Scenario 3: Setting up of an Intermunicipal Association
1. INTRODUCTION TO LOCAL GOVERNMENT SYSTEMS IN BOSNIA AND HERZEGOVINA
1. INTRODUCTION TO LOCAL GOVERNMENT SYSTEMS
Bosnia and Herzegovina has two local government systems, one in the Republika Srpska (RS) and one in Federation of Bosnia and Herzegovina (FB&H). The Repub-lika Srpska is a centralized entity with 63 local government units while the Federation is a decentralized entity with 10 cantons and 80 local government units. Cantons are not another level of local government but rather political and territorial units with pronounced state-like features.
The differences between the municipalities in Republika Srpska are immense, just as are the differences between the municipalities in the Federation of Bosnia and Herzegovina (Zlokapa et al., 2008). Municipalities differ in terms of territorial size, population, development, employment rate, number of large and profitable companies, number of pupils, students and citizens with university degrees, etc.
Table 2.1
Municipalities in the Republika Srpska and the Federation of Bosnia and Herzegovina by Area
Municipalities with territory size Republika Srpska Federation of Bosnia and Herzegovina
up to 200 km2 20 27
up to 100 km2 10 13
from 100 to 200 km2 10 14
from 200 to 500 km2 21 36
200 to 300 km2 9 17
from 300 to 400 km2 7 15
400 to 500 km2 5 4
exceeding 500 km2 21 15
from 500 to 600 km2 5 6
from 600 to 700 km2 6 0
from 700 to 800 km2 3 3
from 800 to 900 km2 4 0
from 900 to 1,000 km2 0 3
exceeding 1,000 km2 3 3
Source: Republika Srpska Statistical Office and Federation of Bosnia and Herzegovina Statistical Office.
Table 2.2
Municipalities in Republika Srpska and the Federation of Bosnia and Herzegovina by Population
Municipalities with population size Republika Srpska Federation of Bosnia and Herzegovina
up to 1,000 inhabitants 4 1
from 1,000 to 5,000 inhabitants 12 10
from 5,000 to 10,000 inhabitants 7 5
from 10,000 to 25,000 inhabitants 23 31
from 25,000 to 50,000 inhabitants 10 19
from 50,000 to 100,000 inhabitants 4 9
exceeding 100,000 inhabitants 2 4
Source: Republika Srpska Statistical Office and Federation of Bosnia and Herzegovina Statistical Office.
When considered spatially and demographically, the current territorial organization of local government units demonstrates a significant discrepancy between geographic and demographic size (Bijelic et al. 2008). Primarily, this imbalance is the consequence of the war (1992–1995) and established inter-entity lines that have created 30 new municipalities (18 of them in the Republika Srpska and 12 in the Federation of Bosnia and Herzegovina). According to data from 2007, the difference between the largest and smallest municipality in the Republika Srpska is 49 times taking into consideration ter-ritory and 6,343 times taking into consideration population. The difference between the biggest and smallest municipality in the Federation of Bosnia and Herzegovina was 116 times taking into consideration territory and 203 times taking into consideration population. In all cases, the differences are between municipalities that existed before 1992 and newly established municipalities. Municipalities next to inter-entity borders are characterized by small territorial and demographic size, and a low level of socio-economic development. Out of 18 newly established municipalities in the Republika Srpska, 16 of them fall into categories of underdeveloped and extremely underdeveloped municipalities according to the classification in 2008.3 The same situation exists in the Federation of Bosnia and Herzegovina.
However, all municipalities within the Republika Srpska and within the Federation of Bosnia and Herzegovina have the same responsibilities (Zlokapa 2008). Local self-government legislation4 does not distinguish among municipalities in terms of their abilities, regardless of the size and economic power of the municipality, the degree of urbanization, or any other important feature. Entity laws on local government make a distinction between municipalities and cities, but still accord them the same responsi-bilities. All local government unit responsibilities can be divided into two categories:5 regulatory and service provision duties. The tables below show local government duties
established by laws on local self-government units in the Republika Srpska and the Federation of Bosnia and Herzegovina.
