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Lithuania - Monitoring report

Date of the monitoring visit: from 23 to 24 January 2018
Report adopted on: 6 November 2018
Files : Report CPL35(2018)02 | Recommendation 420 (2018)
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This report is prepared following the third monitoring visit organised by the Congress since Lithuania ratified the European Charter of Local Self-Government in 1992.

 

The rapporteurs highlight an overall positive situation of local self-government in Lithuania. They note with satisfaction that Lithuania has applied significant efforts in the field of decentralisation, has anchored core principles of local self-government in the legislation, and has made progress in extending the municipalities’ rights in managing State-owned land. In addition, local authorities and their Association (ALAL) are now regularly consulted, and citizens’ participation in public decision making has been strengthened.

 

However, the report points out that in practice, many legal regulations tend to restrict municipal autonomy and local authorities’ ability to act independently. In spite of a quick economic recovery from the financial crisis and increasing local budgets, local authorities’ financial resources are still not commensurate with their responsibilities. The rapporteurs note that Vilnius still does not enjoy a special legal status as a capital city and the administrative capacities and functions of the Regional Development Councils remain limited.

 

Consequently, the rapporteurs recommend to the Lithuanian national authorities, inter alia, that they ensure a better implementation of the subsidiarity principle in practice, allocating sufficient resources to municipalities and providing them with access to capital markets for investment expenditure. They also suggest recognising the right of the Association to initiate legal proceedings before administrative courts and further developing citizens’ participation at sub-municipal level.

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Article ratified Ratified with reservation Non ratified
Compliance Partial compliance Non compliance To be determined
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Article 2
Constitutional and legal foundation for local self government - Article ratified

The principle of local self government shall be recognised in domestic legislation, and where practicable in the constitution.

The 1992 Constitution devotes an entire chapter, Chapter X, to ‘’Local Self-government and Governance”. The opening provision of this chapter, Article 119, proclaims that “The right to self-government shall be guaranteed to administrative units of the territory of the state, which are provided for by law. It shall be implemented through corresponding municipal councils”.

 

The constitutional principles on local self-government are implemented by legislation, especially by the Law on Local Self-Government, which Articles 2 establishes that: “This Law shall lay down the procedure of formation and activities of municipal institutions when implementing the provisions of the Constitution of the Republic of Lithuania and the European Charter of Local Self-government, define the principles of local self-government, municipal institutions and their competence, functions, the status of a municipal councillor, the grounds of economic and financial activities of municipalities”.

 

The Charter as a ratified international treaty, has the priority of the application in cases of collision with the other domestic legal acts (with the exception of the Constitution itself), including laws adopted by the Seimas and constitutional laws.

 

As it was already noticed during the 2011 monitoring visit, the principle of local self-government has been further developed by the Constitutional Court in many judgments, in which the Court also referred to the Charter, as a source of constitutional interpretation.

 

The rapporteurs consider that the requirements of Article 2 of the Charter are fully satisfied in Lithuania.

Article 3.1
Concept of local self government - Article ratified

Local self-government denotes the right and the ability of local authorities, within the limits of the law, to regulate and manage a substantial share of public affairs under their own responsibility and in the interests of the local population.

The main question that must be addressed under this heading is whether, in the present situation, Lithuanian municipalities regulate and manage a “substantial share of public affairs under their own responsibility and in the interests of the local population”. This provision requires an assessment which takes into account the rather “subjective” and relative nature of the concept of “a substantial share of public affairs”, since no official or universal method of measuring such substantial character has yet been developed. The question must be addressed considering the historical evolution, the culture and the constitutional traditions of the country under analysis.

 

In order to assess compliance with this provision, both legislative and factual aspects should be taken into consideration.

 

In Lithuania, Article 120 of the Constitution states that “Municipalities shall act freely and independently within their competence defined by the Constitution and laws” and this principle is echoed by the Article 4, n.2 of the Law on Local Self-Government, which refers to “the freedom of independence and activity of municipalities in accordance with the competence denoted in the Constitution and laws”. The functions of the municipalities are divided into independent and State functions (delegated by the State to the municipalities) in accordance with the freedom of the decisionmaking.

 

Another indicator of the “importance” or the political and social role of local government in a country is the local government expenditure in the national general, government consolidated budget, especially in comparison with other EU countries: in Lithuania, the budget of the municipalities (for independent functions) represent the 17,6% of the consolidate budget, according to 2017 data1.

 

Also taking into account the distinction between independent and delegated functions, in Lithuania, laws and regulations entrust municipalities with a series of competences and powers that can be depicted as “fair” or “reasonable” in the light of the “unitary” constitutional characterization of the country and of its size and population. The Congress delegation did not hear any substantial or recurrent claim from local representatives that the present local competences were insufficient. 


1https://finmin.lrv.lt/uploads/finmin/documents/files/EN_ver/Activities/Actual_Financial_Data/2017_metai_EN.pdf

 

Article 3.2
Concept of local self government - Article ratified

This right shall be exercised by councils or assemblies composed of members freely elected by secret ballot on the basis of direct, equal, universal suffrage, and which may possess executive organs responsible to them. This provision shall in no way affect recourse to assemblies of citizens, referendums or any other form of direct citizen participation where it is permitted by statute.

As for Article 3, paragraph 2, the right to self-government is exercised in Lithuania by elected bodies. According to Article 119 of the Constitution, “The members of municipal councils shall be elected for a four-year term, as provided for by law, from among citizens of the Republic of Lithuania and other permanent residents of the administrative unit by the citizens of the Republic of Lithuania and other permanent residents of the administrative unit, on the basis of universal, equal and direct suffrage by secret ballot. The procedure for the organization and activities of self-government institutions shall be established by law. For the direct implementation of the laws of the Republic of Lithuania, the decisions of the Government and the municipal council, the municipal council shall form executive bodies accountable to it”.

 

Article 4 of the Law on Local Self-Government lists, among the fundamental principles, the representative democracy; the supremacy of the municipal council over accountable executive institutions of a municipality; the accountability of executive institutions of a municipality to the municipal council.

