The Decentralization Strategy drafted by the GED was based on the constitutional provision for local government and the European Charter of Local Self-government. Its intention was to combine Albanian traditions and the vision of local and central officials with the best international experience and models of democratic societies.
The drafting process brought together a variety of invested parties for discussion and consensus building, ranging from interest groups, political groups, local officials, parliamentarians, political parties and the government to NGOs, international donors and other foreign organizations.
The GED presented its first draft for public discussion and held a number of regional meetings to strengthen participation, foster a shared vision and create a sense of contribution among the principal players.
The final Decentralization Strategy was presented at the National Conference on Decentralization in November 1999 and subsequently was formalized by government decree. The result is an integrated policy document that sets out the long-term vision for local government in Albania, as well as the general goals and objectives of decentralization. The strategy proposes phased im-plementation of reform, identifies resources to be used and defines the roles of various actors.
According to the stated strategy, local government responsibilities are to be extended and harmonized with the necessary administrative, investment, financial and regulatory authorities.
The strategy also will be the guide for any subsequent reform directly linked to local government.
The Decentralization Strategy includes a detailed action plan for the implementation phase, which began with the drafting of the Law on Local Government Properties. The initial steps are continuing in the same spirit of cooperation and consensus building among the various actors.
However, the coming local elections and the tense political situation overall could create barriers to impede implementation.
Although the document cannot immediately change actual legislation or the practices of local governments, it does provide necessary coherence and continuity by mapping out the process through which decentralization will become a reality.
Table 2.12
Action Plan For Decentralization in Albania
PHASE I: IMMEDIATE REFORMS, TO BE ACCOMPLISHED BY JANUARY 2000
Immediate Reforms Improvement in local taxes/tariffs system on Local Financing Use of unconditional transfers
Package of Law(s) Law on Local Public Enterprises on Public Property Inventory of normative acts
PHASE II: THE FIRST YEAR, TO BE ACCOMPLISHED BY JANUARY 2001
Organizational Law(s) Study on organization and relation of levels of local on Local Government government
Performance monitoring study Law(s) on Local Finances Study on fiscal decentralization
Implementing Study on the transfer of local public property the Public Property Law
Setting up the Center Study on training assistance for Training and Information
Other Studies in Preparation Study on delegated functions for the Third Phase Study on local public services
Special studies on local police and civil protection Study on local staffing requirements
Study on methodology of assessing the progress of decentralization
PHASE III: THE SECOND YEAR, TO BE ACCOMPLISHED BY JANUARY 2002
Law on Urban Planning Reform and Law for Other Local Functions Law on Delegated Functions
PHASE IV: CONTINUING THE DECENTRALIZATION PROCESS BEYOND 2002
Assessment Complete assessment of the decentralization process, of Decentralization its successes, challenges and failures.
Further Laws and Actions Different studies and actions will be identified according to for Decentralization the needs and tendencies of decentralization.
Recent Publications on Local Government in Albania
Alternative Models for the Creation and Functions of Regions. ISB and Friedrich Herbert Foundation, 1999.
Alternative Models for the Governance of Tirana Municipality. Friedrich Herbert Foundation, 1999.
Citizen’s Charter on Local Government. ISB and ACCD, 1999.
Citizens’ Participation in Local Governance. Association for Democratic Culture, 1999.
“Decentralization and Local Autonomy,” in Human Development Report. UNDP, 1998.
Fiscal Decentralization in Albania. ISB, 2000.
Fundamental Human Rights and Local Governance. Albanian Helsinki Committee, 1999.
Improvement of Public Services at the Local Level. ACER (Albanian Center for Economic Research), 1999.
Legislation on Local Government. Ministry of Local Government, 1998.
The Local Government Unit: Political Versus Services Functions. Association of Cities and Community Development, 1999.
Methodical Guides for Local Governance (USAID Papa Project) (1997-2000).
National Decentralization Strategy. Urban Institute, 1999.
Opportunities and Issues on Municipal Reform. Urban Institute, 1998.
