Economy

Local Government Organization and Finance: Poland 309

the role oflocal government spending in the Polish economy and in the public finance system is presented in table 9.2.

Polish municipal governments are responsible for providing a wide range ofmunicipal services.They include water supply and sewage treatment;street cleaning,refuse collection,and waste disposal;local public transportation;street lighting;district central heating;maintenance and construction oflocal roads;maintenance ofgreen areas;municipal housing; education services,including kindergartens and primary schools;culture, including local libraries and leisure centers;numerous services within the social welfare sector,including services for elderly,handicapped,and homeless people,as well as housing benefits;and physical planning and granting ofbuilding permits.

During the 1990s,there were two significant changes in the scope of functions provided by municipal governments.In 1993,extended functions were granted to the largest cities (mostly those exceeding 100,000 people),as a part ofthe so-called pilot program.With some amount ofsimplification, we may say that those functions were identical to those that are now provided by county governments (see the list below).The second change concerned responsibility for primary schools.In 1990,several factors (including fear of teachers’trade unions) caused a delay in transferring school responsibility to local governments.The transfer was delayed until 1994;until then schools were locally managed only in those localities that applied to do so.Later,the deadline for the schools transfer was delayed to 1996,when primary education (including financing teachers’salaries) was passed to municipal governments.The method ofschool financing is described in the following sections.

TABLE 9.2 Role ofLocal Government Finance in the National Economy

All subnational governments Municipalities

Spending or investment spending as a percentage of 1991 1995 1999 2004 1991 1995 1999 2004

Total budget expenditures 16.3 19.0 38.0 39.1 16.3 19.0 30.5 31.9 Gross domestic product 5.5 6.9 10.5 10.9 5.5 6.9 8.4 8.3 Total investments 6.9 9.8 9.7 12.1 6.9 9.8 8.4 10.3 Total public investments — 17.6 25.8 — — 17.6 22.3 — Total budget investments 42.6 53.5 62.5 63.0 42.6 53.5 54.0 56.6

Source: Author’s calculations based on data from GUS 1992, 1996, 2000, 2003, 2005. Note: — = not available. Data on municipalities include cities with county status.

310 Pawel Swianiewicz

County governments are responsible for providing a number ofservices. These include secondary education;health care (only hospital and clinic buildings;the health care reform implemented with the 1998 local government reform created independent health authorities that are responsible formost medical operations);roads ofcounty importance;several social services; labor offices (offices coping with unemployment);natural disaster protection;consumer protection;land surveying;and sanitary,building,and other inspections.

The role ofregional self-government in direct delivery ofservices is very limited (although there are examples:higher education,maintenance and construction ofmain roads,organization ofregional railway services). Regional governments are mostly focused on strategic planning and regional development programs.

All the functions enumerated above are treated as “own functions”of local governments.In addition,local government also performs functions that are delegated by the state—mostly administrative tasks such as birth and death registration,issuance ofdrivers licenses,and car registration.Delegated tasks are financed through separate specific grants,which in theory are sufficient to perform the tasks,although in practice local governments often complain that they need to subsidize the grants from their own revenue sources.Delegated tasks play a moderate role in municipal budgets (about 10 to 12 percent oftotal municipal spending) but are much more important in counties.

In municipalities,education (mostly primary schools) is the most significant current function.It constitutes nearly halfofoperating expenditures.Transportation (local road construction,bus and tram purchases) is the most important local capital expenditure.Capital expenditures on transportation have been rising steadily over the past few years,despite the decreasing size oftotal local government investments.Thanks to this trend, investments in transportation became the most significant part ofcapital budgets,supplanting communal services (water,sewerage,solid waste disposal,street lighting,and central heating),which dominated throughout most ofthe 1990s.The relatively low importance ofcommunal services in operational spending requires additional explanation.A large proportion of current expenditures on these services is financed by user charges,which are collected by the municipal companies or in-house departments that provide services.These revenues are not reflected in local budgets.But for capital expenditures,subsidies from municipal budgets are much more common.

Education (secondary schools) is also a dominant function at the county level.Three sectors (county roads,health care,and education)