 

According to the Law on Elections to Municipal Councils, the members of municipal councils are elected for a four-year term by universal and equal suffrage, in a secret ballot at direct elections. After more than 10 years of discussion, in 2014 then Law was amended to introduce the direct election of the mayors: therefore, all members of a municipal council, except the mayor, are elected according to a proportional electoral system, while the mayor is elected using an absolute majority electoral system. The first direct elections of municipal mayors took place in Lithuania on 1 March 2015. Previously, mayors were elected by the municipal council among the councilors.

 

The municipal council discharge the most important duties within the municipality: it approves the budget, adopts the decisions to levy taxes, adopts decisions concerning municipal property and to institute municipal corporations, public institutions and stock companies etc. The powers of the mayors have not been improved and remain limited to the representation of the municipality and the activities he discharges as president of the municipal council. The executive power is vested in the director of the municipal administration, a civil servant, appointed by the council upon the recommendation of the mayor, for a period of the powers of the municipal council on the basis of political (personal) confidence. He/she is subordinated to the municipal council, accountable to the municipal council and the mayor.

 

During the monitoring visit, the rapporteurs were told that the failure to increase the power of the mayors could undermine the strengthening of mayors induced by the direct election. The introduction of the direct election of mayors by a legislative act raised also the problem of its compatibility with the Constitution, which does not consolidate the institution of mayors and their direct elections and consider the status of all municipal council members as equal.1 

 

In conclusion, the rapporteurs consider that the requirements of Article 3 are satisfied in Lithuania.


29The Constitutional Court has indicated such a requirement as one of the peculiarities of the constitutional status of members of a municipal council when interpreting, inter alia, the provisions of Paragraphs 1 and 2 of Article 119 of the Constitution (see the Constitutional Court’s rulings of 17 February 2016 and 24 December 2002).

Article 4.1
Scope of local self government - Article ratified

The basic powers and responsibilities of local authorities shall be prescribed by the constitution or by statute. However, this provision shall not prevent the attribution to local authorities of powers and responsibilities for specific purposes in accordance with the law.

Article 4, paragraph 1 of the Charter requires that the basic powers and responsibilities of local authorities are prescribed by the constitution or by statute.

 

In Lithuania, Article 120, paragraph 2, of the Constitution establishes that “Municipalities shall act freely and independently within their competence defined by the Constitution and laws”. Several other Articles refer to the competences of municipalities, as pointed out by the Constitutional Court in its 24 December 2002 decision. The Court mentioned Article 40, paragraph 1, which indicates municipal establishments of teaching and education; Article 41, paragraph 2, which, inter alia, indicates municipal schools of general education, vocational schools, and schools of further education; Article 119, paragraph 4, which provides that for the direct implementation of the laws of the Republic of Lithuania, as well as the decisions of the Government and the municipal council, the municipal council forms executive bodies accountable to it; Article 121, paragraph 1, which provides that municipalities draft and approve their own budgets; Article 121, paragraph 2, which provides that municipal councils have the right, within the limits and according to the procedure provided for by law, to establish local levies, and that municipal councils may provide for tax and levy concessions at the expense of their own budgets; Article 122, which provides that municipal councils have the right to apply to a court regarding the violation of their right. 

 

The Law on Local Self-government (Article 5) distinguishes the municipal into two major categories: independent and delegated and describes in details those function, by listing 44 independent functions and 38 delegated functions. Additional functions have been assigned or delegated by other laws.

 

As for Article 4, paragraph 2 of the Charter, according to which “Local authorities shall, within the limits of the law, have full discretion to exercise their initiative with regard to any matter which is not excluded from their competence nor assigned to any other authority”, (Article 6, n. 44) of the Law on Local Self-Government contains a “general residual clause”, referring to “other functions that are not assigned to state institutions” as independent functions.

 

Article 4, paragraph 3 of the Charter articulates the general principle of subsidiarity. It establishes that “Public responsibilities shall generally be exercised, in preference, by those authorities which are closest to the citizen. Allocation of responsibility to another authority should weigh up the extent and nature of the task and requirements of efficiency and economy”.

 

Recommendation 321 (2012) invited the Lithuanian authorities “to amend Article 4 of the existing Law on Local Self-Government so that the principle of subsidiarity is specifically recognised in the field of local government, by being mentioned as one of its guiding principles”.

 

Even though the principle of subsidiarity has been laid down in the Law in 2016 (being included in Article 4, n. 14 of the Law on Local Self-Government), the local authorities still complain that it is not implemented in practice. For example, the protection of the rights of the child was quoted. This function (previously delegated to the municipalities), will be centralised after June 2018: all the departments for the protection of the rights of the child currently operating in the municipalities will be removed from the municipal structure and will be under the authority of the Ministry of Social Security and Labour. In the opinion of the municipalities, the centralisation of the function of the protection of the rights of the child violates the principle of subsidiarity and raises concerns whether the centralisation of this function will improve the well-being of children and their families.

 

Recommendation 321 (2012) pointed out also that “municipalities” competences have been reduced in certain areas (territorial planning, construction, ownership of land) by relegating them to the position of procedure-executing bodies rather than policy-makers in the field of competences and no compromise could be reached which would extend the municipalities’ rights to manage state-owned land in urban and rural settlements and allow elected representatives some authority in the planning policy for their area”. It invited the Lithuanian authorities to “consider extending the municipalities’ rights to manage state-owned land in urban and rural settlements and allow elected representatives some authority in the planning policy for their area”.

 

According to the ALAL, the recommendation was not fully implemented. An amendment to the Law on Local Self-Government allowing the mayor to change the main designation and way of land use has been introduced (Article 20, paragraph2, n.20). However, the Law on Land and the government regulations maintain this function within the competence of the director of administration.

 

The delegation was informed that no important progress has been made in giving more rights to the municipalities to dispose of State-owned land, although provisions are part of the current Government's programme and a draft amendment to the Law on Land was registered in the Seimas, according to which the function of the organisation of formation and rearrangement of land parcels in rural areas, till now performed by the National Land Service, is intended to be transferred to the municipalities. The Law on Forests was amended in 2017, transferring to the municipalities the State function of supervision, protection and management of the state forest land for the purpose of public recreation, thus eliminating legal barriers preventing the municipalities from the initiation of taking over the city forests.

