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PPerformance-based erformance-based BBudgeting - udgeting - legal base legal base

Lessons learnt & practical recommendationsLessons learnt & practical recommendations

Grzegorz OrawiecGrzegorz Orawiec

CracowCracow

11 December 201311 December 2013

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Performance budgetPerformance budget

Aims (allocation)

PerformanceBudget

Specific tasksConcrete actions

(subdivision)

Results(indicators)

PBB sets the aims, to which money is “connected” (allocated)

From these aimx, specific tasks are delineated and funds are then subdivided among them.

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Performance-based budgetingPerformance-based budgeting

Performance budgetsPerformance budgets use aims, tasks and indicators use aims, tasks and indicators (measured results)(measured results) to explain why the money is being to explain why the money is being spent. spent.

The key word “The key word “resultresult”” The entire planning and budgeting framework is The entire planning and budgeting framework is

result orientedresult oriented. There are tasks and activities to . There are tasks and activities to achieve these results.achieve these results.

Performance budgeting comprises Performance budgeting comprises three elementsthree elements:: strategystrategy (different ways to achieve the final result) (different ways to achieve the final result) activity/outputsactivity/outputs (what will be done to achieve the final (what will be done to achieve the final

result)result) resultresult → concrete measures (indicators) → concrete measures (indicators)

PBBPBB – only one ( – only one (rather finalrather final) puzzle of modern public ) puzzle of modern public finacefinace

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The legal framework for improving The legal framework for improving public financepublic finance

Fiscal rulesFiscal rules

Consolidation of fiscal sectorConsolidation of fiscal sector

Multi-annual planningMulti-annual planning

Independent public institutionsIndependent public institutions

Performance-based budgetingPerformance-based budgeting

http://ec.europa.eu/economy_financehttp://ec.europa.eu/economy_finance

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Performance-based budgeting – the legal basePerformance-based budgeting – the legal base

The is The is no singleno single model of performance- model of performance-based budgeting:based budgeting:- LOLF (France), PSA (GB), PART (USA), VBTB (the - LOLF (France), PSA (GB), PART (USA), VBTB (the Netherlands)Netherlands)

National ↔ Regional ↔ Local level (National ↔ Regional ↔ Local level (administrative administrative divisiondivision))

Countries which directly adopted foreign Countries which directly adopted foreign models later had models later had adjust these modelsadjust these models or or reconstruct them completely with respect reconstruct them completely with respect to:to:- specifics of their own public finances- specifics of their own public finances- national priorities - national priorities - social-economical circumstances- social-economical circumstances

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Taxes in EU

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EU & macroeconomic stabilization policyPBB – only one of the useful tools

Fiscal policyFiscal policy:: government spending and taxes. government spending and taxes. The framework for fiscal policies of EU Member States is The framework for fiscal policies of EU Member States is

intended to monitor andintended to monitor and supervise the supervise the deficitsdeficits and and debtsdebts of each of each MS - the aim of MS - the aim of sound public financessound public finances in the context of in the context of deeper deeper economic integrationeconomic integration (EC) (EC). .

The aim is to achieve The aim is to achieve balancedbalanced budgetary positionsbudgetary positions in the in the medium term (3-5 years): medium term (3-5 years): Fiscal Fiscal rulesrules: The size of the deficit : The size of the deficit (max. (max. 3%3% of GDP ), public of GDP ), public

debt (max. debt (max. 60%60%)) Tax policy: The taxes Tax policy: The taxes – variety of rates– variety of rates Government spendingGovernment spending – different strategies e.g. – different strategies e.g. PBBPBB

Monetary policyMonetary policy controls the value of currency. It is concerned controls the value of currency. It is concerned with the amount of money in circulation with the amount of money in circulation ((inflationinflation)). . Interest ratesInterest rates - - set by set by NCB / ECBNCB / ECB Reserve requirementsReserve requirements

EUEU: common monetary policy ^ national but coordinated : common monetary policy ^ national but coordinated fiscal policyfiscal policy

- (e.g. Poland – Constitution – Art.. 126: 3/5 GDP)- (e.g. Poland – Constitution – Art.. 126: 3/5 GDP)

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The The deficitdeficit in general government finances to in general government finances to GDPGDP

Selected Eurozone MSSelected Eurozone MS

  1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Eurozone -1,3 0,1 -1,8 -2,5 -3,1 -2,9 -2,5 -1,3 -0,6 -1,9 -5,3 -6,5

