THE REFORM OF THE DISTRICT LEVEL OF LOCAL SELF-GOVERNMENT: STATUS AND POSSIBLE OPTIONS FOR ITS FURTHER IMPLEMENTATION

Abstract

Topicality. The urgency of the article is substantiated by an excessive centralization of powers and financial and material resources of the executive branch, the inability of territorial communities at the district level to exercise their powers, limited access to public services due to lack of funding and deterioration of local government infrastructure as well as reduced professionalism of officials. There is a need for scientific substantiation of scenarios for further implementation of the decentralization reform in terms of determining the rational balance of powers and tasks to be allocated to the district level of government with an appropriate financial support. The experience of forming enlarged administrative-territorial entities at the district level in Ukraine is a modern interpretation and development of European approaches to the definition of functional areas and statistical units according to NUTS-3, which determines the relevance of this study not only at the national but also at the Pan-European level within the context of development of applied principles of the regional development theory.Aim and tasks. The objectives of this study are: to analyze the state of the reform of local self-government at the district level, to consider possible options and scenarios for further implementation of this process, to determine a list of powers that should be transferred to the district level, and to propose measures of material, financial and organizational support.Research results. The peculiarity of a new districts formation in Ukraine is that the districts, which include regional centers, have a number of population several times higher than in other districts of the region. This does not comply with the European standard NUTS-3, which specifies a number of population in districts from 150 thou people to 800 thou people. The concept of local self-government reforming and territorial organization of power provides for the transfer of powers at the district level from executive power bodies to executive bodies of district councils; however the executive bodies of district councils have not been created yet, given that the relevant adjustments to the legislation have not been made. On September 17, 2020, the Verkhovna Rada adopted the Law of Ukraine "On Amendments to the Budget Code of Ukraine to Align the Provisions of Budget Legislation in Connection with the Completion of Administrative and Territorial Reform." This legislative act abolishes personal income tax revenues directed to district budgets, which is the main source of their funding. The district level is also excluded from the system of horizontal equalization, hence district budgets will not receive a basic subsidy and will not be engaged in direct inter-budgetary relations with the state budget and they are excluded from the list of "recipients" of educational and medical subventions. The revenues structure of district budgets’ general fund, which is enshrined in the new Article 64 of the Budget Code of Ukraine, narrows their revenue base dramatically. The district level of local self-government is almost leveled, and it is deprived of most powers and financial resources, as a result, it cannot represent common interests of territorial communities at the basic level, which contradicts a principle of subsidiarity, and an issue of expediency of further existence of the district level of local self-government will be raised in the near future. The article considers possible options for further reform of the district level of local self-government, namely: (1) liquidation of the district level of local self-government, (2) preservation of existing state of the district level of local self-government, (3) preservation of the district level of local self-government, while giving it authority and financial resources to represent the common interests of territorial communities of the basic level. A draft of powers, which should be transferred to the district level of local self-government, has been proposed.Conclusions. The amendments to the legislation made in 2020 have led to a situation where the district level of local self-government was deprived of a larger share of its revenues and was significantly limited in its powers. As a result, the local self-government at the district level cannot fully represent common interests of territorial communities of the basic level in accordance with Article 140 of the Constitution of Ukraine and the principle of subsidiarity. This raised a question on expediency of the existence of the local self-government at the district level. Possible options for its further reform have been considered in the article. The most expedient option is to preserve the district level of local self-government and provide it with powers and financial resources so that it would be able to represent common interests of territorial communities of the basic level. The list of powers to be transferred to the district level has been determined.