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Georgia - Monitoring report

Date of the monitoring visit: from 17 to 18 April 2018

Report adopted on: 7 November 2018

Files : Report CG35(2018)18 | Recommendation 426 (2018)
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This report follows the third monitoring visit to Georgia since it ratified the European Charter of Local Self-Government in 2004.

The report highlights the substantial progress achieved by Georgia in the field of local democracy since the previous Congress monitoring and post-monitoring visits. The rapporteurs positively note the integration of the subsidiarity and commensurability principles and the clause of general competence into the constitution. They also welcome such important measures as the development of a comprehensive reform strategy for decentralisation and modernisation of local government, the introduction of direct election of mayors, strengthening of the financial capacity of local self-government and the constitutional status of the Autonomous Republic of Adjara, the modernisation of the auditing system and the official recognition of the representative position of the National Association of Local Authorities of Georgia (NALAG).

However, the rapporteurs express their concerns about difficulties faced by some opposition members in access to information held by municipal administrations and the risks of over-concentration of power in the hands of the mayor in view of his/her role in the appointment of deputy mayors. They also regret, in particular, the deficiencies in the financial equalisation procedure and the lack of clarity in distribution of competences.

The rapporteurs therefore suggest adopting various measures aimed at restoring mutual trust between the representatives of the ruling party and the opposition which is necessary for the proper functioning of local democracy. They recommend to the Georgian authorities to establish an adequate legal framework with regard to sectorial legislation to strengthen the role of the Sakrebulo in the appointment of deputy mayors, to improve the financial equalisation formula and to continue the regional development efforts.

Lastly, Georgian authorities are invited to ratify provisions of the Charter that are de facto applied in Georgia and which are still not ratified, and to sign and ratify the Additional Protocol to the European Charter of Local Self-Government on the right to participate in the affairs of a local authority.

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 new Article 7, paragraph 4, of the Constitution of Georgia provides that: the citizens of Georgia shall regulate the affairs of local importance through local self-government in accordance with the legislation of Georgia. Delineation of competence between the state authorities and self-governing units is based on the principle of subsidiarity. The State ensures the correspondence of financial resources of self-governing units with its competences determined by organic law.

As already shown in several parts of this report, the principle of local self-government is recognised both in the Constitution of Georgia and in ordinary legislation and, more specifically, in the Code of Local Self-Government. The existence of legal acts that are incompatible with the Code and the constitution remains a serious matter of concern in domestic legislation. In April 2016, the parliament received a set of draft changes which concerned 174 pieces of legislation. At its spring session in 2016, parliament adopted the changes at first reading but then the discussion of the package stopped and this process has not yet been revived. During the consultation procedure, the Government of Georgia informed the delegation that the process will continue in the context of decentralisation.

In spite of problems with previous sectoral legislation, it is obvious, however, that the principle of local self-government is recognised both at the level of the constitution and of the legislation and that Georgia fully complies with Article 2 of the Charter.

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.

According to Article 7, paragraph 4, of the constitution, “the citizens of Georgia shall regulate the affairs of local importance through local self-government in accordance with the legislation of Georgia”.

Georgian municipalities have been given additional responsibilities in recent years, yet the share of local government in public affairs is still quite limited. It could be substantially increased, however, especially if social services, including primary and secondary education, together with health services, were decentralised and devolved to local government, and it seems that Georgian authorities are already moving in this direction.

Georgia therefore complies with Article 3, paragraph 1, of the Charter. However, the rapporteurs encourage the Georgian authorities to move forward with decentralisation and devolution of powers to local authorities.

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.

According to Article 74, paragraph 1, of the constitution, “The citizens of Georgia shall regulate affairs of local importance through local self-government representative and executive bodies. A representative body shall be elected on the basis of universal, equal and direct suffrage, by secret ballot, for a term of five years. Local self-government executive bodies shall execute the decisions of representative bodies and shall be accountable to them”.

The appointment of deputy mayors by the mayor without the consent of the Sakrebulo seems to interrupt the line of accountability. Such a unilateral and absolute power of the mayor weakens the position of the representative body (with the exception of Tbilisi). NALAG proposed pertinent changes in the Code in 2017, suggesting the introduction of the Tbilisi model (where vice-mayors and heads of departments are nominated by the mayor and approved by the Sakrebulo) in all municipalities. This recommendation has been submitted to the ministry of regional development and infrastructure and the parliament, but final decisions are still pending.

After July 2015, when the Code introduced new mechanisms for citizen participation in the self-governance process, municipalities began enacting relevant normative documents. The number of citizens using their new rights was low in the second half of 2015, but the process speeded up in 2016 and was augmented by the fact that the ministry of regional development and infrastructure started drafting relevant guidelines.

Civil society also began getting involved in the awareness-raising process. Furthermore, the heads of several municipalities took the initiative to boost the use of the new mechanisms for citizen participation. This is particularly true for such forms of participation as general assemblies in settlements, and councils of civil advisors (Articles 85.1 and 86.1 of the Code). According to data from the ministry of regional development and infrastructure as at 1 January 2017: general assemblies were convened in 415 villages (which account for 11.78% of all the village settlements in Georgia). Village elects were chosen at about 10% of those meetings; in 2016, citizens filed 55 petitions with local self-governing units; this figure exceeds the total number of petitions filed during the last decade; councils of civil advisors were set up in all municipalities and in all districts of Tbilisi.

Concerning the councils of civil advisors, according to Article 86.1, paragraph 1, of the Code, a council of civil advisors is a deliberative body of a municipal council and is composed of representatives of entrepreneurial legal entities, non-governmental organisations and representatives of the municipal population. According to the Code, “The Gamgebeli/Mayor of a municipality shall be obliged to submit for discussion to the council of civil advisors, [a body] approved by him/her, a draft municipal budget, documents relating to the municipality spatial planning, proposals on giving names to the municipality geographical features, as well as other significant draft administrative-legal acts, and infrastructural and social projects. Other powers of the council of civil advisors approved by the Gamgebeli/Mayor and the rules of its operation shall be determined by the statute of the council of civil advisors, which shall be approved by the municipality Gamgebeli/Mayor. (Article 86-3, of the Code).

The level of activity varies among municipalities. Cities/towns and rural communities which were active in lodging citizen petitions were the cities of Batumi and Ozurgeti. Regrettably, there are no precise statistical data about citizen participation throughout 2017. In general, it is safe to say the process continued even more actively.Some local leaders used their legal powers positively to initiate additional mechanisms of citizen participation. A relevant example is the municipality of Marneuli, which implemented participatory budgeting (the so-called Brazilian or Sopot model) in 2015-17. Other examples include municipalities (such as Gori, Zugdidi, Lagodekhi, etc.) where electronic petition systems have been put in place. In the municipality of Gori, acting on its own initiative, the local government began publishing more documents.

