Some Aspects from the New Sofia’s Management Programme
A relatively short period of time had passed after the local elections in Sofia, where the political status quo remain the same. Several months after the elections the mayor of Sofia decided to present his program until 2011. One wanders about the time sequence of presenting the program and (long) passed elections. It is normal that every candidate for a political position, where he is elected by a number of people, which have the right to vote and have decided to exercise that right, to present in advance his vision, intentions and revenues with which to achieve some structured exact and clear aims. Unfortunately, for one reason or another, this did not happen. However, finally this week we could satisfy our curiosity about the publishing of the management program for Sofia.
What is in and what is not in the program?
Same as with the discussions of the 2008 budget of Sofia, in the revised management program the links with respect to revenues and expenses of the municipality are not clearly specified and supported by description of specific policies in both directions – revenues and expenses. In the management program it is foreseen an increase in tax collection of up to 100% by 2011. The only measure specified in the program is the development of an information system, which would automate the activities of collection of taxes, fees and fines from physical person's and legal entities, according to the Bill on local taxes and fees. This could be taken as a positive step of administration of the process of collection of revenues by the municipality.
On the other hand it does not come even closer to the real discussion about the local taxes and fees. Approximately 57% of the Sofia's budget is formed by own revenues, such as real estate tax and revenues from property. From property tax are formed about 25% of the revenues in the Sofia budget, while the share of the fees is approximately 23%. We have to take into account the changes for 2008, which give higher degree of freedom to the municipalities to define their tax policy. They have the right to define the local taxes and fees within a range. The lower bound of the range is set to be the current levels of the rates. When we take into account this new, for the municipalities', situation nowhere in the program one could find any calculations about the effect on the economy of the Capital from increase or reduction of the taxes and fees. In other word, the principal position about the municipality's policies with respect to the main source of revenues of the budget is not clear.
The revenues from concessions for 2008 are estimated at 550 thousands levas, or 0.11% from its own revenues and 0.06% from the total budget. This is a very small share. In the program the idea for "privatization of municipal companies outside of those related to communication services" is specified. This is good news, but one has to think about directing resource towards formulating concession policy of the municipality and significant increase of the revenues to the budget.
In the management program up to 2011 are mentioned numbers of about 500-600 million levas as loans from various local and foreign financial institutions (EIB and EBRD etc.) related to various initiatives of the municipality. With respect to that the question about calculations of the cash flows of the municipality is raised. There is also the issue of financial ability to meet the agreed loans. The ratio loans/revenues or the total loans against own revenues at present is 16%, which at present is relatively stable level. The question than is what is the expected value of this ratio for 2011, assuming that the goals, resources and conditions for getting the loans are clear. In principal, such calculations give more accurate information whether or not the municipality could cover with its own funds the loans. These data must be taken into account when calculating the revenues and costs of the municipality and the general financial management. As a whole in the budget for 2008 and in the management program such financial analysis is missing. In addition, no information is provided about the municipality debt – size of the loans, interest rates, type of credit, maturity etc.
Those are only several selected topics from the management program for Sofia until 2011. Overall the program suffers from lack of sufficient details, clarity and specificity. The information is presented in a telegraph stile without clear distinction of leading policies, which should be prioritized. Various indicators for success are not developed, specific deadlines and criteria for effective spending funds to support various municipal policies. This certainly makes analysis more difficult and causes the strange feeling of lack of certainty in the future.