 

The ALAL and municipal representatives expressed their opinion to the delegation, according to which it is crucial to ensure that the functions of the planning of land use and disposal of the State-owned land of the National Land Service would be transferred to the municipalities as quickly as, since only this will allow to create a favourable investment environment and promote territorial development. The State authorities pointed out that the existing situation should be considered as a transitional status, because the process of returning the public land to the previous owners or to their heirs has not been completed. The main problem the municipalities are facing, according to the Ministry of Interiors, is the length of the procedure in case they intend to rent lands to private investors, as it takes up to 8 months. At the moment, the Government is dealing with speeding up of the procedure, in order to not exceed six weeks.

 

On other issues, competences of the municipalities have been improved. The Law on Cash Social Assistance changed the function of cash social assistance to the independent functions of the municipalities. Sufficient financial resources were allocated. According to the ALAL, the reform has been highly successful.

 

Article 4, paragraph 4, raises the problem of overlapping responsibilities. In the interest of clarity, it provides that “Powers given to local authorities shall normally be full and exclusive. They may not be undermined or limited by another, central or regional, authority except as provided for by the law”. Article 4, paragraph 5, refers to delegated responsibilities, establishing that local authorities shall, insofar as possible, be allowed discretion in adapting their exercise to local conditions.

 

During the meetings with the delegation, the representatives of the municipalities and the ALAL pointed out that the regulation often limits the right of the municipalities to act independently and that in several matters no discretion is allowed in the exercise of delegated functions. Too detailed description of the independent functions implies that the municipalities do not have the right to implement them at their discretion, taking into account the local conditions as much as possible. As a result, the municipalities lack the financial and human resources for the implementation of the excessively cumbersome bureaucratic requirements established by the central authorities.

 

Among the examples presented, the fact that the municipalities are responsible for the organisation of the supply of heat and hot water. However, the role of the municipalities in the management of the heat sector has become merely formal, as the final decision on the pricing of heat and hot water is taken by the National Commission for Energy Control and Prices. Another example concerns the municipal competence on the collection and management of municipal waste and packaging waste. According to the ALAL, the current legal framework is so detailed that its implementation requires additional funds. After the Government resolution on the management of municipal waste No 711 came into force on 20 of April of 2017, the management of municipal waste is paid under a dual payment system. The calculation of such dual payment in the municipalities raises additional problems, as it requires additional human and financial resources.

 

The delegation was also informed of a new regulation of public services, requiring the municipalities to obtain a permission from the Competition Council before entrusting legal entities under their control to start an economic activity. This provision is problematic as for the right of municipalities to choose the most appropriate way of organizing a public service, due to a very wide definition of an economic activity used in the Law on Competition. In order to avoid this risk, a draft amendment has been introduced in the Seimas, aimed at clarifying which activities of municipalities would be regarded as economic activities and at introducing the possibility, but not the obligation, for the municipality to apply for an opinion of the Competition Council, asking in advance to assess whether the foreseen decision will not restrict competition.

 

During the consultation procedure, the Seimas underlined that the existing legal regulation with effect from 1 July 2017, under which the provision of a public service is treated as an economic activity, means that the municipality, before entrusting the implementation of a new economic activity to a legal person controlled by the municipality (either a new legal entity or an existing one), must obtain a authorization from the Competition Council. The Seimas also concluded that this limits the right of municipalities to choose the most appropriate method of organisation of the provision of public services.”

 

Taking into account the claims raised by the municipalities, the rapporteurs consider that the numerous interference by State authorities within the municipal independent functions undermines the attribution to local authorities of full and exclusive powers.

 

Finally, Article 4 paragraph 6 of the Charter provides that “local authorities shall be consulted, insofar as possible, in due time and in an appropriate way in the planning and decision-making processes for all matters which concern them directly”.

 

In Lithuania, municipalities have the right themselves and through the ALAL to take part in drafting laws and other legal acts regulating local self-governance or determining functions of municipalities, and to submit their proposals and comments on the draft projects. According to the ALAL, 60 or 70% of their comments are incorporated in legislative acts and government regulations. Nevertheless, the ALAL complained that the deadlines established in the Government regulation for the coordination between institutions often do not give a chance to the associations to properly formulate a position of the municipalities.

 

The agreement between the Government of the Republic of Lithuania and ALAL on the activities of the bilateral commission bringing together the Government and ALAL, with the aim to balance the competing interests of the State and the municipalities, was renewed, resulting in the increase of the number of members of the commission from 3 to 4 from each side.

 

At the Seimas, the rapporteurs were informed that the Committee on State Administration and Local Authorities actively co-operates with the ALAL also by setting up inter-institutional working groups or advisory groups (for example, on the reform of the system of protection of children rights).

 

Although the system of consultation could always be improved and smoothed, the rapporteurs consider that Article 4, paragraph 6 is respected in Lithuania.

 

In conclusion, the rapporteurs consider that the requirements of Article 4, paragraph 1, 2 and 6 are satisfied in Lithuania, whereas the requirements of Article 4, paragraph 3, 4 and 5 are not fully satisfied by the present legal and factual situation in Lithuania.

Article 4.2
Scope of local self government - Article ratified

Local authorities shall, within the limits of the law, have full discretion to exercise their initiative with regard to any matter which is not excluded from their competence nor assigned to any other authority.

Consult reply indicated at article 4.1

Article 4.3
Scope of local self government - Article ratified

Public responsibilities shall generally be exercised, in preference, by those authorities which are closest to the citizen. Allocation of responsibility to another authority should weigh up the extent and nature of the task and requirements of efficiency and economy.

Consult reply indicated at article 4.1

Article 4.4
Scope of local self government - Article ratified

Powers given to local authorities shall normally be full and exclusive. They may not be undermined or limited by another, central or regional, authority except as provided for by the law.

Consult reply indicated at article 4.1

Article 4.5
Scope of local self government - Article ratified

Where powers are delegated to them by a central or regional authority, local authorities shall, insofar as possible, be allowed discretion in adapting their exercise to local conditions.