The Process of Decentralization and Strengthening Local Self-Governance. ISB (Institute of Contemporary Studies), 1998.
Public Procurement of Local Government. ACER, 2000.
The Self-Administration of Communes. Hans Ziedel Foundation, 1995.
Strengthening of Local Government and Citizen Participation. VNG, 1999.
Contacts for Further Information on Local Government in Albania
Ministry of Local Government
Address: Boulevard Dëshmorët e Kombit, Tirana, Albania Phone: (355-4) 233-540, -541, -542
Association of Municipalities
Address: Boulevard “King Zog First,” Tirana, Albania Phone/fax: (355-4) 357-606
Urban Institute
Address: Boulevard “Dëshmorët e Kombit,” Tirana, Albania Phone/fax: (355-4) 227-945
Friedrich Ebert Stiftung
Address: Rruga “Perlat Rexhepi” Nr. 12, Tirana, Albania Phone/fax: (355-4) 250-986
USAID, Public Administration Program in Albania
Address: Rruga “Murat Toptani” Nr. 25, Tirana, Albania Phone/fax: (355-4) 256-832, -833, -834
VNG, Association of Netherlands Municipalities
Address: Boulevard “King Zog First,” Tirana, Albania Phone/fax: (355-4) 357-603
OSCE Mission in Albania
Address: Rruga “Donika Kastrioti” Nr. 6, Tirana, Albania Phone/fax: (355-4) 240-001
Institute for Contemporary Studies (ISB)
Address: Rruga “Vaso Pasha,” Nr. 7, Tirana, Albania Phone/fax: (355-4) 234-868
Association for Democratic Culture
Address: Rruga “Vasil Ziu” Nr. 36, Tirana, Albania Phone/fax: (355-4) 230-350
Albanian Center for Economic Research (ACER)
Address: Rruga “Sami Frashëri”, Nr 20/1-B, Tirana, Albania Phone/fax: (355-4) 225-021
Association of Cities and Community Development (ACCD) Address: Gjergji Center, Tirana, Albania
Phone/fax: (355-4) 258-363, -361 Albanian Helsinki Committee
Address: Rruga “Sami Frashëri”, Nr 20/1-B, Tirana, Albania Phone/fax: (355-4) 240-891
Annex 2.1
Major General Indicators
Year of data 1996, or latest available
Size of territory 28,748 square kilometers
Population density 115 inhabitants per kilometer
Population 3,324,000
Pensioners 497,000
Retirement pensions 393,000
Invalid pensions 27,000
Family pensions 70,000
School-age children 738,021
Preschool 84,232
Elementary school 560,731
Middle school 93,058
Major ethnic divisions
Albanian 97 percent
Greek 1.8 percent
Per capita GDP 580 USD
GDP Current price Constant price
1995 184,393,000 13,331,000
1996 229,793,000 15,107,000
1997 280,998,000 16,482,000
Annual government budget Local budget expenses State budget expenses
1995 16,961,478 85,245,000
1996 19,281,878 77,134,000
1997 18,702,352 101,594,000
1998 19,997,372 163,570,000
Proportion of local budget expenses/GDP (%)
1995 9.19
1996 8.39
1997 6.65
Public debt 140 billion leks (roughly 1 billion USD)
Unemployment rate 14.9 percent
Inflation rate less than 10 percent
Annex 2.2
Population, Settlements and Administrative Units
Table 2A.1
Number of Settlements by Population Size Categories in Albania*
Population Size Categories Number of Settlements % Number of Inhabitants %
0–1,000 2,341 76.2 1,091,870 29.0
1,001–2,000 515 16.9 786,144 20.9
2,001–5,000 124 4.0 321,926 8.5
5,001–10,000 25 0.8 177,638 4.7
10,001–50,000 23 0.7 444,245 11.8
50,001–100,000 5 0.16 376,343 10.0
100,001–1,000,000 3 0.1 554,179 14.7
1,000,001+ — — — —
Total 3,036 100.0 3,752,345 100.0
Table 2A.2
Number of Municipalities by Population Size Categories in Albania*
Population Size Categories Number of Municipalities % Number of Inhabitants %
0–1,000 — — — —
1,001–2,000 11 2.9 18,928 0.5
2,001–5,000 131 35 580,800 15.4
5,001–10,000 152 40.6 1,107,348 29.5
10,001–50,000 71 18.9 1,038,959 27.6
50,001–100,000 6 1.6 452,131 12.0
100,001–1,000,000 3 0.8 554,179 14.7
1,000,001+ — — — —
Total 374 100.0 3,752,345 100.0
* These figures are based on an official publication of the Ministry of Local Government (January 1997), which confirms the data of the local civil registers and does not reflect changes from emigration (about 400,000 Albanians are living abroad) and internal migration.