Belgium -0,6 0 0,4 -0,1 -0,1 -0,3 -2,7 0,3 -0,2 -1,2 -5,9 -5,1

Germany -1,5 1,3 -2,8 -3,7 -4 -3,8 -3,3 -1,6 0,2 0 -3,2 -5,5

Ireland 2,7 4,8 0,9 -0,4 0,4 1,4 1,7 3 0,3 -7,2 -11,7 -11,6

Greece b/d -3,7 -4,5 -4,8 -5,6 -7,5 -5,2 -2,9 -3,7 -7,8 -12,7 -8,7

Spain -1,4 -1 -0,6 -0,5 -0,2 -0,3 1 2 1,9 -4,1 -9,6 -7,7

France -1,8 -1,5 -1,5 -3,1 -4,1 -3,6 -2,9 -2,3 -2,7 -3,4 -7,9 -8,2

Italy -1,7 -0,8 -3,1 -2,9 -3,5 -3,5 -4,3 -3,3 -1,5 -2,7 -5,3 -5,0

Holland 0,4 2 -0,2 -2,1 -3,1 -1,7 -0,3 0,5 0,2 0,7 -4,9 -6,1

Austria -2,3 -1,7 0 -0,7 -1,4 -4,4 -1,6 -1,6 -0,6 -0,4 -3,5 -4,7

Portugal -2,8 -2,9 -4,3 -2,8 -2,9 -3,4 -6,1 -3,9 -2,6 -2,7 -6,5 -6,7

Slovenia -3 -3,7 -4 -2,5 -2,7 -2,2 -1,4 -1,3 0 -1,8 -5,7 -5,7

Slovakia -7,4 -12,3 -6,5 -8,2 -2,8 -2,4 -2,8 -3,5 -1,9 -2,3 -6,3 -5,5

Finland 1,6 6,9 5 4,1 2,6 2,4 2,8 4 5,2 4,4 -2,2 -3,6

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Performance budget – one optimal model ?Performance budget – one optimal model ?

Multi-annual planning

Transparency

Efficiency

Realistic

Consolidated expenditure plan for entities Consolidated expenditure plan for entities from the public finance sector, prepared in from the public finance sector, prepared in a a functional systemfunctional system (function, task, (function, task, subtask), based on the targets and subtask), based on the targets and measures of their realisation (measures of their realisation (++ MTBFsMTBFs = = more than one budgetary year).more than one budgetary year).

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PPoland currently has a oland currently has a traditional budget systemtraditional budget system that that is based on organisational units and control of inputs.is based on organisational units and control of inputs. But also – Poland But also – Poland in the process of introducing a in the process of introducing a new new budget systembudget system, the performance-based budgeting system, the performance-based budgeting system

The aims:The aims: IImprove public finance managementmprove public finance management (rational use of (rational use of resources: money → tasks)resources: money → tasks) More universal and competent supervisionMore universal and competent supervision of public funds of public funds spending (indicators)spending (indicators),, MMulti-year budgetingulti-year budgeting (analysis of different scenarios) (analysis of different scenarios) TTransparency and accountabilityransparency and accountability (improvement of (improvement of effectiveness of public administration)effectiveness of public administration)

””step by stepstep by step” scenario ” scenario →→ 20132013: national budget : national budget prepared parallel in traditional & performance-based prepared parallel in traditional & performance-based methodsmethods

The performance budget in PolandThe performance budget in Poland

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Polish implementation plan for performance budgetPolish implementation plan for performance budget

4 stage-Traditional & Performance budget

executed parallel-Annual Report of 2012 in performance

budgeting strucutre2012

1 stage-Governmental initiative

-Pilot budget – M. of Science & Higher Education

- the first rules in Public Finance Act

II 2006 – II 2007

3 stage-Setting tasks by the Ministry of

Finance Decree to introduce budgetary expenditure classification for PBB-Preparing and updating indicators

II 2008 - 2010

2 stage-Presentation of performace budgets

of most budgetary chapters to budgetary draft for 2008

-Performance budgets covers 44% of State Budget expenditures

2007 – II 2008

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Legal base for Performance-based Buget in Legal base for Performance-based Buget in Poland (1/2)Poland (1/2)

Public Finance ActPublic Finance Act – 2009 (public expenditures plan in – 2009 (public expenditures plan in tasks order - 2006)tasks order - 2006)- next step complex reform of public finance (new debt’s - next step complex reform of public finance (new debt’s rules, MTBF, performance-based budgeting)rules, MTBF, performance-based budgeting)

