WHY, HOW, AND HOW MUCH CZECH MUNICIPALITIES COOPERATE The law on municipalities defines three forms of IMC: contracts, mutual legal entities,

An interesting issue is the regulation of the property of a VMA, as the law prohibits transfer of property from a municipality to a VMA. VMAs can only act as managers of this property. Despite this regulation a VMA can have property. Based on Vedral (2001) we can distinguish two sources of VMA property: property gained through the VMA’s own activity regardless of the time of acquisition, and property received from its member municipalities before 2001.

The regulation of VMA property may also complicate its activity. Vedral et al. (2008:

285) describe how the regulation of VMA property can limit the potential of the VMA.

For example, one municipality places property in the care of a VMA; according to the law the municipality remains the owner of that particular property. Then if the VMA appreciates this property through an investment, the municipality freely collects this appreciation from the costs of other partnering municipalities.

The monitoring and evaluation of VMA activities suffers the same problems as the monitoring and evaluation of municipal activities. The legal requirements ensure procedural control (i.e., legal compliance); however, the outcome-based control is missing. Especially regarding the VMA there remains an important element of external monitoring and evaluation realized by the grant providers, who require fulfillment of the conditions associated with a particular grant.

4. WHY, HOW, AND HOW MUCH CZECH MUNICIPALITIES COOPERATE

other municipalities with which they had recently been part of the same municipality.

The quite general legal regulation valid in the 1990s enabled the formation of many IMC initiatives. Since the end of the 1990s, support from EU pre-accession instru-ments and structural funds has grown gradually and it has became popular belief that bigger projects are more likely to be supported. This was an important impulse for the formation of many VMAs.

Gavlasová et al. (2007: 61) list these main reasons for intermunicipal cooperation:

the sharing of experience, technical cooperation, and the matching of financial resources and savings. In general, conducted interviews show that most IMC networks expected that they would be able to attract resources that single municipalities would never receive.

This expectation was stronger in direct relation to how less specific (or more general) the IMC purpose was. Of course, in each case there are specific motives for cooperation (see section 6 and the Appendix to this chapter), which allow justification of IMC formation.

The availability of aggregated, nationwide information differs considerably among different types of IMC networks. While we can easily get a full list of registered (both active and extinct) VMAs, to obtain a list of the remaining two types is impossible. In the instance of single municipalities, we can easily find lists of municipal-owned trading companies (in the trade register); however, tracking down the co-owners is challenging work. Based on the trade register, municipalities (as owners) are involved in about 2,400 trading companies. Obtaining information on these individual contracts would require direct communication with each individual municipality.

All the VMAs are registered and thus included in the ARES (Administrative Registry of Economic Subjects, provided by the Ministry of Finance, in cooperation with the Czech Statistical Office). Based on this registry, there were 811 active and 106 already dissolved VMAs, by November 22, 2008. The Ministry of Finance runs the ARIS (Au-tomated Budget Information System) which records VMA financial statements. The statements of 899 VMA are found in ARIS, including statements of some dissolved VMAs. Out of them, 707 include all relevant years. The ARIS also includes statements from 54 municipal associations with varying legal statuses; however, the number of these associations gradually decreases among the records.

The records of microregions are even more fragmented. The Institute of Spatial Development (which belongs to the Ministry of Regional Development) kept a registry of microregions between 2000 and 2005, when individual regions overtook the agenda.

The Czech Statistical Office (its regional offices) publishes information on microregions gained from individual regions. Based on this data, there were 533 microregions in January 2007, out of which about 60 had a legal structure other than a VMA.

A random cross check of various easy explanations did not lead to any simple con-clusion: The VMAs which are not microregions have been founded continuously since 1993; they are active at least to the same extent as the microregions and some of them are not even single-purpose organizations.

A consequent problem with exploration of VMAs comes from the fact that these associations are voluntary, so while they seem stable based on the number of VMAs, the contrary is true. Changes in the membership of VMAs are frequent and information from different sources may differ (see also Ryšavý 2006). The founding municipalities of a VMA are listed in its status; however, the Law on Municipalities does not require amendment of the status when and if membership changes.

All the information presented below is based on an inquiry of a sample of VMAs for which data was available regarding particular characteristics.

It is very difficult to estimate IMC volume and especially the volume of expen-ditures realized through IMC. Based on a detailed exploration of the data available from municipal statements, we can label IMC associated expenditures as transfers and loans to VMAs, other municipalities, and budget organizations established by other municipalities. The picture is distorted by the fact that it is not possible to get information on the volume of services contracted out and especially contracted out to joint companies.

Table 3.5 shows the expenditures of municipalities and VMAs for six functional areas. The first column shows total municipal expenditures. The second column shows transfers and loans to other municipalities. In total they account for three percent of municipal expenditures. Unfortunately from the data available we can only partly link these expenditures to their purpose: 628 million CZK were used as contributions on obligatory education for children frequenting school in another municipality (part of the services for inhabitants), 670 million of administration expenditures were loans, 707 million went to non-specified financial operations, and 997 million were spent on other non-specified activities.

Data in the third and fourth column show the transfers and loans to VMAs and budget organizations established by other municipalities. The loans to both the VMAs and organizations are negligible. The current transfers to VMAs are directed mostly to public transport (CZK 55 million), communal services and spatial development (CZK 55 million), local administration (CZK 45 million), drinking water (CZK 21 million), sewage (CZK 31 million) and tourism (CZK 11 million). Capital transfers are allotted for sewage (CZK 284 million), drinking water (CZK 107 million), communal services and spatial development (CZK 32 million), roads (CZK 20 million), and housing (CZK 10 million). In the area of budget organizations the capital transfers concerned mostly roads (CZK 65 million) and hospitals (CZK 20 million), while the current transfers concerned healthcare (CZK 53 million), education (CZK 33 million), culture (CZK 23 million), and sport (CZK 21 million).

Data on expenditures of VMAs in the fifth column are shown for comparison only and are analyzed in greater detail later.

Table 3.5

Expenditures of Municipalities and VMAs (2007, CZK Millions)

Municipality (1)

Transfers/

loans to other municip.

(2)

Transfers/

loans to VMA (3)

Transfers to org.

(4)

VMA (5)

Agriculture, forestry and fishery 1,586 4 0 0 6

Industry 57,231 46 550 88 3,403

Services for inhabitants 98,327 740 132 171 533

Social affairs 28,052 5 3 16 13

Public safety 6,712 23 0 2 1

Administration 49,669 2,493 105 2 194

Total 112,763 3,312 791 279 4,151

Source: ARIS, author’s calculations.

Note: Column (1) total municipal expenditures, (2) transfers and loans to other municipalities, (3) transfers and loans to VMA, (4) transfers to budget organizations established by other munici-palities, (5) total expenditures of VMA.

The data presented in Table 3.5 suggests that VMAs are used more for cooperation in the area of industry (i.e., physical infrastructure such as water, sewage, and transpor-tation) and that other forms of IMC are used for cooperation in the field of services for citizens (i.e., education or healthcare). Although the presented numbers do not give a complete picture of IMC, the data definitely shows the directions and also the methods of cooperation in the different fields.