National Audit Office: Local governments are incapable of streamlining the infrastructure required for the provision of their services

Toomas Mattson | 12/7/2017 | 11:31 AM

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TALLINN, 7 December 2017 – When analysing the investment support granted to local governments in the last ten years, the National Audit Office found that without significant changes in the funding system, local governments will not have the capability for streamlining their pre-schools, schools and other buildings that are in a poor condition. The state, however, has distributed money over the years without having a complete overview of the infrastructure and also given money for sites that are no longer used to the extent or for the purpose initially intended.

Although the number of local governments will decrease in 2018 as a result of the administrative reform and the new local governments are likely to be better in the performance of their functions under the law, they will not be able to find the 800 million euros or more that they need for the renovation of priority buildings in the coming years. This is 2.4 times more than the support allocated in the last 10 years: the amount of support received by local governments for streamlining or constructing buildings from 2007-2016 is 345 million euros.

Until now, local governments have received 80% of the support for the improvement of their infrastructure mainly from European Union funds, this cannot continue in the future – according to forecasts, European Union support will decrease in the next budgetary period of 2020+. This will put a bigger burden on the budgets of the local governments and the support of the state. The latter has been distributed in small amounts over the last 10 years, which is why the condition of a third of the buildings that have received support are still poor. On the one hand, processing such small projects is disproportionately resource-intensive for the local governments and the state alike and on the other hand, some strange examples appear of situations where support was allocated for the reconstruction of half a roof and the other half started leaking, or windows were replaced in a building before it was insulated and when insulation was undertaken later, it became evident that the surrounding areas of the new windows cannot be insulated at all.

The National Audit Office suggested considering an increase of the scope of the biggest national investment support programme and allocating money from the programme only if the buildings used for service provision are streamlined in full.

On the other hand, the property portfolio of local governments is large and exceeds the property owned by the state by approximately 2.5 times, it is expensive to maintain and the room layout is often not functional. The topic was generally avoided due to the pressure of communities in the merger negotiations held during the administrative reform, so the local government themselves have to analyse and optimise the use of their property by bringing, if possible, additional services to premises that have already been reconstructed and whose use has decreased. In other words – in the merger agreements signed in the course of the merger of local governments, some of them have promised to preserve services and property even in places where it is not optimal.

During the current financing period of the European Union, the state has decided to distribute the majority of the support by the so-called silo principle, i.e. specifically for the development of a field and service in the area of administration of a ministry.

The analysis carried out by the National Audit Office also indicated that larger local governments, which have the most service consumers, are facing the biggest problems. Although the capacity of these local governments to invest their own funds is larger as a total amount, it is still marginal considering the size of the property portfolio and its investment needs, and considerably below the level of smaller local governments. For example, 56 local governments surpass Tallinn in terms of its relative investment capacity (the capacity to invest per square meter of property) and the capital is one of the last in terms of the amount of support received per square meter in the last 10 years. It has also become evident that the support granted to large local governments for the streamlining of sites has often been small.

Local governments themselves estimate that as many as 65% of the pre-school and 46% of the school buildings in county centres are still in a poor state. Local governments can only carry out unavoidable emergency and minor renovations in these buildings, but are unable to streamline them in full without external support.

The National Audit Office is of the opinion that in order to distribute the support better, the grantor must ascertain the location and state of social infrastructure and any alternatives for the provision of services, and determine the actual need for support in cooperation with the local governments.

You can download a selection of the figures of the report here (detailed information about the figures is given in the report).

Figure 3. Division of support granted for streamlining or construction of local government buildings in counties

Figure 4. Support for the construction and streamlining of local government buildings (hereinafter the borders of counties and local governments indicated on the map of Estonia are those of the administrative division as at 01.01.2018)

Figure 5. Support outside the service centres included in county plans

Figure 7. Division of support for infrastructure meant for the performance of mandatory and voluntary functions

Figure 11. Condition of buildings by services provided by local governments

Figure 12. Buildings in a satisfactory or bad condition in service centres

Figure 13. Investment needs of local governments in service centres (in euros)

Figure 14. Unsafe local government buildings

Figure 15. Division of support by sites according to the number of users

Background

The National Audit Office prepared an overview of the support granted for streamlining the property of local governments from 2007-2016 by collecting data from the Ministry of Finance and all local governments. The purpose of the overview was to ascertain whether state budget and foreign support has contributed to the improvement of the condition of local government buildings and which challenges are local governments facing when applying for support.

Jointly with Statistics Estonia, the National Audit Office analyse whether support had been allocated for streamlining sites with larger numbers of users, whether the sites are in a good condition as a result of the support and the quantity of people for whom the services of local governments are not accessible enough. The overview helps the state and local governments plan investment support considering the prospect that the amount of European Union support will decrease as of 2020.

 

Toomas Mattson
Communication Manager of the National Audit Office
+372 640 0777
+372 513 4900
toomas.mattson@riigikontroll.ee
press@riigikontroll.ee
www.riigikontroll.ee

  • Posted: 12/7/2017 11:31 AM
  • Last Update: 12/11/2017 12:02 PM
  • Last Review: 12/11/2017 12:02 PM

Division of support granted for streamlining or construction of local government buildings in counties

National Audit Office

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