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EFFECTS ON THE FINANCIAL AUTONOMY OF LOCAL AND REGIONAL AUTHORITIES RESULTING FROM THE LIMITS SET AT EUROPEAN LEVEL ON NATIONAL PUBLIC DEBT
Report by the Steering Committee on Local and Regional Democracy (CDLR)
prepared with the collaboration of Professor Laura Castellucci
Adopted by the CDLR at its 25th meeting, 7-9 June 2000

Effects of Limitations of Revenues

 

 

Saturs:

I. INTRODUCTION............................................................................................................... 5
II. RESTRICTIONS ON NATIONAL BUDGETARY POLICIES ...................................................... 7
1. Budgetary convergence: the requirement of 3 per cent for annual deficit over GDP
and of 60 per cent for debt over GDP .............................................................................. 8
2. The requirement of converging inflation levels .................................................................... 8
3. The Stability and Growth Pact and the problem of public investment.................................. 9
III. DECISION-MAKING MECHANISMS WHICH ALLOW OVERALL PUBLIC
SECTOR RESTRICTIONS TO BE TRANSPOSED INTO RESTRICTIONS ON THE
VARIOUS LEVELS OF GOVERNMENT............................................................................... 12
1. Reasons for imposing restrictions on local and regional financial autonomy ....................... 12
2. Mechanisms set up by federal states ............................................................................... 14
3. Mechanisms set up by other states.................................................................................. 18
IV. RESTRICTIONS ON LOCAL AND REGIONAL BUDGETARY POLICIES ................................. 19
1. Different types of restrictions on local government financial autonomy .............................. 19
2. Restrictions on budgetary imbalances.............................................................................. 21
3. Restrictions on the overall amount of local expenditure .................................................... 25
4. Restrictions on borrowing and the use of loans ................................................................ 27
V. CONCLUSIONS .............................................................................................................. 33
1. General remarks............................................................................................................. 33
2. Guidelines...................................................................................................................... 34