Hungary's government approves bill restricting municipality financing.

By bne IntelliNews November 7, 2011
Hungary's government has approved a bill envisaging financing for the local councils only on tasks that are not covered by the central government, BBJ online reported, quoting state secretary Andras Tallai. The bill aims at making more transparent the work of municipalities and dividing the responsibilities of the central and local governments. In another bill, approved earlier this year, the government transferred some of the municipal tasks to the state. As a result local councils will control pre-school education and basic medical care, while the central government will be responsible for part of the administration, peoples' protection in case of catastrophe, fire departments, etc. Under the new bill only communities will more than 2,000 residents will have independent local governments, the others will have to unite with neighbours. The new task-based funding will become effective as of January 1, 2013. At the same time, since the beginning of 2012, the conditions for issuing municipal bonds and other kinds of local council borrowing will be tightened. Thus local governments will undertake only those tasks that they can pay for and the indebtedness of the sector will fall.

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