Table 2A.3
Number of Local Governments at Different Levels in Albania
First Level Second Level
Communes Municipalities Districts
65 309 36
Table 2A.4
Administrative Division of Albania
Prefectures Districts Number of Municipalities Number of Communes
Berat Berat 2 10
Kuçovë 1 2
Skrapar 2 8
Dibër Dibër 1 14
Bulizqë 1 7
Mat 1 11
Durrës Durrës 4 6
Krujë 2 4
Elbasan Elbasan 3 20
Librazhd 2 9
Gramsh 1 9
Peqin 1 5
Fier Fier 3 14
Lushnje 2 14
Mallakastër 1 8
Gjirokastër Gjirokastër 2 11
Tepelenë 2 8
Përmet 2 7
Table 2A.4 (continued) Administrative Division of Albania
Prefectures Districts Number of Municipalities Number of Communes
Korçë Korçë 2 14
Pogradec 1 7
Kolonjë 2 6
Devoll 1 4
Kukës Kukës 1 14
Has 1 3
Tropojë 1 7
Lezhë Lezhë 1 9
Mirditë 2 5
Kurbin 2 2
Shkodër Shkodër 2 16
Pukë 2 8
Malësi e Madhe 1 5
Tiranë Tiranë 3 16
Kavajë 2 8
Vlorë Vlorë 4 9
Sarandë 2 6
Delvinë 1 4
Total 36 65 309
Average population in basic local governments 10,033 inhabitants Number of civil servants [in thousands]
Employed by state administration 14.6 Employed by local governments 7.1 Number of public employees [in thousands]
Employed by state administration 239 Employed by local governments n/a
Figure 2A.1
Administrative Map of Albania
1. Prefecture of Shkodra 2. Prefecture of Kukesi 3. Prefecture of Lezha 4. Prefecture of Dibra 5. Prefecture of Durresi 6. Prefecture of Tirana 7. Prefecture of Elbasan 8. Prefecture of Fieri 9. Prefecture of Berati 10. Prefecture of Korça 11. Prefecture of Gjirokastra 12. Prefecture of Vlora
1
1 1
3
3 3
3
2
2
2
4 4
5 4 5
6
6 7
7 7
7 8
8 8
9
9 9
10
10
10
10 3
11
11 11 12
12 12 12
Annex 2.3
Major Laws on Public Administration and Local Government
The following laws regulate public administration and local government in Albania:
• Law No. 7572, dt. 06/10/1992, “On the Organization and Functioning of Local Govern-ment”
• Council of Ministers Decision No. 441, dt. 08/15/1994, “Regulation of Responsibilities and Tasks of the Municipalities and Communes Administration”
• Law No. 7605, dt. 02/15/1992, “On the Subdivision of Territory in Municipalities and Communes and for the Organization and Functioning of the Municipality of Tirana”
• Council of Ministers Decision No. 434, dt. 10/12/1992, “On the Subdivision of Some Municipalities in Quarters and Fixing Their Numbers”
• Council of Ministers Decision No. 282, dt. 01/23/1995, “On the Election of the Village Dignitary (Kryeplak) and the Representatives of the Villages”
• Law No. 8095, dt. 05/15/1997, “On Civil Service (Public Administration) in the Republic of Albania”
• Law No. 8224, dt. 05/15/1997, “On the Organization and Functioning of the Police in Municipalities and Communes”
• Law No. 7608, dt. 09/22/1992, “On Prefectures”
• Law “On Urban Planning”
• Law No. 7776, dt. 12/22/1993, “On the Local Budget”
• Law No. 7777, dt. 12/22/1993, “On the System of Taxes in the Republic of Albania”
• Council of Ministers Decision No. 673, dt. 11/29/1995, “On Criteria for Using Independent Revenues of Local Authority Organs”
Annex 2.4
Responsibilities of Administrative Tiers
Table 2A.5
Specific Functions of Local Government Units in Albania
Functions All Regional Central Other Remarks
Municipalities or Urban or State Government Governments Territorial Format
Administration I . E D U C A T I O N
1. Preschool X
2. Primary X
3. Secondary X
4. Technical X
5. Staff Recruitment X
I I . S O C I A L W E L F A R E
1. Nurseries X
2. Kindergartens X
3. Welfare Homes X X
4. Personal Services X
for the Elderly and Handicapped 5. Special Services
(for the homeless, families in crisis, etc.)
