TALLINN, 4 March 2010 - The National Audit Office is of the position that the payment of culture, sport and youth work support from local finances cannot be considered transparent because many local governments have no rules for such a procedure, and in those that do cases of ‘special treatment’ were frequently identified. Once the support had been allocated, the audited municipalities, towns and cities showed no interest in what the money was used for, or only did so formally.

Taxpayers want to see their municipalities, towns and cities involving and supporting the members of their communities and their associations on the basis of clear, transparent and uniform principles. This requires councils to have thought about the principles of support, that these are in line with the development objectives of the municipality, town or city, and that public money is paid out in support for a particular purpose and that its use is checked.

The National Audit Office audited the payment of culture, sport and youth work support to civic associations by 15 local governments in 2008. The audited municipalities, towns and cities spent a total of 301.1 million kroons in these areas during the year, including on the upkeep of institutions administered by them, the operating costs of municipal governments and support. On the basis of reporting and local government budgets it is not possible to determine how much of this 301.1 million kroons comprised support. According to the analysis carried out by the National Audit Office, the audited municipalities, towns and cities paid out at least 20.6 million kroons in culture, sport and youth work support in 2008. Support which those audited recorded in their budgets outside of these areas of activity could also be added to this figure.

Establishing a procedure for the provision of support is the exclusive competence of the council. If the council does not establish one, there is no legal basis for the payment of taxpayers’ money as support. Rules are also broken if the council establishes principles of granting support but the government does not adhere to them. There were a large number of cases in the local governments audited where the council had established principles of granting support but where the town, city or municipal government actually awarded support based on convention, their own feelings and other indeterminate circumstances.

For example, the City of Viljandi had established a procedure for the allocation of youth work support, but there was no such procedure in the fields of culture or sport. At the same time, more support was being granted to culture and sport in the city than to youth work. In many cases officials decided to grant support of their own initiative. In Roosna-Alliku municipality, where there was no procedure for the allocation of support, the accountant paid invoices issued by village associations when ordered to do so by the municipal mayor. There is also the danger of a conflict of interests in decision-making when support is issued if those making the decisions and those receive the funding overlap, as in the City of Viljandi and Audru municipality.

Where recipients of support had requested ‘special treatment’, outside the bounds of the rules established by the council, they mostly made reference to convention and previous long-term agreements, although no such agreements had been entered into between the local government and the civic association. Moreover, local governments do not feel it is at all important to check whether support that is granted is used as intended – the best form of ‘reporting’ is considered to be the information that gets around the community.

In the view of the National Audit Office, such a situation creates grounds for the unequal treatment of civic associations since councils elected from among local community members relinquish their decision-making competence and look on as municipal, town and city governments breach rules. “Municipalities, towns and cities complain about the money they don’t have, and yet are failing to ensure that support is being planned, paid out and used in the interests of the local population and of municipal or civic development priorities and on the basis of the principles established by their councils, rather than simply being thrown around,” said Airi Mikli, the direct of audits in the Local Government Audit Department.

Streamlining of support procedures for civic associations has even been an issue in national strategy documents. According to the anti-corruption strategy approved by the government for 2008-2012, the procedure for the funding of non-profit organisations would increase the risk of corruption if it was not clear and uniform. So as to implement the strategy, the Ministry of the Interior was charged with the task of honing the system of allocating funding to non-profit organisations from state and local budgets and publicizing such funding during 2008, but this was not achieved in the time given.

In 2009, the recession led to the need to reduce the amount of income tax being received by local governments, and in connection with this the national parliament ruled that local governments were no longer obliged to support sport and youth work, but only to do so within their means.

Mikli noted that despite the difficult times the local governments audited did not leave their community members without funding, even though legislative changes gave them the chance to do so. “Rather they acted conservatively – they continued to pay out support to civic associations, and did not reduce the amount of support they were paying out any more than they reduced other costs.”
 

Toomas Mattson
Director of Communications Services, National Audit Office
Telephone: +372 640 0777
Mobile: +372 51 34 900
E-mail: [email protected]
 

• Posted: 3/4/2010 9:53 AM
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