 

Consult reply indicated at article 4.1

Article 4.6
Scope of local self government - Article ratified

Local authorities shall be consulted, insofar as possible, in due time and in an appropriate way in the planning and decision-making processes for all matters which concern them directly.

 

Consult answer indicated at article 4.1

Article 5
Protection of local authority boundaries - Article ratified

Changes in local authority boundaries shall not be made without prior consultation of the local communities concerned, possibly by means of a referendum where this is permitted by statute.

 

This provision aimes at requiring that the local communities be consulted in case of changes in local authorities’ boundaries.

 

In Lithuania, the Law on the territorial administrative units and their boundaries provides a rigorous procedure for the establishment of new municipalities and for the change of municipal boundaries, including a consultation of the residents and of the local councils involved. It is worth mentioning that, according to Article 7 of the Law, more than half of the residents of the municipality to be established eligible to take part in the poll shall participate and more than half of those who participated shall vote in favour of establishment of a new municipality.

 

This provision was applied by the Constitutional Court in the judgment of 28 June 2001, mentioned in the previous report, according to which the Government failed to implement those legislative provisions, as the Ministry of Public Administration Reforms and Municipal Affairs, neither requested nor received proposals form municipal councils as regards changing the boundaries of municipalities, nor did it organise any opinion polls of local residents under the procedure established by the Government.

 

During this visit, the rapporteurs did not hear any complaint from municipal representatives and the ALAL on the protection of local authorities’ boundaries. No changes in municipal boundaries happened after the last monitoring visit.

 

The rapporteurs consider that the requirements of Article 5 of the Charter are fully satisfied in Lithuania.

Article 6.1
Appropriate administrative structures and resources for the tasks of local authorities - Article ratified

Without prejudice to more general statutory provisions, local authorities shall be able to determine their own internal administrative structures in order to adapt them to local needs and ensure effective management.

Article 6, paragraph 1 of the Charter provides that local authorities shall be able to determine their own internal administrative structure.

 

Lithuanian local authorities are endowed with pretty large self-organisation powers. In this sense, Article 16 of the Law on Local Self-Government provides that the municipal council has the competence on “6) setting-up of municipal council’s committees, commissions, other units necessary for organization of the work of a municipality, other commissions provided for in laws, as well as approval of their regulations; 10) approval of the structure of the municipal administration taking of decisions concerning establishment of positions of civil servants of political (personal) confidence of the mayor, determining of their number and forming of the secretariat of the municipal council on the recommendation of the mayor; 13) taking of decisions on the establishment, abolishment of wards and determination of their number, conferment of names to the wards and change thereof, assignment of territories to the wards, defining of the boundaries of the territories serviced by the wards as well as the change of the said boundaries, after having evaluated the opinion of the residents; 14) approval of division (grouping) of localities or their parts into elderships on the recommendation of the director of the municipal administration”

 

Furthermore, under Article 30, “the structure of the municipal administration, its regulations of activities and wage fund, the biggest allowed number of positions of civil servants and employees working under the employment contract and receiving payment from the municipal budget shall, on the proposal of the director of the municipal administration and the recommendation of the mayor, be approved and changed by the municipal council, and the staff positions shall be approved by the director of the municipal administration”.

 

As regards Article 6 paragraph 2 of the Charter, the conditions of service of local government employees are the same as other civil servants and employees working under the employment contract. They are regulated by the Law on Civil Service and the Labour Code. According to the Law on Local Self-Government, approval of the structure of the municipal administration, regulations and salary fund, setting of the maximum possible of positions of civil servants and employees working under the employment contract in the municipal administration on the proposal from the director of the municipal administration on the recommendation of the mayor, is the exclusive competence of the municipal council. The remuneration of employees somewhat depends on the population of the municipality.

 

During this visit, the delegation did not hear any complaint from municipal representatives on the possibility to recruit high-quality staff, although they were told that, within the Civil Service, salaries at local level are 20% lower than at national level.

 

The rapporteurs consider that current Lithuanian system meets the requirements enshrined in Article 6 of the Charter.

Article 6.2
Appropriate administrative structures and resources for the tasks of local authorities - Article ratified

The conditions of service of local government employees shall be such as to permit the recruitment of high-quality staff on the basis of merit and competence; to this end adequate training opportunities, remuneration and career prospects shall be provided.

Consult reply indiated at article 6.1

Article 7.1
Conditions under which responsibilities at local level are exercised - Article ratified

The conditions of office of local elected representatives shall provide for free exercise of their functions.

Article 7, paragraph 1, aims at ensuring the free exercise of their functions for elected representatives. This Article does not raise any special concern in Lithuania, where the democratic process at local level is fully guaranteed.

 

Article 7, paragraph 2, refers to an appropriate financial compensation for elected representatives. For municipal councillors, Article 26 of the Law on Local Self-Government establishes that “such remuneration shall be calculated in accordance with the amount of the average monthly wage, taking into consideration the actual length of work, the duration of which is confirmed pursuant to the procedure laid down in the rules of conduct. The amount of the remuneration for the performance of the duties of the municipal councilor shall be fixed by the municipal council”. As for the mayor and deputy mayor, their salaries shall be approved by the municipal council in accordance with the ratios established by the law (Article 19, paragraph 8).

 

During the meetings with elected representatives in the municipalities, the delegation was informed that the conditions of office are satisfactory, but the salaries are low. Normally, the councillors are only compensated for the expenses related to their activities as the councillors and only the mayor and deputy receive a salary.

 

As for Article 7, paragraph 3, according to which “Any functions and activities which are deemed incompatible with the holding of local elective office shall be determined by statute or fundamental legal principles”, the incompatibilities are determined by Article 91 of the Law on elections of municipal councils.

 

According to this Article, “The office of municipal councillor shall be incompatible with the office of President of the Republic, Seimas member, European Parliament member, Government member, head of a government agency or an agency under a ministry, whose work is related to the supervision and control of activities of municipalities, Government representative in the county, Auditor General and his deputies”. Moreover, the office of councillor of a municipality shall be incompatible with several positions of the municipality (like the office of the office of director of the administration of that municipality etc.).

 

The rapporteurs consider that the requirements of Article 7 of the Charter are satisfied in Lithuania.