6. Social Housing X X
I I I . H E A L T H S E R V I C E S
1. Primary Health Care X
2. Health Insurance X
3. Hospitals X
4. Public Health X
Table 2A.5 (continued)
Specific Functions of Local Government Units in Albania
Functions All Regional Central Other Remarks
Municipalities or Urban or State Government Governments Territorial Format
Administration I V. C U L T U R E , L E I S U R E , S P O R T S
1. Theaters X
2. Museums X
3. Libraries X X X
4. Parks X
5. Sports, Leisure X X
6. Maintaining Buildings X for Cultural Events
7. Cultural Centers X X X
V. E C O N O M I C S E R V I C E S
1. Water Supply X X
2. Sewage X
3. Electricity X
4. Gas X
5. District Heating X
V I . E N V I R O N M E N T, P U B L I C S A N I T A T I O N
1. Refuse Collection X X
2. Refuse Disposal X
3. Street Cleaning X
4. Cemeteries X
5. Environmental X X
Protection
V I I . T R A F F I C , T R A N S P O R T
1. Roads X X X
2. Public Lighting X
3. Public Transport X
Table 2A.5 (continued)
Specific Functions of Local Government Units in Albania
Functions All Regional Central Other Remarks
Municipalities or Urban or State Government Governments Territorial Format
Administration V I I I . U R B A N D E V E L O P M E N T
1. Town Planning X X
2. Regional/Spatial X X
Planning 3. Local Economic
Development X X
4. Tourism X
I X . G E N E R A L A D M I N I S T R A T I O N
1. Authoritative X X X
Functions (licenses, etc.)
2. Other State X X X
Administrative Matters (electoral register, etc.)