The regrettable aspect of the process is that the general assemblies and the councils of civil advisors as advisory bodies have no real power in practice. Since forms of citizen participation carry only consultative power, the level of participation dropped once citizens saw that they were not making an actual difference. In addition to a lack of real rights, there is also a technical issue related to organising meetings: a general assembly can take decisions if 20% of registered voters in the settlement attend; however, in practice, it is almost impossible to reach this number of attendees, both in medium-sized and large settlements.

The Council of Europe has actively supported public policy for citizen participation in Georgia, also through a project that finished in December 2017 and gave rise to: the Handbook on Transparency and Citizen Participation in Georgia (English–Georgian): it aims to support local and regional authorities in their efforts to make communities more open, ethical and citizen-oriented. It outlines the legislative frameworks in Georgia and provides practical guidance for preventing corruption risks and implementing transparency and citizen participation mechanisms. the study on Institutionalised citizen participation: an assessment of existing mechanisms in Georgia which was undertaken to support NALAG in advocating for improvements in the consistency and coherence of legislative frameworks for citizen participation.

Further improvements are being considered under the new decentralisation strategy, for which a process of public consultation was launched in January 2018. The Government of Georgia presented the concept of the new decentralisation strategy in early 2018. Citizen participation will be fostered within this strategy and it is currently being debated whether to give legal status to online petitions. For the time being, there is a new online governmental portal through which citizens can register petitions to central and/or local governments.

Today, Georgian legislation includes provisions on citizens’ participation in local affairs which originated in the Additional Protocol to the European Charter on the right to participate in the affairs of a local authority. As there is no legal or conceptual inconsistency between the additional protocol and the Georgian legal framework, it seems that ratification of the additional protocol is only facing technical obstacles, and Georgian interlocutors (including the chairman of the parliament) confirmed their willingness to ratify it. Recently, the Committee on Regional Policy and Local Self-Governance of the Parliament of Georgia started a public debate on the ratification of this protocol, and positive moves in this direction are expected in the very near future, possibly before the end of 2018.

In general, Georgia complies with Article 3, paragraph 2, of the Charter. However, it is recommended that a new provision be introduced into the Code concerning the approval of the appointment of deputy mayors by the Sakrebulo, as is already the case in Tbilisi. Moreover, the Georgian authorities should be encouraged to proceed with the ratification of the Additional Protocol to the European Charter of Local Self-Government on the right to participate in the affairs of a local authority.

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.

The new Code of Local Self-Government (2014) provided for additional responsibilities of municipalities, but at the same time, fire safety and rescue functions were removed from their fields of competence. The duty to ensure the operation of agricultural information and advice centres, which had been delegated to them in 2012, was also taken away. Nowadays, the Georgian Government is considering further steps towards decentralisation. The ministry of education and science has since come forward with an initiative to delegate the administration of public schools (including construction, repairs, equipment, school transport, etc.) to local self-governing units.

In March 2018, the prime minister and the speaker of the parliament announced in parliament that a reform strategy would be presented to the public during the summer of 2018 and be adopted by the end of that year. Emphasis is now being made on delegating more powers, and the first stage of the reform is supposed to be completed by 2025. The ministry of regional development and infrastructure of Georgia is working on a project for decentralisation and good governance strategy. The representatives of the respective government agencies and representatives of the relevant committee of the Georgian Parliament, together with experts from international and non-governmental organisations, are involved in the preparation of the draft strategy, which is planned to take place, along with the launch of a wide range of discussion forums, by the end of 2018.

In general, the Georgian legal framework for local self-government has considerably improved since 2014. Local authority competences have been strictly differentiated from the mandate of central government and the municipalities have obtained the right to claim any competence that has not been allocated to any other level of government (see below).

Georgia therefore fully complies with Article 4, paragraph 1, of the Charter.

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.

According to Article 75, paragraphs 2 and 3, of the constitution, a self-governing unit shall: 2. … have the right to make decisions on its own initiative on any issue which does not fall within the exclusive authority of state authorities or the Autonomous Republics and the decision of which is not excluded by law from the authority of a self-governing unit. 3. … exercise its powers independently and on its own responsibility, within the scope of the legislation of Georgia. The powers defined by the organic law shall be full and exclusive.

Besides these constitutional provisions, a general clause on municipal competence has been introduced, and thus the principles of own responsibility and discretion to exercise initiative in local affairs are enshrined in the Code.

Georgia therefore complies with Article 4, paragraph 2, of the Charter.

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.

The principle of subsidiarity is enshrined in the Constitution of Georgia, Article 7, paragraph 4: “delineation of competence between the state authorities and self-governing units is based on the principle of subsidiarity”, while the Code adopted in 2014 already clearly stipulated that public competences are to be executed by the authorities that are the closest to citizens. Based on this provision, a number of competences (such as the supply of water and the collection of solid waste) were transferred to municipalities; the Government of Georgia has since also delegated competences in secondary education to municipalities.

Georgia therefore complies with Article 4, paragraph 3, of the Charter.

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.

According to Article 75, paragraph 3, of the constitution, “[o]wn powers defined by the organic law shall be full and exclusive”. This provision is nearly identical to the first sentence of Article 4, paragraph 4, of the Charter.

In practice, however, some competences that have been transferred to municipalities (for example, water supply) are not full and exclusive, and current public services are provided by enterprises that are under the ownership of the central government. The main cause of such a lack of clarity regarding devolved competences is a lack of coherence between the local government code and the sectoral legislation, but also inconsistency.

Water supply is a topical example. In 2017, centralised water supply systems were available to 72% of the population (compared with 68% in 2013). Municipalities were allocated the competence to supply water in 2014. However, the provision of the water supply is realised through outsourcing and public–private partnerships. In the case of the capital city, Tbilisi, the city of Rustavi and the municipality of Mtskheta, the water supply is provided by a commercial entity, Georgian Water and Power Ltd., while for the vast majority of Georgian municipalities, the water supply is provided by the United Water Supply Company of Georgia, a commercial entity that belongs to the central government and serves up to 57 local self-governing units. The municipalities are not permitted to intervene in monitoring the quality of State company-provided services. A different model is applied in the Autonomous Republic of Adjara; here the supply of water to the population is provided by companies that are under the ownership of municipalities. Recently, six municipalities in the Autonomous Republic of Adjara initiated a process of consolidation of these small companies into one regional company.

