set:

• better quality of life for people in local communities;
• participation of people in decision-making: democratic local elections, referendums, meetings of local residents, the civil initiative;
• economical and efficient local administration (local management);
• proportionate development of all community (realisation of principles of subsidiarity and decentralisation);
• enforcement of local self-government as the essential element of parliamentary democracy which is based on the principles of democracy and decentralisation of power;
• redefinition and enforcement of identity of classic municipality and other forms of local self-government;
• introduction of regions;
• comparability with the neighbours and Europe.

Local self-government in the Republic of Slovenia has been introduced in very unfavourable time limits. Researches on the constitution of new municipalities and findings of the competent bodies showed that the targets of the reform were set correctly, however, due to short time limits they have not been realised yet.

2.

In addition to the constitution, the legal basis for the implementation of local self-government in Slovenia represents also the Local Self-Government Act as the most important legislative regulation in this field, accompanied by the Act on Referenda for the Establishment of Municipalities, Establishment of Municipalities and Municipal Boundaries Act, Local Elections Act and Financing of Municipalities Act.

The Local Self-Government Act is of basic importance to the system of local self-government. The Act was adopted by the National Assembly on 21 December 1993 and amended eight times. Its present contents essentially differ from the original concept which was more internally harmonised.

Such frequent amendments of the basic act on local self-government evidently show at least three things. First: those, who declared that the law was not required or that it should be based on principles, were wrong. Second: the realisation of self-government is far more complex process as it was thought in the beginning, and that the state or legislator should strongly intervene in the local autonomy if the relations between the bodies are such that they block the normal functioning of the municipality. Thirdly: the law is not wholly suitable due to unsuitable interventions of politics into it and should be reconsidered in conceptual manner. We can add that the expectations that all problems of local self-government can be solved with this law are unreal.

Other regulations, which define the substance of the municipalities’ tasks (regional legislation), and especially the Public Administration Act, are also important for the local self-government.

The reform of Slovene local self-government contains five components: functional, territorial, organisational, financial-material and legal.

The functional component involves the redistribution of competence between the state and municipalities as the basic self-governing local communities and the realisation of the principle of subsidiarity with the process of decentralisation which has already begun.

The territorial component involves the establishment of new municipalities, which replaced the former communes. In 1994, 147 new municipalities were formed out of 62 communes, in 1998 another 45 municipalities were added and in 2002 one more. There are currently 193 municipalities in Slovenia which are not all formed according to the legislative criteria (5000 inhabitants).

The number of municipalities according to the number of inhabitants:

The organisational component involves a new organigram of the organisation of powers in municipality which consists of the bodies: directly elected municipal council and the mayor, supervisory board and forms of direct participation of citizens by decision-making in the municipality: meetings of local residents, referendums and civil initiative.

The financial-material component involves the realisation of principles of proportionality of funds with regard to the tasks of localities, solidarity with weaker municipalities as regards the development, the right to their own sources of localities, etc.

The legal component involves the position of municipality as a legal entity according to the public law and its incorporation into the whole legal system of the Republic of Slovenia.

The centralisation of competence which occurred at the establishment of local self-government should be only temporary, then the state should return individual matters from the present state competence to the municipalities as their original or transferred competence. The realisation of local self-government is therefore a great task which refers especially to the division of competence between the state and local communities, which also means the regulation of reasonable financial and ownership flows and relations between both levels. The absence of wider self-governing local communities in Slovenia represents an urgent problem, which can not be avoided.

3.

The local self-government is not intended for itself. It is intended for people and their needs. It introduces the activity for strengthening of local identity and strengthens the co-operation between local communities and citizens and the local authority. For the democracy of one state it is essential that the democracy is insured and that it functions in its smallest units, i.e. in local communities.

The target of introduction of local self-government was also the democratisation of life of people in local communities by more frequent meetings of local residents, local referendums, civil initiative and other forms of participation in the processes of decision-making in local community. These forms should help identify the relation of people to concrete and urgent problems which they face in their local community. Local communities should be returned to people, made as efficient as possible, transparent and attractive to people, living in them. The participation of citizens in various forms is characteristic in all states with well-formed local self-government. In Slovenia these forms are still undeveloped.

The introduction of local self-government substantially changed the image of public administration in the Republic of Slovenia. The introduction should have been carried out simultaneously and in connection with the reorganisation of state administration. The experts pointed to that fact from the very beginning and believed that on the contrary the municipalities as basic self-governing local communities would be without real contents from the very beginning of their functioning or would deal only with matters previously covered by localities. This was not the target of reform of local self-government in the Republic of Slovenia.

Many years of living in municipalities, former communes, made difficult for the inhabitants to understand new local self-government in which they still frequently search and request the role of municipality as a state representative. The introduction of local self-government means new organisation, the categorised regulations of which have not been sufficiently known yet. Also the comprehension of people is strongly burdened with the former organisation. Only the clarification and definition of new concepts can make the circumstances for implementation of normative organisation of local self-government.

The Slovene case involves a rather limiting constitutional definition of self-governing local communities’ sphere of work, conditioning of transfer of individual tasks from the state competence to a local community upon its previous consent, and the problematic constitutional definition of regions as voluntary wider self-governing local communities. The Local Self-Government Act is a little bit better regarding the definition of work of municipalities, regional acts are insufficient because competence should be allocated between the state and local communities in favour of the latter, and proper funds be assured to them.

According to the Slovene constitution, a municipality is competent for local matters, which it can manage independently and which concern only the inhabitants. The constitution also defines that the state can by previous consent of municipality or wider self-governing local community transfer to them according to the law the operation of individual task from the state competence if it provides also the funds.

