Summary on the North-east public hearings

There was held a series of public hearings on November 27^th through December 27^th, 2007 at 19 municipalities of 4 districts (Guba, Gusar, Xachmaz and Davachi) of the North-east region to discuss the 2008-year budget forecasts with the public participation of a total of 700 people, an average of 35 people per municipality.

Quantitatively, the highest participation rate was at Xudat, Shollar, Hajihuseynli, Gendob, Mohuj, Bedirgala, Zerdabi and Ashagi Zeyd, an average participation rate of 48 people per municipality, while the lowest rate was observed at Davudoba, Shahnezerli, Mollaburhan, Balaqusar and Xuray municipalities, an average of 20 people per municipality. The highest rate was at Xudat municipality, 71 people, while the lowest was at Balagusar municipality, 15 people.

The Hajihuseynli, Mohuc, Piral, Bedirgala and Ashagi Zeyid municipalities stood out other municipalities for the most active people. The people turned out to be the most active as compard to the others and came out averagely with 3 proposals each. The most passive people were at Xudat, Shollar, Shahnezerli, Gendob, Mollaburhan, Hazra, Kohne Xudat Gazmalar, Balagusar and Xuray municipalities’ public hearings. None of the people at those public hearings made any proposals, perhaps because of the limited budget resources, higher trust in municipal heads and etc.

Hajihuseyenli, Bedirgala and Ahsagi Zeyid showed the highest performance in terms of people’s participation and activity. By these two criteria, the lowest rate was with Balagusar, Shahnezerli and Mollaburhan municipalities.

As for the venues of public hearings, 9 of them were held in club halls, 1 in open air, 1 in municipal building and 6 in village schools and the rest two in village tea-shops.

Public hearings were held in 19 municipalities, including Guba, Gusar, Khachmaz and Davachi districts from November 27 till December 19, 2007 to discuss forecasted 2008 year budget together with the local population. Approximately 700 people in total attended the hearings and below are the noteworthy points:

1. 
   Local people’s unawareness or misconception about municipal governance. The local people do not have large information on financial capacity and responsibilities of the municipality and think of the municipality as one of the structures of excoms. Large awareness work was implemented in this respect during the hearings.
   
2. 
   Low-level tax culture. The local population are not enough interested in payment of taxes since they think that those payments become lost. This is because the awareness activities have not been implemented among the population so far.
   
3. 
   Irrelevant interference of excoms in municipal activities. That is, certain excoms require collection of electricity and gas fees in the region from the municipalities. This in turn impacts negatively on the relations between the local population and the municipality. Municipality members obliged to require those payments from the people and the citizens get angry with each other that results in the fact that the citizens avoid paying taxes to the municipality.
   
4. 
   Local population’s mistrust in municipal operations. The municipalities encounter difficulties in solving local problems due to a number of responsibilities and little financial capacity. That is, financial capacity of the municipalities is insufficient for the solution of the local problems. Consequently, the population becomes less confident in the municipalities.
   
5. 
   Low budget revenues. The major stable source of income of such country municipalities is the land tax. It will sound wrong to speak about the total budget formulation given the low tax payment by the region. That is, the sale of the land under the property of the municipalities and subsidies to be provided from the state budget are the main source of incomes for the municipalities failing to collect all the taxes. Considering that land sale is not permanent, it is impossible to forecast the revenues in this respect accurately. The amount of subsidies provided from the state budget is too little. The subsidy granted to the district municipalities varies between 800-1200 manat. Not all of these funds go the municipal budget. For example, it is to note that 600 manat out of the subsidy provided for each municipality in Guba last year was obtained by the respective excoms to build a monument in the city which is unambiguously against the law.
   

The Economic Research Center project staff visited the partner municipalities in the South-Eastern region to conduct monitoring from January 1 to February 29, 2008 within the scope of SW 07-02 project. The aim of visiting was approval of the summary forecast budget for 2008 and monitoring of establishment of budget information boards. During monitoring the approved budget variants of the partner municipalities were reviewed and compared to the budget variants prior to public discussions. The municipality members were asked questions about the changes made and the reasons for them. In order to do a broader analysis of the changes, one copy of the approved budgets was obtained.

Actions were implemented about establishment of information boards throughout meetings with partner municipalities. The municipalities working on establishment of information boards were informed on technical shortcomings regarding the form of the boards and to locate them in more appropriate places so that they are accessible to the population. Besides, they were informed about the documents for budget board placement that was incorporated into the agreement of budget board establishment as # 1 addition.

Discussions were carried out with municipality members and survey was conducted throughout monitoring to study people’s activity following the public hearing.

1. 
   During public hearing held in Mohuj municipality of Guba district the citizens came out with suggestions on solving water problem in the village and allocating more funds in this respect. People’s suggestions were considered during budget approval and funds for “renovation costs”, “capital costs” and “other enterprise expenses” are forecasted to be spent on construction of water pipe. The total municipality budget is estimated at 3195 manat. 800 manat of this amount will be spent on construction of water pipe. This is the only change made to the budget expenditures and no other change is recorded. The municipality budget board has been established and instructions have been given towards all documents for budget board placement.
   