Table 2.3
Regulatory Competences in Republika Srpska and the Federation of Bosnia and Herzegovina
Regulatory competences Republika Srpska Federation of Bosnia and Herzegovina Entity
level
Local government
Cantonal level
Local government
Adopting local government budget, development program, spatial, urban and regulation plan, as well as other policies related to municipal tasks and in accordance with the law
— x — x
Establishment of municipal bodies, organization of services and their coordination
— x — x
Collection, collection control and enforcement when collecting the munici-pality’s original revenue
— x — x
Adopting regulations on taxes, fees, duties and tariff s under the duties of the local government unit
— x — x
Establishing and carrying out inspections, surveying the implementation of regulations under the responsibilities of the local government unit
— x — x
Determining policies for managing natural resources in the local government unit and distributing the income from their use
x x — x
Determining the policies and fees for the use of public goods
— x — x
Devising and implementing policies of disposal, use and management of construction sites
— x — x
Organizing the communal police — x — x
Table 2.4
Service Provision Responsibilities in Republika Srpska and the Federation of Bosnia and Herzegovina
Service provision competences Republika Srpska Federation of Bosnia and Herzegovina Entity
level
Local government
Cantonal level
Local government
Education—preschool x x x x
Education—primary and secondary x x x —
Education—higher x — x —
Public administration x x x x
Police x — x —
Civil protection — x — x
Firefighting x x — x
Civic affairs registry x x — —
Healthcare centers x x x x
Centers for social work — x x x
Geriatric centers — x — x
Theaters and galleries x x x x
Sport and culture halls — x x x
Water supply — x — x
Gas supply x x x x
Heating — x — x
Sanitation — x — x
Waste disposal — x — x
Local and uncategorised roads and streets — x — x
Cemeteries — x — x
Protection of environment — x x x
Public transportation (local) — x — x
Trade and tourism x x x x
Crafts — x — x
Water management x — x —
Employment x x x x
Local media (newspaper, radio, TV) x x x x
As can be seen from the previous tables, laws entrust local government units with many and quite important authorization abilities. Laws also allow local governments to deal with other issues of local importance that are not excluded from their jurisdiction and are not entrusted to another level of government. This is completely in line with the European Charter on Local Self-Government, since the laws are formulated in line with this European document, which was ratified by Bosnia and Herzegovina in 2002.
The Laws on Local Self-Government in the Republika Srpska and the Federation of Bosnia and Herzegovina explain some municipal capacities in detail, while for others it merely invokes other laws pertaining to their fields and determines municipal abilities.
Almost 100 laws in the Republika Srpska and the Federation of Bosnia and Herzegovina regulate the work of the municipal administration (Miovcic 2008).
The duality of local government systems in Bosnia and Herzegovina, coupled with problems of territorial division among both entities, are partly the consequence of the capacity of local government policy makers. The central policymaking body in the Republika Srpska is the Republika Srpska Ministry for Administration and Local Self-government and has generally weak capabilities for coping with vast problems related to local self-governance.6 The situation is even more problematic in the Federation of Bosnia and Herzegovina where there is no formal structure within the administration responsible for local government issues and policies. Within this entity, local govern-ment framework policies are given responsibility under the Federation of Bosnia and Herzegovina’s Ministry of Justice, with every canton having one or two people within their administrative structure responsible for local government (cantonal ministries of justice and/or general administration).
1.2 Weak Economic Position Concerning the Scope of Local Duties The territorial organization and consequential distribution of state and society func-tions have a major influence on the economic position of a particular level of authority (Draganic et al. 2008). Since Bosnia and Herzegovina has four levels of authority (state, entity, cantonal—in Federation of Bosnia and Herzegovina—and local), the position of local self-government units in this context is not surprising at all. According to the data set forth in the next table, it is evident that the allocation of public expenditures for local government are significantly lower in Federation of Bosnia and Herzegovina than in Republika Srpska (2.27 percent as compared to 7.28 percent of the respective entity’s gross domestic product in 2006 and 7.64 percent to 4.33 percent in 2007). At the same time, the allocations for the middle level of authority (entity and cantonal level in Federation of Bosnia and Herzegovina, and entity level in Republika Srpska) are lower in Republika Srpska than in Federation of Bosnia and Herzegovina.
Table 2.5
Distribution of Public Expenditures in Bosnia and Herzegovina in 2006 and 2007
In percent GDP B&H In percent GDP RS In percent GDP FB&H
2006 2007 2006 2007 2006 2007
Municipalities in FBiH 1.56 2.72 — — 2.27 4.33
Municipalities in RS 2.73 2.65 7.28 7.64 — —
Total municipalities in BiH 4.29 5.37 — — — —
Cantons in FBiH 8.49 8.57 — — 12.34 13.64
Entity FBiH 5.45 7.70 — — 7.92 12.26
Funds FBiH 9.64 9.02 — — 14.00 14.37
Entity RS 6,31 6,75 16.83 19.50 — —
Funds RS 4.92 3.62 13.12 10.47 — —
BiH level 4.84 4.92 — — — —
Brčko District 0.98 1.25 — — — —
Total 45.00 47.19 39.84 37.61 36.53 44.60
Source: Data on public spending in 2006 and 2007 for all levels of authority (Bosnia and Herzegovina Central Bank, Directorate for Economic Planning, Ministries of Finance, Macroeconomic Analysis Unit).
The share of local government unit expenditures as part of gross domestic product (GDP) of Bosnia and Herzegovina (4.29 percent in 2006 and 5.36 percent in 2007) is extremely low compared to other countries in Europe (see Table 2.6).7
Table 2.6
Local Government Expenditures in Percent of GDP in 2006
Euro 25 Euro 15 Denmark Czech Rep France Germany
Percent of GDP 11.5 11.5 33 11.9 11.1 7.2
Source: Eurostat statistics.
