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Strengthening municipalities’ financial base, optimising local government powers, and achieving more effective public participation in the local government process were the main subjects on the meeting’s agenda.

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President of Russia Vladimir Putin: Good afternoon colleagues, it is a great pleasure to see you all.

I propose that we organise our discussion as follows: I will set out a few ideas that I hope might anticipate some of your questions, and then, as at our past meetings, we will have a free discussion of the problems on your minds.

Let me start by noting that Russia has a very long tradition of local self-government. These traditions played a big part in developing our civil society and strengthening our statehood. I remind you that back on January 1, 1864, Alexander II approved the law on gubernatorial and district local government institutions. We will soon celebrate this anniversary. These local government councils helped to develop education, healthcare, and assistance for the needy. They were an example of genuine and selfless service to the country. Today too, you represent the level of government that is closest to the people, and I even envy you in part, because I think that yours is the most interesting work. It is also the most difficult work because you work directly with the public and come directly face-to-face with problems that need to be resolved. But your work is the most interesting precisely because it is the most concrete.

Let me remind, that Alexander Solzhenitsyn, who always gave a lot of attention to this system of local government councils, held the view that their experience would be needed and useful in building modern Russia.

Today, the foundations of local self-government are enshrined in our Constitution. As you know, Russia has ratified the European Charter of Local Self-Government. Ten years ago, we passed a law extending local self-government to the entire country. We will probably discuss this law today. It is far from ideal of course and has its problems that we need to reflect on and resolve.

”Russia has a very long tradition of local self-government. These traditions played a big part in developing our civil society and strengthening our statehood.“

Continuing to develop strong and independent local self-government is one of our priority tasks. Most important is for the municipalities to become genuinely prosperous, and this applies to their finances too. I imagine that this is probably the issue we will spend the most time discussing later. In this area, despite all of the problems, we have made serious progress. Municipalities have seen their revenue rise by almost a third over the last five years. Municipalities will also receive additional funds in 2013–2016 through redistribution of tax revenue. 

At the same time of course we need to recognise that inter-budgetary relations cannot be built purely on the principle of ‘cut a bit here to add a bit there’. Our common task is to find a balance between the municipalities’ powers and resources. Sometimes it seems to me that finding this balance will be an endless task because we are always in the process of redistributing either powers or financial resources, and sadly, I am forced to say that we have still not found the ideal solution. But ultimately this is an area that we have no choice but to reflect on constantly. And I say without any irony that perhaps this is simply a natural process because life is constantly confronting us with new problems. It is probably only natural then that we never stop having to think about them and make the needed changes.

Of course, we also need to define clear responsibilities as much as possible for each level of government and set long-term rules of the game. This was something we talked about at the meeting with mayors of large cities. I think that the Government, together with local self-government representatives – you and your colleagues in other words – should carry out an additional inventory of the different types of municipalities and draft proposals on the needed legislative amendments. In this work, you also need to leave behind vague wording, give concrete definitions to the different concepts and powers, and clearly divide them between the different types of municipalities.

Yesterday, I met with academics involved in public and constitutional law. These issues came up at that discussion too and a number of proposals were made. We will probably discuss all of this. Some of the proposals supported the idea of consolidating municipalities, while others proposed breaking them down into smaller units that would be even closer and more open to the public, so as to make this level of government really right at hand for citizens. This would all need to be examined in a separate discussion, and if you have thoughts on the matter, I would be genuinely interested to hear your views on the issue.

”Continuing to develop strong and independent local self-government is one of our priority tasks. Most important is for the municipalities to become genuinely prosperous, and this applies to their finances too.“

We need to look particularly closely at the possibilities in rural areas. We are forced to admit that local self-government in the countryside is not very effective, not deliberately, but because of objective circumstances. Rural local government officials have many responsibilities but only minimal resources. This essentially condemns them to being unable to fulfil their obligations. This is essentially true for many other municipalities as well.

This brings me to another issue that I will say a few words on now, namely the problem of endless checks, inspections and so on. The Prosecutor General is here today and will join us in this discussion. I can see that there is a problem here and that it is becoming bigger all the time. As I understand the situation, only one in 16 checks actually reveals or addresses violations taking place, while the rest produce no result at all and simply distract people from their business. At the same time, we cannot do away with checks and inspections entirely. This is something we will also examine today in more detail, I think.