3. Local Police X X
4. Fire Brigades X X
5. Civil Defense X X X
6. Consumer Protection X X X
Local Government in Bosnia and
Herzegovina
by Charles Jokay
C h a p t e r 3
Local Government
in Bosnia and Herzegovina
Contents
1. Legal and Constitutional Basis ... 93 1.1 Brief History of Local Self-government in the 1990s ... 93 1.2 Territorial Structure ... 94 1.3 Levels of Self-government ... 96 1.4 Status of Cities and Capitals ... 98 1.5 Relationship between State Administration
and Local Government ... 98 1.6 Legal Reforms in Progress ... 100 2 . Local Politics, Decision Making ... 101 2.1 System of Local Elections ... 101 2.1.1 Background on Local Elections ... 101 2.1.2 Local Election Procedures ... 102 2.1.3 The 1997 Municipal Elections
in Bosnia and Herzegovina ... 103 2.2 Forms of Direct Democracy and Public Participation
in Decision Making ... 106 2.3 Internal Structure of Local Government Decision Making ... 106 2.4 Ethnic Issues, Multicultural Government ... 107 2.5 Local Government Associations and International Contacts ... 108 3. Local Administration, Service Provision ... 109 3.1 Structure and Operation of Local Administration ... 109 3.2 Control, Audit and Supervision of Local Governments ... 109 3.3 Local Service Delivery ... 111 3.4 Conclusions ... 113 4. Local Finance ... 114 4.1 Municipal and Canton Revenues ... 115 4.2 Municipal and Canton Expenditures ... 119
4.3 Municipal Expenditures in Republika Srpska ... 123 4.4 Local Taxation Potential ... 123 4.5 Municipal Borrowing and Other Issues ... 124 4.6 Specific Obstacles to Municipal Borrowing
and Local Economic Development ... 125 5. Next Steps in the Transition Process ... 126 Recent Publications on Local Government in Bosnia and Herzegovina ... 127 Contacts for Further Information on Local Government
in Bosnia and Herzegovina ... 128 Notes ... 130 References ... 132 Annex 3.1: Major General Indicators ... 134 Annex 3.2: Population, Settlements and Administrative Units ... 135 Annex 3.3: Major Laws on Public Administration and Local Government ... 137 Annex 3.4: Responsibilities of Administrative Tiers ... 138
Local Government
in Bosnia and Herzegovina
Charles Jokay
1. Legal and Constitutional Basis
1.1 Brief History of Local Self-government in the 1990s
The former Yugoslav Republic of Bosnia-Herzegovina disintegrated during the four years of war that culminated in the Dayton Agreement of October 1995. The Dayton Agreement estab-lished a cease-fire as well as demarcation lines and arranged for a new constitution and set of laws, essentially from a blank slate. The agreement gave the former Yugoslav republic a new name: Bosnia and Herzegovina, the name by which the United Nations (UN), the Organiza-tion for Security and CooperaOrganiza-tion in Europe (OSCE), the World Bank and other internaOrganiza-tional organizations refer to what is called “Bosnia” in common parlance.
The agreement as well as subsequent and continuing negotiations are to settle the repatriation of refugees representing displaced and ethnically cleansed persons of each ethnic group. No municipality, village, city or settlement in Bosnia at the end of 1999 had a truly permanent population, since refugees from the war have not all returned, the ethnic composition of most areas changed dramatically during the war, and repatriations cannot restore the status quo ante bellum for a variety of reasons. Bosnia’s prewar population was 4.5 million, of which 3 million had to leave their homes during the fighting. The population in 1999 was estimated at 3.5 million, with over 250,000 dead and the balance—nearly a million—as refugees throughout Europe. Bosnia’s civilian population distribution and composition is consequently in flux four years after the cease-fire. One difficulty facing the international community in supervising elec-tions is that only sixty percent of Bosnia’s population still resides where they were registered in 1991. Municipal elections were delayed several times and were hard to certify in the ethnically cleansed areas, where prewar electoral rolls were manipulated to mask the extent of ethnic cleans-ing. Displaced persons and refugees throughout Bosnia had to be accounted for and added to remote voters’ registers.
Very little remained of the former republic’s administrative structure in terms of personnel or facilities. Former municipal employees were subject to deportation, and municipal buildings,
The former republic was reconstituted as Bosnia and Herzegovina (the state, BiH) and contains two entities that are de facto the government and administrative organs with substantial powers to pass legislation, impose taxes and otherwise govern. The two entities, as they are called, are the Federation of Bosnia and Herzegovina (hereafter referred to as the Federation) and the Republika Srpska (RS) with a Serb-majority population. The state and federal capital is Sarajevo, and RS’s capital is Banja Luka. In addition to a federal-level government, executive and legisla-tive branches, the Federation contains ten subnational units called cantons, consisting of mixed (Bosniac and Croatian, with very small Serbian minorities in some locations) as well as predom-inantly Bosniac or Croatian cantons. (The generally accepted term for citizens of Bosnia and Herzegovina who are not Serbian or Croatian in ethnicity, but are not necessarily Muslim in religion, is “Bosniac” as distinguished from “Bosnian” which tends to be a political, citizenship-based designation). These cantons have their own legislatures, their own basic laws (constitu-tions), their own governors as well as ministries headed by ministers. In both entities
settle-ments are organized into municipalities that could consist of several distinct physical locations.
