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TI Georgia on Change in Law Allowing Municipalities to Delegate Powers to Public Law Entities

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Transparency International Georgia, a local watchdog, released an assessment of an amendment to the Local Self-Government Code of Georgia on April 28, which – if adopted – would expand municipal governments’ authority to form legal entities of public law (LEPL), municipal bodies exercising a wide range of delegated powers, for a period of ten years.

Authority to establish LEPLs should only be granted to municipal governments in the framework of a fundamental change in the laws regulating LEPLs, said the watchdog, stressing the need to put in place a unified registry of LEPLs, as well as effective monitoring mechanism for implementing oversight.

According to the draft law, municipal authorities will be able to establish LEPLs and delegate some of its powers to those entities, including collection of local taxes, street maintenance, municipal waste management, organizing local traffic, issuance of construction permits, management of municipal transport services, animal control service and other municipal roles and responsibilities.

The Government argues that the said change in law will allow municipal authorities to exercise more powers and that such reform would open the door to better local governance practices.

Until now, only one municipal government – that of the capital city of Tbilisi – has been authorized to establish and manage LEPLs.

The watchdog argued that municipal governments should not be authorized to set up LEPLs “without a [proper] legal reform.” It highlighted several shortcomings that need to be addressed before passing the amendment.

According to TI Georgia, the draft law does not argument the grounds for expanding municipal governments’ authority to form separate LEPLs while they can carry out same functions without outsourcing.

It questioned whether the proposed changes were aligned with the overall decentralization strategy in the country.

No well-founded justification was given for the time span – providing municipal governments with such authority for ten years, the watchdog noted.

TI Georgia considered establishing additional LEPLs unadvisable while the entire body of legislation governing LEPLs remained “in need of reforming.”

“Legislation governing LEPLs contains many pitfalls,” it added, stressing that no nationwide categorization of LEPLs had been carried out, while preconditions for establishing new entities, as well their scope of authority were not delineated by the law.

TI Georgia noted that municipal governments already enjoy the right to set up non-profit, non-commercial legal entities (locally known as N(N)LEs), performing some of the delegated functions, albeit with less regulatory supervision then LEPLs.

The Government, it said, maintained that municipal bodies in the form of N(N)LEs could not exercise the powers granted by the draft law – imposing and enforcing sanctions in particular – unless upgraded to the legal rank of LEPLs.

TI Georgia refuted this argument, referring to the example of Tbilisi City Hall that had delegated authority to impose and collect parking penalties to a private company for years – a practice which was “never questioned.”

According to the watchdog, existing legislative framework allows delegation of some municipal powers to N(N)LEs concerning maintenance of utilities, tourism and protection of cultural heritage monuments, sports and culture, pre-school education and others.

On the other hand, TI Georgia remarked, it would be a “positive development” if the amendment had envisaged transforming municipal bodies in the form of N(N)LEs into LEPLs, as the latter were much more strictly regulated and demonstrated a higher degree of transparency in comparison with the former.

The lack of transparency in managing N(N)LEs is frequently exploited by the ruling party to boost its administrative resources, especially in the run-up to the elections, TI Georgia said.

Transparency International Georgia called on the authorities to carry out a regulatory impact assessment (RIA) of the draft law before amending the legislation.

This post is also available in: ქართული (Georgian) Русский (Russian)

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