Article 7.2
Conditions under which responsibilities at local level are exercised - Article ratified

They shall allow for appropriate financial compensation for expenses incurred in the exercise of the office in question as well as, where appropriate, compensation for loss of earnings or remuneration for work done and corresponding social welfare protection.

Consult reply indicated at article 7.1

Article 7.3
Conditions under which responsibilities at local level are exercised - Article ratified

Any functions and activities which are deemed incompatible with the holding of local elective office shall be determined by statute or fundamental legal principles.

See answer indicated at article 7.1

Article 8.1
Administrative supervision of local authorities' activities - Article ratified

Any administrative supervision of local authorities may only be exercised according to such procedures and in such cases as are provided for by the constitution or by statute.

Article 8 of the Charter deals with supervision of local authorities. Any administrative supervision of the activities of local authorities can only aim at ensuring compliance with the law and constitutional principles. Administrative supervision may, however, be exercised by higher-level authorities with regard to expediency in respect of the tasks delegated to local authorities. Another important requirement which can be inferred from the Charter provisions is that the law should precisely define the administrative authorities empowered to exercise legal supervision over municipalities.

 

In line with the requirements of the Charter, the rules governing central control over local authorities in Lithuania, and the powers of the central authorities concerned, are determined by the Constitution and by the law.

 

According to Article 123 of the Constitution, “The observance of the Constitution and the laws as well as the execution of decisions of the Government by municipalities shall be supervised by the representatives appointed by the Government. The powers of the Government representative and the procedure of their execution shall be established by law. In cases and according to the procedure provided for by law, the Seimas may temporarily introduce direct rule in the territory of a municipality”.

 

The Law on administrative supervision of municipalities provides that the supervision is performed by the government representatives in the counties. Government representatives check whether the legal acts of municipal collegial and non-collegial administration entities are in conformity with laws, resolutions of the Government and other legal acts related to the implementation of laws and adopted by the central entities of state administration.

 

According to Article 5 of the Law on administrative supervision of municipalities, upon having established that a legal act adopted by a municipal administration entity does not comply with laws or decisions of the Government, a Government representative shall by presenting a reasoned motion, propose to the appropriate municipal administration entity to consider amending or repealing the said legal act. The Government representative must be informed about the adopted decision within ten days after the adoption of such decision.  Within ten days after the receipt of a notification about the refusal to satisfy the motion (if upon the consideration of the motion of the Government representative, a municipal administration entity refuses to amend or repeal the legal act under dispute), appeal against such a legal act to the court.

 

Upon having established that a municipal administration entity fails to implement laws, to execute decisions of the Government, a Government representative shall submit to the appropriate municipal administration entity a written request to immediately implement the law, to execute the decision of the Government. The Government representative must be informed about the adopted decision within ten days of the adoption of such decision. Within ten days after the receipt of a notification about the refusal to satisfy the request (if upon the consideration of the Government representative’s request a municipal administration entity refuses to execute the said request), appeal to the court regarding the omission of this municipal administration entity.

 

When carrying out the advanced control of draft legal acts of municipal collegial administration entities, a Government representative may examine draft legal acts submitted to municipal collegial administration entities for adoption. Government representative also may attend meetings of municipal collegial administration entities and, where appropriate, inform the municipal councillors that the drafts under consideration do not comply with laws or decisions of the Government.

 

According to the Law on Local Self-Government, municipal controller (municipal control and audit service) carry out the external audit in the municipality. In his activities the municipal controller (municipal control and audit service) shall observe this and other laws, State audit requirements, methodologies prepared by the National Audit Office, and other legal acts.

 

The National Audit Office shall carry out audit of the use of State budget funds allocated to municipal budgets. The National Audit Office shall perform audit of the implementation of municipal budgets and the management, use and disposal of municipal property in accordance with the scope of public audit. 162. During this visit, the delegation did not hear any complaints from municipal representatives and the ALAL on the State supervision and on the National Audit Office system. 163. In its written remarks, the ALAL pointed out that the Ministry of the Interior has drafted a new version of the Law on administrative supervision of municipalities, aimed at changing the legal status of the government representative and at allocating 5 government representatives (one for two counties). The Association expressed its concerns, especially on the possibility that, by reducing the number of government representatives, the supervision of draft legislation would also be reduced. The Association considers that prior surveillance of draft legislation reduces the risk of decisions infringing the Constitution, the laws or government resolutions.

 

In conclusion, the rapporteurs consider that Lithuania complies with Article 8 of the Charter.

Article 8.2
Administrative supervision of local authorities' activities - Article ratified

Any administrative supervision of the activities of the local authorities shall normally aim only at ensuring compliance with the law and with constitutional principles. Administrative supervision may however be exercised with regard to expediency by higher-level authorities in respect of tasks the execution of which is delegated to local authorities.

Consult reply indicated at article 8.1

Article 8.3
Administrative supervision of local authorities' activities - Article ratified

Administrative supervision of local authorities shall be exercised in such a way as to ensure that the intervention of the controlling authority is kept in proportion to the importance of the interests which it is intended to protect.

Consult answer indicated at article 8.1

Article 9.2
Financial resources of local authorities - Article ratified

Local authorities' financial resources shall be commensurate with the responsibilities provided for by the constitution and the law.

Xonsult reply indicated at article 9.1

Article 9.8
Financial resources of local authorities - Article ratified

For the purpose of borrowing for capital investment, local authorities shall have access to the national capital market within the limits of the law.

Article 9, paragraph 8, on the access to the national capital market for the purpose of borrowing for capital investment, is highly problematic in Lithuania.

 

The main concern of the municipalities in Lithuania is related to the Constitutional Law on the Implementation of the Fiscal Treaty, whose Article 4 provisions entered into force from 2016 and severely restricted the annual net borrowing opportunities to 57 out of 60 local authorities. The ALAL requested the central government to address the underlying problem for the municipal budgets and to highly increase the borrowing opportunities for 57 local authorities in 2016, which were reduced several times to 1.5 per cent of the budget revenue.

 

From 2017 the amount of the annual net borrowing for 57 municipalities could not amount to a positive rate, i.e. the municipal loan could not increase throughout a year and the municipalities had the right to borrow the amount not exceeding the amount repaid for the loans taken out previously.

