Decentralization and Sub-National Government in Poland: Territorial Governance, Competencies, Fiscal Autonomy of Local Governments

Decentralization and Sub-National Government in Poland: Territorial Governance, Competencies, Fiscal Autonomy of Local Governments

Jolanta Gałuszka (Univeristy of Economics in Katowice, Poland)
DOI: 10.4018/978-1-5225-0320-0.ch005
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Abstract

During the past two decades, decentralization as a silent revolution in public sector governance has generated a keen interest in a large number of countries including Poland. However, this notion is very difficult to define as it refers to a wide range of institutional arrangements on the political, economic and social levels. There are many good reasons why allocating fiscal resources and budget transfers among levels of government must come after a strict assignment of spending powers. The aim of this chapter is to point out the basic characteristics of financing system of local government in Poland. The chapter examines the structure of local revenues and the problem of financial autonomy. The research shows that the Polish public sector is already considerably decentralised, however the level of financial autonomy of local governments is low and the local revenues are unable to cover expenditures. Thus, the amounts of local public debt keep expanding. Though a system of equalizing grants was introduced to diminish horizontal fiscal imbalances, its' efficacy is still limited.
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Introduction

During the past two decades, decentralization as a silent revolution in public sector governance has generated a keen interest in a large number of countries including Poland. However, this notion is very difficult to define as it refers to a wide range of institutional arrangements on the political, economic and social levels. There are many good reasons why allocating fiscal resources and budget transfers among levels of government must come after a strict assignment of spending powers. Hence, decentralisation in the public sector governance has swept across the globe and has reemerged as a valued political and economic goal in most countries, significantly varying from country to country.

The aim of this chapter is to point out the basic characteristics of local government in Poland. The financing system of local government, mandatory and optional range of tasks belonging to local governments against the traditional principles of local autonomy are examined in this chapter. Statistical measures of financial independence of self-government entities and their restrictions have also been presented in the chapter. This study indicates the results of research into the financial situation of Polish local governments and major problems in the management of public funds the local governments face.

The research shows that the Polish public sector is already considerably decentralised, however the level of financial autonomy of local governments is low and the local revenues are unable to cover expenditures. Thus, the amounts of local public debt keep expanding. Though a system of equalizing grants was introduced to diminish horizontal fiscal imbalances, its’ efficacy is still limited.

At the beginning It should be mentioned that Poland was the first country in Central and Eastern Europe to break out of communist rule. The collapse of the Communism in Poland (1989) transformed a power to representatives of democratic movement lead by the Solidarity. The Polish society was ready and expected radical changes of system towards democracy and market economy. The new leaders met these expectations and the first years witnessed the rapid reforms. Reforms created foundations for the rule of law system, political liberties, protection of individual rights and free market economy in Poland. The pro-reform movement has also toughed the system of state administration. One of the first reform in this area was decentralization.

But in the way of new reforms it became clear then that what was occurring in Central and Eastern Europe in terms of local government was not simply the democratisation of a level of government, nor the direct transfer of institutional models from Western Europe. Rather it was the rediscovery and reinvention of the purpose and rationale of local government, seen as playing a central role in the political and social life of the country, bridging the state and civil society. In the early years this may have seemed distant from the realities of the mainstream of contemporary local government in Western Europe (Coulson & Campbell, 2006, pp. 539).

The first, 1990-reform in Poland didn’t change the territorial organization of the country, but gave the local-governmental power to municipalities (gmina) – basic territorial units with average number of inhabitants ca. 7000 people. The purpose of establishing municipalities was not only to divide the administrative territory of the country, but also to develop local communities capable of resolving their local problems. The communities possessed own tasks, property and financial resources (ca 15% of the total GDP), free elections system and legal protection against central administration. The state control over performance of the communities’ own tasks has been limited to legality only. The new local governments showed their effectiveness and in short time they formed a real political power lobbying further decentralization.

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