Regulation of Ministry of FinanceRegulation of Ministry of Finance on detailed rules, on detailed rules, methods and time limits for materials essential for methods and time limits for materials essential for preparation of national budget – each yearpreparation of national budget – each year- basic rules, indicators- basic rules, indicators

Decree of Ministry of FinanceDecree of Ministry of Finance on standards to define on standards to define goals and actions for public finance sector’s entities for goals and actions for public finance sector’s entities for 2011 budgets2011 budgets- compatibility of goals with present economic & social - compatibility of goals with present economic & social situation (e.g. consultations, technical & human capacity)situation (e.g. consultations, technical & human capacity)- compliance of goals& actions with actual strategic - compliance of goals& actions with actual strategic planning documents (e.g. NDS, RDP)planning documents (e.g. NDS, RDP)- Detailed standards to define goals for performance-- Detailed standards to define goals for performance-based budgeting (e.g. precise, coherent, measurable)based budgeting (e.g. precise, coherent, measurable)

Regulation of Ministry of FinanceRegulation of Ministry of Finance changing changing organizational scheme of Ministry of Finance (e.g. 2009)organizational scheme of Ministry of Finance (e.g. 2009)

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Legal base for Performance-based Buget in Legal base for Performance-based Buget in Poland (2/2)Poland (2/2)

First steps directly onFirst steps directly on governmental level governmental level- <2006-2008> Council of Ministers (Law Office) – first - <2006-2008> Council of Ministers (Law Office) – first basic documents and methodology for PBBbasic documents and methodology for PBB- since I 2008 Ministry of Finance responsible for PBB- since I 2008 Ministry of Finance responsible for PBB

National Coordinator for PBBNational Coordinator for PBB (in the structure of (in the structure of

Ministry of Finance – annual report to the Minister of Ministry of Finance – annual report to the Minister of Finance – 15 February, ESF) – main tasks:Finance – 15 February, ESF) – main tasks:- coordination of preparation of models and - coordination of preparation of models and demonstration forms for PBB for public entitiesdemonstration forms for PBB for public entities- coordination of list of goals, tasks and results- coordination of list of goals, tasks and results- compliance of these goals and tasks with national - compliance of these goals and tasks with national strategic documentsstrategic documents

Public Finance Reform Department (RF),Public Finance Reform Department (RF), responsible responsible for:for:- improvement of public finance system in Poland- improvement of public finance system in Poland- economic & legal analysis of exist and new proposals- economic & legal analysis of exist and new proposals- expert support for National Coordinator for PBB - expert support for National Coordinator for PBB

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PBB in Local Self-Governments in PolandPBB in Local Self-Governments in Poland

TThree-gradual systemhree-gradual system of administration (16 regions, 3 of administration (16 regions, 31414 counties, 2478 counties, 2478 local municipalities)local municipalities)

Increasing status of regions (Increasing status of regions (decentralizationdecentralization) & More ) & More responsibilityresponsibility for for local levellocal level

First PBB in Poland – Cracow (1994)First PBB in Poland – Cracow (1994) ↔ Rochester (USA) → 60 ↔ Rochester (USA) → 60 municipalitiesmunicipalities

PBB in LSG as PBB in LSG as additional additional planning document (annex)planning document (annex) Free choiceFree choice of local municipalities & of local municipalities & no sanctionsno sanctions for not fulfilling the for not fulfilling the

indicators (testing period)indicators (testing period) External supportExternal support: USAID, Know-How Fund (GB), IDP - 30 (MSWiA), ESF : USAID, Know-How Fund (GB), IDP - 30 (MSWiA), ESF

– 18– 18 PBB in LSG: intensive PBB in LSG: intensive social consultationssocial consultations & & flexible structureflexible structure (fields, (fields,

indicators)indicators) EU fundsEU funds → intensive investments → → intensive investments → more restrictedmore restricted public finance public finance

rules:rules:

- debt limits, debt/revenue relation, operational surplus index, MTBF- debt limits, debt/revenue relation, operational surplus index, MTBF Complex reformComplex reform of public finance at national & regional level of public finance at national & regional level

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The main independent institutions in the sector of public finance in Poland

National fiscal National fiscal entitiesentities are defined as :are defined as :- independent public bodies, other than the central - independent public bodies, other than the central bank, government or parliament that prepare bank, government or parliament that prepare macroeconomic forecastsmacroeconomic forecasts for the budget, for the budget, monitor fiscal monitor fiscal performanceperformance and/or and/or advise the governmentadvise the government on fiscal on fiscal policy matters.policy matters.

