Local Government Initiative

DEVELOPMENT CHALLENGES Regardless of the difficulties which municipalities encountered in the period of Bulgaria’s transition to a free-market democracy, they have gone a long way in their development since. The changes include constitutional guarantees for their functioning as basic local self-governance units; promotion of democratic procedures and mechanisms in the election, organization, and operation of local self-governance bodies, and relatively well trained municipal staff. However, local governments are still seeking to gain control over their administrative and fiscal destiny, to equip themselves to make responsible choices about their future, and to act on these choices effectively and accountably. Central to these aspirations is the issue that local institutions are poorly equipped and lack the authority to discharge their responsibilities having few opportunities to establish the tools to create a sound municipal finance base in support of local infrastructure development and provision of services. USAID works with local governments to enhance their efficiency, to improve local services, and to lobby more effectively for their interests at the national level.

USAID INVOLVEMENT USAID is unique in its approach to local governance issues. It is the only donor organization carrying out a comprehensive program of local government improvement. The local government assistance is focused on: capacity building in local government support organizations; technical assistance to municipalities in improving municipal management; designing and conducting training in areas such as finance, budget management, public procurement, and human resource management; citizen participation in local decision-making; and improving services to citizens by the establishment of Municipal Customer Service Centers. The Local Government Initiative (LGI) was launched by USAID in 1997. While previous assistance was focused at the local level, the current LGI program took advantage of a window of opportunity when the 2001 national elections ushered in a government with the political will to undertake fiscal decentralization.

GOAL USAID’s goal is to develop transparent and accountable democratic institutions, laws, and economic and political processes and practices which support a more effective and accountable local governance.

PROJECT DESCRIPTION Recognizing that the main impediment to the proper development of democratic local government lies in excessive centralization, the current phase of the USAID’s LGI program is focused on decentralization policy reform which could only be achieved by working at both national and local levels. The program is organized around policy reform and local capacity building activities.

At the policy and legislative level, USAID works to promote decentralization:
• Fiscal decentralization: promoting increased local autonomy, clear rules for intergovernmental relations, increased access to resources, and local fiscal discipline.
• Municipal decision-making: strengthening the legal framework for responsive and effective local decision-making and citizen participation, fostering collaborative relations between mayors and city councils.
• Infrastructure finance: promoting a sound legislative framework for municipal credit, options for financial intermediaries, and a strategic approach to the Government’s infrastructure finance policy.
• Sectoral decentralization: exploring options for expanding local roles in education, defining the municipal interest in other service sectors such as health, social services, and water.
• Deconcentration of State activities: redefining the role of the regional level of government, improving municipal-regional communication.

At the local level, USAID works through Bulgarian organizations to build municipal capacity in many areas related to decentralization reforms:
• Fiscal decentralization: municipal finance policies, budgeting, accounting, fee setting and tax management.
• Sectoral decentralization: demonstrations of local service management options in education.
• Infrastructure finance: building tools such as capital investment planning, project packaging, and credit worthiness analysis.
• Effective municipal decision making: promoting sound and transparent operating procedures for municipal councils and teamwork between councils and mayors.
• Municipal services: analyzing service performance, establishing performance measures in key municipal services, comparative service analyses across municipalities.

SUCCESS STORY New GOB decentralization strategy: The Local Government Initiative heavily assisted the Ministry of Regional Development and Public Works to develop two key policy documents. (1) a Decentralization Strategy (2006–2015) and (2) a Program for Implementation of the Decentralization Strategy (2006–2009). Assistance included the following: Initial outline, strategic objectives, and content of the draft Strategy; Facilitation of the smaller working groups in developing the activities for the Program according to the strategic objectives; Outline and final draft of the Program; and Options for institutionalizing the policy dialogue on decentralization and forming an official body at the Council of Ministers (COM) to implement and monitor the Program. The Strategy consists of three strategic objectives: 1. Accelerated transfer of authority, responsibilities and resources from the central government to the municipalities to build strong local governance; 2. Optimization of the functional responsibilities of the regional governors and territorial units of the central government for better coordination of the sectoral policies at the regional level; and 3. Development of local-level governance by increasing the managerial and financial autonomy of the mayoralties and service centers. COM approved the Strategy on 1 June 2006.

^{Last updated: 28 September 2006}