The Malta Independent on Sunday
‘We will never say we have enough funds’, but current financial situation is good – LCA
Local governments will never say they have enough funds to address rising local and social demands but the current financial situation is still good, Local Councils’ Association (LCA) President Mario Fava told this newsroom.
On 19 October, the government announced the budget for 2021 which received a mix of reactions from stakeholders, professionals, as well as political parties like the PN which said that this budget lacked vision.
During an interview on party media last Sunday, Grech elaborated on the party’s reaction alongside four individuals who explained how the budget did not address certain issues in their field of expertise. One of these people was Francine Farrugia, a PN councillor in Siġġiewi, who said that local governments were left out from the budget as more attention was given to regional councils and there was no increase in the amount of allocated funds.
A quick look at the budget document confirms this to be true, which raises questions on the fiscal situation that local governments are in at the moment; something that LCA President Fava elaborated with The Malta Independent.
Local governments are doing well financially
Fava started off by saying that local governments are doing well financially overall with the allocation of direct funds for local governments having increased for the fifth consecutive year. Yet, such direct aid only caters for the legal obligations that local governments have to carry out while helping the inflation of the Systematic Transfer Plan (STP) in relation to waste management, which is the costliest procedure for local governments.
He noted that the difference in direct allocations from one year to the next is quite marginal since the amount has to be divided among 68 local governments, depending on the size of the urban areas in that locality.
With regard to projects separate from legal obligations, local governments are then funded through schemes that are implemented throughout the year and with the help of regional councils. The amount of funds a project receives depends on the type
of project it is.
Notably, regional councils did not have any responsibilities when they were first introduced but later took on the role of enforcement. In recent years, regional councils started receiving more direct funds and responsibilities and now have a defining role in assisting local governments with their projects. A current topic of discussion is whether waste management should fall under the remit of regional councils rather than local governments.
Fava said there is enough financial support for such projects as well; “a case in point is the undergoing studies on how to enhance accessibility and mobility in all localities for the implementation of the ‘slow streets’ project.”
‘We will never say we have enough funds’
This newsroom asked Fava if the LCA and its members were expecting something to come out on increasing financial aid in the budget for next year, considering Farrugia’s comment.
He said that the LCA was not anticipating anything of the sort as its focus at the moment is on fixing the mechanism by which direct funds are distributed across localities. He explained that there is a fault in the system wherein localities rich in rural areas, like Rabat, are not getting enough funds to cater for this land because the size of their urban areas is much smaller in comparison.
The Association is having monthly discussions on the topic with local governments, regional councils as well as the Auditor General to ensure that they can find the best methods of providing superior services at the cheapest price possible.
“Certainly, we will never say that we have enough funds, no matter which party is in government,” Fava said. “It’s not to have more money in our pockets, but the problems that localities or communities within certain localities face need to be addressed and funded individually.”
“Even from a social aspect, more funds allow local governments to be more involved and present in issues that citizens may face, for example, if a social worker has to be employed by the local government to cater to a resident’s needs.”
Removal of road works from local government portfolio had no effect on funds
Fava was asked if the removal of road works from local government’s portfolio back in 2018 has affected the amount of funds that they receive from the central government.
“No, it did not,” he said. “When road works are passed on to local governments, the project would have already been finished and the money we receive is directed at maintaining said roads.”
However, he explained that there comes a time after a road has been patched up for decades on end where it would be wiser to replace it altogether. “So, it made sense for the government to take road works under its wing and change roads when needed; as long as local governments keep receiving maintenance funds.”
The ongoing discussion now is whether the maintenance of roads should remain under the remit of local governments or if this responsibility will be transferred to Infrastructure Malta. Fava said there is a mix of opinions on this issue.