In 2016, the ministry of regional development and infrastructure prepared a package of legislative changes for harmonisation of sectoral legislation with the Code. This package was adopted at first reading in the Parliament of Georgia and is awaiting adoption following its second and third readings.

In view of this situation, it is clear that further steps should be implemented in order to fully comply with Article 4, paragraph 4, of the Charter. The rapporteurs are therefore of the opinion that at this stage Georgia partially complies with the above mentioned provision.

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.

According to Article 134.1 of the Code, a sectoral supervision authority can also provide “recommendatory instructions”, but these should not restrict the right of a municipality to ensure the exercise of its delegated powers, taking into consideration local conditions.

In view of this legislation, it can be confirmed that Georgia complies with Article 4, paragraph 5, of the Charter.

Article 4.6

Scope of local self government - Non 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.

According to Article 76, paragraph 4, of the constitution, “state authorities shall make decisions on issues related to local self-government in consultation with self-governing units. The rule for consultations shall be defined by the organic law”.

According to Article 7, paragraph 3, of the Code, State authorities are obliged to hold preliminary consultations with non-entrepreneurial (non-commercial) legal entities that comprise more than half of the country's municipalities, before making decisions on issues relating to the powers of a municipality. One such non-profit (non-commercial) legal entity is NALAG, which unites all local self-governing units in Georgia. All draft laws relating to local self-government are submitted to NALAG for comments. In accordance with parliament regulations, all comments must be attached to the draft law and submitted to the parliament.

Georgia fully complies with Article 4, paragraph 6, of the Charter and this article could therefore be ratified by the Georgian authorities, as was confirmed by interlocutors during the monitoring visit to Georgia.

Article 5

Protection of local authority boundaries - Non 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.

The Georgian Code of Local Self-Government includes special provisions for consultation with municipalities and the local population in cases of territorial reform (Articles 10, 11, 12 and 13). In addition, Article 74, paragraph 2, of the constitution provides that “decisions on the establishment and abolition of a self-governing unit, or the changing of its boundaries, shall be made by Parliament in consultation with the respective self-governing unit and on the recommendation of the Government”. It therefore seems to the rapporteurs that Georgia is able to ratify the Article 5 of the Charter and this was confirmed by all interlocutors of the Congress delegation during the monitoring visit, including the chairman of the parliament.

Concerning the implementation of a consultation procedure before the mergers of 2017, when 14 municipalities were merged into seven cities (Gori, Zugdidi, Ozurgeti, Telavi, Mtskheta, Akhal’tsikhe, Ambrolauri), information provided by Georgian experts indicated that the ministry of regional development and infrastructure had organised a policy meeting with NALAG in March 2017 and presented a report on the pilot territorial reform implemented in 2014, pointing out that separation of urban centres from their rural areas was not in the interests of efficiency and that the government had plans to reverse the 2014 territorial reform. The official position of NALAG was that: a) there should be consultation with municipalities before any decisions are taken; b) re-merging of the seven cities with their adjacent rural communities should be approved by locally elected bodies of each respective municipality; and c) in no cases should funding of merged municipalities (State transfers) be less than the cumulative sum of funds of merged municipalities in the previous fiscal year. The ministry agreed with NALAG’s proposals and asked NALAG to provide logistical support for the organisation of consultations with Georgian municipalities.

In April-May 2017, NALAG organised 10 consultation meetings in all regions of Georgia. Those meetings were attended by mayors and heads of local councils, representatives of the central government, and independent experts and they were also open for public participation. The agendas of those meetings included three topics: a) re-amalgamation of seven cities and seven municipalities; b) recommendations for decentralisation of State powers; and c) recommendations for financial decentralisation. In total, 250 local government representatives took part in these consultation meetings. NALAG prepared a verbatim report of the meetings and developed a set of recommendations based on that report. Both documents were submitted to the ministry. The verbatim report showed that the absolute majority of local government representatives supported the re-amalgamation of the affected municipalities.

The ministry of regional development and infrastructure then officially submitted a proposal for amalgamation to the following local government units: the city and the municipality of Gori, the city and the municipality of Telavi, the city and the municipality of Akhaltsikhe, the city and the municipality of Ozurgeti, the city and the municipality of Mtskheta, the city and the municipality of Zugdidi, and the city and the municipality of Ambrolauri. Local councils of all 14 local government units organised open sessions in which to discuss the proposals on amalgamation, which were subsequently approved. Representatives of the NGO coalition that had strongly opposed the proposal for re-amalgamation also attended these meetings.

Following a final session of the executive board in June 2017, NALAG decided to support territorial consolidation of the 14 municipalities. Subsequently, a draft legislative proposal, along with a verbatim report of regional consultation meetings that had taken place, was sent to parliament for approval. Laws on this territorial reform were adopted after three readings. The delegation has been informed that, although the President of Georgia vetoed the bills on the ground that rolling back this process seemed completely unsubstantiated and unacceptable, and that taking away the self-governing status of seven towns would halt the development and strengthening of self-governance in Georgia, the Parliament overrode the President’s veto on 26 July 2017.

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.

According to Article 76, paragraph 2, of the constitution, “a self-governing unit shall independently establish its organisational structure in accordance with the organic law, and shall make decisions with regard to human resources in accordance with the organic law and legislation governing public service”. According to the Code, Georgian municipalities have the right to determine their internal administrative structure in accordance with Georgian legislation. In general, the basic internal structure of a local government unit is defined by the Code, but municipalities are able to form administrative units and structural divisions. Statutes and rules of procedure for internal departments and services are adopted by the municipal councils.

The Code of Local Self-Government (Article 156) indicates the specific formula for calculation of the number of employees per municipality – a formula based mainly on the size of the population. However, initial experiences with the enforcement of this legislation have shown that it is quite difficult to use one formula for all municipalities in view of the very big differences between them and the specific needs of municipalities in mountainous or other areas. Several changes have been made in order to give more discretion to municipalities and to achieve a more flexible formula.

Municipalities have the right to establish non-commercial (non-profit) and commercial (Ltd), enterprises for the provision of municipal and social services. As yet, there is no regulation defining how many such enterprises can be established in each municipality. According to local experts, this possibility is being misused as there is a huge number of non-commercial entities, thus leading to increased costs. In recent years the number of non-commercial entities established by the municipalities has nearly doubled and this has taken place in order to provide employment. Any entity that receives funding from municipal budgets is open for monitoring by the local council; the true reason for this spectacular increase in the number of non-commercial entities is that their employees are not subject to the law on civil service employment. As a result, open recruitment competitions are not required in order to hire staff, which makes these jobs easily accessible to political supporters.