 

From 2018 the mentioned provisions (and threats) on limited borrowing opportunities are applicable to 3 biggest municipalities of the cities of Vilnius, Kaunas and KlaipÄ—da, in accordance with Article 13(1)(2) of Law on the Approval of Financial Indicators of the State Budget and Municipal Budgets for 2018 and Article 4(2) of the Constitutional Law on the Implementation of the Fiscal Treaty.

 

According to the ALAL, this provision undermines the possibility for municipalities to properly implement a part of investment projects planned in the Operational Programme for the European Union Funds' Investments in 2014–2020, as well as other international programmes and the state investment programme, as for the major part of these projects the central government has set the requirements for the municipalities to contribute with own resources, which are essentially borrowed funds.

 

In conclusion, the rapporteurs consider that the requirements of Article 9, paragraph 3, 4, 5, 6 and 7 are satisfied in Lithuania, whereas the requirements of Article 9, paragraph1, 2 and 8 are not met by the present legal and factual situation in Lithuania.

Article 9.7
Financial resources of local authorities - Article ratified

As far as possible, grants to local authorities shall not be earmarked for the financing of specific projects. The provision of grants shall not remove the basic freedom of local authorities to exercise policy discretion within their own jurisdiction.

As for Article 9, paragraph 7 of the Charter, grants for specific projects do exist: among them, appropriations for municipal investment projects, planned in the State Investment Programme and allocated from the state budget in the form of special targeted subsidies. Part of municipal investment projects are also financed from the EU structural funds and other financial instruments, based on the legal instruments, but they do not represent an important part of the financial resources of local autonomies and do not seem to constitute a problem for their autonomy. 

Article 9.6
Financial resources of local authorities - Article ratified

Local authorities shall be consulted, in an appropriate manner, on the way in which redistributed resources are to be allocated to them.

As for Article 9, paragraph 6, of the Charter, on consultation of local authorities on the way in which redistributed resources are allocated, it should be considered respected.

 

Article 11 of the Law on the Methodology of Determination of Municipal Budgetary Revenues establishes that the Government and the ALAL consider draft financial indicators of state and municipal budgets approved by the Seimas and primary statistics of other indicators in accordance with the procedure approved by the Government.

 

The rapporteurs did not hear any complaint on this respect. They were informed that, in practice, every year in September-October, when the law for the coming budget year is drafted, consultations take place between the Ministry of Finance (the state institution responsible for drafting the Law on the Financial Indicators of State and Municipal Budgets) and the ALAL. In the case of disagreement or new circumstances, the Association of Local Authorities in Lithuania may submit its proposals when the Government is considering the draft at its meeting. Another option is to submit proposals and defend them when the said draft is considered by the Seimas committees and the Seimas. 

Article 9.5
Financial resources of local authorities - Article ratified

The protection of financially weaker local authorities calls for the institution of financial equalisation procedures or equivalent measures which are designed to correct the effects of the unequal distribution of potential sources of finance and of the financial burden they must support. Such procedures or measures shall not diminish the discretion local authorities may exercise within their own sphere of responsibility.

Article 9, paragraph 5, refers to the protection of financially weaker local authorities by the way of equalisation procedures.

 

In Lithuania, according to the Law on the Methodology of Determination of Municipal Budgetary Revenues, an equalization of the Personal Income Tax is provided1. According to the procedure established by the Law, part of the revenues from Personal Income Tax of the municipalities whose planned income in the coming financial year exceeds the national average is accrued in the "redistribution fund". In 2018 there were 5 municipalities-donors: Vilnius City, Kaunas City, Klaipéda City, Neringa and Visaginas municipalities.

 

These funds are allocated to:

1. equalise the Personal Income Tax for those municipalities whose income from this tax is below the national average (additional funds are allocated to such municipalities, so that the total revenues from Personal Income Tax would amount to 90% of the national average).

2. equalise the differences of the composition of the expenditure for municipalities by considering the value of its demographic, social and other indicators (a number of children, schoolchildren, people of retirement age, area of the territory and etc.) and the importance of these indicators. This part is allocated to all municipalities, as well as to the donors. According to the data provided by the Ministry of Finances, in 2018 Vilnius City municipality is allocated EUR 20, 8 million. Source: Ministry of Finances (2018) 


1The Constitutional Court ruling of 11 June of 2015 declared several provisions of the Law on the Methodology of Determination of Municipal Budgetary Revenues in conflict with the Constitution of Lithuania. Implementing the Constitutional Court's ruling the Seimas adopted the amendment to the Law on the Methodology of Determination of Municipal Budgetary Revenues at the end of 2015 which allocates funds to the donor municipalities as well as other municipalities from 2016 to offset the differences in municipal expenditure structures.

Article 9.3
Financial resources of local authorities - Article ratified

Part at least of the financial resources of local authorities shall derive from local taxes and charges of which, within the limits of statute, they have the power to determine the rate.

Article 9, paragraph 3, establishes the requirement that part at least of the financial resources of local authorities shall derive from local taxes.

 

The ALAL maintains that the size of tax revenue which the municipalities have the right to regulate is below 10 per cent in the revenue structure of the municipalities and ask for the allocation to municipalities of several taxes, which are currently only allocated to the state budget:

a. the property tax on luxury property which is paid by natural persons for the share of residential (noncommercial) property owned by them above 220 thousand euro;

b. a share of corporate income tax.

 

Although an improvement of the financial resources deriving from local taxes would be welcomed, rapporteurs consider that the existing level of local taxes, together with the lease tax on State-owned land and water bodies of the State Inland Water Fund and revenues for goods and services, allow to maintain Article 9, paragraph 3, respected. 

Article 9.1
Financial resources of local authorities - Article ratified

Local authorities shall 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.

According to Article 9 paragraph 1 of the Charter, local authorities should have adequate financial resources of their own, of which they may dispose freely within the framework of their powers. Financial autonomy is an essential component of the principle of local self-government and an important condition for the exercise of a wide range of responsibilities in the field of local public affairs. These elements are cumulative and not alternative, which means that all the conditions laid down in Article 9 paragraph 1 of the Charter are mandatory. Another basic principle, established in Article 9, paragraph 2, requires that local authorities should have sufficient financial resources in proportion to the responsibilities assigned to them by law.

