Romania - Reining in Local Government Spending

Sub-national Governments play an important role in the Romanian public sector. In 2009, sub-national spending was equivalent to 8.5 percent of gross domestic product (GDP). Romania has frequently adjusted its system for financing sub-national government over the last decade. These changes reflect ongoing Government concerns over the performance of local governments as well as attempts to increase the transparency and stability of the intergovernmental fiscal relationship. The most recent reform proposals reflect a more immediate concern: the government deficit. In an effort to meet aggregate targets for cuts in spending, the Government has been debating measures to reduce the local wage bill, cut transfers to local governments, and restrain local arrears. The principal objective of this technical assistance has been to advise the Government on the design and implementation of such efforts, and to suggest directions for longer-term structural reforms. Romania has a two-tier structure of local government. The national territory is divided into 41 counties (judets) and the city of Bucharest. These are then divided into various categories of second-tier local governments, hereafter referred to as localities. As of 2008, there were 3,179 such jurisdictions, consisting of 2,855 communes, 216 towns, 102 cities, and six Bucharest districts. Both counties and localities have elected councils and directly elected mayors/presidents. The budgets of sub-national governments are dominated by spending on education. Education accounted for 30 percent of sub-national expenditure in 2009. But the role of sub-national governments in education is limited. Localities act as paymasters for the ministry of education, distributing teachers' salaries on its behalf. These payments are financed from earmarked grants. Localities have no control over staffing numbers or wage levels in the education sector. They are, however, responsible for operating and maintaining school buildings, a function which they finance from discretionary revenues. In much the same respect, localities act as agents of centrally-financed social assistance programs, such as the guaranteed minimum income.

Bibliographic Details

Main Author:	World Bank
Language:	English
Published:	World Bank 2011-02-01
Subjects:	ACCOUNTANT, ACCOUNTING, ADMINISTRATIVE BURDEN, ADMINISTRATIVE CAPACITY, ARREARS, BAILOUT, BAILOUTS, BANKING SECTOR, BANKRUPTCIES, BANKRUPTCY LAW, BANKRUPTCY PROCEDURE, BLOCK GRANT, BORROWER, BUDGET CYCLE, BUDGET EXECUTION, BUDGET PROCESS, BUDGET REQUIREMENT, CAPITAL EXPENDITURE, CAPITAL EXPENDITURES, CAPITAL GRANTS, CAPITAL INVESTMENT, CAPITAL PROJECTS, CAPITALS, CASH FLOW, CENTRAL AGENCIES, CENTRAL GOVERNMENT, CENTRAL GOVERNMENT AGENCIES, CENTRAL GOVERNMENT CONTROL, CENTRAL GOVERNMENT SUBSIDIES, CITIES, CIVIL SERVICE, COST SHARING, COST-SHARING, CREDIT APPLICANT, CREDITORS, CURRENCY, CURRENT ACCOUNT, DEBT CONTROLS, DEBT FORGIVENESS, DEBT MANAGEMENT, DEBT REPAYMENT, DEBT SERVICE, DECENTRALIZATION, DEFICITS, DEVELOPMENT EXPENDITURES, DISBURSEMENTS, DISCRETIONARY REVENUES, DISTRICT, DISTRICT HEATING, DISTRICTS, ELECTRICITY, EQUALIZATION, EQUIPMENT, EXPENDITURES, FINANCIAL ASSETS, FINANCIAL CRISIS, FINANCIAL DISTRESS, FINANCIAL INSTITUTIONS, FINANCIAL MANAGEMENT, FINANCIAL SYSTEM, FISCAL CAPACITY, FISCAL CRISIS, FISCAL DISCIPLINE, FISCAL GAPS, FISCAL POLICY, GARBAGE COLLECTION, GOVERNMENT BANKRUPTCY, GOVERNMENT BUDGET, GOVERNMENT BUDGETING, GOVERNMENT DEFICIT, GOVERNMENT FINANCE, GOVERNMENT REGULATIONS, GOVERNMENT REVENUE, GOVERNMENT SUBSIDY, HOUSEHOLDS, INCOME TAX, INSURANCE, INTERGOVERNMENTAL FISCAL RELATIONS, INTERGOVERNMENTAL FISCAL RELATIONSHIP, INTERGOVERNMENTAL TRANSFERS, INVENTORIES, INVENTORY, LAND PARCELS, LARGER TOWNS, LEGISLATION, LENDERS, LEVY, LICENSES, LOAN, LOCAL AUTONOMY, LOCAL COUNCILS, LOCAL DEBT, LOCAL EXPENDITURE, LOCAL FINANCE, LOCAL GOVERNMENT, LOCAL GOVERNMENT BORROWERS, LOCAL GOVERNMENT BORROWING, LOCAL GOVERNMENT FINANCE, LOCAL GOVERNMENT REVENUE, LOCAL GOVERNMENT REVENUES, LOCAL GOVERNMENT SPENDING, LOCAL GOVERNMENTS, LOCAL INFRASTRUCTURE, LOCAL PUBLIC ADMINISTRATION, LOCAL PUBLIC FINANCE, LOCAL REVENUE, LOCAL SPENDING, LOCAL TAXES, LONG TERM DEBT, MARKET VALUE, MARKET VALUES, MAYOR, MAYORS, MINISTRY OF EDUCATION, MINISTRY OF FINANCE, MUNICIPAL, MUNICIPAL BANKRUPTCY, MUNICIPALITIES, MUNICIPALITY, NATIONAL BANK, NURSERY SCHOOL, OPERATING COSTS, OUTSTANDING STOCK, PENSION, PENSION FUNDS, PERSONAL INCOME, POLICY DISCRETION, PRINCIPAL REPAYMENT, PRIVATE SECTOR, PRIVATE SECTOR LENDERS, PROPERTY OWNERSHIP, PROPERTY TAX, PROPERTY TAX ADMINISTRATION, PROPERTY TAX REFORM, PROPERTY TAXES, PROVISIONS, PUBLIC, PUBLIC DEBT, PUBLIC FINANCE, PUBLIC INVESTMENTS, PUBLIC SECTOR, PUBLIC SECTOR DEFICIT, PUBLIC SERVICES, PUBLIC TRANSPORT, PUBLIC TRANSPORTATION, PUBLIC UTILITIES, REAL ESTATE, RECEIPTS, RECURRENT EXPENDITURE, RECURRENT EXPENDITURES, REGISTRATION FEES, REGULATORY AUTHORITIES, REPAYMENT OF PRINCIPAL, REPAYMENT PERIOD, REVENUE MOBILIZATION, ROADS, SCHOOL BUILDINGS, SECTORAL MINISTRIES, SEWAGE, STAMP DUTIES, STATE BUDGET, STREETS, STRUCTURAL REFORMS, SUBNATIONAL, SUBNATIONAL EXPENDITURE, SUBNATIONAL GOVERNMENT, SUBNATIONAL GOVERNMENTS, SUBVENTIONS, TARIFF REVENUES, TAX, TAX ADMINISTRATION, TAX BASE, TAX BASES, TAX CODE, TAX OBLIGATIONS, TAX RATE, TAX RATES, TAX REFORM, TAX REVENUES, TAX SHARING, TAXPAYERS, TECHNICAL ASSISTANCE, TOWN, TOWNS, TRANSPARENCY, TREASURY, UNION, URBAN AREAS, WAGES,
Online Access:	http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000333038_20110218011058 https://hdl.handle.net/10986/2736
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