In this regard, of course we need to find an overall, systemic solution to the problem, get to the essence, balance revenues and powers, and, coming back to the problem of inspections, not carry out endless checks just for the sake of ticking off the boxes, and not set penalties and issue instructions knowing that there is no realistic way of actually carrying them out. 

I note too that the problem of relations with the oversight and control bodies is a serious issue not just in rural areas but in all municipalities. This was a matter we discussed in detail at the meeting of the Council for the Local Self-Government Development in January. We decided to radically limit possibilities for the various oversight bodies to interfere with municipalities’ work and keep breathing down their necks. The Government prepared the relevant draft law and the State Duma passed it in the first reading on October 25, 2013. If you are already familiar with the draft law so much the better, and if you are not, I ask you to examine it and give your views. You do not have to do this right now. You can do it later through your appropriate organisations or send your opinions directly to the Presidential Executive Office.

What does this law propose exactly?

First, the inspection and oversight bodies will be allowed to carry out checks of municipalities not more than once every two years. There must be no duplication of functions between the different oversight bodies. Checks will be carried out jointly and according to a common plan that must list the checks’ objectives, the grounds for making them, and the timetable for carrying them out. This plan will be published on the website of the regional prosecutor’s office, which will be responsible for coordinating the checks of municipalities in each region. The purpose is obvious – so that people will know in advance what is being planned and how it will be done.

Second, the oversight bodies will not be able to demand that municipalities take measures that do not come under their powers and responsibilities, and all the more so spend municipal budget funds on such measures.

Third, local self-government bodies do not need to provide information if this information has already been officially published in the mass media or on the municipality’s website.

Fourth, mass violation of citizens’ rights and direct threat to people’s lives and health are exceptional cases. If the oversight bodies receive information about such cases, they can carry out unscheduled checks, but still have to get the regional prosecutor’s office’s authorisation. 

”The federal authorities, the regional authorities, and each of the more than 23,000 municipalities, from big city districts to tiny villages, all need to see themselves as working within a single system. We all share the common goal of developing Russia and its entire territory.“

Here today at this meeting with you, I appeal to the State Duma to speed up this draft law’s passage so that it will be ready to come into force as from January 1, 2014. I hope that the oversight bodies will comply in full with this law’s provisions.

We have set ambitious goals for these coming years, and we need to achieve them no matter what the circumstances, no matter what the external and internal conditions.

The quality of policy implementation at the regional and local levels is especially vital today. This is why central and local government have to work as one team. I have already said this many times before. The federal authorities, the regional authorities, and each of the more than 23,000 municipalities, from big city districts to tiny villages, all need to see themselves as working within a single system. We all share the common goal of developing Russia and its entire territory. But our biggest common goal is our people’s prosperity. As I said, you have the hardest part of this work, but then again, perhaps you chose this fate, perhaps it is your own choice.

I also want to appeal to the political parties and public movements to pay more attention to local self-government and promote at this level competent managers with constructive ideas.

Friends, I want to return to Alexander Solzhenitsyn once more. He said that we must do all we can to encourage the growth of local economic initiative. This depends above all on you.

Of course we need to reflect on local development over the coming years, strengthen the economic base, support small business, and find investors willing to put money into job creation. Only then will your revenues increase rather than dwindle.

We can complain endlessly about oversights in the laws and lack of resources and incentives. There is certainly no shortage of problems, and you perhaps have even more than anyone else. But success comes to those who work for it, make use of all available resources and possibilities, and at the same time come up with their own solutions. 

There are plenty of good examples. Chelyabinsk Region has many good examples, and so too do other places where the situation is no better than in other municipalities. I will not list now the particular towns, settlements and single-enterprise towns, which, specifically, are currently facing difficulties. But your colleagues are achieving real results and have brought unemployment down to minimal levels. 

How did they achieve this? They did it by being creative, freeing up the business environment, and creating conditions that make businesses not afraid to invest in a particular locality. They made it so that not only will businesses not be afraid to come, but are investing, creating new jobs and bringing in new technology. This is producing results.

Let’s now turn to the discussion.

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