Paper/Speech Details of Conference Program for the 25th NISPAcee Annual Conference Program Overview V. Public Finance and Management Author(s) Mihaly Lados HUN-REN Centre for Economic and Regional Studies Gyor Hungary Monostori Adam, Title Effects of the Changes in Task Assignments of Education to Local Budgeting in Hungary File Paper files are available only for conference participants, please login first. Presenter Mihaly Lados Abstract The paper would join Track 2: "Better” governmental spending as a reaction to the crisis of V. Working Group on Public Finance and Public Financial Management. The crises of the state budget in 2006 and the worldwide fiscal and economic crises in 2007-2008 made more visible the contradictories of the Hungarian Local Government System, including Local Government Finance. The decrease of intergovernmental transfer resulted the cut of spending which effected all local governments. After coming out the economic crises local tax revenues has increased. However, only one tenth of local government could improve the condition of their local budget. The basic problems of the system remained in place, additionally the differences among local governments grew significantly. The results of the parliamentary election 2010 gave the chance for changes because the two third majority of the government party was the key to adopt a new Law on Local Governments (2011). The new law holds the fragmented structure of the Hungarian LG system, but installed a new structure in the provision of local public services. Functions with the highest budgetary burden – like public education (primary schools, high schools) and public health (hospitals) – shifted from LGs to the central government. Theoretically, this changes made more harmonic our LG system and the task assignment of LGs in provision of local public services. After two-four years of the implemented changes we can evaluate some short term and long term effects the new Law on Local Governments in Hungary. Our hypothesis is that the changes effected LGs differently according to their size. Small municipalities has better of regarding their local finance, at medium and large municipalities the result was more diverse. Our study would evaluate four different size of local government: cities with count rights (population is over 50,000), medium size cities, villages with population over 3,000, and villages with population below 3,000. The evaluation will focus on the effects of changes in the public education. This sector covered the one third of local budget in cities and two third in villages before the new Law on Local Governments. So the changes related to this sector had the strongest effect on local budgets. At the same time, education is one of the most sensible sector in each settlement and the attitude of localities are different related to these changes. The research would contribute to identify these differences by the size of LGs and providing good cases for municipalities but also expressing the weaknesses of the changed system to the decision makers of central government. Structure of the paper: • ‘Good governance’ as the theoretical background of the new Law on Local Government in Hungary • Changes of the provision of local public education by the law and its general effects on local budgeting • Case studies of four LGs including the methodology of comparative study. (Two cities and two villages will be selected. Selection is made by the number of population of each municipalities because the different responsibilities of LGs by their size.) • Policy implications.