2. 
   Though no changes are recorded for the budget revenues following the public hearing in Davudoba municipality of Guba district, changes have been made to the expenditures. That is, “the salary of the staff members” have been raised from 1380 manats to 2530 manats out of the expenditure items, while transactions to the State Social Protection Fund” from 303 manats to 600 manats. “Office maintenance costs” have been reduced from 340 manats to 110 manats, “payment of transport fees” have been increased from 280 manats to 300 manats, “payment of utility and communication services” have been decreased from 360 manats to 190 manats, the funds amounting to 1030 manats for “Purcase of consumption goods and materials” have been liquidated totally and “renovation” costs have been decreased from 800 manats to 500 manats. The funds estimated at 700 manats for “other costs” has been withdrawn totally and “capital costs” have been decreased from 5534 manats to 4160 manats, whereas bank expenditures have been reduced from 130 manats to 30 manats. As is seen from the comparisons, the key change was incidental to the increase in municipality members and employees’ salary which relates to the people’s minimum salary increase at the beginning of this year. The municipality budget board has been established and provided with all budget information.
   
3. 
   Despite the fact that no changes have been recorded for budget revenues after the public hearing held in Guba district Hajihuseynli municipality, changes have been made to the expenditures. The road problem raised by the people as a priority was discussed during the hearing and it was suggested to enhance expenditures towards solution of this problem. The municipality assessed the suggestion and 1000 manats out of funds for “capital repair of administrative and management units” was transferred to “capital repair of roads”. Thus, 2367 manats will be spent on “capital repair of administrative and management units”, whereas 2500 manats on “capital repair of roads”. The municipality budget board has already been established and provided with budget information.
   
4. 
   Although no changes have been recorded for budget revenues after the public hearing conducted in Khachmaz district municipality of Ashagi Zeyid, changes have been made to the expenditures. That is, 300 manats of 500 manats allocated for “capital repair of administrative and management units” has been directed towards “payment of transport fees”, and 200 manats towards “purchase of inventory and equipment”. Hence, funds for “capital repair of administrative and management units” have been decreased from 200 manats to 1500 manats and the expenditures of “payment of transport fees” appeared to be 300 manats, whereas “purchase of inventory and equipment” turned out to be 200 manats. The municipality budget board has been established and budget information was incorporated in it.
   
5. 
   Following the public hearing in Davachi district municipality of Rahimli, changes have been made to the budget revenues and expenditures. The budget revenues appeared to be 12688 manats increasing by 4912. Increase by items is recorded at 857 manats for land tax, 1567 manats for rental fee and 288 manats for land sale. Besides, the remaining funds of the last year amounting to 2200 manats were incorporated into the budget as the budget remnant. As per the budget expenditures, “salary” expenditures have increased from 4196 manats to 5120 manats, whereas “Transactions to the State Social Protection Funds” from 1000 manats to 1230 manats. “Office maintenance costs”have decreased from 530 manats to 320 manats, “business trip expenditures” from 100 manats to 78 manats, while “payment of utility and communication services” has been increased from 200 manats to 220 manats, “renovation” expenditures from 1250 manats to 1500 manats. The “capital costs” have undergone the most serious changes. If 200 manats was considered to be allocated towards this section in the forecast budget, after the budget hearing this amount makes up 3800 manats in the approved budget. 2200 manats of this fund has been directed towards “capital repair of administrative and management units” and 1600 manats to “capital repair of roads”. Besides, bank expenditures in the amount of 1600 manats has been directed towards “capital repair of roads”. The municipality budget board has been established and instructions have been made about the documents for budget board placement.
   
6. 
   Consequently, we would like to note that no changes have been made to the forecast budget of 2008 after the public hearing held in Khachmaz district municipalities of Khudat, Mollaburhanli, Garachay, Chek, Gusar district municipalities of Badirgala, Piral, Hasangala, Khuray, Hazra, Kohne Khudat Gazmalar, Davachi district municipalities of Shahnezerli and Gandov and it was approved as in original. The municipality budget board has been established and the municipality members have been instructed about the documents for budget board placement. We got familiar with Gusar district municipality of Balagusar budget and no change was recorded for budget expenditures. Regarding the budget board, the municipality chairman stated that the municipality building was not ready and that the building was going to be finished in two months and that they were not going to establish the budget board. Guba district municipality of Zardabi and Khachmaz district municipality of Shollar refused to meet us at all.
   

The visit also revealed that the municipality cash debit and credit orders do not meet the up-to-date standards. Municipal head was given necessary instructions to take new orders and they were filled out.

The visit also revealed that the municipality cash debit and credit orders do not meet the up-to-date standards. Municipal head was given necessary instructions to take new orders and they were filled out.