Mostar, Sarajevo and Banja Luka also have lord mayors and city-level administrations that operate often at the mercy of the many independent coterminous municipalities that make up these three large communities.
The state constitution delegates most powers to the two entities. The RS has a centralized administrative structure and an entity-level Ministry of Local Government to regulate and conduct dialogue with its sixty-four municipalities, while the Federation does not have such a ministry.
Financial and budgetary matters affecting municipalities in the Federation either are delegated to the cantons or are shared by several departments in the Federation’s Finance Ministry.
Instead, each of the ten cantons has, or should have passed by the end of 1999, a separate set of local government laws and is free to organize departments of the usual ministries to handle local government issues or to create independent canton ministries. Thus, besides a three-page local government law and references to the constitution, the Federation does not have a body of legislation or much authority to govern the subnational units. Instead, the cantons are given taxation and regulatory powers to organize the Federation’s seventy-three municipalities as they see fit.
Bosnia and Herzegovina, as of the Dayton Agreement, thus has eleven systems of local govern-ment, ten of which—at least in the Federation—show considerable variation in the redistribu-tion of taxes, the allocaredistribu-tion of other resources and municipal tasks. In the Federaredistribu-tion the can-tons passed local government laws derived from the state and federal constitutions and basic laws over a three-year period, from 1996 to 1999. These canton laws have many similarities, such as standard language and legal formulae. However, in practice similarities in canton legis-lation—and in many cases up to late 1999, the lack of canton local government legislation—led to much variation in the level and type of services. This paper will make an attempt to highlight differences and similarities among various cantons in the Federation.
At a macroeconomic level, Bosnia and Herzegovina has a currency board until 2004 that fixes the Bosnian mark to the German mark at parity. In essence Bosnia’s economy is denominated entirely in DM, including interest rates and inflation. The currency board provides monetary stability and a common currency to the two entities and severely restricts deficit spending and sovereign or subsovereign borrowing both domestically and internationally.1 Unlike other post-war economies (Croatia, Yugoslavia) Bosnia and Herzegovina at least did not and does not suffer from rampant inflation, but due to military occupation, the state does not enjoy full sovereignty, since the currency board controls monetary policy and a limited tax capacity re-stricts nondonor-funded spending at the state, entity, canton and municipal levels. Unfortu-nately postwar reconstruction projects funded by donors cannot absorb Bosnia and Herzegov-ina’s idle workforce, some forty percent of which were unemployed on a national average basis in 1999. Industrial and service facilities either were destroyed in the war or found themselves on the territory of several successor states. Given barriers to trade between Croatia, Yugoslavia and Bosnia and Herzegovina, formerly successful foreign investments found their supply chains
destroyed or in hostile economies. With road, rail and other transport links expensive, unreli-able and simply ununreli-able to operate in all weather conditions, the industrial facilities remaining in BiH are largely idle. Unemployment, a destroyed infrastructure, repatriation of refugees and the large number of orphans, widows, crippled and able-bodied veterans of prime working age make life very difficult for municipalities, cantons and the two entity governments. In other words, Bosnia and Herzegovina’s municipalities in both the Federation and RS face challenges that are uniquely difficult and controversial, and failure in the social welfare area has the poten-tial to unleash new waves of violence as SFOR slowly withdraws.
1.3 Levels of Self-government
The Dayton Peace Accord serves as a source document for the state constitution and for the Federation and Republika Srpska constitutions as well. Local government legislation in the entities, and consequently in the cantons, is derived from language in the state constitution that essentially devolves all issues related to local self-government, including tax policies, to the lowest possible level. Bosnia and Herzegovina’s state constitution was designed to derogate most powers to the entity level and below for the simple reason of providing as much ethnic self-rule as possible. In other words, a strong centralized state would have been unacceptable to all three dominant ethnic groups. In heterogeneous areas of the Federation, canton and munic-ipal governments must balance various ethnic interests in city and canton councils. Mayors and deputy mayors, not to mention ministers and senior officials at the canton level, are appointed in duplicate to guarantee proportionate powers and de facto veto powers to each ethnic group.
