The Ministry of Development, on August 7, published for consultations the draft bill for local administration reform, part of the second package of reforms, besides the state-owned enterprises (SOE) reform and the special pension reform.
While the SOE reform was left without a coordinator after deputy prime minister Dragos Anastasiu resigned, the special pension reform faced fierce opposition from magistrates.
The local administration reform bill follows the general outline provided by minister Czeke Attila previously: higher revenues, lower spending, particularly payroll, smoother functioning of the institutions, better tax collection, and more local autonomy.
Among the main measures included in the draft bill, there are: cutting the number of personal advisors employed and paid from the budget by top public servants by 6,060; downsizing by 20% the recommended staff (minimum, medium and maximum levels) in village halls to city halls and prefectures (government’s bodies at county level); improving the coverage of property taxation by identifying all properties and charging 100% supplementary property tax for the properties without a building permit, over a period of five years; and charging a 30% surtax on the driving fines not paid within 3 months and another 30% surtax for the fines not paid within 6 months and lifting the driving rights for those who fail to pay the fine within 3 months.
The recovery of unpaid local taxes will be passed to judicial officers.
The draft bill also includes detailed evaluation procedures for employees in the local public administration to be enforced once the bill is approved as a law and periodically afterwards.
The estimate of the budgetary impact is incomplete and prudent as it seems to include only the savings generated by the lower staff and not the higher revenues that have a lower degree of certainty.
Specifically, the substantiation note published along with the draft bill indicates RON 2.2 billion (EUR 400 million) lower annual expenditures from the general government budget. This accounts for only 0.1% of this year’s GDP. In 2025, however, the impact will be proportional to the period of enforcement.
For comparison, the impact of the first package of reforms on the general government budget is estimated at 3.3% of GDP in 2026, according to the Fiscal Council’s projection shared by the rating agencies.
iulian@romania-insider.com
(Photo source: Gov.ro)
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