In general, Georgia complies with Article 6, paragraph 1, of the Charter, but there are some concerns about the formula for the calculation of the number of employees in municipalities, which is restricting their organisational autonomy. In principle, such restrictions do not conflict with the Charter, but they should be flexible and take into consideration the big differences between municipalities. According to the Charter, local authorities should be able to determine their structures (including the number of posts of civil servants) “in order to adapt them to local needs” and this is not possible if the formula for the calculation of the number of employees is formalistic and basically oriented on the size of the population.

Article 6.2

Appropriate administrative structures and resources for the tasks of local authorities - Non 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.

Staff of the Gamgeoba (city hall) are appointed by the Gamgebeli/mayor on the basis of open competition. Staff of the Sakrebulo (council) are appointed by the head of the council (chairperson). Appointment and dismissal of municipal staff are regulated by the Law of Georgia on Public Service.

Salaries of civil servants in Georgia are regulated by the Law of Georgia on the Remuneration in Public Institution as referred to in the Law of Georgia on Public Service; this legislation uses special coefficients for to calculate the salary of each category of municipal employee. The law indicates 12 categories of civil servant, and municipalities are free to assign a relevant category to each employee who has passed procedure. According to several interlocutors during the Congress monitoring visit, salary schemes in Georgian municipalities are highly competitive in the domestic labour market. According to NALAG, however, a lack of adequate human resources at local level is the biggest problem. Moreover there are a number of municipal sectors such as spatial planning, urban design and urban transport management, where the shortage of qualified personnel is evident, even in Tbilisi. Aiming at raising the level of qualifications of civil servants, Article 101, paragraph 2, of the Code now obliges municipalities to spend at least 1% of the total amount of budgetary allocations intended for remuneration on professional development of their civil servants.

As already mentioned, apart from civil servants, local government entities employ many people on an individual contract basis. Both limited liability companies and non-profit entities serve as “shelters” for retired civil servants and other people having close ties with local government officials. As at 1 January 2017, local governments (not including Tbilisi) employed 11 913 individuals directly and an additional 19 825 individuals through non-profit entities, making a total of 31 738 employees. The Government proposed legislation aiming at regulating the number of non-commercial entities per municipality and introducing a limit on the amount of administrative costs. This initiative, according to local experts, is still under consideration of the Government.

In general, municipalities have the power to recruit and select the required staff, evaluate their performance and offer training and re-training opportunities. Contracting is easily possible within the reasonable procedures stipulated in Georgian law. The procedures (competitions) for selection are prescribed by law and enforced by the Civil Service Bureau. The scale and limits of remuneration are set by law, but municipalities have the power to decide on the amount of remuneration within these limits. Municipalities cannot increase their budget for employee salaries without the consent of the Ministry of Finance of Georgia (according to changes made in 2018 to the Law of Georgia on Remuneration in Public Institutions).

In spite of such restrictions (which can be found in many European countries), it can be stated that Georgia complies with Article 6, paragraph 2, of the Charter, and that this provision could be ratified by the Georgian authorities.

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.

Local elected representatives have the right and the possibility to exercise their mandate freely and unconditionally. Members of the Sakrebulos (councils) have the right to monitor the activities of municipalities and to organise hearings on reports provided by the mayor and heads of departments. Local elected representatives are entitled to discuss, adopt and monitor local budgets; they also have the right to request any information on the spending of public funds by local executive bodies and entities subordinated to the municipal administration.

On 23 March 2018, Mr Irakli Nadiradze, Chairperson of the faction “United National Movement” (UNM) of the Tbilisi City Municipal Assembly, addressed a complaint to the Congress with regard to the alleged violations of local self-government principles in Tbilisi Municipal Assembly. He claimed that the ruling party denied the rights which are supposed to be legally attributed to a member and a faction of the municipality by several legal acts, in such areas as the access to certain information, the modalities of convening and holding of sessions.

Indeed, during the visit in Georgia the rapporteurs met with local elected representatives from the opposition and some interlocutors expressed complaints that members of the municipal assemblies are being denied access to information. However, it seems that these are rather exceptional cases and in most instances members of opposition parties do get information on local budgets’ spending, public procurement and privatisation. This is indicated through the fact that the opposition has reported cases on misuse of public funds on television and in printed media.

An interesting court case was the case of “Ms Sharashenidze against the Ozurgeti City Municipality” when a member of Ozurgeti city council from an opposition party, applied to the civil court of Ozurgeti accusing the mayor of City of preventing her from having access to information on public procurement. She claimed that the Mayor of the city refused to provide her with the copies of procurement contracts because they would include a vast number of pages and the city could not spend so much money on their copying. The Civil Court of Ozurgeti has recognised the mayor’s decision as legal. Subsequently, Ms Sharashenidze applied to the Court of Appeal in Kutaisi. The court of appeal obliged the city municipality to provide to the applicant council member a workplace equipped with a desktop computer or an internet connection for a reasonable period of time in order to enable her to have access to electronic copies of all procurement contracts.

In this respect it should be noted that most of the local authorities and experts met by the delegation have indeed underlined that Georgian legislation includes sufficient remedies in order to ensure the free access by members of local deliberative bodies to legally required information.

Nevertheless, the rapporteurs believe that capacity building programmes for local council members to enhance the use of available legal instruments, notably in remote municipalities, would help them to better protect their rights as local elected representatives and thus would positively contribute to strengthening the role of opposition parties in local self-government.

Unfortunately, in many member States of the Council of Europe, municipalities shall cope with sometimes difficult relationships among their local elected representatives, notably between the representatives of the ruling parties and the opposition. The number of complaints addressed to the Monitoring Committee in this respect has been gradually increasing recently which shows that this issue is becoming a problematic trend for local self-government.

Following the 2012 parliamentary election, negative developments took place in a number of municipalities and some locally elected representatives came under heavy pressure. However, it seems that these instances were the result of the transfer of power and that they were rather exceptional cases. According to NALAG, the Government of Georgia took specific steps to prevent national political interference in local affairs. More specifically, the Georgian criminal code has since been amended and tougher penalties have been introduced for violent interference in the operation of a local administration. In addition, the minister of justice has established a specific interministerial commission with the tasks of overseeing election procedures and prevention of violations during electoral and post-electoral periods. It is worth mentioning that all international observation missions have evaluated the work of this commission positively. After the 2014 local government reform, national political influence upon local authorities has been decisively pushed back. The Code of Local Self-Government clearly defines the mandate, role and responsibility of local elected representatives and provides specific legal measures to guarantee free and full execution of the mandates of local elected representatives.

During the monitoring visit and following several discussions, and in spite of some protests from opposition parties, the rapporteurs’ general impression was that Georgian authorities have tried to respond to the recommendations in Recommendation 334 (2013) on local and regional democracy in Georgia, and that Georgia generally complies with Article 7, Paragraph 1, of the Charter.

