Million-dollar blow to local budgets: Union of Municipalities proposes constitutional review of three laws

The Union of Municipalities of Montenegro submitted proposals to the Constitutional Court for the assessment of the constitutionality of the provisions of three laws, the Law on Audiovisual Media Services, the Law on Forests and the Law on Amendments to the Law on Social and Child Protection, with a request that the court consider them urgently, assessing that the disputed solutions seriously encroach on the constitutionally guaranteed financial and budgetary autonomy of local self-governments and threaten their regular functioning.

The proposals state that the disputed provisions are in conflict with the systemic laws on local self-government and local self-government financing, as well as with the European Charter of Local Self-Government, because they impose new financial obligations on municipalities without secured funds or reduce their legally guaranteed revenues. The Association of Municipalities warns that the implementation of these laws would cause multi-million-dollar damage to local budgets, jeopardize the provision of basic utility and social services to citizens, increase the risk of litigation and question the stability of local authorities, which is why it is requesting a priority decision from the Constitutional Court.

It has been estimated that the implementation of the disputed provisions of the Law on Audiovisual Media Services would cost individual municipalities more than a million euros annually, while due to the amendments to the Law on Forests, local governments would lose more than two million euros in revenue annually.

"These laws directly threaten the financial stability of municipalities, especially in the northern region, and drastically complicate the work of utility companies, which directly threatens basic services to citizens, such as water supply, waste management, and maintenance of local infrastructure," the Association of Municipalities pointed out.

The Constitutional Court told "Vijesti" that the proposals from the Association of Municipalities arrived on June 23rd and that the cases were assigned to the judge rapporteurs and constitutional court advisors, using the method of random assignment of cases.

"Regarding the Law on Forests, the proposal has been sent to the Parliament and Government of Montenegro, so that they can comment on the allegations within 30 days, while this week the same will be done in relation to the other two proposals," they said.

"Vijesti" asked whether, until a final decision is made, the Constitutional Court could consider the possibility of temporarily suspending the application of the disputed legal provisions if it assesses that their application could cause consequences that are difficult to eliminate.

"Judge rapporteurs have the opportunity, but also the obligation, to propose the adoption of an interim measure if they find it necessary, but only if the conditions for this are met, or if the preliminary constitutional court analysis of the disputed provisions indicates this," the Constitutional Court said.

"The Law on Audiovisual Media Services prescribes percentage annual allocations from local budgets for financing local public broadcasters. In addition to the mandatory fixed percentage allocations for television and radio broadcasters, it is also prescribed that the amount of funds is increased by at least five percent if the broadcaster also publishes content on an online publication, and by at least 20 percent if the share of its own production in the total annual broadcasting time of the television program is above 50 percent. These provisions grossly violate the guaranteed right of municipalities to independence and local self-government, i.e. the right to regulate and manage certain public and other affairs on the basis of their own responsibility and in the interests of the local population. They also violate the right of municipalities to a budget, as prescribed by the Constitution of Montenegro," explained the Association of Municipalities.

Although certain municipal enterprises provide services of public interest that represent a basic human right, such as public water supply, waste management, municipal wastewater, and the like, specific laws in these areas do not prescribe, according to the Association of Municipalities, the amounts that a municipality must determine in the local budget for their financing, as this would violate its right to fiscal autonomy.

"This is exactly what was done by the Law on Audiovisual Media Services, which deprived municipalities of the freedom to independently determine priorities within local policies and the freedom to plan and implement their budgets in accordance with their legal, contractual obligations and local regulations, plans and programs," the Association of Municipalities assessed.

The disputed provisions of the Forest Law establish income from the use of forests and forest land as the income of a state-owned company, from which it pays 20 percent of the fee to the state, and part of that 20 percent is ceded to municipalities.

"This is in contradiction with the provisions of the systemic Law on Financing Local Self-Government, which determines the same income as income from concession fees for the use of goods of general interest allocated by the state in accordance with the law, which is ceded to the municipality on whose territory they are located, in the percentage of 70 percent. The collision with the systemic law violates the fundamental constitutional principles of legal certainty and the rule of law, the unity of the legal order, the right to local self-government and the right to the budget," is the position of the Association of Municipalities.

For all three laws, the Union of Municipalities submitted initiatives on behalf of 14 mayors and mayors: the Mayor of the Capital City Saša Mujović, President of the Municipality of Žabljak Radoš Žugić, President of the Municipality of Bar Dusan Raičević, President of the Municipality of Rožaje Rahman Husović, president of the Municipality of Pljevlja Daria Vraneš, President of the Municipality of Plav Nihad Canović, President of the Municipality of Ulcinj Gentry of Nimanbegu, President of the Municipality of Zeta Mihaila Asanović, President of the Municipality of Petnjica Samir Agović, President of the Municipality of Mojkovac Vesko Delić, President of the Municipality of Bijelo Polje Petar Smolović, President of the Municipality of Kotor Vladimir Jokić, President of the Municipality of Danilovgrad Aleksandar Grgurović and the President of the Municipality of Plužine Slobodan Delic.

The disputed provisions are not an isolated case in the legal system of Montenegro, but part of a long-standing, continuous legislative approach that imposes additional financial obligations on municipalities or deprives or reduces revenues without simultaneously providing other sources of financing, which is a trend that must be stopped, the Association of Municipalities said.

The government can dismiss the mayor if the law is not implemented.

In the Law on Amendments to the Law on Social and Child Protection, the Association of Municipalities disputes that part of the original state competencies have been transferred to municipalities, without at the same time providing them with funds from the state budget to carry out these obligations.

"These are community support services and advisory services, for which municipalities are obliged to fully fund them, as well as day care services for which the disputed provisions provide for state co-financing of 60 to 90 percent of the total amount, but only in the case of less developed municipalities," the Association of Municipalities explained.

The municipalities also pointed to formal violations of the Constitution in the adoption of these legal solutions because the association of municipalities and individual municipalities were not given a substantive opportunity to express their views within 15 days in accordance with the Law on Local Self-Government, which also violated the Convention right of local authorities to be consulted.

"Furthermore, the process of preparing the law did not determine at all the possibilities for municipalities to carry out these very complex and expensive state-owned tasks, which is also a legal obligation."

Providing financial resources to municipalities for delegated tasks is a particular focus of the report of the monitoring mission of the Congress of Local and Regional Authorities of the Council of Europe on the implementation of the European Charter of Local Self-Government in Montenegro from March 2024, as well as the recommendations for the roadmap sent to the Government of Montenegro at the end of May this year in connection with the post-monitoring of the state of local democracy in Montenegro.

"It is also important to note that in the event of failure to perform these transferred tasks, which numerous municipalities are de facto unable to perform, the Government has the right to dismiss the mayor and thereby cause a local government crisis," the Association of Municipalities emphasized.