In the framework of the constitution and acts, a municipality independently manages local affairs of public relevance, defined by the Local Self-Government Act, field acts and general acts of a municipality (statute, decrees), as well as the state tasks, which the state transfers to a municipality upon its consent and with the provision of sources for the fulfilment of tasks. The basic criterion for determining what belongs within the competence of a municipality and what belongs within the competence of the state is a (too restrictive) constitutional provision that all these are local affairs which a municipality can manage independently and which concern only the inhabitants of a municipality. These are especially those issues which are principally aimed at the definition or provision of normal life conditions. The obligation to meet the joint needs and interests of the inhabitants, which is at the same time also a condition for the establishment of a new municipality according to Article 13 of the Local Self-Government Act, is a criterion for determining the original tasks of municipalities. The important original competence of a municipality has already been or is in the process of being divided or defined by substantive acts, which regulate individual spheres of social life (spatial planning, roads, communal activities, public services, environmental protection, social welfare, culture, sport, etc.).

The allocation of tasks has to take into account the subsidiarity principle – a municipality carries out all tasks which it is capable of and qualified for. This is also the so-called principle of municipality's general competence for all public affairs, with the exception of those which according to the constitution or the acts belong within the competence of other authorities.

The allocation of tasks between the state and a local community therefore depends on the criterion whether some regulatory or implementing task refers only to the inhabitants of a municipality or whether there are general public benefits in question which surpass the interests of a municipality. This is a value criterion which has to be taken into account by the state in its legislation process as well as by a municipality in its regulative role.

4.

Financial resources are of essential importance for the estimation of the actual situation of local self-government. Without autonomy and sufficient financial resources, local self-government is nothing more than an external appearance. To avoid the risk of local bodies remaining without funds for performing the tasks laid down by the law, financial resources which pertain to them should be defined at the same time as their competence.

The ECLS demands that local authorities should be entitled, within national economic policy, to adequate financial resources of their own, of which they may dispose freely within the framework of their powers. Local authorities must possess a high level of autonomy as far as their responsibilities are concerned, the methods and instruments for implementation of these responsibilities, and the sources for their realisation. Financial autonomy requires the expansion of responsibilities of local communities, but at the same time it requires a democratic control over the expenses of local communities.

Local communities require adequate funds for their increasing tasks. The states provide their local communities with some forms of financial aid, such as general or special financial transfers or shared taxes (e.g. personal income tax). The former state property was in numerous cases transferred to local communities, and the privatisation of such property gave the local communities the necessary liquidity. However, the financing by the state is in general not sufficient for the level of services demanded by local inhabitants, at least not in the long term. Small local communities are stricken by a low tax base. This is especially true in the countries with a substantially increased number of autonomous local communities. Such small populations are not capable of providing the necessary funds for many social services which are now within the competence of local communities.

The introduction of local self-government results in a decentralisation of management of public affairs which are transferred from the state level to the local level. The perspective of financing a successful and sustainable development of municipalities requires also:

• a new system of fiscal decentralisation and flow of financial resources from the state level to the local level,
• provision of own, original resources to local communities for the implementation of local public affairs,
• new methods of operations and supplementation of tax resources with non-tax ones and resources from the private sector,
• an introduction of management methods, which will replace the classic budgetary technique of provision and financing of local public services.

The municipalities in Slovenia are financed according to the Financing of Municipalities Act adopted as a temporary act in 1994 prior to the beginning of new municipalities' operations. The central contents of the Act were financing of necessary tasks (at that time, guaranteed expenditure, now appropriate expenditure), determining the criteria for financing the necessary tasks, and financial equalisation, i.e. the state budget funds intended for municipalities' operations.

The criteria for guaranteed expenditure were prepared in the competent departmental ministries and services, on the basis of which and with the co-operation of municipalities, the Ministry of Finance assessed guaranteed expenditure for each accounting year. The result of the determined criteria was assessed guaranteed expenditure of municipalities per inhabitant (expenses of municipalities for financing of necessary tasks). Financial equalisation also balanced the difference between the municipalities' own incomes and funds required for fulfilment of necessary tasks.

The state budget funds intended for transfers to municipalities according to the determined and financially evaluated criteria were from the very beginning of new municipalities' operations not sufficient. Financial equalisation was therefore provided only with taking into account the actual situation and the development level or the achieved standards in the areas defined as necessary tasks (guaranteed expenditure) of a individual municipality – as the difference between own incomes and the assessed amount of funds required for financing of necessary tasks, however, it did not provide for at least minimum development needs, which should be provided for according to Article 52 of the Local Self-Government Act. Considering this, it will be therefore necessary to provide the local communities with more funds – higher share of GDP in the framework of public expenditure.

The changes in the system of financing of municipalities are required also by the ratification of the ECLS. Article 9 comprises 8 principles, which the signatory states must take into account when preparing their internal legislation which will regulate the financing of local communities. These principles are: The principle of adequacy, which requires that local communities have adequate financial resources of their own, of which they may dispose freely within the framework of their powers. The principle of commensurateness requires that local communities' financial resources are commensurate with the responsibilities provided for by the constitution and the law. The principle of self-financing requires that at least part of the financial resources of local communities derive from local taxes and charges of which, within the limits of statute, local communities have the power to determine the rate. According to the principle of flexibility, financial resources of local communities must be sufficiently diversified and flexible to enable them to keep pace as far as practically possible with the real evolution of the cost of carrying out their tasks. According to the principle of equalisation, the state must provide for equal distribution of financial resources between local communities in the area of financing of local affairs not only by financial equalisation but also by other equivalent measures. The principle of co-operation requires that local communities be consulted, in an appropriate manner, on the way in which redistributed resources are to be allocated to them. The principle of independence requires that grants to local communities should not be strictly earmarked for the financing of specific projects. The principle of borrowing requires that for the purpose of borrowing for capital investment, local communities have access to the national capital market within the limits of the law.