 

In Lithuania, municipalities dispose of a relevant part of the financial resources. The law provides for municipalities the right to freely use over 60 percent of the financial resources accumulated in municipal budgets for the exercise of independent functions assigned to them by law. Up to 40% of the financial resources are made up of special targeted subsidies, which are allocated either for statedelegated functions (e.g. in 2018, 780 million euros allocated) or for municipal investment projects financed according to the State Investment Program (e.g. in 2018, 160 million euros allocated). In addition, both the total amount of financial resources of municipal budgets and the financial resources, which municipalities of Lithuania have the right to freely use at their discretion, have experienced a growth tendency as of 2013.

 

The ALAL pointed out some achievements in the last few years. 168. From 2015 at the request of the ALAL the central government restored the procedure for the calculation of the percentage of Personal Income Tax allocated to the municipalities in force till 2011, so that the estimated increase of revenue from Personal Income Tax due to natural economic growth is once again divided to the state and the municipal budgets. From 2016 the estimated growth of independent revenue of municipal budgets above 21 per cent is not deducted to the state budget revenue or limited.

 

For the first time after the economic crisis, the budgets of 38 municipalities experienced a real growth in 2018 under comparable conditions due to the implementation of a decision requested by the ALAL multiple times: an innovation was introduced in the amendment to the Law on the Methodology of Determination of Municipal Budgetary Revenues of 5 December of 2017 adopted by the Seimas by abandoning the general subsidy from the state budget and allocating the same amount of founds as the general subsidy which was planned for the 38 municipalities in 2017 to Personal Income Tax of these municipalities as a regular source of revenue. Until this point, the general subsidy of the municipalities receiving the general subsidy was reduced by the expected amount of tax revenue growth, i.e. the budgets of the majority of the municipalities were actually “frozen” in the 2009 level and they did not have a possibility to increase revenues. During the consultation procedure, the Minister of Finance argued that the municipal budget income projected for independent functions in 2018 is higher by 18.3 per cent or by EUR 256.6 million than in 2017. The demand for appropriations to perform government functions which, following the laws, the government transfers to municipalities, is calculated according to the methodologies for calculation of funds approved by public authorities and bodies. The appropriations to perform government (transferred by the government to municipalities) functions are allocated from approved general appropriations of relative public authorities and bodies (i.e. the amount to be allocated for the performance of functions is decided by public authorities and bodies themselves). The appropriations allocated to finance the government (transferred by the government to municipalities) functions should comply with the methodologies for calculation of funds approved by public authorities and bodies. It should be noted that in 2018 the amount approved for delegated functions is higher by 6.7 per cent or by EUR 9.3 million than in 2017. If the Seimas or the Government during the budget year adopts or plans to adopt the decisions in the upcoming year, due to which occur changes in municipal budget revenue and expenditure, both revenue and expenditure changes are compensated. This is provided for by both the Law on Local Self-Government and the Law on the Methodology for Determination of Municipal Budget Revenue.

 

Nevertheless, the ALAL expressed many concerns that the financing from the State to the major part of the functions allocated by the state to the municipalities (special targeted grants) is lower than required according to the funding needed for the implementation of these functions. During the monitoring visit, this concern was expressed by all the elected local representatives the delegation met. The limited resources, coupled with the limitations in loans due to the constitutional law on the fiscal treaty, imply that municipalities do not have the possibility to act as independent and to develop investment projects.

 

Recommendation 321 (2012) drew attention on the fact that “municipalities do not have sufficient resources to deliver the services under their responsibility (a situation exacerbated by the economic crisis but also by the fact that the termination of the county administration put the burden of additional tasks on local authorities) and their borrowing limits are restrictive”, inviting Lithuanian authorities to “ensure the allocation of sufficient resources to local authorities, respecting the principle that resources should match functions and duties which are vested in local government”;

 

The rapporteurs consider that, notwithstanding the improvement of municipal revenues in the recent years, the financial resources can be considered neither adequate (Article 9, paragraph 1) nor sufficient in proportion to the responsibilities assigned to municipalities (Article 9, paragraph 2). 


3

Article 9.4
Financial resources of local authorities - Article ratified

The financial systems on which resources available to local authorities are based shall be of a sufficiently diversified and buoyant nature to enable them to keep pace as far as practically possible with the real evolution of the cost of carrying out their tasks.

Article 9, paragraph 4, refers to the necessity that the resources available to local authorities are of a sufficiently diversified and buoyant nature to enable them to keep pace as far as practically possible with the real evolution of the cost of carrying out their tasks.

 

In Lithuania, the main revenue for municipalities is the Personal Income Tax. Nevertheless, grants from the State budget constitute an important sources as well, especially for delegated functions. Municipalities have their own-source municipal revenues, which include various taxes, set by municipalities or assigned to municipal budgets by law (e. g. land, property taxes, taxes for various services, local fees, etc.) and other non-tax municipal revenue (e. g. fines, rents, revenue of municipal budgetary establishments). These resources are of a sufficiently diversified and expanding nature to enable them to keep pace as far as practically possible with the real evolution of the cost of carrying out their tasks, in compliance with Article 9, paragraph 4 of the Charter. 

Article 10.1
Local authorities' right to associate - Article ratified

Local authorities shall be entitled, in exercising their powers, to co-operate and, within the framework of the law, to form consortia with other local authorities in order to carry out tasks of common interest.

Article 10 of the Charter covers the co-operation between local authorities and their right to associate, at national and international level.

 

In Lithuania, there is neither inter-municipal co-operation tradition nor any specific organisational arrangements or strategies for the development of such kind of cooperation.1 Article 5 of the Law on Local Self-Government refers to the possibility for a municipality to conclude joint activity contracts with other municipalities or to transfer the implementation of functions of administrative and public services to another municipality by mutual consent of the municipal councils, on the basis of contracts. Article 16, on the competences of the municipal council, refers to “taking decisions on joining municipality unions, co-operation with municipalities of foreign states or joining international selfgovernment organisations”.

