Haste in the village
The amalgamation of territorial communities has been chaotic. This may lead to unequal funding, abilities to support themselves and impact on local residents
The delegation of additional financial resources and powers from the center down is one of the key reforms after the Maidan. The Cabinet of Ministers approved the Concept of Local Self-Governance and Territorial Organization of Governance back in April 2014. In late December 2014, the Rada passed amendments to the Budget and Tax Codes. This increased the sources of revenues for local budgets as some of the funding was passed to them from the central budget. A new excise duty on sales to final consumers was introduced. The tax base expanded to include real estate tax. Self-governing authorities got more control over local taxes, including the power to determine tax rates and privileges. New subventions from the central budget were introduced to help education and health care systems perform their new functions. A legislative mechanism was designed in 2015 to make cooperation of territorial communities horizontal: nearly 400 of those have already signed deals on cross-community cooperation in various fields ranging from road repair and transport maintenance to education, health care and fire security services.
Meanwhile, a sharp rise in local budget revenues of the first two years of decentralisation has slowed in 2017. In 2015-2016, local communities saw a 42-49% increase in their own revenues compared to the previous year. In 2017, the expected rise is a mere 16%, which is slightly over the current inflation rate. In the past years, the most attention has been focused on the creation of amalgamated territorial communities and priority funding for them.
The mechanism for community amalgamation was designed in 2015. It enabled them to switch to direct work with the central budget, eliminating intermediary levels, such as oblast or county, and thus allowing them to receive funds for infrastructure directly. A number of powers were delegated to the merged communities from the county administration level: they will now provide social assistance, administrative services, run schools and kindergartens, organize the work of primary health care facilities, as well as culture and sports facilities. This brings along subventions for education, health care and infrastructure development from the central budget.
As a result, 794 old village and town councils that covered 2,015 settlements merged voluntarily into 159 amalgamated territorial communities (ATC) as soon as 2015. The initial process was the most dynamic in Ternopil and Khmelnytsky Oblasts in Western Ukraine where 26 and 22 ATCs emerged in 2015, merging 673 settlements out of the 2,015 that year. Elsewhere, however, a few or no new ATCs were created. As of the early 2016, ATCs covered more than 5% residents in four regions only, and more than 5% of the territory in ten regions.
That year, the pace of amalgamation accelerated, taking the number 159 to 366, and doubling the population covered to over 3.1 million. For now, these ATCs number at 1,740 or nearly 15% of former town and village councils. The geography has changed too: Zhytomyr, Dnipro, Vinnytsia and Zaporizhzhia oblasts have the lead now, while the pace of mergers in the two abovementioned oblasts has slowed down.
Overall, as of April 2017, Ukraine has 413 ATCs where elections of local self-governing authorities have already taken place, most recently on April 30 in 47 of those. According to the Ministry of Regional Development, another 102 potential ATCs are finalizing their merger.
On March 14, 2017, President Poroshenko signed Law No5520 “On details of voluntary amalgamation of territorial communities in cross-county territories”. It will allow a number of ATCs to hold the first elections and speed up the creation of new ones.
Financially, the key difference between the ATCs and old unmerged village and town councils is as follows: ATCs pool the revenues and ex-