CONFLICTS OF INTEREST BETWEEN LOCAL GOVERNMENTS AND CENTRAL LEGISLATION – HOW FINANCIALLY INDEPENDENT CAN LOCAL GOVERNMENTS BE

Abstract

Rights and responsibilities of local governments are defined by the central legislature, in accordance with the given country’s rules, traditions, institutions of constitutional and administrative law. To perform public duties they need financial resources, incomes and wealth. Above these, the right of disposition, financial and economic autonomy have to be provided, moreover, the possibility to receive suitable subsidies from central budget. The proportion and guarantees of the income are important too, as the autonomy of local governments depending from central subsidies may be injured. The question of primary importance is that where are the limits of the mentioned autonomy, protected by various constitutional provisions and international legal documents, how the legislature is able to control the law of taxation, to enter transactions that give rise to debts, or how to withdraw different resources from local governments. The central withdrawal and reallocation of resources may raise the issue of local government solidarity. As well as the extent to which the property and income of local governments can be limited. According to the practice of the various constitutional courts and the supreme courts (American, French, German and Hungarian judicature), the rights and authorities of local governments are not unlimited. Although, local governments have to get effective protection, but after all it is the state who determines the content and the framework of relevant legal regulations for local governments. Therefore, within the constitutional framework, the central legislature has a serious opportunity to intervene in protected autonomy by withdrawing or reallocating revenues, assets or subsidies.

The research method of the study is primarily financial and administrative legal analysis and legal comparison: in addition to international, constitutional and legal (American, German, French, Hungarian) rules, the basic characteristics of local government financial autonomy are presented based on the principles worked out in various Supreme Court and Constitutional Court decisions elements, as well as the limitations that said autonomy must face as a result of the decisions of the central legislature. The subject of the research is the financial autonomy of local governments and its legal limitations, which point out that autonomy - unfortunately, cannot be unlimited. Local taxation, own revenues and subsidies can indeed provide adequate foundations for independent local government management, however, since local governments must adapt in the state’s central system of public administration and public finances, therefore, within the constitutional framework, the central legislation can make decisions that adversely affect their incomes, budgets and assets.