 

Since the first years of restored State independence, Lithuanian government chose the way of municipal consolidation: the big size of the municipalities contribute to explain the limited practice. Later, the focus has been on the Regional Development Councils as tools for cooperation. The intermunicipal cooperation is possible, but it is very limited and lack material resources. Basically the cooperation is informal and voluntary, based on solely economic efficiency. It is implemented in the forms of ad hoc project agreements, which are mostly financed by EU funds.

 

During the monitoring visit, the delegation was informed on several co-operation projects, especially as for infrastructures and investment projects. A good cooperation on transportation does exist between Klaipeda City municipality and its neighbours, as well as between Kaunas City municipality and Kaunas District municipality, whereas in Vilnius area such co-operation is proved to be more complicated and a pilot project is about to be launched.

 

The second paragraph of Article 10 of the Charter is also fully respected in Lithuania, as local authorities are entitled to set up associations for the protection and promotion of their common interest. The Law on the Basic Regulation of the Association of Municipalities of Lithuania established the ALAL as a national association representing “the common interest of its members, municipalities, in all institutions of State power and government”. Registered as a non-profit organisation, the ALAL seems to be an active entity whose right to represent all the 60 Lithuanian municipalities is respected by the Government and Seimas.

 

Lithuania has signed and ratified the European Outline Convention on Transfrontier Co-operation between Territorial Communities or Authorities and the addition protocol to the European Outline Convention on Transfrontier Co-operation between Territorial Communities or Authorities. This, in connection with Article 10.3 of the Charter, which fully applies in Lithuania, provides for a robust legal and political basis for Lithuania local governments in engaging in transfrontier co-operation.

 

As a matter of fact, many municipalities have established numerous partnerships, agreements and twining with towns and cities in other countries. Frequently, these involve cross-border cooperation with neighbouring districts in Poland, Russia, Latvia and Belarus. The ALAL represents the interests of its members, in relationship with foreign local authorities and international organisations. One of its tasks is to monitor the implementation of the provisions of the Charter.

 

Therefore, rapporteurs consider that, Article 10 is respected in Lithuania.


1See Klimovský, Daniel & Mejere, Oksana & MikolaitytÄ—, Jurgita & Pinteric, Uros & Saparniene, Diana. (2014). Inter-Municipal Cooperation in Lithuania and Slovakia: Does Size Structure Matter?. Lex Localis “Journal of Local Self-Government” Vol. 12, No. 3, pp. 643-658, July 2014.

Article 10.2
Local authorities' right to associate - Article ratified

The entitlement of local authorities to belong to an association for the protection and promotion of their common interests and to belong to an international association of local authorities shall be recognised in each State.

Consult reply indicated at article 10.1

Article 10.3
Local authorities' right to associate - Article ratified

Local authorities shall be entitled, under such conditions as may be provided for by the law, to co-operate with their counterparts in other States.

Consult reply indicated at article 10.1

Article 11
Legal protection of local selfgovernment - Article ratified

Local authorities shall have the right of recourse to a judicial remedy in order to secure free exercise of their powers and respect for such principles of local self-government as are enshrined in the constitution or domestic legislation.

Article 11 of the Charter refers to an effective judicial remedy to secure the respect of the local selfgovernment.

 

In Lithuania, according to Article 122 of the Constitution, municipal councils have the right to apply to a court regarding the violation of their rights. Consequently, municipalities can apply to ordinary courts (courts of general jurisdiction) or administrative courts (specialised courts) in case of all violations of their rights.

 

The Law on Local Self-Government, Article 41, establishes that “Municipalities may appeal to the court for the violation of their rights, taking into consideration the character of violation”.

 

The Constitution does not give municipalities, as well as any natural or legal person, the right to submit their petitions on the violation of their rights to the Constitutional Court directly. The municipalities can make use of the possibility of indirect access to this Court through ordinary or administrative courts. Paragraph 2 of Article 110 of the Constitution provides that, in cases when there are grounds to believe that a law or another legal act that should be applied in a concrete case is in conflict with the Constitution, the judge shall suspend the consideration of the case and shall apply to the Constitutional Court, requesting that it decide whether the law or another legal act in question is in compliance with the Constitution. However, the delegation was informed that new initiatives have been undertaken recently to introduce this new legal remedy.

 

Recommendation 321 (2012) invited Lithuania authorities to “ensure that the Association of Local Authorities of Lithuania is given the appropriate standing to represent all municipalities before domestic courts”.

 

During the monitoring visit, the ALAL reiterated this request, with specific reference to the proceeding of abstract application on the review of the legality of administrative regulations.

 

According to the Law on administrative proceedings (Article 112, paragraph 1), the right to apply to the administrative court with a petition for review of conformity of a regulatory administrative act with a law or a regulation issued by the Government shall be vested in the Seimas members, the Seimas Ombudsmen, the Children's Rights Ombudsmen, the Equal Opportunities Ombudsmen, state control officers of the Republic of Lithuania, courts and tribunals, the prosecutors and the professional selfgovernment associations, founded by law to implement public functions.

 

The ALAL claimed the lack of the standing to represent the municipalities in administrative courts, taking into account that, according to Article 2 of the Law on the Basic Regulations of the Association of Municipalities of Lithuania as well as Article 53 of the Law on Local Self-Government, the ALAL represents the common interests of its members (the municipalities) in the Government, other State institutions and international organisations.

 

The rapporteurs consider that the requirements of Article 11 of the Charter are partially satisfied in Lithuania.

ACCESSION

to the Council of Europe 14 May 1993

RATIFICATION

of the European Charter of Local Self-Government 22 June 1999

CONSTITUTION | NATIONAL LEGISLATION

The 1992 Constitution devotes an entire chapter, Chapter X, to ‘’Local Self-government and Governance”. The opening provision of this chapter, Article 119, proclaims that “The right to self-government shall be guaranteed to administrative units of the territory of the state, which are provided for by law. It shall be implemented through corresponding municipal councils”.



30Ratified provision(s)
0Provision(s) with reservation(s)
0 Unratified Provision(s)
23Compliant Provision(s)
4Partially Compliant Articles
3Non-compliant Provision(s)