Stronger stick, sweeter carrot, and urge to merge

16 July 2015

At the moment, Estonia sports 213 local governments. By our 100th Anniversary, they should be three times less. The conditions for survival of some and extinction of others are being feverishly forged. 

Under the guiding hand of administrative reform minister Arto Aas (Reform), an expert team of 18 is defining minimal requirements thereof. The criteria have got to be ready by September-October when the ministry will be writing the law – Administrative Reform Act – on their basis. Once the law is enacted in July 2016, local governments not meeting the requirements will have a year to voluntarily marry a neighbour. Once the deadline dawns, minnows will merge as dictated by the ministry. What you just read is administrative reform in a nutshell.

As explained by Mr Aas, the current reform differs from earlier versions in various aspects. «Firstly, the very Prime Minister stands responsible for the reform to be carried out so it would not be neglected as has happened under lots of governments,» he cited.

Secondly, forced merger option has been created. Up to recently, this was a no-no for Reform Party. The squirrels have reconsidered.

«According to Andrus Ansip, carrier of the no-ideology, local governments were supposed to act as counterweight to central power. The argument still stands, but we cannot ignore the fact that a local government with a hundred inhabitants is unable to represent its folks at state level,» said Mr Aas. Studies show the critical mass would be at about 4,000–5,000 inhabitants.

«Today, 80 percent i.e. 173 local governments fall under 5,000. Speaking of a minimum, we might retain some 70 local governments – three times fewer than now,» suggested Mr Aas.

Lubricating local leaders

For a smoother run of reform, the government has acted. In June, they decided to double the merger support and local governors’ lay off benefits – come fall.

Details? A merged local government will be receiving €100 per inhabitant but no less than € 300,000 or over €800,000. As for mayors, parish governors and chairmen of councils, 12 months’ salary will be paid as bonus in case of employment over a year. For those that managed to be at the job under a year, the bonus is six month wages.

Mr Aas says this may smell like a bribe, but the main reason is that lion’s share of local leaders have been in office for ages and the fears for future need to be managed.

«History says all it takes is one or two leaders in a local government who are against and the entire process stalls. We would like to see a breakthrough and every reform comes with a price,» said the minister.

The merger-support to parish elders would come out of merger-support package. Should all local governments volunteer to merge by October 2017, state budget would be set back by €75m.

«If after that the government will have to do the merging, only direct costs will be covered and the financial carrot will be no more,» explained Mr Aas.

Think population and distance

According to think tank Praxis economic expert and member of merger-committee Katrin Pihor, they are working at an optimal local government model as basis for calculations to get the criteria.

They have figured out a thing or two, already. «We will definitely be talking about two indicators – population and distances. We have seriously considered the 3,000–5,000 inhabitant floor,» she said, to serve up an example.

Ms Pihor said that it made sense local governments of said size to keep two or three basic schools and people would have a choice regarding educating their kids. A sufficient amount of consumers of social services and taxpayers would be present, and social workers could be employed full time.

But there will be other requirements and all are not numerical. Such as: capacity to earn own income, to offer quality social, educational and other services, and possess a servicing area of expedient size.

Representing rural local governments, Antsla parish council chairman Kurmet Müürsepp (IRL) said the parish leaders have unanimously accepted the rise in merger benefits, but are undecided about the reform as such – so success is hard to predict. It will depend on the details of merger criteria.

The one year grace period for free-will merger provided by the government is deemed as sufficient by Mr Müürsepp, but what will be decisive is willingness by government to allow exceptions with the forced mergers.

«For instance, the plan to merge [the isle of] Kihnu with [the city of] Pärnu is ridiculous. And should they wish to forge Ida-Viru County into one big local government, problems will surely abound,» predicted Mr Müürsepp.

Former regional minister and administrative reform engine Siim Kiisler (IRL) wishes reform by Mr Aas well while warning that exceptions should be kept at a minimum.

«When talking about up to 5,000 level, I think the introduction of any exceptions would be a misleading and damaging message. As long as they do not dare to boldly admit we are talking about the population, it will be beating about the bush,» he said, to shed light on how local leaders think.

In addition to setting the merger criteria, Mr Kiisler said the state also needed to see the bigger picture as the priority should be merging such local governments with significant commuting between them for work and study.

«Should the government tiptoe around the issue, then the weaker the message the more money spent to «bribe» local governments,» cautioned Mr Kiisler.

County lines altered

Mr Aas the minister said disputes would surely come. «We have never hoped it would go without disputes. Definitely, there will be emotions and criticism. No escaping that, but we would like to set criteria understandable to all,» he said.

The changes set in motion by the reform will be major. Such as: should a local government decide to unite with a neighbour in county next door, the county lines will need to be redrawn.

Mr Aas envisions that county governors would remain. Even so, some of their tasks could go to local governments – along with the money. For instance, local governments could organise their own public transport and building plans, or develop business.

Source: Stronger stick, sweeter carrot, and urge to merge, PM