The Supreme Chamber of Control (NIK)The Supreme Chamber of Control (NIK) – state budget – state budget The Regional AThe Regional Auditudit Chamber (RIO) Chamber (RIO) – regional & local – regional & local

levellevel The Treasury Control Office (UKS)The Treasury Control Office (UKS) The Supervisor of Public Finance DisciplineThe Supervisor of Public Finance Discipline

* * Internal AuditInternal Audit (Act on Public Finance -2009) (Act on Public Finance -2009)

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NIK (The Supreme Chamber of Control):

NIK (The Supreme Chamber of Control)NIK (The Supreme Chamber of Control):: – – annual periodic work plans = based oannual periodic work plans = based onn directions established by the directions established by the NIK College for a period of three yearsNIK College for a period of three years –– The NIK isThe NIK is only only subordinate to the Sejm (lower chamber of the Polish subordinate to the Sejm (lower chamber of the Polish Parliament)Parliament)

–– The President of NIK has the immunityThe President of NIK has the immunity –– concentration on whole public finance sector, especially at national concentration on whole public finance sector, especially at national levellevel –– special care for especial care for execution of the xecution of the state budgetstate budget –– wide-ranging audit of the revenue and expenditure of the state and all wide-ranging audit of the revenue and expenditure of the state and all institutions and corporations that make use of public fundsinstitutions and corporations that make use of public funds

Additional control issues:Additional control issues:- - Management of public property by state and local governmental bodies Management of public property by state and local governmental bodies and economic entitiesand economic entities- concentration on subsidies, grants from State Budget & foreign - concentration on subsidies, grants from State Budget & foreign programmsprogramms- control of advisability & accuracy & thrift of public spendings- control of advisability & accuracy & thrift of public spendings

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The Regional Account Chamber (RIO)

The independent state institutionThe independent state institution with control with control powers to local self-governments (mainly financial powers to local self-governments (mainly financial aspect)aspect)

The RIO is subordinate to the appropriate Minister The RIO is subordinate to the appropriate Minister for Public Administration & supervision of the for Public Administration & supervision of the Prime Minister Prime Minister

The network – 16 RIO based on polish The network – 16 RIO based on polish administrative divisionadministrative division

RIO is divided into departments:RIO is divided into departments:

- Control of finance management- Control of finance management

- Information, analysis and training- Information, analysis and training

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The Regional Account Chamber (RIO) the main control areas:

Control local self-government bodies (regions – Control local self-government bodies (regions – counties – local municipalities & associations & counties – local municipalities & associations & other entities spending money from self-government other entities spending money from self-government budget) in area of:budget) in area of:- public finance (all aspects of local budgets)- public finance (all aspects of local budgets)- public procurement- public procurement

The proposal of the budget, obligatory financial The proposal of the budget, obligatory financial forecasts and indicatorsforecasts and indicators

Annual execution of the budget & quartely financial Annual execution of the budget & quartely financial report (+ Ministry of Finance)report (+ Ministry of Finance)

Conformity with law (e.g. Conformity with law (e.g. economic classification of economic classification of budget expensesbudget expenses & chart of accounts) & chart of accounts)

Supervision of local self-government‘s resolutions Supervision of local self-government‘s resolutions (Local Councils - opinions)(Local Councils - opinions)

Information & training activity (eventual incomeInformation & training activity (eventual income can can bebe destined only to the same activity) destined only to the same activity)

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The Regional Account Chamber (RIO) the main control areas:

Important deadlines (local municipality → RIO)Important deadlines (local municipality → RIO)- - 15 November15 November: proposal of budget for next year & all : proposal of budget for next year & all obligatory forecasts and indicators: WPI, WPF, individual obligatory forecasts and indicators: WPI, WPF, individual debt/revenue ratio → RIO public opinion (15 December)debt/revenue ratio → RIO public opinion (15 December)- - 31 December31 December: budget accepted by Local / City Council : budget accepted by Local / City Council (exceptions: 31 January next year)(exceptions: 31 January next year)- - 31 March31 March: annual report about budget’s execution: annual report about budget’s execution- - 31 August31 August: report about budget’s execution for first half : report about budget’s execution for first half yearyear

Each: credit, loan, issue of bonds ↔ RIO opinion Each: credit, loan, issue of bonds ↔ RIO opinion (creditworthy)(creditworthy)