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.

The head of Sakrebulo and his or her deputies, as well as the heads of committees and fractions enjoy the status of local elected public officials and as such they receive allowances for the execution of their mandates. Those members of local councils who do not hold official administrative positions receive compensation for the execution of their mandate, the amount varying between municipalities and being dependent on the size of local budgets; it is higher in big cities and lower in small municipalities with limited own revenues.

Georgia therefore complies with Article 7, paragraph 2, of the Charter.

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.

Functions and activities that are incompatible with the work of a local council member are laid down in the Code of Local Self-Government (Articles 39, 42, 55 and 58) and other relevant legislation.

Georgia therefore complies with Article 7, paragraph 3, of the Charter.

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.

With the new Code of Local Self-Government, the office of prime minister replaced State governors and the ministry of justice as the new supervising authority of municipal bodies. Putting a single body in charge of oversight instead of having two bodies supervise the same issue is in line with Council of Europe Recommendation No. R (98) 12 of the Committee of Ministers to member States on supervision of local authorities’ action. However, a number of questions arise as to performance of the legal oversight function by a prime minister: in none of the other Council of Europe member States is a prime minister directly responsible for legal supervision of local authorities. There are also several formal difficulties in the current system: the Code in force does not allow the prime minister to delegate his or her legal oversight function, which means that, formally speaking, legal findings of an oversight commission have to be endorsed by the prime minister, which is not very easy in practical terms. The existing practice is that legal findings are signed by a chief of the relevant department in the government administration.

In most countries, the function of State supervision over local authorities is vested in a government ministry with responsibility for local self-government policy. The rationale is that such a ministry would have the expertise to perform this demanding function. The system that is currently in place in Georgia could cause overlapping of certain functions in the executive branch of the government, since ministries and administrations would also supervise municipalities in performing delegated tasks. In order to optimise the existing legal oversight system, it is being considered whether or not to give this function back to State trustees – Governors, but interlocutors of the Congress delegation were sceptical, since the record of informal control that State trustees – Governors used to exercise over municipal activities has not yet been forgotten.

Financial control and audit of local authorities is undertaken by the State Audit Office (SAO), which conducts audits of municipalities according to annual plans and publishes audit reports to inform the public. The SAO organises training for its staff and develops new methodologies for auditing of local authorities in co-operation with international partners. As a result, it seems that the suggestion in Recommendation 334 (2013) on local and regional democracy in Georgia to improve training and provide standards for auditing has been followed. Today, audits at the local level are performed by both internal and external auditors. External audits are carried out by the SAO (notably the local self-government entities audit department; the Audit Department of the Autonomous Republic of Adjara and the Audit Department of the Autonomous Republic of Abkhazia, which are the structural entities of the SAO), and independent auditors. More specifically, audit reform in Georgia included: i) the Law of Georgia on Public Internal Financial Control; ii) standards on internal audits; and iii) the central harmonisation unit (CHU) that was established by the ministry of finance to co-ordinate and harmonise the creation of internal audit and financial management and control systems in the public sector, including development of and updates to relevant standards and methodologies. According to the legislation, internal audit departments have been set up in municipalities as separate independent units.

Finally, it should be mentioned that the Public Defender of Georgia is also mandated to monitor local self-governing authorities and also to examine the statements and appeals of both Georgian and foreign citizens and stateless persons, legal entities under private law, and political and religious associations regarding actions or acts of local self-governing authorities that violate the rights and freedoms defined in the laws and Constitution of Georgia, and in treaties and international agreements to which Georgia is a party. In her reports, the public defender has pointed out the most frequent shortcomings in this area by municipal administrations, such as a lack of clear reasoning when taking decisions, a lack of impartiality combined with discriminatory practices, and a lack of awareness for persons with disabilities, etc.

The rapporteurs concluded that Georgia complies with Article 8, paragraph 1, of the Charter since supervision procedures are described in law and there has been no systematic violation of these procedures in recent times.

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.

According to Article 75, paragraph 5, of the constitution, “the State authorities shall exercise legal supervision over the activities of self-governing bodies. The activities of self-governing units may be supervised in order to ensure the appropriateness of decisions only with respect to decisions made on the basis of delegated powers. State supervision shall be exercised in accordance with procedures established by the organic law, in compliance with the principle of proportionality”.

The Code of Local Self-Government (Article 129-1) refers to two types of supervision: legal supervision and sectoral supervision. According to this article, “State supervision is an activity carried out by executive authorities that is intended to ensure the lawfulness of the activities of municipal bodies, and proper exercise of delegated powers.”

In order to examine the expediency of activities carried out by local self-governing bodies (officials) within the sphere of their delegated competences, the State supervisory authority is entitled to request from the respective local self-governing body (official) submission of any official documents, including legal acts promulgated by the local self-governing body/official, minutes of meetings and sittings, materials relating to administrative proceedings and financial documents, etc.

A municipality may appeal the legality of a decision by the State supervising authority on annulment of an individual normative act due to its inappropriateness, as prescribed by law (Article 136 of the Code). The supervising authority may, after consulting with and notifying the officials of the appropriate self-governing bodies, decide to implement appropriate measures to suspend and/or annul the normative acts concerned. Such a decision on the implementation of measures to remove and prevent damage may be appealed to a court as prescribed by law.

In order to ensure maximum protection for self-governing units, the Code of Local Self-Government has introduced a legal consultation mechanism: each self-governing body may, on its own initiative, submit a request for legal consultation on a draft normative act to the supervisory authority if it is not sure whether this act fully complies with Georgian law (Article 137 of the Code). The supervisory authority is obliged to provide a legal opinion, which is only recommendatory, on the submitted draft. Thus, local authorities and officials can adopt their legal acts independently and on their own responsibility.

Provisions of the Code of Local Self-Government are in accordance with the Charter. Controls regarding legality and appropriateness are permitted only for decisions made on the basis of delegated powers. Georgia therefore complies with Article 8, paragraph 2, of the Charter.

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.

According to Article 75, paragraph 5, of in the constitution, state supervision shall be exercised in accordance with the rule prescribed by the Organic law, in adherence to the principle of proportionality.

In principle, the Georgian central government has no substitutive power over local government, but it can introduce direct State rule in cases where the territorial integrity of the country is concerned, if a local council ceases to function due to the permanent absence of 50% of its members and if the local budget for the current financial year is not adopted during the first three months of the fiscal year. Moreover, according to Article 133, paragraph 2c), of the Code, a sectoral supervision authority may substitute the local self-government when performing state supervision over the exercise of delegated powers. The conditions for the exercise of substitutive power and other means and measures of supervision are described in law and local authorities also have the possibility to appeal decisions of the State supervisory authority to a court (Article 135, paragraph 8, of the Code).

