The Draft Law No 173970-6 On Amending Article 154 of the Budget Code of the Russian Federation was submitted by the Council of People’s Deputies of the Kemerovo Region.
The Government has reviewed the above Draft Federal Law.
The Draft Law proposes adding a new paragraph to Article 154 of the Budget Code of the Russian Federation, hereinafter referred to as the Budget Code. This paragraph stipulates the possibility of exercising specific functions of financial agencies of municipal entities by regional financial agencies and by their territorial divisions on the basis of agreements being signed between them and in accordance with a procedure stipulated by a top regional executive agency. At the same time, the draft law does not specify the list of these functions.
An explanatory note on the draft law states that the above agreements should be signed in order to improve and streamline the budget process at the local level under conditions of shortages of material resources and human resources within municipal entities.
Under Part 1 of Article 132 of the Constitution of the Russian Federation, local governments shall independently formulate, approve and implement a local budget.
Moreover, the relevant provisions of Federal Law No 131-FZ On the General Principles of Organising Local Governments in the Russian Federation dated October 6, 2003 do not stipulate the possibility of transferring specific functions from local governments to regional executive agencies.
Under Paragraph 2 of Article 154 of the Budget Code, financial agencies of the municipal entities shall draft the relevant budget and mid-term financial plan, and they shall submit them together with the required documents and materials to a legislative (representative) body for review. They shall organise the implementation of the budget, stipulate the relevant procedure for compiling budget records, and exercise other budget functions as stipulated by the Budget Code and/or by regulatory documents being approved in accordance with the Budget Code and the regulation of legal budget relations.
Local issues should be addressed by local governments or directly by the people, rather than by institutions of state authority because, under Article 12 of the Constitution of the Russian Federation, local governments, rather than regional financial agencies, are not part of the system of institutions of state authority.
In this connection, the exercise of specific functions of financial agencies of municipal entities by a regional financial agency on the basis of an agreement violates the principle of an independent local budget (See Article 31 of the Budget Code) and runs counter to the provisions of the Constitution of the Russian Federation and the Budget Code.
Paragraph 2 of Article 154 of the Budget Code allows the financial agency of a municipal district to exercise specific budget functions of a financial agency of any specific community on the basis of an agreement between the local administration of a community and the local administration of a municipal district. The financial agencies of communities may exercise this right in case of shortages of human resources, programme-technical and other material resources. At the same time, the constitutional principle of the independence of local governments is being observed because a municipal district and a community are municipal entities.