Types of cTypes of controlontrol::- - documents’documents’ control (budget, obligatory financial forecasts control (budget, obligatory financial forecasts and indicators)and indicators)- - complexcomplex control (whole finance management of public control (whole finance management of public entity – at least one in four-year period)entity – at least one in four-year period)- - tasktask control (selected issues of the public entity v entities) control (selected issues of the public entity v entities)- - temporarytemporary control (if the need arise) control (if the need arise)

Local Self-Government access to the Local Self-Government access to the capitalcapital

Own financial resourcesOwn financial resources (e.g. taxation, (e.g. taxation, governmental subsidy – governmental subsidy – BUTBUT: ↑ tasks, ↓ : ↑ tasks, ↓ budgetary budgetary revenuerevenue))

Private bank sectorPrivate bank sector (credits) – (credits) – BUTBUT: ↑ cost : ↑ cost of loans (interest rates), ↓ access to capital of loans (interest rates), ↓ access to capital (world financial crisis & ”hot investments” (world financial crisis & ”hot investments” time → increasing liabilities of local time → increasing liabilities of local municipalities)municipalities)

Special governmental loansSpecial governmental loans (e.g. EU (e.g. EU projects) – projects) – BUTBUT: limited access: limited access

National capital marketNational capital market → the municipality → the municipality bonds market – …bonds market – …

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Local Self-Government access to the capital market – Poland

The structure of local government debt in Poland (%)

The share of local government debt in general government debt (%)

2011

Short-term bank loans6 %

Long-term bank loans 82 %

Municipality bonds 12 %

  2002 2011The average2002 - 2011

Greece 0,5 0,8 0,7

Poland 4,0 5,0 4,4

Luxemburg 34,00 33,2 38,2

Poland – Fiscal policy Local self-government - Local self-government - The Public Finance Act – The Public Finance Act –

2009 2009

- thethe limited limited aimsaims of loans & municipality bonds, of loans & municipality bonds,

- debt limits – debt limits – 15%15% (total amount of credit (total amount of credit installments may not exceed 15% of the planned installments may not exceed 15% of the planned revenues in the particular budgetary year) e.g. 50 revenues in the particular budgetary year) e.g. 50 million € local budget → 8 million € of installmentsmillion € local budget → 8 million € of installments

- 60%60%(total debt may not exceed 60% of revenues in (total debt may not exceed 60% of revenues in the particular budgetary year)the particular budgetary year)

- public debt/GDP ≥public debt/GDP ≥ 55% 55% → local budget’s deficit only → local budget’s deficit only for EU projects ^ only for EU projects ^ only 12%12% limit for annual limit for annual installmentsinstallments

- public debt/GDP ≥ public debt/GDP ≥ 60%60% → no deficit at the local level → no deficit at the local level

List of task for medium termList of task for medium term

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Debt / Revenue relationLocal self-government in Poland – new rules

(1): Annual budget – since 2014 (art. 242)(1): Annual budget – since 2014 (art. 242)- Current expenditures ↔ Current revenueCurrent expenditures ↔ Current revenue

Current expenditures (Current expenditures (WbWb) ) ≤≤ Current revenue ( Current revenue (DbDb) ) + budgetary surplus from previous years (+ budgetary surplus from previous years (NbNb) + ) + free sources based on bonds, credits & loans from free sources based on bonds, credits & loans from previous years (previous years (WśWś) )

Exception: ≥ only for amount of current Exception: ≥ only for amount of current expenditures with external funds if these external expenditures with external funds if these external funds (art. 5) were not transferred in current yearfunds (art. 5) were not transferred in current year

nnnn WśNbDbWb

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Debt / Revenue relationLocal self-government in Poland

operational surplus indexoperational surplus index arithmetic mean for last three budgetary yearsarithmetic mean for last three budgetary years- repayment of debt (repayment of debt (RR) & interest () & interest (OO) /annual ) /annual

revenue (revenue (DD))- Current revenue (Current revenue (DbDb), Revenue from (sale of ), Revenue from (sale of

property (property (SmSm), Current expenditures (), Current expenditures (WbWb)) Increasing debt possible only if:Increasing debt possible only if:- surplus in current section of the budget surplus in current section of the budget

(revenue ↔ expenditures) v revenue from sale of (revenue ↔ expenditures) v revenue from sale of public (council) propertypublic (council) property

3

333

2

222

1

111

3

1

n

nnn

n

nnn

n

nnn

n D

WbSmDb

D

WbSmDb

D

WbSmDb

D

OR

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PBBPBB – always remember – always remember that:that:

Step by step attitude (e.g. fiscal rules, consolidation of Step by step attitude (e.g. fiscal rules, consolidation of fiscal sector)fiscal sector)