Georgia therefore complies with Article 8, paragraph 3, of the Charter.

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.

According to Article 75, paragraph 4, of the amended constitution (2018), “[d]elegation of powers by the state to a self-governing unit shall be carried out on the basis of a legislative act or agreement by transferring appropriate material and financial resources”. Furthermore, according to Article 7, paragraph 4, of the amended constitution, “[t]he State ensures the correspondence of financial resources of self-governing units with its competences determined by organic law”.

When delegating powers to local authorities, the central government provides concomitant financial support through targeted transfers. Audits have not revealed any deficiencies concerning the use of transferred funds in the exercise of delegated powers. According to the State Audit Office, the amount of financial resources allocated to municipalities is sufficient for the exercise of the delegated powers. In only a few cases have municipalities been obliged to contribute from their own revenues in order to finance activities relating to delegated powers.

Georgia therefore complies with Article 9, paragraph 2, of the Charter.

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.

The capital market is still developing in Georgia. At the same time, the Government of Georgia has access to donor credits on concessional terms. Municipalities are allowed to borrow only with the consent of the government and they can only borrow for investment purposes. Since the government is in a better position to negotiate with the donor community, in practice the central government signs the loan agreements and then lends the borrowed funds to local authorities for investment projects. In 2017, municipalities borrowed 4% of total 2017 budget expenditure for this purpose.

Generally, local self-governing bodies in Georgia do not possess large amounts of borrowed funds. Audits have not revealed any particular weaknesses related to loans and credit in the municipalities. Municipal debt management is regulated by the fiscal rules (macroeconomic parameters) laid down in the Organic Law of Georgia on Economic Freedom (Article 2): the so-called “debt rule” – 60% of GDP; “expenditure rule” – 30% of GDP, and “balance rule” – 3% of GDP. The government is allowed to set certain overall restrictions in order to keep general government parameters in line with these limits, but municipalities are fully independent to define their priorities in terms of spending within the resources available to them. Local self-governing bodies may only borrow amounts exceeding the limits determined by law from public authorities and from legal entities that are controlled by public authorities. Property owned by the municipalities cannot be used as collateral for a loan.

Restrictions on borrowing autonomy are provided by law and do not exceed similar restrictions in force in other European countries.

The rapporteurs therefore conclude that Georgia complies with Article 9, Paragraph 8, of the Charter.

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.

Besides the equalisation transfer, the central authorities can allocate targeted transfers to self-governing units for the exercise of their delegated powers. They can also allocate special transfers, which are intended to be used for urgent projects and also to cover damage caused by unforeseen events (natural disasters, for example) and which cannot be financed from the local budget, but which are nevertheless considered to be urgently needed in order to benefit the local population.

For the year 2018, the structure of the total financial assistance transferred to local authorities from the central budget was as follows.

Calculation of the targeted transfers is performed on the basis of consultations between the Ministry of Finance of Georgia and the financial administrations in the municipalities, in accordance with the real value of the cost of implementation of the delegated task. A special commission has been created by the government to review the project requests submitted by the municipalities and to prepare requests for funding, for approval by the government. This kind of transfer is earmarked for specific projects and can only be used for such. Special transfers are calculated on the basis of the volume and cost of the approved projects.

The share of State funds which is earmarked for special transfers is relatively small, and therefore the system of State grants in Georgia does not affect the basic freedom of local authorities to exercise policy discretion and is in accordance with Article 9, paragraph 7, of the Charter.

Article 9.6

Financial resources of local authorities - Non ratified

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

According to the ministry of finance, there is a system in place to negotiate grants for investment projects from the State Budget Regional Development Fund; each decision is made by the Government Commission on Regional Development which reviews the proposals made by municipalities. Furthermore, the Code contains provisions permitting a local authority to engage in consultations with the national associations of Georgian local authorities such as NALAG. Georgia therefore complies with Article 9, paragraph 6, of the Charter, and ratification of Article 9, paragraph 6, could be considered, as several Georgian interlocutors also confirmed.

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.

The existing formula for calculating the equalisation transfer is designed with the aim of filling the gap between projected revenues and expenditure of individual local self-governing units. Accordingly, an increase in a municipality’s own revenues will naturally result in a decrease in the equalisation transfer receivable by that municipality. Article 154 of the Code of Local Self-Government was amended to eradicate this shortcoming but the amendment was removed soon afterwards. According to some critics, this means that in general the existing transfer policy offers local authorities no incentive to increase their own revenues, because any increase would automatically cause the ministry of finance to reduce the equalisation and other transfers.

Chapter XI of the Budgetary Code regulates the equalisation transfer, which should serve the purpose of achieving a more or less equal level of development across the country. As defined in Article 74, ”the size of the Equalization Transfert made to each Local Authority Budget is calculated with the following equation: T=E-R, whereby: a. T = the transfer to be allocated to the Local Authority Budget; b. E = total amount of the total sum of expenditures and increase in non-financial assets within the budget of a Local Authority, which is calculated on the basis of statistical data (population broken down by the following age groups: children below 6, adolescents from 6 to 18, adults with a socio-economic condition (rating score) falls below the threshold defined by the Government of Georgia, size of the region in square meters and road length of local significance) and equalization ratio by splitting the self-governing cities and municipalities; c. R = revenues to the Local Authority Budget (net of grants), which are calculated by the projections for the current year and actual trend indicators of the past 3 years within the budgets of Local Authorities.” The final amount allocated for the equalisation transfer is determined by the central government and approved by the parliament.

Some experts see serious problems in the equalisation transfer scheme, since 61% of equalisation transfers are channelled to large self-governing cities with a population of 42% of the nation’s total population, while only 39% of the transfers reach municipalities in which 58% of country’s total population reside. By the same token, according to the Law on the Development of Mountainous Regions, the size of targeted transfers did not in fact change in 2015-17, even though the municipalities received additional delegated powers. Targeted transfers amounted to GEL 11.4 million in 2015, GEL 11.6 million in 2016 and GEL 11.7 million in 2017.

The ministry of finance is working on modification of the equalisation mechanism and on revision of the formula for calculation of the equalisation transfer, as already suggested by the Congress in its Recommendation 334 (2013) on local and regional democracy in Georgia and during the post-monitoring procedure. There is therefore no incompatibility with Article 9, paragraph 5, of the Charter. On the other hand, it is obvious that the existing equalisation mechanism does not fully comply with the Charter, since the mechanism should work for the benefit of weaker local authorities and Georgian authorities should be encouraged to further elaborate the equalisation formula and monitor the effects of its implementation upon regional and intermunicipal disparities.