The revenues structure of local government units in the Republika Srpska is such that approximately two-thirds of local government unit revenues come from taxes (particularly significant is the component of indirect taxes) whereas one-third comes from non-taxation revenues (including grants).8 According to the Law on Budgetary System of Republika Srpska,9 local government units receive: 24 percent of revenues from indirect taxes that are attributed to the Republika Srpska, 25 percent of income tax, 70 percent of fees charged for re-categorization of agricultural land, 70 percent
of fees charged for utilization of minerals, 30 percent of repossessed property and resources from sales within the capacities of the republic’s market inspectorate, as well as other revenues from donations and other business activities according to relevant regulation.
The revenue structure for local government units in the Federation of Bosnia and Herzegovina is such that approximately half of all local government unit revenues come from taxes (particularly significant is the component of indirect taxes) whereas the other half comes from non-taxation revenues (including grants and other revenues).10 Ac-cording to the Law on the Origin of Public Revenues,11 local government units receive 8.42 percent of revenues from indirect taxes that are attributed to the Federation, at least 28.5 percent from income taxes, 100 percent of fees for construction, and other fees according to relevant regulation.
The current financial position of local government units is generally weak, especially in municipalities with a small number of inhabitants where all local government rev-enues in the form of local taxes (consumption taxes, property and income taxes), and various administrative and utility levies are just sufficient to cover current administra-tive costs (employees’ wages and material costs). In these municipalities, the provision of communal services is completely neglected—an extension of the poor condition in communal infrastructure. In the economic literature, it is diversely claimed that the number of inhabitants is the decisive criterion for determining the optimal size of a local administrative body (Steiner 2003). However, this is not the case in Bosnia and Herzegovina, where numerous duties require that even small municipalities provide the conditions for various services. The investments and maintenance of infrastructure depends primarily on larger grants for the improvement of conditions in this field. It is very difficult to quantify how many municipalities adhere strictly to the law in fulfilling their duties, but the general impression is that most municipalities adapt their opera-tions to the means at their disposal and the situation “in the field.” Thus, it happens that even the richest and most developed municipalities fail to meet all the legal standards in providing certain services, while the poorest and most underdeveloped fail to provide these services entirely.12
1.3 The Shadow of Centralization Hovers above Local Communities One of the most noticeable characteristics of the local government system in Bosnia and Herzegovina is the considerable tendency of local units to orient themselves toward mid-level state organization: the entity authorities in Republika Srpska, and the can-tons in Federation of Bosnia and Herzegovina (Zlokapa 2007). In centralized political systems, the state has a monopoly over a lot of information and activities, which links all the parts of the system to the state center and makes them dependent on this center.
Traditionally, for centuries now, the political system in Bosnia and Herzegovina has been constructed in the manner of a strict and thorough centralization, so the central-ist tendencies of today can partly be traced to this hcentral-istorically acquired predisposition.
Although the system was radically decentralized by the Dayton Agreement,13 central-ism remained rooted in key areas of the system. Local communities greatly depend on the assistance of upper levels, which is why they subordinate all other relationships to their relationship with the state. The municipality finds it simplest to maximize its relations with the state by reinforcing its position within the centralized system. Under such circumstances, intermunicipal cooperation is the exception, not the rule. Previous studies on the priorities of the municipal mayor (Zlokapa et al. 2007) have shown that after maintaining good relations with upper levels, mayors feel the need to devote their energy to local inter-party and intra-party struggles for power and prestige. Efforts to strengthen the capacities of the municipality as a whole and improve the quality of services for citizens are third or fourth on most mayors’ lists of priorities.
1.4 Intermunicipal Cooperation Prior to the 1990s
There are still examples of functional linking that testify to the fact that cooperation can occur when there is a concrete interest for it even in the previous communal model of local government organization. IMC was often established for the purposes of water supply since some municipalities in the Bosnia and Herzegovina did not have their own water systems, so they latched onto the water systems of neighboring municipalities that had better water sources, better distribution and higher flow rates in their water system. Unfortunately, these were only sporadic cases, since most municipalities insisted on constructing a local water supply system (Zlokapa 2007).
The reasons for such municipal behavior were seen in the communal model of local governments in former Yugoslavia, where frequent territorial merging led to the attempt to create an optimally sized municipality that would provide all communal services (Draganic 2008). The prototypical local government unit14 structuring was justified with the argument of economies of scale (provision of cheaper services with given investments) for all services provided by the local government. This meant that efforts had been made to find an adequate territorial organization and the distribution of responsibilities that would improve all the activities entrusted to the local government.
Development of Bosnia and Herzegovina’s local government territorial organization during the period between 1952–2007 is shown in the Table below.
Table 2.7
Development of Territorial Organization in Bosnia and Herzegovina from 1952
Year Area (km2) Population Number of municipalities
Average area of municipality (km2)
Average population of municipality
1952 51,221* 2,791,000** 418 122.54 6,677
1962 51,197 3,336,000** 122 419.65 27,344
1991 51,197 4,377,033 109 469.70 40,156
2007 51,197 3,873,000 142*** 360.54 27,275
Source: Correction or remodeling, EDA Banja Luka 2008.
Notes: * Bosnia and Herzegovina area in 1953
** Population, midyear—estimate *** includes Brcko District
2. THE CULTURAL, LEGAL, AND ECONOMIC ASPECTS OF