One mission One mission →→ one team one team

(system of independent public institutions, audit & (system of independent public institutions, audit & control)control)

Need for planning (Medium-term budgetary frameworks)Need for planning (Medium-term budgetary frameworks) Final result: Performance-based budgeting as the tool in Final result: Performance-based budgeting as the tool in

modern national system of public finance (NPM)modern national system of public finance (NPM)

Complex team work + timeComplex team work + time

Don’t afraidDon’t afraid – – May the Force be with youMay the Force be with you

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””Men build too many walls Men build too many walls and not enough bridges”and not enough bridges”

Isaac Isaac NewtonNewton

Thank you for your attentionThank you for your attention

Grzegorz OrawiecGrzegorz Orawiec

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RIO (The Regional ARIO (The Regional Audiudit Chamber)t Chamber)

RIO (The Regional ARIO (The Regional Audituditt Chamber)t Chamber) – – concentration on public finance management at concentration on public finance management at self-self-

government sectorgovernment sector (three levels: regions / counties / local (three levels: regions / counties / local municipalities)municipalities)

– – directly directly controlling the budgetscontrolling the budgets: e.g. economic : e.g. economic classification, charts of accounts, fiscal rules (e.g. debt classification, charts of accounts, fiscal rules (e.g. debt limits, investemnts / current spendings)limits, investemnts / current spendings)

The scope of the control:The scope of the control:- the proposal of the budget - the proposal of the budget - annual execution of the budget - annual execution of the budget - quartely financial report (+ Ministry of Finance)- quartely financial report (+ Ministry of Finance)- conformity with law (e.g. - conformity with law (e.g. economic classification of economic classification of budget expensesbudget expenses & chart of accounts) & chart of accounts)

Information & training Information & training tasks (advisory activity) e.g. tasks (advisory activity) e.g. PBBPBB

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Budget projections → risk identification & assessment:

Basic definitions Risk – the possibility of an event occurring that

would cause that actual budget circumstances would be differ from those assumed when forecasting budget revenue and expenditures

Risk – can never be eliminated → ACAT

Risk – allocated through: legal regulations ^ the formal limits ^ legal institutions (external & internal control)

The basic problem: debt / revenue relation Creating new budget → the base from previous

year

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Budget projections methodology over the Budget projections methodology over the medium termmedium term

The main defined risks

Local economy

Selling assets&

Privatization

Public debt / revenueratio

Current revenue&

Taxes

New tasksExternal funds

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The main defined risks - Budget projections 1 / 4

Assets report & privatization programme – best time for transactions Official valuation of real estate + e.g. 10% (mayor’s decision) Development plan for territory of local municipality (agricultural,

investment, building plots) Land division (small building plots) & fit up (water, electricity, roads)

Indirect & long-term activities:- promotion & investment actions expressing tourism

attractions (e.g. EU funds)- special tax reliefs for local entrepreneurs- looking for strategic investors generating new work places

Selling assets&

Privatization

Local economy

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Development plan for territory of local municipality

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The main defined risks - Budget projections 2 / 4

Planning current revenue for medium-term (e.g. property lease, services) – special equipment

Participation in national taxes (personal & corporate tax rates) – general national economic situation

Determine local taxes (real estate, means of transport, agricultural taxes) – thresholds (City Council) & reliefs (Mayor)

Current revenue&

Taxes

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The main defined risks - Budget projections 3 / 4

Own tasks (obligatory & optional) – local infrastructure, sport, culture, promotion

External tasks (money transfer from governement) - register of business activity

Essential reforms e.g. system of schools Educational grant per pupil

Long-term planning & programming (WPI & WPF) System of pre-agreements (simply application form → reduction of

costs e.g. technical documentation, feasibility studies, planning permission, environmental report → II stage → final financial agreement)

System of reimbursements & controls (financial flow, 3 months ^ 5% rule)

New tasks

External funds

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The main defined risks - Budget projections 4 / 4

EU & MS rules (new polish tools for local self-governments):- maximum 5% discount for municipal bonds- ban on loans, credits & municipal bonds based on foreign currencies

(€, £, $)- credits & loans only taken out in banks with registered office in

Poland (Polish Commission for Banks’ Supervision)- only loans & credits repaid at least once a year- current expenditures only from current loans (the same budgetary

year)- long-term loans & credits for investments pointed in WPI- ban on guarantee for loans without precise date and total amount of

repayment- level of debt = public information

Public debt / revenueratio