The rapporteurs are of the opinion that the situation in Georgia only partially complies with the Article 9, paragraph 5 of the Charter.

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.

According to information provided by the ministry of finance, up to 85% of local authority revenues come from own revenues, including an equalisation transfer. Without an equalisation transfer this figure is 56%. Local authority tax revenues constitute 34% of total local authority revenues, while other revenues amount to 16% of total local revenues. Municipalities’ revenues cannot determine local tax rates (property tax) but they are allowed to determine the rate within the limits set by the Tax Code of Georgia. The figures shown are for the total of all local authorities, but the picture could be different in a specific municipality. Some municipalities do not benefit from equalisation transfers since their tax revenues are high enough, whereas other municipalities depend almost fully on equalisation transfers.

The rapporteurs therefore conclude that Georgia complies with Article 9, paragraph 3, of the Charter.

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 the legislation, local government revenue includes own receipts and transferred funds. Own receipts include local taxes and duties, an equalisation grant and other revenues provided to the local self-governing unit. The transferred funds include capital transfers, special transfers and targeted transfers, loans and the grants obtained according to the Law of Georgia on Grants. The legislation provides the right of self-governing units within their powers, to use their own receipts at their discretion.

There has been an increase in municipalities’ budgetary revenues since 2013, which is a positive development.

However, a large part of these revenues continues to come from the central authorities by means of transfers. Between 2013 and 2017, the share of grants received from the central budget made up 49.7-47.7% of total revenues. Today, the main legal debate concerns the Budget Code of Georgia. Since 2016, the Government of Georgia has begun the decentralisation of property income tax (PIT). At the initial stage of the reform, the PIT paid by individual entrepreneurs was assigned to local budgets. Moreover, according to a new reform strategy announced in March 2018 by the prime minister and the speaker of the parliament, local budgets should amount to at least 7% of gross domestic product (GDP) (considered to be a minimum threshold based on practice in other European countries) before the end of the upcoming reform period 2018-25. According to local interlocutors, this strategy requires changes to the Budget Code of Georgia and to sectoral legislation.

In 2017, municipalities received total tax revenues amounting to GEL 559.5 million, which is GEL 269 million more than in 2015. The increase was caused by amendments made to the Georgian Budgetary Code. In particular, since 1 January 2016, the following taxes provide revenue for the budgets of local authorities: income tax paid by private individual entrepreneurs; income tax paid by non-residents (income from property sales); income tax paid by natural persons on the surplus from the sale of material assets; income tax payable by natural persons on gifted property; income tax paid by natural persons on inherited property; and income tax paid by natural persons on rented property. Municipalities’ revenues from the various types of income tax described above amounted to GEL 245.4 million in 2016 and decreased to GEL 162.3 million in 2017. Because revenue from these taxes was passed on to municipalities, local authorities have received smaller equalisation transfers from the State central budget as a result. In 2015, equalisation transfers from the central State budget amounted to GEL 834.6 million, while this figure decreased by GEL 234.9 million in 2016 and by GEL 179.5 million in 2017.

Among the existing tax revenues of municipalities, property tax has played an important role as it has brought increased revenue for local budgets. The amount of property tax revenues amounted to GEL 397.2 million in 2017, which is GEL 33.8 million more than in 2016 and GEL 107.6 million more than in 2015. Besides this growing trend, there is room for increasing tax revenues even further. There are, however, significant obstacles that would first have to be removed, such as existing tax privileges for certain categories (for example, owners of agricultural land who owned their land prior to 2015 and natural persons whose income is less than GEL 40 000 per year are exempt from paying property tax) and other problematic regulations (for example, the value of real estate on which property tax is paid is determined by the taxpayers themselves, while local authorities are given no information on property and income taxes paid by legal entities and natural persons).

As for non-tax revenues (consisting primarily of property-related income and fees), their share in the revenues of local authorities’ budgets is considerable: 17% in 2015, 15% in 2016 and 19% in 2017. It has to be pointed out, however, that in the case of community municipalities, both tax revenues and non-tax revenues are meagre; only large towns achieve a meaningful level of revenues.

Fiscal decentralisation remains one of the most important concerns in relation to the local self-governance system in Georgia. The ratio between the revenues of municipalities and those of the State decreased between 2015 and 2017: from 23.4% in 2015, to 22% in 2016 and 20.1% in 2017. The share of municipal budget revenues (except for Tbilisi) in relation to Georgia’s GDP is still low, amounting to 3.16% in 2015, 3.21% in 2016 and 3.06% in 2017.

Municipal property (Article 104 of the Code) also constitutes an important asset for the financial autonomy of municipalities. According to the National Agency of State Property, 1 335 real estate objects were transferred into the ownership of municipalities in 2016 and 1 038 in 2017. In general, proper evaluation of property transferred to local self-governments presents a significant difficulty because its market value is not being established. The ministry of economy and sustainable development does not have this information, even though it is directly responsible for the process of transferring property to local authorities. Moreover, central authorities have not yet fully implemented the decentralisation of land, water, forest and natural resources, although according to Article 107 of the Code, such property existing in the territory of a municipality shall be assigned to the municipality. Until now, the central authorities have not managed to fulfil their obligation under Article 165 of the Code of Local Self-Government to develop, by 1 January 2016, a bill defining local natural resources, including water and land.

Municipal expenditure amounted to a total of GEL 1 813 million in 2017, which is GEL 24 million less than in 2016 and GEL 66 million less than in 2015. In recent years (including in 2017), municipal expenditure mostly related to the areas of economic activity (23%), housing and utilities (19%), education (14%) and other general services.

“State services of general purpose” includes administrative costs and costs for the maintenance and operation of self-governing bodies; the total cost amounted to GEL 245.9 million in 2017, which is GEL 23 million less than in the previous year and only GEL 4.3 million less than in 2015. It should be pointed out that this figure is relatively high in small municipalities.

The budgetary system in Georgia is based on the principle of independence. Municipalities enjoy independence in formulating their budgets and in redistributing and allocating resources. According to Georgia’s Budgetary Code, local authorities should have been drawing up their budgets using the “programme budgeting” format since 2012. Budget performance is managed through electronic public finance management systems. All accounts relating to the municipalities’ budgets appear in the State treasury system of accounts, and central government has real-time information on the status of local authorities’ budgets. Procurements are also managed through a centralised e-procurement system.