For example, the City of Mostar, consisting of many municipalities and well as a central district controlled by the city itself, has a set of deputy mayors from the Bosniac and Croatian commu-nities as well as parallel professional bureaucrats at each level to ensure that each ethnic group gets a fair share of resources and no official can make decisions or seek outside funding without involving the other dominant ethnic group.
The state has few exclusive responsibilities outside of foreign policy, customs and trade, mone-tary policy, international borders and immigration, refugees, air traffic control, management of international debts and payments, transport and communications. The two entities have their own military forces (with international advisors, monitors, et cetera), as the state may not have its own army. All other powers are by default the perquisite of the two entities, which voluntar-ily may delegate authority upward. The state relies on tax collection and contributions of the two entities.2 The state sets customs duties, but they are collected and spent entirely by the two entities. Sales tax, turnover and other taxes also are collected and allocated by the two entities and shared with the municipalities. The two entities have independent budgets that then allo-cate funds upward to the state and downward to the cantons (Federation) and municipalities (RS). Thus Bosnia and Herzegovina has two independent budgets with a third budget, albeit a modest one, remaining for the “framework state”; two-thirds of the state’s funds are provided by the Federation, and one-third by Republika Srpska.
The Federation and RS collect customs duties, excise taxes, administrative fees, court fees and penalties. The Federation provides that cantons have funds available in revenue-sharing ar-rangements that are altered on an annual basis. The cantons’ main sources of revenue include turnover taxes on goods and services (akin to a value-added tax), enterprise profit tax, income tax and various financial penalties. The Federation Budget Law regulates these arrangements.
In the RS similar taxes are imposed and collected by the entity, then shared with the municipal-ities directly, as there is no intermediate layer of administration. The Federation, responsible for the Federation Army, veterans and invalids, has a direct claim on certain corporate income taxes as of 1998, causing resistance on the part of canton governments. The Federation and RS are responsible for police protection, environmental policy, the social sector, agriculture, refugees, reconstruction, justice, taxation and customs administration. In the Federation these functions can be shared with the cantons, which in turn can assign a part of these functions to the municipal level.
Cantons (and the entity in the RS) are responsible for the following public services: courts, canton (entity) public administration, executive offices, health care, education, culture and social ser-vices. The cantons, similar to the entities in their relationship with the state, are responsible for all other tasks not explicitly assigned to the entity by the entity constitution. Thus, BiH has two levels of federalism. One level allocates almost all functions of the state to the two entities, and the process is repeated in the Federation with entity functions and implicit functions granted to the cantons. Ad absurdum, the cantons can assign varying degrees of rights and responsibilities to the municipal level within the framework of canton local government legislation.
The Constitution of the Federation Bosnia and Herzegovina defines the roles of each level of government, including granting all powers to cantons not expressly granted to the Federation, such as land use planning, local business development and local economic development.
The final layer of extreme federalism and decentralization involves the rights and responsibili-ties of local governments, called municipaliresponsibili-ties in both entiresponsibili-ties. Namely, the constitution grants municipalities “self-rule” in all matters delegated to them by the cantons of the RS entity. In the Federation, if the municipality has a majority population that is different from that of the canton as a whole, then education, culture, housing, public services, land use planning, et cetera must be allocated to the municipal level to protect the minority within the canton. In other situations each canton may determine the extent to which the municipality is responsible for such functions.
In essence, as previously stated, the Federation has ten different systems of local government using the framework provided by the state and federal constitutions, local government legislation in the Federation and core local government laws (required by the Federation) in each canton.3 Municipalities in the RS essentially operate in a parallel fashion to that of the canton-municipal relationship in the Federation. Without a middle level of public administration, the Republika