15 Jun

Latvian Parliament passes municipal reform proposed by minister Juris Pūce

Saeima (the Latvian Parliament) approved the bill for the ‘Law on Administrative Territories and Populated Areas’ proposed by Juris Pūce (chair of the Latvijas attīstībai, co-chair of Attīstībai/Par!, and Minister of Environmental Protection and Regional Development) in its final reading, involving the creation of 42 municipalities in Latvia, instead of the current 119.

Minister Juris Pūce: ‘Implementing this municipal reform, prompted by the need to reduce the growing inequality in the economic development of Latvia’s regions and to provide a set of quality municipal services to their residents, has been one of the key ideas in our electoral program. Promises made – promises kept! I am happy about what we have achieved. Reducing inequality is one of the most crucial tasks that both our party and alliance, as well as the government as a whole must handle. The goal of the municipal reform is to prevent the injustice of people being discriminated against because of where they live. No balanced regional development is possible without strong development centres; no quality education and social services are possible without sufficient tax income; no private investments and competitive salaries can be considered if there is no infrastructure. In implementing the municipal reform, our objective has been to provide more equal opportunities to all people living in Latvia, enabling them to receive good municipal services and an ability to grow in their own region, regardless of where they live.’ 

As of now, the inequality between different municipalities in Latvia is staggering: per capita administrative costs can range from 50 to 200 euros, depending on the municipality (and in only 28 municipalities, do these costs account for less than 7% of their budgets). 104 of 119 municipalities receive subsidies from the Municipal Equalisation Fund. Only 57 municipalities can provide employment to more than 40% of their working-age residents. Only 46 municipalities can make an investment of 1 million euros. Only 62 municipalities hold business idea competitions and can offer grants to businesses. Secondary schools in only 38 municipalities have enough students to fill up at least two classes of the same year. These numbers serve as evidence of discrimination, and the municipal reform is a way to put an end to it.

In order to accomplish the task set by the Parliament on 21 March 2019, namely, preparing a bill for the new administrative structure, informing the general public about it, and taking into account expert opinions, in strict compliance with Article 5 of the European Charter of Local Self-Government, The Ministry of  Environmental Protection and Regional development (VARAM), as the body in charge of the reform, worked consistently to prepare the new model for the administrative structure of the country. The ministry involved municipalities (including consultations with the Latvian Association of Local and Regional Governments representing them), local residents and social partners in the discussions about the reforms, listening to opinions and proposals for setting up a new model for the administrative structure of the country.

On 10 April last year, the ministry arranged a presentation of the reform, where the minister and invited experts answered some of the key questions about the reform, and published the vision of the new draft administrative structure model. This was followed by the approval procedure for the Information Report on the Public Discussions for the Proposed Administrative Structure Model. On 14 May, the Cabinet approved the Information Report on the Public Discussions for the Proposed Administrative Structure Model prepared by the ministry, authorising official consultations with municipalities and activities to inform the general public. On 27 May, the ministry launched the biggest public discussion campaign in the political history of the country and during the subsequent three months minister Juris Pūce, other representatives of the ministry and invited experts met with 63%, or 947, of the total number of municipal council members in 30 of the administrative centres of the new municipalities proposed, in order to discuss the criteria for creating administrative divisions and municipalities proposed by the ministry. The municipal councils were able to acquaint themselves with a specific plan for the new administrative structure, and had sufficient time to discuss it. The conceptual report was supported during the 17 September session of the Cabinet.

In addition to the work on the legislation, the ministry continued informing and engaging the general public. On 2 April last year, a special e-mail address was set up to enable two-way communication with the local residents, social organisations and municipal governments, which have submitted their proposals and questions, and continue to do so. The campaign promoting the municipal reform included meetings with local residents all over the country, and an information hotline.

The ministry also discussed the reform with its social partners, and the reform was supported both by the Latvian Chamber of Commerce and Industry, and the Employers’ Confederation of Latvia. Major international organisations, such as the OECD, have also pointed out the need for this reform and its potential benefits in reducing regional inequality.

In the European Commission’s report about Latvia this year, particular emphasis is made on the reform proposed by the Latvian government creating more sustainable municipalities with more capacity and ability to provide comparable-quality services.

The report notes that over time, the current structure of municipalities will aggravate the regional differences and negative socio-economic trends even further, due to an uneven distribution of population in them.

The bill for the ‘Law on Administrative Territories and Populated Areas’ was passed in its final reading on 10 June 2020. The Parliament voted in favour of creating 42 municipalities to replace the current 119.