However, information on objectives, tasks and expected outcome indicators are still not clearly defined or are simply missing from municipal budgets, although these data should serve as a basis for local self-governments to make decisions on how to distribute their financial resources. According to critical comments made during the monitoring visit, this situation also creates problems for financial reporting and transparency and discourages citizen involvement in the budgeting process.

Concerning compliance with Article 9, paragraph 1, there is no doubt that impressive progress has been made in recent years. A system of local revenue has been developed and municipalities can freely dispose of the biggest part of this revenue. Georgia therefore complies with Article 9, paragraph 1, of the Charter; however, the rapporteurs encourage the Georgian authorities to move forward with further financial decentralisation.

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.

As already shown in the analysis of the financial situation of municipalities, Georgian local government has different and diverse sources of revenue, including many different types of taxes. Although Georgia therefore complies with Article 9, paragraph 4, of the Charter, the rapporteurs would nevertheless encourage the Georgian authorities to move forward with the “municipalisation” of immovable property and natural resources that would certainly enlarge and further diversify the financial basis of local government in Georgia, which is a fundamental prerequisite for local autonomy.

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.

Intermunicipal co-operation is gradually emerging in Georgia. In July 2015, the Code empowered municipalities to establish joint enterprises, and local authorities have started to come forward with initiatives for such collaboration. For example, the city of Zugdidi and the community of Zugdidi have been successful in continuing a joint waste management enterprise, even though the municipality was split in 2014. Other self-governing units have established regional development agencies that are still operating in some regions (Mtskheta-Mtianeti, 2016).

Three municipalities in the highlands of the Autonomous Republic of Adjara established a joint municipal services development centre in 2017 and the centre has already obtained its first funding from the European Union in order to improve solid waste removal services.

Article 21 of the Code provides municipalities with the right to implement joint activities and to establish joint entities for the provision of services and implementation of projects. However, according to interlocutors from the Tbilisi Government, a number of changes are needed in sectoral legislation in order to allow municipalities to allocate financial resources for joint projects and shared infrastructure.

Article 76, paragraph 3, of the amended constitution (2018) provides that: “a self-governing unit shall be entitled to co-operate with other self-governing unit[s] to exercise its powers according to rule prescribed by the organic law”.

Georgia therefore complies with Article 10, Paragraph 1, of the Charter. However, the Georgian authorities should be encouraged to further elaborate the legal framework, especially concerning sectoral laws, in order to facilitate and promote intermunicipal co-operation.

Article 10.2

Local authorities' right to associate - Non 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.

Article 76, paragraph 3, of in the constitution provides that: “a self-governing unit shall be entitled to join unions of self-governing units in accordance with the organic law”. The right of local self-governing units to associate is also guaranteed by Article 20 of the Code of Local Self-Government. It allows local self-governing units to establish a union (association) in the form of a non-commercial legal entity for the purpose of co-ordinating their own activities. Such unions are authorised to participate in the decision-making process and conduct consultations with the State authorities, and also to review draft laws and other projects. They are also entitled to join international associations of self-governing units. NALAG is recognised as the national association of Georgian local self-governing units. It renewed its political leadership following the local elections in 2014 and another transfer of power took place after the 2017 local elections. The current president of NALAG is the Mayor of Tbilisi, but NALAG has a multiparty executive board and its membership is formed on the basis of regional representation.

NALAG has concluded a memorandum of understanding with the Georgian Parliamentary Committee on Regional Policy and Self-Government and also with the Georgian Ministry of Regional Development and Infrastructure. The association is actively involved in discussions on any matter that has direct influence on local government. During the presentation of the new decentralisation strategy, the Government of Georgia stated that NALAG will be a key partner for the government during implementation of the next stage of decentralisation in Georgia.

Georgia therefore fully complies with Article 10, paragraph 2, of the Charter and could ratify the relevant provision.

Article 10.3

Local authorities' right to associate - Non 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.

In principle, Georgian municipalities are allowed to co-operate with foreign municipalities without a need of national government’s approval. Approval from the Government is needed only if this cooperation involves reception of a grant and if this grant is not part of an intergovernmental agreement between the Georgian State and a foreign State (or an international organisation). Concerning the Additional Protocol to the European Outline Convention on Transfrontier Co-operation between Territorial Communities or Authorities, Georgian interlocutors were rather cautious. The Georgian side closely connects this issue with the restoration of Georgia’s territorial integrity and realisation of the principles of the European Charter of Local Self-Government in Georgian territories which are not currently under the control of the Georgian Government, and where foreign troops are present without its consent.

The second issue is the exact demarcation of the State borders. Georgia officially left the Commonwealth of Independent States (CIS) in 2009 and the process of demarcation of State borders with CIS member States (Russia, Armenia and Azerbaijan) has not yet been completed. Georgian interlocutors pointed out that before the ratification of any international legal act on transfrontier co-operation, those frontiers must be physically and legally defined. The process of demarcation of the State borders with Armenia and Azerbaijan is in progress; all remaining difficulties are technical in nature and so this process may be expected to end successfully in the near future. According to the Congress delegation’s Georgian interlocutors, Georgia is committed to ratifying the additional protocol to the outline convention. However, continuing occupation of parts of Georgian sovereign territory and the on-going process of demarcation of borders with CIS member States means that the process of ratification can move only slowly.

Georgia complies with Article 10, paragraph 3, of the Charter.

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.

A major guarantee for the legal protection of each local self-governing unit is provided by the constitution. Article 60, paragraph 4, of the constitution entitles a local authority to have access to judicial remedy, namely to apply to the Constitutional Court if a decision by a State agency has infringed on the powers and competencies prescribed to local authorities by law. The Code, too, provides that a municipal Sakrebulo (council) may, in accordance with Georgian legislation, file an appeal with the Constitutional Court of Georgia requesting a review of the constitutionality of normative acts. Furthermore, according to Article 7, paragraph 4, of the Code, a municipality may appeal to a court in respect of those administrativelegal normative acts and actions that restrict the exercise of local self-government powers provided for by law. Finally, according to the Code (Articles 132,135 and 136), any decision on the legal compliance of any normative act adopted by a self-governing body within its exclusive competences shall be taken by judicial authority, and such decisions may be appealed to a court of higher instance. Within the area of its delegated competences, every self-governing authority is entitled to challenge a decision of the State supervisory body before a court.

In view of this legal framework, Georgia fully complies with Article 11 of the Charter.

ACCESSION

to the Council of Europe 27 April 1999

RATIFICATION

of the European Charter of Local Self-Government 8 December 2004

CONSTITUTION | NATIONAL LEGISLATION

24Ratified provision(s)

0Provision(s) with reservation(s)

6 Non ratified articles

27Compliant Provision(s)

2Partially Compliant Articles

0Non-compliant Article