ZMOS Insists on Exemption for Municipalities from Debt-brake Sanctions

Bratislava, 19 June (TASR) - The Slovak Towns and Villages Association (ZMOS) insists that local authorities should be exempt from the sanction mechanisms of the Constitutional Act on Budgetary Responsibility. Following a special online meeting of the ZMOS Council on Friday, the association's chair, Jozef Bozik, said that the main item on the agenda was whet the organisation intends to do next regarding the debt brake and territorial self-government. According to Bozik, recent developments have shown that a constitutional law cannot rely solely on political interpretations or promises. "The association expects a stance from the Finance Ministry that may serve as a practical basis for preparing municipal budgets for next year, but it can't replace an amendment to the constitutional law. The ministry's interpretation is a temporary tool, not a source of long-term legal certainty," he underlined. Bozik noted that towns and municipalities begin preparing their budgets during the summer months. Some local authorities will approve them in October, while others will do so only after municipal elections. However, it is essential that they have clear, legally certain and rational rules. According to ZMOS, political disputes and the lack of agreement between the coalition and the opposition on this issue mustn't outweigh the proper functioning of society and the delivery of public administration. "The ZMOS Council today confirmed that the Slovak Towns and Villages Association will continue to seek an amendment to the constitutional law so that local authorities will be excluded from the debt brake's sanction bands. ZMOS considers the next two years following the municipal elections to be a crucial period for adopting a permanent solution, as the current political agreement on this issue has failed," said Bozik. He noted that towns and municipalities can't incur debt without limits. They are bound by existing legal rules governing budget management and may borrow only within the limits permitted by legislation. For this reason, ZMOS argues that the financial management of local authorities doesn't justify subjecting local and regional self-government to debt-brake sanctions. "The share of towns and municipalities in Slovakia's total public debt is below 1.5 percent. Together with the self-governing regions, the proportion is below 2 percent. Even if all towns and municipalities borrowed up to the maximum level permitted by law, this would only amount to approximately 6.5 percent of the state's current debt. This clearly shows that local authorities aren't the cause of the debt brake and don't have the capacity to generate debt on a scale that would endanger public finances," stressed Bozik. mf/df