No. 29




The Sustainability of the Local Governments of Estonia According to the Audits of the National Audit Office

  • Airi Mikli

    Airi Mikli

    National Audit Office, Director of Audit

The audits conducted in the local governments by the National Audit Office give a good overview of the main problems of the local governments and enable to generalise the problems of the sustainability of the local government organisation in Estonia.

The first question that arises is why the local governments are not able to perform their functions or perform them selectively. Another important question is why the local governments are not a strong partner for the state. The audits of the National Audit Office show that the sustainability of local governments is negatively influenced by three main problems: the inability of cities and rural municipalities to plan their development, the lack of people with specialist knowledge and the weakness of internal control and democracy.

In 2012, the local governments of Estonia invested altogether 217.6 million euro, which is about 30% of the tax revenue of the local governments. But the increasing impact of the state in directing the investments of local governments is a problem. In 2007 the local governments made around 70% of investments with their own money, but by 2012 this indicator had decreased to 36%. Although it has been discussed how to divide the financial resources during the new EU programme period (2014–2020) in such a way that it would be possible to reduce the dependence of local governments on structural funds and at the same time improve their investment capacity, it cannot be foreseen how that aim can be met until there is no common understanding of the reform of the financing system of local governments or their revenue base.

Most of the local governments have difficulties in finding people with necessary training. One reason for that is the financial constraint of smaller local governments – good specialists will not get a good salary – but on the other hand the work in a small local government does not offer a good specialist enough challenges, burden and possibilities for self-development, which are of no small importance from the professional point of view. This situation can be illustrated by an example from a rural municipality that is not the smallest in Estonia. In this municipality, there are 4.6 positions in the local government, together with the municipality mayor, and these positions have for years been filled by people who are trained in geodesy, secretarial work and accounting, and as a tailor of outerwear. They have to manage with organising social work, child protection, care for the elderly, education, culture, sports, spatial planning, construction, local roads, communal services, state procurements and other issues. Is this possible?

Another risky spot from the aspect of the sustainability of local governments is the ability of cities and rural municipalities to discover their mistakes and correct them by themselves. The audits show that the capability to find potential risky spots in their activities and to correct the work processes, and the wish of the council to control the activities of the municipality government are rather small.

What should be done? There are no real obstacles for liquidating some of the problems – the leaders of rural municipalities or cities just have to change their attitude and management culture decisively. It is more complicated for the local governments themselves to make changes to the system of the organisation of local government, or to influence the existing project-based procedure of allocating money for investments or the capacity of local governments to finance their investments by themselves. It is not reasonable to expect that all the local governments of Estonia, which differ by over 4000 times by their population and income, would be able to perform the same functions, and it should not even be necessary. Unfortunately developing the organisation of local governments has not been a priority for the state for decades, actually this issue has been avoided. Establishing sustainable local governments in Estonia should be the aim of the state and it must not be postponed, changes have to be carried out and they have to take into account the existing realities.


Full article in Estonian